TOTAL QUALITY MANAGEMENT

Imarga, Catalina, Provido, Medina, Narvasa

A core definition of (TQM) describes a management approach to long–term success

through customer satisfaction. In a TQM effort, all members of an organization participate in
improving processes, products, services, and the culture in which they work.

PRINCIPLES OF TOTAL QUALITY MANAGEMENT

1. Strategic and Systematic Approach
Strategic Planning - is a process an organization uses to prioritize and focus the efforts
of the company as well as the implementation of a plan. Strategic and systematic
approach is important in total quality management because it helps an organization
to analyze and evaluate the needs of customers to determine the best approach to
meet their needs and produce the best quality an organization wants.
2. Process-centered
Process – it is a series of actions or steps taken in order to achieve a particular end.
Process-centered is a fundamental principle in TQM because it helps an organization
to fully measure and focus on the process it is undertaking. TQM focuses on a process
centered approach in most organizations. Following a streamline process reduces the
tendency for errors
3. Total employee involvement
All employees participate in working toward common goals. As the employees has
the freedom to share their ideas towards the plan of an organization it ensures an
empowered workplace and generally happier employees and it eventually results in
better quality.
4. Communication
Communication – is simply the act of transferring information from one place, person
or group to another. Communications involve strategies, method, and timeliness.
Effective communication plays a big part in a day-to-day operation of every
organization. Having an effective communication helps all the employees in
maintaining their morale and motivating themselves. Communication must not only
be done in higher position of an organization but also in the lower position. Effective
 communication among the shareholders is key to the success of a business. To
implement TQM successfully in an organization, it should be supported at all levels of
the firm– from the CEO to the low-level paid employee. The managers and employees
should also collaborate across departments and business units, and even among
customers and suppliers to identify areas of process improvement. Thus, effective
communication is the key to TQM success and the key to have a quality business.
5. Fact-based Decision Making
In order to know how well an organization is performing, data on performance
measures are necessary. TQM requires that an organization continually collect and
analyze data to improve decision making accuracy, achieve consensus, and allow
prediction based on history. As per Warner (2013), decision makers depend on hard
data, soft data, assumptions, anecdotal experience, and the occasional hunch when
selecting from a range of available options. Yet, so as to have sound judgment,
research suggests that all of these inputs are not equivalent, and we need to learn to
put more emphasis on facts. In other words, we need to adopt a fact-based decision-
making approach. As the term implies, fact-based decision making involves putting
considerable initial emphasis on the gathering of facts, figures, data and evidence.
6. Integrated System
An integrated business system may be modeled after the Baldrige National Quality
Program criteria and/or incorporate the ISO 9000 standards. Every organization has
a unique work culture, and it is virtually impossible to achieve excellence in its
products and services unless a good quality culture has been fostered. Thus, an
integrated system connects business improvement elements in an attempt to
continually improve and exceed the expectations of customers, employees, and other
stakeholders. An Integrated Management System (IMS) integrates all of an
organization’s systems and processes into one complete framework, enabling an
organization to work as a single unit with unified objectives. Read more:
https://integrated-standards.com/articles/ims-benefits/
7. Continuous Improvement
TQM focuses on continuous improvement of organizational processes resulting in
high quality products and services. The ideal goal of TQM is do things right the first
 time and every time. The customer is the ultimate judge of quality. Quality cannot be
improved without significant losses in productivity. It further drives an organization
to be both analytical and creative in finding ways to become more competitive and
more effective at meeting stakeholder expectations. Vijayakumar (2013) likewise
stated that quality cannot be improved without significant losses in productivity. It is
imperative that the top management provide leadership and support for quality
initiatives. Quality goals are moving targets and improving quality requires
establishment of effective metrics.
8. Customer-focused
The customer ultimately determines the level of quality. No matter what an
organization does to foster quality improvement—training employees, integrating
quality into the design process, upgrading computers or software, or buying new
measuring tools—the customer determines whether the efforts were worthwhile.

Total quality management can be summarized as a management system for a

customer-focused organization that involves all employees in continual improvement. It
uses strategy, data, and effective communications to integrate the quality discipline into the
culture and activities of the organization

CUSTOMER FOCUS

There is a wide variety of approaches or concepts of defining the word quality. These
concepts span from conformance to standards, excellence and most importantly, meeting or
exceeding customer needs or expectations.

Customer

According to Bloomenthal (2019), a customer is an individual or business that

purchases a company’s goods or services. It has the ability to choose between several
alternative products based on various factors such as taste and preference, income,
occupation, religion, age, gender and cultural background.
Two (2) General types of customers

➢ External Customer – is a customer who purchases or uses the product but is not a
part of or not directly connected to the business organization; one who influences the
sale of the product or service. These customers are the main subjects for
brainstorming problems and designing solutions. This type is further classified into
three (3) categories:
• Current customer – a customer who is into buying the business organization’s
product. He or she may be a one-time purchaser or a repeat buyer.
• Prospective customer – a customer who is targeted by the business
organization may be because of the compatibility of their product offering to
a specific market to which it belongs
• Lost customer – a customer who switched brands because of a variety of
reasons such as dissatisfaction, difference in product performance and the
like.
➢ Internal Customer – is a person who has a relationship with or works within the
business organization. This person is a customer of the preceding production
operation. Each internal customer’s goal is to meet the quality that the next person in
the production process expects.

Customer Focus: Definition

A principle of Total Quality Management is about customer focus which emphasizes

the role of the customers and their relationship with the business. It is an orientation of an
organization toward serving its customers’ needs and ensuring their satisfaction as the
primary concern. In other words, this connotes excellence and belief that customers
ultimately define quality.

KEY CONCEPTS ON CUSTOMER FOCUS

Emphasis on customer-defined quality

A business organization produces goods and services not only to gain profit but to
meet its customer’s needs. As William Edwards Deming said, “The consumer is the most
important part of the production line. Quality should be aimed at the needs of the consumer,
present and future.”

The business should decide on the quality of the products to offer based on the
characteristics of the customers that it has chosen to serve. From this perspective, product
and service quality is determined by what the consumer wants and is willing to pay for.
Quality in this sense is the product’s fitness for use. How well does it do what the consumer
or user thinks it is supposed to do and wants it to do?

The dimensions of quality for products which a consumer looks for in a good or
service may include the following:

➢ Accuracy – it refers to the right or correct performance of the service

➢ Courtesy – it refers to the manner or how the employees of the firm treat its
customers
➢ Responsiveness – it refers to how the business organization reacts to unusual
situations or customer complaints
➢ Performance - it is the basic operating characteristic of a product.
➢ Features - these are the additions or extra items added aside from the basic features
such as phone case to a cellular phone, or the leather interior in a car.
➢ Reliability - it is the quality of performing consistently well under different conditions
or circumstances.
➢ Conformance - it is the degree to which a product meets pre-established standards or
design specifications.
➢ Durability - it is the life span of a product before being replaced. It tells how long a
product last.
➢ Serviceability - it is the ease of getting repairs, the speed of repairs, and the courtesy
and competence of the repairperson
➢ Aesthetics - it tells how a product looks, feels, smells or tastes
➢ Safety - it refers to the assurance that the product will not cause harm or injury to the
customer using it.
 ➢ Other Perceptions - it may include subjective perceptions based on brand name,
advertising, reviews and the like.

Emphasis on Customer Service

Customer service is the act of taking care of the customer’s needs by providing and
delivering professional, and high-quality service and assistance before, during and after the
customer’s requirements are met.

Some good characteristics of customer service are:

➢ Promptness - being on time is an important factor under customer service as it helps

in making the customers feel that they are valued or prioritized by business
organization.
➢ Proactively following up with the customer - this ensures that satisfaction is achieved
from customer by making sure that all his or her needs are met
➢ Politeness – is the use of good manners to any person whether he or she makes a
purchase or not
➢ Professionalism – it refers to the use of skill or competence expected of the
professional.
➢ Personalization – it refers to the use of the customer’s name during a transaction. It
helps in making loyal customers since they commonly like the idea that the person
that they transact with knows them on a personal level.

Types of customer service

➢ Self-service Knowledge Base

➢ Social Media Support
➢ Email support
➢ Phone Support
➢ In store or on-site support
A common customer service approach can be summarized with the acronym L.A.S.T.:

➢ Listen – in order to know what the problem is, an employee of the firm must first
listen to the customer’s feedback or complaint. Show that the customer is
acknowledged or properly heard by briefly reiterating what he or she said.
➢ Apologize – after listening and finding out the problem, apologize for his or her bad
experience without blaming anyone or anything.
➢ Solve – fix the problem and make things right
• If you know how to solve the problem, try to give clear and brief instructions
• If you do not know how to solve the problem, be honest with the customer and
get somebody who does.
➢ Thank the customer - appreciate the customer’s effort of citing the problem. End on a
positive, friendly note by thanking them because you want the firm to maintain good
relations with them

Involving Customers with Product Development

Since products that are produced by the business organization are defined in terms
of quality by customers, making collaborations on product development would be an
effective approach in providing quality products and achieving customer satisfaction.
Involving them will not only pave way for the success of developing a new product but also
increases their loyalty to the brand and strengthens relationships with them.

Customer Involvement may be done through the following:

➢ Polls and surveys

➢ Social Media Monitoring
➢ Testing Prototypes by customers
➢ Collaborating
➢ Co-designing
Emphasis on Customer Feedback

An important component of any TQM program is the company’s ability to measure

customer satisfaction. By developing a feedback control system, the company will know if its
TQM program is effective by the level of customer satisfaction that it would get as a result.
TQM programs require that some form of measurement system be in place to determine how
their company performs to satisfy customer needs by providing data about the customer’s
level of satisfaction. In addition, customer feedback enables business organizations to:

➢ Discover customer dissatisfaction

➢ Discover relative priorities of quality
➢ Identify customer needs
➢ Determine opportunities for improvement
➢ Compare their performance with other firms in the industry

Customer feedback may be gathered through:

➢ Customer feedback surveys

➢ Product reviews
➢ Email
➢ Online feedback
➢ Phone calls

CUSTOMER NEEDS AND EXPECTATIONS

• Customer needs
- The success of every company is dependent on its ability to create
products and services that address unmet customer needs. Despite this
fact, in over 95 percent of all companies, marketing and development
managers don’t agree on what a customer “need” even is. More
specifically, they do not agree on what characteristics a customer need
statement should possess, what information it should contain, its
purpose, and how it should be structured. The first step in becoming a
 customer-centric organization is agreeing on a customer needs
definition.
- Ulwick (2005) discovered that a customer need is best defined as a
statement that describes how a customer measures success and value
when getting a job done. We call these statements “desired outcomes”.
A desired outcome statement is uniquely structured to detail how
customers define value and how a company can help create it.

- Myths that mislead. Managers and employees in nearly every company

hold some of these mistaken beliefs about identifying customer needs.
These beliefs are a key reason why companies struggle to innovate.
These myths have survived for decades because companies commonly
confuse customer needs with solutions. The key point to remember is
that a customer need is not a solution, product feature, or idea. The
truth is customers don’t know what solutions will help them get their
job done best, nor should they. Customers are not engineers, scientists
and materials experts. It’s up to the company to come up with the best
solutions once the customer’s needs, or desired outcomes, are known.
• Understanding your customer’s needs
- Each customer will have a different perception of what customer
service means to them. If you want to provide good customer service,
 you should know the needs of the customer and how to fulfill those
needs. Most customers have a set of basic need that they want from a
service, make sure you understand them and work them into you
customer service strategy.
• Setting customer’s expectations
- Once you know what your customer needs, you can begin setting
expectations. Here you can tell customers what service levels they can
expect to receive; what support is available to them and what results
they should be getting. Every industry and even every customer might
have a different set up expectations, therefore, expectations should be
adjusted accordingly.
- Key influences of customer expectations:

• Meeting customer’s expectations

- Meeting customer’s expectations is the most valuable part of customer
satisfaction. A satisfied customer is one that has had their expectations
met. To do this, you must make sure you deliver a consistent level of
service that is based on the key areas you have set for each customer
when you set expectations. When you are able to accurately identify
and adequately meet your customers' expectations, your customer
service reputation will automatically be enhanced.
- Techniques in meeting customer’s expectations:
 a) Become familiar with your customers
b) Ask your customers what their expectations are
c) Tell your customers what they can expect
d) Live up to their expectations
e) Maintain consistency
- Some of the benefits of meeting your customers' expectations
include:
a) Customers that transform from first-time visitors to loyal clients
b) Increased sales as customers feel more comfortable doing
business with you
c) More referrals from satisfied customers who bring in additional
business by word of mouth

- There is no doubt that adequately meeting customer expectations is an

essential part of a robust customer service department. By accurately
identifying those expectations, and meeting or exceeding them
consistently, your company is likely to enjoy happier customers and a
healthier bottom line.

DIFFERENCE BETWEEN CUSTOMER’S EXPECTATIONS AND SATISFACTION

• Customers expect certain things when they walk into a business, and those
with the highest level of service will know how to identify those expectations
and meet them to the customer's satisfaction. However, this process is not as
easy as it sounds – customer expectations are a dynamic feature that ebbs and
flows regularly in accordance with a wide range of factors or marketing offers.
• However, when expectations are not met by the performance of your
customer service representatives, customer dissatisfaction is the result.
• Customer Expectations + Service Performance = Customer Satisfaction
- Customer satisfaction depends on the product’s perceived
performance relative to a buyer’s expectations. If the product’s
 performance falls short of expectations, the customer is dissatisfied. If
performance matches expectations, the customer is satisfied. If
performance exceeds expectations, the customer is highly satisfied or
delighted.

PREVENTION AND NOT CORRECTION

The concept of TQM emphasizes that concentrating on prevention rather than on

correction is a more cost-effective approach. Preventing defects and failures is a lot cheaper
than dealing with quality failures. Therefore, managers strive to reach zero defects in the
organization to minimize quality costs.

One of the most important bases of justifying Total Quality Management is

understanding its impact on total quality costs.

Overview of Quality Costs:

It is not the price of creating a quality product but the cost of not creating a quality
product. Whenever a work is redone, the quality cost is increasing.

Quality Costs are Prevention costs, Appraisal costs, Internal and External Failure
costs.

A. Prevention Costs are associated with the design, implementation, and maintenance
of the TQM system. They are planned and incurred before actual operation, and can
include:
• Product Requirements: The setting specifications for incoming materials,
processes, and finished products/services
• Quality Planning: Creation of plans for quality, reliability, operational,
production, and inspections
• Quality Assurance: The creation and maintenance of the quality system
• Training: The development, preparation, and maintenance of processes
B. Appraisal Costs are associated with the vendor's and customer's evaluation of
purchased materials and services to ensure they are within specification. They can
include:
 • Verification: Inspection of incoming material against agreed upon
specifications
• Quality Audits: Check that the quality system is functioning correctly
• Vendor Evaluation: Assessment and approval of vendors
C. Internal Failure Costs occur when results fail to reach quality standards and are
detected before they are shipped to the customer. These can include:
• Waste: Unnecessary work or holding stocks as a result of errors or poor
organization or communication
• Scrap: Defective product or material that cannot be repaired, used, or sold
• Rework: Correction of defective material or errors
• Failure Analysis: This is required to establish the causes of internal product
failure
D. External Failure Costs occur when the products or services fail to reach quality
standards but are not detected until after the customer receives the item. These can
include:
• Repairs: Servicing of returned products or at the customer site
• Warranty Claims: Items are replaced, or services re-performed under
warranty
• Complaints: All work and costs associated with dealing with customers'
complaints
• Returns: Transportation, investigation, and handling of returned items

Prevention costs are thoroughly planned. It includes certain practices comprising the
core principles. These practices highly take into account the product quality, employee
training, supplier certification, equipment and facilities maintenance, and quality
procedures.

Managers should consider the determinants of the end results of these good practices
and the consequences if the desired results are not achieved. Thorough research and
development must be done and employed before and during the designing phase of the
production to avoid dealing with negative feedbacks and production defects by the time the
products come to the hands of the customers or by the time the service is being conducted.

Consequences of not following the Concept of Prevention

• Higher cost of quality
• Negative customer feedbacks and complaints
• Greater load on reworking defects
• Poor quality may affect sales and profit
• May eventually lead to the downfall of the business if not addressed immediately

An example is the case of the Hubble telescope. An external failure cost was encountered
because the mirrors used were improperly assembled producing only blurred images. The
correction cost was over 1 billion USD.

Always remember the axiom that "an ounce of prevention is worth a pound of cure"
(Ross, 2008). The concept of 1-10-100 Rule must be applied in understanding quality costs
and in implementing a more cost-effective approach of preventing than correcting.