Republic of the Philippines

ISABELA STATE UNIVERSITY

Cauayan Campus

Mgt 56A - Total Quality Management

Chapter 1: Introduction to Total Quality Management

Objectives:
At the end of the chapter, the students should be able to:
 State a brief introduction of TQM
 Define Quality.
 Identify primary elements core concepts, and benefits of TQM.
 Distinguish between traditional management and TQM.
 Compare and contrast reengineering and TQM.

Introduction
In this day and age, companies must compete on the global market for customers who expect
nothing less than perfection. A modern management concept such as Total Quality Management (TQM)
helps improve the quality of products and services to achieve maximum customer satisfaction.
The concept of TQM is most applicable to companies and organizations that are heavily department-
focused. In such organizations, the left hand often doesn't know what the right hand is doing, as the
saying goes, and inter-department struggles negatively affect how customers’ needs and wants are met.  
With TQM, everyone in the company or organization is responsible for quality assurance and problem
prevention. This management concept was originally applied solely to manufacturing, but it has since
been successfully implemented by a number of businesses across many industries.

Learning Content

What is Quality?
In order to understand “Total quality management”, first we have to understand what does
Quality actually mean?
Quality is generally referred to a parameter which decides the inferiority or superiority of a
product or service. It is a measure of goodness to understand how a product meets its specifications.
Usually, when the expression "quality" is used, we think in the terms of an excellent product or service
that meets or even exceeds our expectations. These expectations are based on the price and the
intended use of the goods or services. In simple words, when a product or service exceeds our
expectations we consider it to be of good quality. Therefore, it is somewhat of an intangible expression
based upon perception.

Approaches to Quality Definition

1. The Transcendent Approach
According to the transcendent view, quality is synonymous with “innate excellence.” It is both
absolute and universally recognizable, a mark of uncompromising standards and high achievement.
Nevertheless, proponents of this view claim that quality cannot be defined precisely; rather, it is a simple,
unanalyzable property that we learn to recognize only through experience.
2. The Product-based Approach
Product-based definitions are quite different; they view quality as a precise and measurable variable.
According to this view, differences in quality reflect differences in the quantity of some ingredient or
attribute possessed by a product.
3. The User-based Approach
User-based definitions start from the opposite premise that quality “lies in the eyes of the beholder.”
Individual consumers are assumed to have different wants or needs, and those goods that best satisfy
their preferences are those that they regard as having the highest quality. This is an idiosyncratic and
personal view of quality, and one that is highly subjective. In the marketing literature, it has led to the
notion of “ideal points”: precise combinations of product attributes that provide the greatest satisfaction
to a specified consumer; in the economics literature, to the view that quality differences are captured by
shifts in a product’s demand curve; and in the operations management literature, to the concept of
“fitness for use.”
4. The Manufacturing-based Approach
User-based definitions of quality incorporate subjective elements, for they are rooted in consumer
preferences — the determinants of demand. In contrast, manufacturing-based definitions focus on the
supply side of the equation, and are primarily concerned with engineering and manufacturing practice.
Virtually all manufacturing-based definitions identify quality as “conformance to requirements.” Once a
design or a specification has been established, any deviation implies a reduction in quality. Excellence is
equated with meeting specifications.
5. The Value-based Approach
Value-based definitions take this idea one step further. They actually define quality in terms of costs
and prices. According to this view, a quality product is one that provides performance at an acceptable
price or conformance at an acceptable cost.

Quality Types
1. Quality of Design
Quality of design is all about set conditions that the product or service must minimally have to satisfy
the requirements of the customer. Thus, the product or service must be designed in such a way so as to
meet at least minimally the needs of the consumer. However, the design must be simple and also less
expensive so as to meet the customers' product or service expectations. Quality of design is influenced by
many factors, such as product type, cost, profit policy, demand of the product, availability of parts and
materials, and product reliability.
2. Quality of Conformance
Quality of conformance is basically meeting the standards defined in the design phase after the
product is manufactured or while the service is delivered. This phase is also concerned about quality is
control starting from raw material to the finished product. Three broad aspects are covered in this
definition, viz. defect detection, defect root cause analysis, and defect prevention. Defect prevention deals
with the means to deter the occurrence of defects and is usually achieved using statistical process control
techniques. Detecting defects may be by inspection, testing or statistical data analysis collected from
process. Subsequently, the root causes behind the presence of defects are investigated, and finally
corrective actions are taken to prevent recurrence of the defect.
3. Quality of Performance
Quality of performance is how well the product functions or service performs when put to use. It
measures the degree to which the product or Service satisfies the customer from the perspective of both
quality of design and the quality of conformance. Meeting customer expectation is the focus when we talk
about quality of performance.

Quality Level
1. Organizational Level
The organizational level quality requirements revolve around its customers quality requirements. A
customer is anyone who receives one or more of the organization’s products or services who could be an
internal or external one. The following issues may help define quality at this level:
a. Products or services that meet the customer expectation.
b. Products or services that do not meet customer expectation.
c. Products or services that are needed by the customers but they do not received.
d. Products or services that are not needed by the customers but they do not received.
The resolution to these issues will include productivity and cost requirements and those that are
traditionally linked to quality. Timeliness, accessibility, and value for money are quality features for a
customer.
2. Process Level
At the process level, units of the organization are categorized into functions or department like
marketing, operations, finance, and human resource and so on. Most processes are cross – functional so
managers can optimize the activities of his department and sub – optimize the activities of the entire
organization. The following issues may help define quality at this level:
a. Products or services that are most important to external customers.
b. Processes that produce those Products or services.
c. The key inputs to the process.
d. Processes that have the most major effect on the organization’s customer drive
performance standards.
e. The internal customers and their needs.
 Defining quality at the process level starts with determining the end – customer requirements for the
process. End – customer requirements should then be translated into specific measures that should drive
one or more internal measures for the overall process. These measures must be brought to the different
sub-process. The outcome is a set of meters in addition to the specific standards they produce placed and
key stages of the process that will serve as the basis for monitoring each steps contribution to process
quality. The meters and standards will also be used for trouble shooting the system in case customer
requirements are not met.

3. Performer/Job/Task Design Process

Individuals are one of the vital components of the human performance system. At the micro level they
serve as a reflection of the process and the system being used by the organization. Each individual under
the human performance system accepts inputs, generate outputs, and then adjust his performance from
the feedback obtained.
Developing standards to measure each individual key output is a necessity to define individual quality.
The standards created from organization and process levels should be the basis for these standards to be
developed. Productivity and cost are the requirements for a customer driven quality. With these
requirements the areas to be measured to qualify individual standard would include accuracy,
completeness, innovativeness, reliability, ease of use, timeliness, volume, rate, cost, and flexibility.

Quality Paradigms
1. Custom – Craft Paradigm.
The custom-craft paradigm focuses on the product specification relative to customer demands. In this
case the craftsperson and customer communicate directly so the product is customized to exactly what
the customer wants.
2. Mass Production and Sorting Paradigm
The focus in the mass production and sorting paradigm is on productivity. Customers are often
contacted through mass advertising sales promotion. The product is defined with the customer in mind
but without direct customer involvement.
3. Statistical Quality Control Paradigm
The statistical quality control paradigm is similar to the mass production and sorting paradigm with
the difference that more attention is given to production processes. Statistical process control and lot-by-
lot sampling inspection are used. The result is far less scrap and rework than in the mass production and
sorting paradigm. Product performance and timeliness are similar to that obtained with the mass
production and sorting paradigm.
4. Total Quality Management Paradigm
The total quality management (TQM) paradigm involves customers and suppliers in addition to mass
production and statistical methods.  TQM paradigm recognizes the importance of customer focuses on
continuous quality improvement in day-to-day processes, aiming at higher product performance, lower
cost, and faster delivery.
5. Techno – Craft Paradigm
The techno-craft paradigm is the socio-technical counterpart to the custom-craft paradigm. The
techno-craft paradigm is a new frontier in quality that seeks to emulate the custom-craft paradigm in
performance, but reduce the cost and the delivery time. The techo-craft paradigm is possible through the
proper integration of people, machines and automation.

Cost of Quality
The application of costs of quality is a good means to identify the quality performance of an
organization. A quality costing system is a management tool for identifying and monitoring costs incurred
with respect to quality. It enables the application of proper management direction and control over areas
where quality cost figures are abnormally high.
1. Prevention Cost
The costs associated with preventing the potential for quality problems. These can consist of training
costs, quality improvement program costs, design costs, preventive maintenance costs, data collection
and analysis costs, etc.
2. Appraisal Cost
The costs associated with determining the quality of the systems or products. These can consist of
inspection equipment costs, testing costs, laboratory costs, inspector costs, costs associated with
evaluating the performance of the systems and products, etc.
3. Internal Failure Cost
The costs incurred as a result of a product failure before it is delivered to the customer. These can
consist of rework costs, scrap cost, downtime, etc.
 4. External Failure Cost
The costs incurred when a product fails after it has been delivered to the customer. These can consist
of rework costs, warranty costs, liability claims, penalties, etc.

Defining Total Quality Management

 Total Quality Management is defined as a customer-oriented process and aims for continuous
improvement of business operations. It ensures that all allied works (particularly work of
employees) are toward the common goals of improving product quality or service quality, as well
as enhancing the production process or process of rendering of services. However, the emphasis
is put on fact-based decision making, with the use of performance metrics to monitor progress.
 Total quality management (TQM) is the continual process of detecting and reducing or
eliminating errors in manufacturing, streamlining supply chain management, improving the
customer experience, and ensuring that employees are up to speed with training. Total quality
management aims to hold all parties involved in the production process accountable for the
overall quality of the final product or service.
 TQM is a continuous process of improvement for individual, groups as well as the entire
organization, whereby managers attempt to change the organization’s way of working by
developing people’s knowledge about what to do, how to do, doing it with the right methods and
measuring the improvement of the process and the current level of achievement.

The Primary Elements of TQM

Quality is necessary parameter which helps organizations outshine their competitors and survive
the fierce competition.
The achievement of TQM depends on the following eight elements which are further classified into
following four groups.

Foundation
The entire process of TQM is built on a strong foundation of ethics, integrity, and trust. TQM involves
every single employee irrespective of his designation and level in the hierarchy.
1. Ethics - is a combination of written and unwritten codes of principles that govern decisions and
actions within a company. It is an understanding of the difference of good and bad decision
making and behavior at the business world. It boils down to following the code of conduct of
organization and adheres to rules and regulations.
2. Integrity – is the consistency of action, values, methods, measures, principles, expectations, and
outcomes at workplace. There is a need to respect organizations policies. Avoid spreading
unnecessary rumors about fellow workers. TQM does not work in an environment where
employees criticize and backstab each other.
3. Trust – is one of the most important factors necessary for implementation of TQM because it
builds a cooperative environment. It is a relationship based on reliance. Employees need to trust
each other to ensure participation of everybody and allows empowerment that encourages pride
of ownership and commitment. Trust improves relationships among employees and eventually
helps in better decision making which further helps in implementing TQM successfully.

Building Bricks
Bricks are placed on a strong foundation to reach the roof of recognition. The foundation needs to be
strong enough to hold the bricks and support the roof. Leadership, Teamwork, and Training are the
building bricks of TQM.
1. Leadership – provides a direction to the entire process of TQM. It is about raisin the aspiration
of followers and enthusing people with a desire to reach the goals. Leadership in TQM requires
the manager to provide an inspiring vision, make strategic decision, and instill values that guide
subordinates. TQM needs to have a supervisor who acts as a strong source of inspiration for
other members and can assist them in decision making. A leader himself needs to believe in the
entire process of TQM for other to believe in the same.
2. Teamwork – is a crucial element of TQM. Rather than working individually, employees need to
work in teams. When individuals work in unison, they are in a position to brainstorm ideas and
come up with various solutions which would improve existing processes and systems. Team
members ought to help each other to find a solution and put into place.
3. Training – employees need to be trained on TQM to become highly productive. Managers need to
make their fellow workers aware of the benefits of TQM and how would it make a difference in
their product quality and eventually yield profits for their organization. Employees need to be
trained on interpersonal skills, the ability to work as a team member, technical know-how,
 decision-making skills, and problem-solving skills and so on. Training enables employees to
implement TQM effectively within their departments and also make them indispensable
resources.

Building Mortar
Building mortar binds all the elements together. Communication binds everything together,
starting from foundation and going up to the roof. Communication is the vital link between all the TQM
elements and must be prevalent in an organization in order for TQM to work the way it should. The
channels of communication need to be credible and easily interpreted for all members of the
organization.
Communication binds employees and extracts the best out of them. Information needs to be passed on
from the sender to the recipient in its desired form. Small misunderstandings in the beginning lead to
major problems later on. Employees need to interact with each other to come up with problems existing
in the system and find solutions as well. Three types of communication take place between employees.
1. Downward communication – this is the dominant form of communication in an organization.
Presentations and discussions are two examples of this form of communication. Flow of
information takes place from the management to the employees. The supervisors are able to
make the employees clearly understand TQM using this type of communication.

2. Upward Communication – flow of information takes place from the lower-level employees to
the top level management. The lower-level employees are able to offer suggestions on the effects
of TQM to the upper level management using this type of communication. Supervisors should
listen effectively and incorporate the insights and constructive criticisms offered by the
employees in correcting the situations that arise through the use of TQM. This creates a level of
trust between supervisors and employees. This is also similar to empowering communication,
where supervisors listen to others.
3. Sideways/Lateral Communication – Communication also takes place between various
departments. This type of communication is important because it breaks down barriers between
departments. It also allows a more professional dealing with customers and suppliers.

Roof
It includes recognition which brings greater internal customer satisfaction which in turn leads to
external customer satisfaction in the organization. There can be huge change in self-esteem, productivity,
and quality when the contributors are recognized.
Recognition is the final element of TQM. Recognition is the most important factor which acts as catalyst
and drives employees to work hard as a team and deliver their lever best.
Every individual is hungry for appreciation and recognition. Employees who come up with improvement
ideas and perform exceptionally well must be appreciated in front of all.

Core Concepts of TQM

Each of the following core concepts of TQM can be used to drive the process of continuous
improvement and to develop a framework for quality improvements over many years.
1. Customer Satisfaction – is a marketing term that measures how products or services supplied
by a company meet or surpass a customer’s expectation. It is important because it provides
marketers and business owners with a metric that they can use to manage and improve their
businesses. TQM is centered on the requirements of the customer. In order to meet customer
requirements, it is imperative to listen to them and do what is agreed upon.
2. Internal Customer Satisfaction – customers are not only external, but there are also internal
customers. Internal customers have a relationship with, and within, your company, either
through employment or as partners who deliver your product or service to the end user or the
external customer. Less obvious but certainly still significant, stakeholders and shareholders are
also internal customers. All of these may or may not purchase your product or service.
3. All work is Process – another possible focal point of improvement is that of business processes.
A process is a combination of methods, materials, manpower, and machines that work
collectively to produce a product or service.
4. Measurement – in order to improve, one must first measure one’s present performance. This
will help one focus both on satisfying internal customers and meeting the requirement of
external customers.
5. Synergy in teamwork – the idea in synergy in teamwork, where the whole is greater that sum of
the parts, is the key concept in TQM. Here, it is used to promote collaboration, consensus, creative
conflict, and team winning. One of the strength of using teams for TQM is that they can merge the
 mutually restricted individual qualities needed for running business today. Teamwork can
provide opportunities for people to work together to reach quality improvement.
6. People make Quality – most of the quality problems within an organization are not usually
within the control of an individual employee. The system often comes in the way of employees
who are trying to do a good job. In such a situation, motivation by itself cannot work. Therefore
managers are required to ensure that all necessary is prepared to let people to produce quality.
This creates an environment where people are eager to take responsibility for the quality of their
own work.
7. Continuous Improvement Cycle – the continuous cycle of instituting customer requirements,
meeting and measuring them, measuring success and continuing the improvement can be used
both externally and internally to stimulate quality improvements. The continuous improvement
cycle used over and over again will lead to a fresh “chemistry” within the organization so that the
culture starts to change to one of continuous improvement.
8. Prevention – at the heart of TQM is the conviction that it is possible to achieve defect-free work
most of the time. This is termed “right first time, every time” or zero defects. The “right first time,
every time” or zero defects policy is the result of an emphasis on prevention, and the diligent use
of measurement, process controls, and the data-driven elimination of waste and error. It serves
as goal for continuous improvement. Prevention is the goal of all quality assurance. Through
planned and systematic action quality assurance prevents quality problems.

Benefits of TQM
There are many benefits of TQM. Essentially, TQM refers to the total quality in fulfilling the needs
of customers, the quality of the products and the quality of life.
1. Creates a good corporate culture – TQM is an approach where the customer is the center point
of the business rather than the department. Therefore, quality is transformed from an issue of the
production department to a strategic business entity to meet global challenges. The TQM
philosophy revolves around developing a culture that supports total commitment to customer
satisfaction through continuous improvement.
2. Better reviews from customers – another benefit of TQM is that customers and clients are
highly satisfied with the performance. Given the quality assurance testing procedures, the
products of the company will constantly meet the requirements and needs of clients and
customers. Therefore, the customers stay with the company longer, deepen their relationship
with the company, and demonstrate less price sensitivity while recommending the company’s
products or service to others.
3. Better performance from employees – through TQM there is often more attention placed on
meeting the needs of the employees or internal customers. The training given to the employees
as part of the program can boost employee’s morale at the workplace resulting in employees
working harder to achieve the goals of TQM.

Shifting From Traditional Management To TQM

Traditional management systems focus on goals and objectives that the senior management of
the company establishes. These goals usually relate to increased sales or profits, with an eye toward
pleasing the shareholders.
By contrast, Quality-focused management involves a partnership with customers to produce a
product or service that meets, or even exceeds, their expectations and needs. Quality-focused
management works on the premise that if your product pleases customers, sales will increase.
Changing from a Traditional Style to a Quality-Focused Style of management requires re-
education of managers to become leaders instead of bosses as well as clear communication of the
company’s quality vision. The quality goal must be championed by everyone, beginning from the top
down to the lowest worker.

TQM and Reengineering

Reengineering sometimes called Business Process Reengineering (BPR), involves a complete re
thinking and transformation of key business processes, leading to strong horizontal coordination and
greater flexibility in responding to changes in environment.
Reengineering basically means starting over-throwing out all thinking of how work was done and
deciding how it can best be done now. It entails identifying customer needs and crafting how it can best
be done now. It requires identifying customer needs then designing process and supporting people to
meet those needs.
Similarity and Differences between Reengineering and TQM
Some people have said that both TQM and Reengineering are the same, while others have argued
that they are incompatible. Michael Hammer argues that the two concepts are compatible and actually
complement each other. Both concepts have the same focus – Customer satisfaction.
TQM has advocated continuous and incremental improvement of processes whereas
Reengineering is about radical discontinuous change through process innovation.

Reengineering vs TQM
Similarities Reengineering TQM
Basis of Analysis Processes Processes
Performance Measurement Rigorous Rigorous
Organizational Change Significant Significant
Behavioral Change Significant Significant
Time Investment Substantial Substantial

Differences Reengineering TQM

Level of Change Radical Incremental
Starting Point Clean Slate Existing Process
Participation Top-Down Bottom-Up
Typical Scope Broad, Cross-Functional Narrow, within Functions
Risk High Moderate
Primary Enabler Information Technology Statistical Control
Type of Change Cultural and Structural Cultural
ACTIVITY

Read the story of URATEX in the link below and answer the questions below it.
https://www.philstar.com/business/2010/08/16/602727/uratex-commits-product-quality

1. What approach in quality has Uratex brand used to excel?

2. How would you qualify Uratex brand using the three quality types of design, conformance, and
performance?
3. Can Uratex brand make use of reengineering to further improve its product?

SELF-ASSESSMENT

I. True of False
Write T if the statement is correct and F is the statement is wrong.

__________1. Quality can only be observed through the eyes of the customers.
__________2. Feedback on a regular basis must come from both internal and external customers.
__________3. With TQM all of the organization’s resources are used effectively to improve all its processes.
__________4. TQM does not work in an environment where employees criticize each other.
__________5. Teamwork breaks down the communication barriers and acts as platform of change.

II. Identification
Write the correct answer in the space provided below.

__________1. It is generally referred to a parameter which decides the inferiority or superiority of a product
or service.
__________2. It is all about set conditions that the product or service must minimally have to satisfy the
requirements of the customer.
__________3. The costs associated with preventing the potential for quality problems.
__________4. One of the core concepts of TQM and it is a marketing term that measures how products or
services supplied by a company meet or surpass a customer’s expectation.
__________5. One of the foundations that refer to the consistency of action, values, methods, measures,
principles, expectations, and outcomes at workplace. There is a need to respect organizations
policies.

References
Serrano, Angelita Ong Camillar Total Quality Management 2016
https://www.businessanalystlearnings.com/ba-techniques/2017/2/11/an-introduction-to-total-quality-
management
https://sloanreview.mit.edu/article/what-does-product-quality-really-mean/