TOTAL QUALITY

MANAGEMENT
Kristian Veil N. Nierves
Meaning of Quality
 Meeting Customer’s Requirements

 Doing Things Right the First Time

 Freedom from Failure (Defects)

 Consistency

 Continuous Improvement
Meaning of Quality
 Conformance to specifications
 Does product/service meet targets and tolerances
defined by designers?
 Fitness for use
 Evaluates performance for intended use
 Value for price paid
 Evaluation of usefulness vs. price paid
 Support services
 Quality of support after sale
 Psychological
 e.g. Ambiance, prestige, friendly staff
Total Quality Management
 A holistic approach to long-term success
that views continuous improvement in all
aspects of an organization as a process
and not as a short-term goal. It aims to
radically transform the organization
through progressive changes in the
attitudes, practices, structures, and
systems.

buisnessdictionary.com
Total Quality Management
 Total quality management transcends the
product quality approach, involves
everyone in the organization, and
encompasses its every function:
administration, communications,
distribution, manufacturing, marketing,
planning, training, etc. Coined by the US
Naval Air Systems Command in early
1980s, this term has now taken on several
meanings and includes
businessdictionary.com
Total Quality Management
 commitment and direct involvement of highest-
level executives in setting quality goals and
policies, allocation of resources, and monitoring
of results
 realization that transforming an organization
means fundamental changes in basic beliefs and
practices and that this transformation is
everyone's job
 building quality into products and practices right
from the beginning

businessdictionary.com
Total Quality Management
 understanding of the changing needs of the
internal and external customers, and
stakeholders, and satisfying them in a cost
effective manner
 instituting leadership in place of mere supervision
so that every individual performs in the best
possible manner to improve quality and
productivity, thereby continually reducing total
cost
 eliminating barriers between people and
departments so that they work as teams to
achieve common objectives
 instituting flexible programs for training and
education, and providing meaningful measures of
performance that guide the self-improvement
efforts of everyone businessdictionary.com
involved.
Dimensions of Quality:
Manufacturing Organizations
 Conformance
 the degree to which a product
characteristic meets preset standards
 Performance
 such as acceleration of a vehicle
 Reliability
 that the product will function as
expected without failure
Dimensions of Quality:
Manufacturing Organizations
 Features
 the extras that are included beyond the
basic characteristics
 Durability
 expected operational life of the product
 Serviceability
 how readily a product can be repaired
Dimensions of Quality:
Manufacturing Organizations
 Aesthetics
 how a product looks, feels, sounds,
smells, or tastes
 Safety
 assurance that customer will not suffer
injury or harm from a product
 Perceptions
 subjective perceptions based on brand
name, advertising, and the like
Dimensions of Quality:
Service Organizations
 Time and Timeliness
 How long must a customer wait for service, and is it
completed on time?
 Is an overnight package delivered overnight?
 Completeness
 Is everything customer asked for provided?
 Is a mail order from a catalogue company complete
when delivered?
 Courtesy
 How are customers treated by employees?
 Are catalogue phone operators nice and are their voices
pleasant?
Dimensions of Quality:
Service Organizations
 Consistency
 Is the same level of service provided to each customer each
time?
 Is your newspaper delivered on time every morning?
 Accessibility and convenience
 How easy is it to obtain service?
 Does a service representative answer you calls quickly?
 Accuracy
 Is the service performed right every time?
 Is your bank or credit card statement correct every month?
 Responsiveness
 How well does the company react to unusual situations?
 How well is a telephone operator able to respond to a
customer’s questions?
Cost of Quality
 Quality affects all aspects of the
organization and has dramatic cost
implications

Quality Control Costs Quality Failure Costs

Prevention Costs Internal Failure Costs
Appraisal Costs External Failure Costs
Quality Control Costs
 costs necessary for achieving high quality

Prevention Costs
Costs incurred in the process of preventing poor quality from occurring.

Appraisal Costs
Costs incurred in the process of uncovering defects.
Prevention Cost
 Quality planning costs
 costs of developing and implementing quality
management program
 Product-design costs
 costs of designing products with quality
characteristics
 Process costs
 costs expended to make sure productive
process conforms to quality specifications
Prevention Cost
 Training costs
 costs of developing and putting on quality
training programs for employees and
management
 Information costs
 costs of acquiring and maintaining data related
to quality, and development of reports on
quality performance
Appraisal Cost
 Inspection and testing
 costs of testing and inspecting materials, parts, and
product at various stages and at the end of a process
 Test equipment costs
 costs of maintaining equipment used in testing quality
characteristics of products
 Operator costs
 costs of time spent by operators to gar data for testing
product quality, to make equipment adjustments to
maintain quality, and to stop work to assess quality
Quality Failure Costs
 cost consequences of poor quality

Internal Failure Costs

Costs associated with discovering poor product quality before the
product reaches the customer.

External Failure Costs

Costs associated with quality problems that occur at the customer site.
Internal Failure Cost
 Scrap costs
 costs of poor-quality products that must be
discarded, including labor, material, and
indirect costs
 Rework costs
 costs of fixing defective products to conform to
quality specifications
 Process failure costs
 costs of determining why production process
is producing poor-quality products
Internal Failure Cost
 Process downtime costs
 costs of shutting down productive process to
fix problem
 Price-downgrading costs
 costs of discounting poor-quality products—
that is, selling products as “seconds”
External Failure Cost
 Customer complaint costs
 costs of investigating and satisfactorily
responding to a customer complaint resulting
from a poor-quality product
 Product return costs
 costs of handling and replacing poor-quality
products returned by customer
 Warranty claims costs
 costs of complying with product warranties
External Failure Cost
 Product liability costs
 litigation costs resulting from product liability
and customer injury
 Lost sales costs
 costs incurred because customers are
dissatisfied with poor quality products and do
not make additional purchases
Cost of Quality
 The earlier defects are found, the less
costly they are to correct.
 Example:detecting and correcting defects
during product design and product
production is considerably less expensive
than when the defects are found at the
customer site
Cost of Quality
Evolution of Total Quality Management
Quality Gurus
Quality Guru Main Contribution
-contributed to understanding of process variability
Walter A. Shewhart
-developed concept of statistical charts
-stressed management’s responsibility for quality
W. Edwards Deming -developed “14 points” to guide companies in
quality improvement
-defined quality as “fitness for use”
Joseph M. Juran
-developed concept of cost quality

Armand V. Feigenbaum -introduced concept of total quality control

-coined phrase “quality is free”

Philip B. Crosby
-introduced concept of zero defects
-developed cause-and-effect diagrams
Kaoru Ishikawa
-identified concept “internal customer
-focused on product design quality
Genichi Taguchi
-developed Taguchi loss function
Deming’s 14 Points
1. Create constancy of purpose
2. Adopt philosophy of prevention
3. Cease mass inspection
4. Select a few suppliers based on quality
5. Constantly improve system and workers
6. Institute worker training
7. Instil leadership among supervisors
8. Eliminate fear among employees
9. Eliminate barriers between departments
10. Eliminate slogans
11. Remove numerical quotas
12. Enhance worker pride
13. Institute vigorous training and education programs
14. Develop a commitment from top management to implement
above 13 points
Total Quality Control Philosophy
 TQM Focuses on identifying quality
problem root causes
 Encompasses the entire organization
 Involves the technical as well as people
Total Quality Control Philosophy
 Customer focus  Goal is to first identify
 Continuous and then meet
improvement customer needs
 Employee  TQM recognizes that
empowerment a perfectly produced
product has little
 Use of quality tools
value if it is not what
 Product design the customer wants
 Process management  Quality is customer
 Managing supplier driven.
quality
Total Quality Control Philosophy
 Customer focus  A philosophy of never-
 Continuous ending improvement
improvement  The Plan–Do–Study–Act Cy
 Employee  Benchmarking
empowerment
 Use of quality tools
 Product design
 Process management
 Managing supplier
quality
Total Quality Control Philosophy
 Customer focus  to seek out quality
 Continuous problems and correct
improvement them
 Employee  Employees are
empowerment rewarded for
uncovering quality
 Use of quality tools
problems, not
 Product design punished
 Process management
 Managing supplier
quality
Total Quality Control Philosophy
 Customer focus  External customers
 Continuous  those that purchase
improvement the company’s
 Employee goods and services
empowerment  Internal customers
 Use of quality tools  employees of the
 Product design organization who
 Process management receive goods or
 Managing supplier services from
quality others in the
company
Total Quality Control Philosophy
 Customer focus  Team Approach
 Continuous  Two heads are
improvement better than one
 Employee  Using techniques such
empowerment as brainstorming,
discussion, and quality
 Use of quality tools control tools, teams
 Product design work regularly to
correct problems.
 Process management
 The contributions of
 Managing supplier teams are considered
quality vital to the success of
the company.
Total Quality Control Philosophy
 Customer focus  Quality Circle
 Continuous  A team of volunteer
improvement production employees
and their supervisors
 Employee who meet regularly to
empowerment solve quality problems.
 Use of quality tools
 Product design
 Process management
 Managing supplier
quality
Total Quality Control Philosophy
 Customer focus  Employees need to
 Continuous identify and correct
improvement quality problems so
 Employee they need proper
empowerment training
 Use of quality tools
 They need to
understand how to
 Product design assess quality by
 Process management using a variety of
 Managing supplier quality control tools,
quality how to interpret
findings, and how to
correct problems
Total Quality Control Philosophy
 Customer focus  Seven Tools of Quality Con
 Continuous
improvement
 Employee
empowerment
 Use of quality tools
 Product design
 Process management
 Managing supplier
quality
Total Quality Control Philosophy
 Customer focus  Quality Function
 Continuous Deployment
improvement  A tool used to translate
the preferences of the
 Employee customer into specific
empowerment technical requirements
 Use of quality tools
 Product design
 Process management
 Managing supplier
quality
Total Quality Control Philosophy
 Customer focus  QFD encompasses
 Continuous  Customer requirements
improvement  Competitive evaluation
 Product characteristics
 Employee
 Relationship matrix
empowerment
 Trade-off matrix
 Use of quality tools  Setting Targets
 Product design
 Process management
 Managing supplier
quality
Total Quality Control Philosophy
 Customer focus  Reliability
 Continuous  The probability that a
improvement product, service, or part
will perform as
 Employee intended.
empowerment  No product is 100%
 Use of quality tools certain to function
properly
 Product design  Reliability is a
 Process management probability function
dependent on sub-parts
 Managing supplier
or components
quality
Total Quality Control Philosophy
 Customer focus  Reliability
 Continuous  Reliability of a system is
improvement the product of
component reliabilities
 Employee  RS = (R1) (R2)... (Rn)
empowerment  RS = reliability of the
 Use of quality tools product or system
 R1 = reliability of the
 Product design components
 Process management  Increase reliability by
placing components in
 Managing supplier
parallel
quality
Total Quality Control Philosophy
 Customer focus  Reliability
 Continuous  Parallel components
improvement allow system to operate
if one or the other fails
 Employee  RS = R1 + (R2*
empowerment Probability of needing
 Use of quality tools 2nd component)
 Product design
 Process management
 Managing supplier
quality
Total Quality Control Philosophy
 Customer focus  Quality products come
 Continuous from quality sources
improvement  Quality must be built
 Employee into the process
empowerment
 Use of quality tools
 Product design
 Process management
 Managing supplier
quality
Total Quality Control Philosophy
 Customer focus  Quality at the source
 Continuous  a belief that it is better
improvement to uncover source of
quality problems and
 Employee correct it
empowerment  TQM extends to
 Use of quality tools quality of product
 Product design from company’s
 Process management suppliers
 Managing supplier
quality
Total Quality Control Philosophy
 Customer focus  An inspection
 Continuous performed to check
improvement the quality of
materials that has
 Employee
arrived is viewed as a
empowerment
practice contributing
 Use of quality tools to poor quality and
 Product design wasted time and cost.
 Process management
 Managing supplier
quality
Total Quality Control Philosophy
 Customer focus  TQM extends the
 Continuous concept of quality to
improvement suppliers and ensures
that they engage in
 Employee
the same quality
empowerment
practices.
 Use of quality tools
 Product design
 Process management
 Managing supplier
quality
Quality Awards and Standards
 Philippine Quality Award
 Malcolm Baldrige National Quality Award
(MBNQA)
 The Deming Prize
 ISO 9000 Certification
 ISO 14000 Standards
Philippine Quality Award
 Sets a standard of excellence to help
Filipino organizations achieve world-class
performance and serves as a “template”
for competitiveness based on the
principles of Total Quality Management
(TQM).
 A national quality award comparable with
the Malcolm Baldrige National Quality
Award (MBNQA) of the US and those in
Europe and Asia.
Malcolm Baldrige National Quality
Award (MBNQA)
 Award named after the former Secretary
of Commerce – Regan Administration
 Intended to reward and stimulate quality
initiatives
 Given to no more that two companies in
each of three categories; manufacturing,
service, and small business
 Past winners; Motorola Corp., Xerox,
FedEx, 3M, IBM, Ritz-Carlton
The Deming Prize
 Given by the Union of Japanese Scientists
and Engineers since 1951
 Named after W. Edwards Deming who
worked to improve Japanese quality after
WWII
 Not open to foreign companies until 1984
 Florida P & L was first US company winner
ISO 9000 Standards
 Certification developed by International
Organization for Standardization
 Set of internationally recognized quality
standards
 Companies are periodically audited &
certified
ISO 9000 Standards
 ISO 9000:2000 QMS
 Fundamentals and Standards
 Provides the terminology and definitions used in the
standards.
 It is the starting point for understanding the system
of standards.
 ISO 9001:2000 QMS
 Requirements
 This is the standard used for the certification of a
firm’s quality management system.
 It is used to demonstrate the conformity of quality
management systems to meet customer
requirements.
ISO 9000 Standards
 ISO 9004:2000 QMS
 Guidelines for Performance
 Provides guidelines for establishing a quality
management system.
 It focuses not only on meeting customer
requirements but also on improving performance.
 More than 40,000 companies have been
certified
ISO 14000 Standards
 Focuses on a company’s environmental
responsibility
Why TQM Efforts Fail
 Lack of a genuine quality culture

 Lack of top management support and

commitment

 Over- and under-reliance on statistical

process control
TQM Within
Operations Management
 TQM is broad sweeping organizational
change
 TQM impacts
 Marketing
 providing key inputs of customer information
 Finance
 evaluating and monitoring financial impact
 Accounting
 provides exact costing
TQM Within
Operations Management
 Engineering
 translate customer requirements into specific
engineering terms
 Purchasing
 acquiring materials to support product development
 Human Resources
 hire employees with skills necessary
 Information systems
 increased need for accessible information
Reference
 www.wiley.com
 Wiley and Sons
The Plan–Do–Study–Act Cycle
 A diagram that describes the activities
that need to be performed to incorporate
continuous improvement into the
operation.
 Also called the Deming Wheel after
originator
 Circular, never ending problem solving
process
The Plan–Do–Study–Act Cycle

 Plan  Evaluate current process

 Do  Collect procedures, data,
 Study identify problems
 Act  Develop an improvement plan,
performance objectives
The Plan–Do–Study–Act Cycle

 Plan
 Do  Implement the plan – trial basis
 Study
 Act
The Plan–Do–Study–Act Cycle

 Plan
 Do
 Study  Collect data and evaluate
 Act against objectives
The Plan–Do–Study–Act Cycle

 Plan
 Do  Communicate the results from
 Study trial
 Act  If successful, implement new
process
Benchmarking
 Studying the business practices of other
companies for purposes of comparison
Seven Tools of Quality Control
 Cause-and-Effect  A chart that identifies
Diagrams potential causes of
 Flowcharts particular quality
problems.
 Checklists
 Cause-and-effect
 Control Charts
diagrams are
 Scatter Diagrams problem-solving tools
 Pareto Analysis commonly used by
 Histograms quality control teams.
Seven Tools of Quality Control
 Cause-and-Effect
Measurement Human
 Specific causes of
Machines
Diagrams
Faulty problems can be
testing equipment Out of adjustment
explored through
Poor supervision
 Flowcharts
Incorrect specifications
 Checklists
Lack of concentration brainstorming.
Tooling problems

Improper methods Inadequate training  The Old development

/ worn
of a
 Control Charts
cause-and-effect Quality
 Scatter Diagrams
Inaccurate
temperature
diagram requiresProblem the
 Pareto
control Analysis
Defective from vendor Poorteam to think through
process design

 Histograms Not to specifications all the possible causes

Ineffective quality
management
Dust and Dirt Material-
handling problems
of poor quality.
Deficiencies
in product design

Environment Materials Process

Seven Tools of Quality Control
 Cause-and-Effect  A schematic of the
Diagrams sequence of steps
 Flowcharts involved in an
operation or process
 Checklists
 It provides a visual
 Control Charts
tool that is easy to use
 Scatter Diagrams and understand.
 Pareto Analysis  Often the first step in
 Histograms Process Re-
Engineering
Seven Tools of Quality Control
 Cause-and-Effect  A list of common
Diagrams defects and the
 Flowcharts number of observed
occurrences of these
 Checklists
defects.
 Control Charts
 A checklist can also be
 Scatter Diagrams used to focus on other
 Pareto Analysis dimensions, such as
 Histograms location or time.
Seven Tools of Quality Control
 Cause-and-Effect  Charts used to
Diagrams evaluate whether a
 Flowcharts process is operating
within set
 Checklists
expectations.
 Control Charts
 Scatter Diagrams
 Pareto Analysis
 Histograms
Seven Tools of Quality Control
 Cause-and-Effect  Graphs that show how
Diagrams two variables are
 Flowcharts related to each other
 Checklists  They are particularly
useful in detecting the
 Control Charts
amount of correlation,
 Scatter Diagrams or the degree of linear
 Pareto Analysis relationship, between
 Histograms two variables.
Seven Tools of Quality Control
 Cause-and-Effect  A technique used to
Diagrams identify quality
 Flowcharts problems based on
 Checklists their degree of
importance.
 Control Charts  Often called the 80-20
 Scatter Diagrams Rule
 Pareto Analysis  Principle is that quality
 Histograms problems are the
result of only a few
problems e.g. 80% of
the problems caused
by 20% of causes
Seven Tools of Quality Control
 Cause-and-Effect  A chart that shows the
Diagrams frequency distribution
 Flowcharts of observed values of
a variable
 Checklists
 Control Charts
 Scatter Diagrams
 Pareto Analysis
 Histograms