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 LEARNING OUTCOMES:
● After this chapter, students shall be
able to:
● Know the Foundation of Total Quality
Management (TQM)
● Appreciate the significance of TQM in
business organization
● Adopt TQM in business operation.
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Introduction:
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 Quality starts with

understanding the needs of

the customers. This all started

the foundation of TQM.

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 ⬤ The concept was introduced during the Industrial

Revolution.

⬤ It was the time when a worker no longer made the whole product

instead, he made a part only. It was a decline in workmanship,

⬤ Because of this most manufactured product during that period

were not that complicated, quality was not greatly affected.

⬤ Productivity improved, there was also a decrease in cost.

⬤ Inspection after production became necessary because the

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products became more complicated and jobs more specialized.

 Historical
Background
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 Facts! 1924
W.A. Shewhart of Bell Telephone
•
Laboratories developed a statistical
chart for control of product variables

● The beginning of statistical quality

control.

● H.F. Dodge and H. G. Romig developed

the area of acceptance sampling as a
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substitute for 100% inspection.

 Facts! 1980’s to the 1990’s
• New phase of Quality control and management began.

• This became known as Total Quality Management.

• Having observed Japan’s success of employing quality

issues, western companies started to introduce their own
quality initiatives.

• TQM developed as catchall phrase for the broad spectrum

of quality focused strategies, programs and techniques
during this period, became the center of focus for the
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western quality movement.

 Definition of TQM
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 What is TQM?

Total Quality Management is an improvement to

the traditional way of doing business.

Only by changing the actions of management will

the culture and actions of an entire organization
be transformed. TQM is for the most part common
sense, as stated by D.H. Besterfield.

long-term planning ; Consistent improvement in

the quality ; A never Ending process.
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 Analyzing the three words
such as:
Total - Made up of the whole.

Quality -Degree of excellence a product or service provides.

Management -It is a process of planning, organizing, directing and

controlling. An act or manner of handling, controlling, directing etc.
Therefore, TQM is the art of managing the whole to achieve excellence.

TQM integrates all the fundamental management techniques, existing

improvement efforts, and technical tools under a disciplined approach.
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covers the most quality principles and practices proposed by quality

gurus
 What is TQM?

Total Quality Management (TQM) is a

management approach for an organization,
centered on quality, based on the
participation and commitment of all the
internal and external customers and aiming at
strategically long- term success through
customer satisfaction, and benefits to all
members of the organization and to society
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 Six Basic
Concepts of TQM
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By B. Creech
 1. A committed and involved
management to provide long –term
top – to- bottom organizational
support.
2. An unwavering focus on the
customer, both internally and
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externally.
 3. Effective involvement and
utilization of the entire work
force.
4. Continuous improvement of
the business and production
process
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 5. Treating suppliers as
partners.
6. Establish performance
measures for the
processes.
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 Purpose of TQM
To provide a quality product or service to
customers, which will in turn, increase
productivity, and lower cost.

With a higher quality product or service and

lower price, competitive position is the
market place will be enhances.
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 Purpose of TQM

These series of events will allow

the business organization to
achieve the objectives of profit
and growth with greater ease.
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 Transformation to
TQM
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 ● Quality and productivity are not exclusive;
improvements in quality can directly lead to
increase productivity and other benefits.
● A business organization cannot start the

transformation to TQM until it is aware that the

quality of the product or service must be
improved.
● Awareness comes in when a business

organization loses market share or realizes

that quality and productivity go hand-in-hand.
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 Automation and other productivity
enhancement might not help a
business organization if it is unable to
market its product or service
because of poor quality.
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 According to
E. Deming

“Quality improvement is not limited to the conformance

of the product to specifications; it also involves the
inherent quality in the design of the system. The
prevention of product and process problems is a more
desirable objective than taking corrective action after
the product is manufactured or a service rendered.”
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 TQM does not occur overnight; there are
no quick solutions. It takes a long period
of time to build the appropriate systems
and techniques into the culture.

Short term results and profits must be

set aside so long-term planning and
constancy of purpose will be done.
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 Meaning of
Quality
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 Did you know?

●When “quality is used, we usually think of an

excellent product or service that satisfies or
exceeds our expectations. These expectations
are based on the intended use and the selling
price. When a product surpasses our
expectation, we always consider it as a quality
product, as stated by D.A. Garvin.
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 The Deming of
TQM
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 Did you know?

● According to D.H. Besterfield, Dr. W. Edwards Deming was

influenced of Dr. Walter Shewhart, who pioneered Statistical
Process Control (SPC) at Bell Laboratories. Both spent much time
together during the late 1920s, under Sir Ronald Fisher, who
pioneered design of experiments.

● Deming taught statistical quality control as part of the wartime

production effort. In 1950 he taught SPC concepts and the
importance of quality to the leading CEOs of Japanese industry
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 14 Deming Points as a Theory for
Management for Improvement of quality,
productivity and competitive positions:

1. Create and Publish the Aims

and Purposes of the Organization.
2. Learn the New Philosophy.
3. Understand the Purpose of
Inspection.
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 4 . Stop Awarding Business
Based on Price Alone.

5. Improve Constantly and

Forever the System.

6. Institute Training.
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 7. Teach and Institute Leadership

8. Drive Out Fear, Create Trust, and

Create a Climate for Innovation.

9. Optimize the Efforts of Teams,

Groups and Staff Areas.
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 10. Eliminate Exhortations for the
Work Force.
11. Eliminate numerical Quotas for
work force and Management by
Objectives.
12. Remove barriers that Rob
people of Pride of Workmanship.
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 13.Institute a vigorous program of
education and self-improvement for
everyone.
14.Put everybody in the company
to work accomplishing the
transformation.
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 Impediments of
TQM
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 Many business organizations like
small ones with niche are comfortable
with their present condition. They are
satisfied with the work being
performed and their perceptions that
the customers are satisfied. This kind
of organizations do not need TQM until
they begin to lose market share.
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 Once a business organization take off on TQM,
there will be a resistance to change. People
become accustomed to doing things in a
particular way and it becomes the preferred
way. People become closed to innovations, and
TQM is viewed as another thing that is deemed to
fail. It is hard for individuals to change their way
of doing things; it is much more difficult for a
business organization to make a cultural change.
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 A considerable amount of
training in the six stated
concepts is needed to overcome
these impediments to TQM. Also,
the channels of communication
will need to be improved and
developed.
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 Chapter # 2

Quality Cost
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 LEARNING OUTCOMES:
After this chapter, students shall be
able to:
• Know the classification of Failure,
Reducing, Internal and external cost.
- Identify and internalize the powerful
tool that could raise awareness on how
to lessen the failure of cost.
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Introduction:
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 Cost of Quality

Cost of quality (COQ) is defined as a methodology

that allows an organization to determine the
extent to which its resources are used for
activities that prevent poor quality, that appraise
the quality of the organization’s products or
services, and that result from internal and
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external failures.
 Cost of Quality

Cost of quality is a method that

allows an organization to determine
the extent to which its resources are
used for activities that prevent
defects or failures.
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 Remember:
The costs of doing a
quality job, conducting
quality improvements, and
achieving goals must be
carefully managed.
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 Remember:

These costs must be a true

measure of the quality
effort, and they are best
determined from an
analysis of the costs of
quality.
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 Remember:
Cost of quality is also an important
communication tool.

Philip Crosby demonstrated what a powerful tool

it could be to raise awareness of the importance
of quality.

He referred to the measure as the "price of

nonconformance" and argued that organizations
choose to pay for poor quality.
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 Many organizations will have true quality-related
costs as high as 15- 20% of sales revenue, some
going as high as 40% of total operations.

General rule of thumb - Costs of poor quality in a

thriving company will be about 10-15% of
operations.

The quality cost system, once established, should

become dynamic and have a positive impact on the
achievement of the organization’s mission, goals,
and objectives.
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 Classification of Failure cost
1. Internal failure cost
Internal failure costs are incurred to remedy
defects discovered before the product or
service is delivered to the customer.

These costs occur when the results of work

fail to reach design quality standards and
are detected before they are transferred to
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the customer.
 They could include:
Waste: Performance of unnecessary work or holding of
stock as a result of errors, poor organization, or
communication

Scrap: Defective product or material that cannot be

repaired, used, or sold

Rework or rectification: Correction of defective material or

errors
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Failure analysis: Activity required to establish the

causes ofinternal product or service failure
 2. External failure costs
External failure costs are incurred to
remedy defects discovered by customers.

These costs occur when products or

services that fail to reach design quality
standards are not detected until after
transfer to the customer.
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 They could include:

Repairs and servicing: Of both returned products and

those in the field
Warranty claims: Failed products that are replaced or
services that are re-performed under a guarantee
Complaints: All work and costs associated with handling
and servicing customers’ complaints
Returns: Handling and investigation of rejected or
recalled products, including transport costs
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 Reducing the Cost of Quality Failure
Prevention
Prevention costs are incurred to prevent
or avoid quality problems.

These costs are associated with the

design, implementation, and maintenance
of the quality management system.

They are planned and incurred before

actual assembly of the product at the shop
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floor.
 Figure 1. This shows how hidden failure costs dominate the more obvious costs of
failure
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 Prevention is the key to reduced quality costs.
Failure in this context includes time wasted by customers in
seeking support, in addition to the issue causing them to seek
support in the first place.

Support systems must be designed so they are readily available to

the customer, with accurate information provided to quickly
resolve the issue.

The customer support process should be analyzed for waste and

process capability, typically by monitoring the time to initial
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response and overall time to resolution.

Thank you!
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