Taguig City University: Bsba-Marketing Management CBM Ec 1-Total Quality Management

Republic of the Philippines
City of Taguig
Taguig City University
Gen. Santos Avenue, Central Bicutan, Taguig City
BSBA-MARKETING MANAGEMENT
CBM EC 1-TOTAL QUALITY MANAGEMENT
MODULE 1
TABLE OF CONTENTS
I. TITLE
II. INTRODUCTION
III. OVERVIEW
IV. LESSONS
V. REFERENCES
Lesson I: Concept and Terminology of TQM
Objective
Definition of Total Quality Management
Definition of Quality
Common elements of TQM
Evolution of Quality
The 5’s method
Lesson II: Dimensions of Quality
Objective
Service Quality
Product Quality
Additional attributes of Quality
Activity
Lesson III: Quality Costs
Objective
Definition of Quality Costs
Three Types of Quality Costs
Classification of failure cost
Activity
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Lesson IV: LEADERSHIP

Objective
Leadership for Total Quality Management
Elements of TQM
Deming’s 14 points for top management
Ten strategies for top management
Activity
Lesson V: TOTAL QUALITY IMPLEMENTATION
Objective
PDSA TQM implementation
Planning Phase of TQM
Barriers to TQM Implementation
Activity
Lesson VI: CUSTOMER SATISFACTION
Objective
Service quality
Features of Services
Customer Service
Customer Service Attributes
Three Levels of Quality
Activity
Lesson VII: EMPLOYEE INVOLVEMENT
Objective
Definition of employee involvement
TQM principles and strategies pertaining to employee involvement.
Employee Motivation
Motivation Theory of Individual Employees
Activity
Lesson VIII: TEAMWORK
Objective
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Definition of teamwork
Definition of Communication
Barriers to Communication
Attributes for selection of best performing employees
Feedback
Empowerment
Barriers to Success
Activity
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BSBA-MARKETING MANAGEMENT
CBM EC 1-TOTAL QUALITY MANAGEMENT
MODULE 1
I. TITLE: TOTAL QUALITY MANAGEMENT
II. INTRODUCTION:
Total Quality Management (TQM) is customer oriented management philosophy

and strategy. It is centred on quality so as to result in customer delight.
The top management looks at every activity in the organization in terms of return on
direct and indirect investment. Total Quality Management was evolved to satisfy
customers in the most economical way. Quality means cost effectiveness. It means
reducing expenditure by eliminating wastes through systematic quality management
approach.
Total quality management is a way of managing an organization with the
objective of carrying out right jobs right-the first time and every time. In quality
management, there is a thumb rule called 85/15 rule. It means that the root cause of
85 per cent of the problems in the organization are due to faulty systems and 15 per
cent are a result of the behaviour of our employee.
The top management always leads the implantation of TQM. TQM is based
on self-control, which should be embedded in each employee, team division, etc.
pushing problem solving and decision making to the lower levels of the organization
allows employees to both measure and take corrective action in order to deliver a
product or service that exceeds customer expectation.
Customers are the greatest need of any organization. Hence it is obvious that
they should be satisfied. Satisfying customers requires adoption of PDCA.
The employees are the strength of an organization. They are the prime
contributors to its success. When an organization wants to expand its business or
increase its profits, only the employees can make it happen. The only expandable
resource in the organization are employees. Any improvement will happen only
because of the employees. Therefore, employee involvement is essential for TQM.
Teams are formed to fulfil the objectives. It is part of the regular organizational
structure of the organization. The team coordinator will coordinate the day-to-day
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activities of the team. He may be called manager, supervisor, team leader, head,
team coordinator and etc.
CONCEPT AND TERMINOLOGY OF TQM
Objective: To understand the concept of Total Quality Management and to practice
and achieve the center resulting in Total Quality
At the end of the chapter, the student is expected to understand the following:
 Definition of Total quality management
 Chain reaction
 Dimensions of quality
Lesson I: Definition of Total Quality Management
Total Quality Management (TQM) is customer oriented management philosophy
and strategy. It is centered on quality so as to result in customer delight. The word
“Total” implies that all members of the organization make consistent efforts to
achieve the objectives of customer delight through systematic efforts for
improvement of the organization.
The TQM philosophy was involved in Japan after World War II. Edwards Deming, an
American quality expert helped the Japanese to apply concepts of TQM.
The International Standard, ISO 9000, defines Total Quality Management (TQM) as
“a management approach of an organization, centered on quality, based on the
participation of all its members and aiming at long term success through customer
satisfaction and benefits to the member of the organization and to the society.”
Definition of Quality
Juran, one of the quality gurus, defined quality as fitness for use.
The definition of Quality as per the ISO 9000 standards is: “The totality of features
and characteristics of a product or service, that bear on its ability and services to
satisfy a given or implied need.”
Dimensions of Quality
1. Product Quality
 Functionality refers to the core features and characteristics of a product.
 Reliability is an indicator of durability of products.
 Usability a product should be easily usable. The customer should be able
to use the product easily without help of experts.
 Maintainability refers to the ease with which a product can be maintained
in the original condition.
 Efficiency is the ration of output to input
 Portability is defined as a set of attributes that bear on the ability of
software to be transferred one environment to another.
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2. Service Quality unlike products, every service is made to order.

 Quality of Customer Service customer service is important in every
business. In a service industry, meeting customers and finding out their
requirements is more challenging. Therefore, ability to satisfy customer
depends on the quality of customer service.
 Quality of Service Design since services is usually made to order, it is
important that the service is designed as per the requirements of the
specific customer.
 Quality of Delivery is important in any sector, but more crucial in case of
services. Defects on delivery should be zero to satisfy the customers.
Additional attributes of Quality
1. Timeliness
2. Aesthetics
3. Regulatory Requirements
4. Requirements of Society
5. Conformance to Standards
Evolution of Quality
1. Dr Walter A. Shewhart
2. Deming W. Edwards
3. Joseph M. Juran
4. Philip B. Crosby
5. Armand V. Feigenbaum
6. Kaoru Ishikawa
Quality Control the operational techniques and activities that are used to fulfil the
requirements for quality. Juran gives 3 steps of QC.
1. Evaluate actual operating performance
2. Compare actual performance to goals
3. Act on the difference
QC is inspection or appraisal of products and services to ensure that the
stated requirements are fulfilled.
Quality Assurance all the planned and systematic activities implemented within the
quality system, and demonstrated as needed, to provide adequate confidence that
an entity will fulfil the requirements for quality.
Quality Design it refers to how well the product or services has been designed to
meet the current and future requirements of customers and add value to all the
stakeholders.
Quality of Conformance this indicates the consistency in delivering the designed
product.
Quality of Performance it is an indicator of the performance of the end product.
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Quality of Service involves all activities that will enable the customer to procure and
use the product without any hassles.
Quality Planning refers to the activities that establish the objectives and
requirements for quality.
Quality Improvement this process aims at attaining unprecented levels of
performance, which are significantly better than past level.
Quality Management (QM)
According to ISO 9000, Quality Management comprises “all activities of the
overall management function that determine the quality policy, objectives and
responsibilities and implement them by means such as quality planning,
quality control, quality assurance and quality improvement within the quality
system.
Just-In-Time
Tai-Chi Ohno of Toyota motors refined an idea for Just-In-Time. This means
that at no stage of manufacturing nobody or nothing waits for anything.
Activities
 Video presentation
 Quiz
 Recitation
 Group presentation
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QUALITY COSTS
Objective: To analyze the importance of quality costs in an organization.
At the end of the chapter, the student is expected to understand and differentiate the
following:
 Definition of Quality Cost
 Three types of quality costs
 Classification of failure cost
Lesson II: Definition of Quality Costs
Cost of Quality (COQ) is the sum of costs incurred by an organization in preventing
poor quality.
Three Types of Quality Costs
1. Prevention Costs are the planned costs incurred by an organization to
ensure that no defects occur in any of the stages such as design,
development, production and delivery of a production and delivery of a
product or service.
2. Appraisal Costs are incurred in verifying, checking or evaluating a product or
service at various stages during manufacturing or delivering.
3. Failure Costs are incurred by an organization because the product or service
did not meet the expected requirements and the product had to be fixed or
replaced or the service had to be repeated.
Classification of failure cost
Internal failure cost- includes costs of every failure that takes place before the
product is delivered to the customers. It accrues due to defective processes. The
following accounts for internal failures:
 Rejected material, supplied by vendor
 Rejected pieces of sub-assemblies
 Rejected products at final inspection
 Scrap on account of poor workmanship
 Overtime due to non-conforming products
External failure Cost- these are on cost failure of the product after its delivery to the
customers. Examples of external failure are:
 Warranty costs
 Free replacement given due to failure of items supplied
 Cost incurred to travel to customer’s site for repair
 Cost of product returned
 Cost of customer complaint administration
 Cost of customer follow up field service department.
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Activities
 Quiz
 Recitation
 Group presentation
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LEADERSHIP
Objective: To develop their management skills
At the end of the chapter, the student is expected to understand and differentiate the
following:
 Elements of Total Quality Management
 Deming’s 14 points for top management
 Ten strategies for top management
Lesson III: Leadership for Total Quality Management
When we peruse the teachings of the quality gurus, we gather that the higher
echelons of management have an important role to play for TQM to be implemented.
In fact the management is solely responsible for the success of TQM as it is
responsible for selecting people, forming teams, providing resources and
establishing the system in the organization. As Crosby says senior management is
100 per cent responsible for the problem of quality and its continuance. According to
Harrington, between 70 to 85 per cent of all errors can only be corrected by
management. Thus, it is important that top management understands TQM and
leads the organization through the TQM journey.
Elements of TQM
 Training
 Constancy of Purpose/Long term Commitment
 Focus on process
 Quantitative methods
 Continuous Process Improvement
 Supplier Partnership
 Customer Focus
 Leadership
 Total Employee Involvement/Teamwork
Deming’s 14 points for top management
Deming is the father figure of Japanese quality movement. Deming addressed the
Japanese top managers several times in the 1950’s. He gave the 14 points for top
management. These initiatives of Deming transformed the nation. The results are
there for everyone to see. Let us identify the role of top management for TQM to
happen from the 14 points given by deming.
Create constancy of purpose for improvement of products and services
The top management must believe that their business will continue for 100 years.
Such a confidence of will motivate them to aim long-term success. It will infuse a
constant quest for innovation, improvement of processes, product and services.
They will invest in research to innovate new products and will train their employees
without the fear of losing them. If the employees understand that the company is
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interested in long term success, then the employees will follow suit. Therefore, it is
the role of the top management to create constancy of purpose for improvement for
products and services, which is essential for TQM. They have to constantly reiterate
their intention to practice TQM and improve products and services.
Adopt the new philosophy
The new philosophy is to practice the Japanese CWQC, which was renamed as
TQM much later. The new philosophy means elimination of wastes, delays and
radically changing the work culture. The new philosophy means, just-In-Time (JIT)
manufacturing is possible with zero defects. All the 14 points of deming should to be
adopted by the top management to result in long term success through the
implementation of TQM in the organization.
Cease dependence on mass inspection
Doing things right and doing it right the first time would reduce the dependence on
inspection, in fact it would be eliminated. TQM is aimed at eliminating inspection in
the long run to prevention.
End the practice of awarding business on the basis of price tag alone
This point addresses supplier partnership. The suppliers should be selected on basis
of the following 4 parameters.
 Quality
 Price
 Delivery
 Service
Therefore price alone should not be the criterion for selection of supplier. Supplier
partnership is discussed in section II.
Constantly improved the system of production and services
The process in the organization need continuous improvement, Kaizen in Japanese.
TQM is aimed at continuous improvement of process so that the quality of product
and services improvement. The very purpose of TQM is the constant improvement of
the system for production and services.
Institute training
The abilities of employee should be improved and harnessed only though training.
Deming advocates, “Management needs training to learn about the organization, all
the way from incoming material to the customer”. Today every Japanese employee
receives six weeks of training every year. This is the proof of deming’s teaching and
adaption of his concepts by the Japanese.
Adapt and institute leadership
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Deming urges that the senior employees must conduct themselves as leaders rather
than managers.
Drive out fear
Employees should be encourage to suggest improvement and new ideas, ask
question about the existing process, etc. if freedom to express new ideas is curtailed,
then the employees will continue to do what they are doing. This will stunt
improvement. Fears is detrimental to improvement of processes.
Break down barriers between staff areas
Quite often, the various thing of the organization stop communicating with each
other. The teams, over the years become water tight compartments. Every team may
prove that this is the best. But organization as a whole maybe doing poorly due to
lack of communication between the teams! TQM dictates removal of barriers
between the departments.
Eliminates slogans, exhortations and targets for the work force
Here deming talks about slogan and target for increasing productivity. He says that
barriers to quality productivity exist within the organization itself. Hence, to achieve
higher productivity, the system has to be improved for which, management is
responsible. The posters are directed at the wrong people, namely the workers. They
only generates “frustration and resentment’ among workers. The best strategy for
improvement is to correct defects in the system, not slogans or posters.
(a) eliminate numerical quota for the work force
Setting the target for production, say producing 1000 bolts per shift, etc. may affect
the quality of workmanship. This forces the worker to ignore quality and concentrate
on quantity. This is detrimental to the organization. On the contrary standards for
quality workmanships, etc. could be prescribed. Numeric quota is given assuming
that the worker maybe idling. This is not the right approach.
(b) eliminate numerical goals for people in management
Setting goals without the necessary wherewithal does not work. Goals such as
growth of business by 15% or reduction of quality cost by 5% given in a new year
day will end like new year promises! Such improvement should arise out of
improving processes and not by passage of time.
remove barriers that rob people of pride of workmanship
The organization should establish the right processes and a proper system for
quality management. This will lead to carrying out jobs correctly. If the work is carried
out correctly, it gives prides to those who did. Any barriers that rob the managers or
workers their pride of workmanship should be removed. Every employee should be
encourage to as much as he can. Removing the obstacles to this pursuit is the
responsibility of the top management.
Encourage the education and self-improvement for everyone
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Employees should be encourage to pursue higher training while in service, for

improving the skills, or updating knowledge. If an employee undergoes education or
training, it will improve his ability, which will be beneficial to the organization. Hence,
employees should be motivated and encouraged to improve their knowledge and
skills through various channels.
Take Action to Accomplish the Transformation
The top management should understand the above 13 points and then enable their
employees to understand them. They should interpret the 13 points properly and
educate their employees appropriately. They should have the courage to break the
status quo and improve their employees, processes, system and thereby their
products continually. They should identify all the processes in the organization and
improve each one of them using PDSA cycle. Therefore the final point is about
implementation of the 13 points, which in essence are TQM principles and
strategies.
Thus the 14 points formulated for Japanese management by Deming are relevant
today. He emphasized the same points to the American industry during the 1980’s
when they looked for his guidance.
TEN STRATEGIES FOR TOP MANAGEMENT
When we will now look at some of the strategies advocated by experts to be adopted
by the CEO and the top management to lead the organization on TQM principles.
The author in guiding the organization, of which he is the head, adopted these
strategies for the success of the organization in its TQM journey. Thus, they are very
practical. Some of the strategies are:
1. Proactive Management
2. Adventurous and bold change management
3. Do It Right First Time (DIRFT)
4. Continuous preventive action
5. Care for little things and accumulate gains
6. Ensure economic performance
7. Practice manage by walking around
8. Measure success
9. Never rest on laurels, continue to improve
10. Build a virtual organization
Activities
 Quiz
 Recitation
 Group presentation/Activity
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Lesson IV: LEADERSHIP

I. TITLE: TOTAL QUALITY MANAGEMENT

Total Quality Management (TQM) is customer oriented management philosophy

2. Service Quality unlike products, every service is made to order.

Employees should be encourage to pursue higher training while in service, for

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