OPERATIONS MANAGEMENT with TQM

1st Semester SY 2023-2024

Ms. Marissa C. Bautista
Lesson: Total Quality Management (TQM)

Objectives:

• Explain the basic concepts of TQM and its role in customer satisfaction
• Explain the basic theories in TQM and their origin
• Learn the evolution of TQM in industries

QUALITY MANAGEMENT CASE STUDY

Read the following case study carefully and answer all the questions below.

QUALITY DRIVES TRIDENT'S SUCCESS In 1987, Trident Precision

Manufacturing, Inc. in Webster, New York, was a good, profitable little operation that
was humming along quite well at about $5 million in revenue a year. Trident had started
as a three-person operation back in 1979, and by the late '80s, Trident had become a
fast-growing, precision sheet metal fabricator and electromechanical assembly
business, with such big-name clients as Xerox, Kodak and IBM. On the surface,
Trident's customers were happy with its products, which ranged from simple brackets
to machines that sort X-rays. Business was in the black. But below the surface,
problems were firing up. Turnover was clocked at a staggering 41 percent with many
workers quitting within only a few months of starting their jobs. And because the firm
had no quality process, products often got to the end of the assembly line with major
defects and had to be completely redone. The company's informal motto was: "We make
it nice because we make it twice." Even so, products were getting made, customers were
buying them, and the company was profitable. But seeing operations from the inside,
the company's owner, president and CEO, Nicholas "Nick" Juskiw, knew there must be
a better way to do business. So, he set out to find a solution and eventually headed his
company down a path of total quality management (TQM). Trident senior managers
decided to focus on workers, not products, yet the products improved. It turned out to
be a visionary HR move and a formula for financial success.
Ten years later, the company has more than quadrupled its annual revenue
to more than $19 million, lowered its product defects from 3 percent in 1988 to virtually
defect-free in 1997 (99.993 percent) and celebrates its revenue per employee at 73
percent. (The company didn't measure revenue per employee before 1988.) And two
years ago, Trident won the Malcolm Baldrige National Quality Award. This year, it wins
a Workforce Magazine Optimas Award in the Financial Impact category. The key to
Trident's success story is that the company didn't just embark on a run-of-the-mill TQM
process. The privately held firm proactively focused on improving its human resources
practices in a TQM environment that translated directly into customer satisfaction. The
journey started with a clear vision. Visioning Quality In 1988, Juskiw attended a
presentation on quality management at Stamford, Connecticut-based Xerox Corp. called
"Leadership Through Quality." Juskiw came back to Trident with a new management
vision—TQM. He pulled his senior team aside for nearly three days to discuss whether
managers thought it was a good direction for Trident. They did. But they realized a big

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OPERATIONS MANAGEMENT with TQM
1st Semester SY 2023-2024
Ms. Marissa C. Bautista
Lesson: Total Quality Management (TQM)

part of their problem was that they needed to value workers. So, the senior management
team of 10 people (now 17) spent 14 months developing an entirely new management
strategy to revamp company operations, which included everything from overhauling
their training initiatives to changing the company culture to be more people oriented.
They called the new plan Excellence in Motion, and the strategy has guided their actions
ever since. The plan focuses on five key business drivers: supplier partnerships,
operational performance, customer satisfaction, shareholder value and, finally,
employee satisfaction. Interestingly, April V. Lusk, the company's total quality
administrator in the HR department, explains that at Trident, she's responsible for "Big
Q"—the quality of the people and the environment. Lusk's associate, Joe Conchelos, vice
president of quality administration, is responsible for "Little Q." It's unusual for a
company to put workers before products. But that's where Trident started. Worker
issues were primary concerns. "In 1988, we actually were proud that we had 41 percent
turnover because it was lower than the industry standard of 52 percent," says Lusk.
"The irony of it all was that our people were leaving for as little as a nickel more down
the street." Lusk explains that the industry was famous for not listening to employees'
ideas or rewarding them for good work.
Trident wanted to change this scenario. Senior managers asked an employee
team to investigate the problem, identify the root cause and help develop a corrective
action. The team's answer was direct: Managers didn't care whom they hired so long as
they were breathing and could do the job. The team members suggested the firm revise
its hiring practices. So, Trident's small HR department did just that—and much more.
Now, instead of hiring just anyone, candidates are interviewed first by HR, then by the
hiring manager and finally by members of the team with which the candidate would be
working. "It's a lengthy process, but we feel we've been able to hire better people by
having more input," says Margery Haywood, Trident's HR manager, who has seen the
turnover rate drop to 3.5 percent in the past 10 years. (Turnover in 1997 was 1.2 percent
among employees with five years' tenure or more.) Of course, winning the Baldrige has
helped the flow of resumes to this small business located in a suburb of Rochester, New
York. Adds Lusk: "We try to get as many perspectives as possible. We want new
employees to come on board and immediately feel part of the family atmosphere we've
created." Corporate culture was another big issue to tackle. In 1987, employees at
Trident weren't especially happy and weren't particularly team oriented.
Now employees are completely empowered. They can—and do—halt
production for the smallest of flaws. Instead of passing problems to the next person on
the line, workers own the problems and fix them. In 1990 for example, 8.9 percent of
employees' time was spent reworking nonconforming products. In 1997, they spent only
1 percent of their time "making things twice." But the first step to employee ownership
was education, with HR standing diligently at the blackboard. Empowerment Through
Training One of the first things the HR department did to move the company toward its
goals was to implement a 25-hour training course on TQM tools for each employee. The
education included basics on problem solving, quality improvements, just-in-time
manufacturing, and even interpersonal communications skills. Each year, employees
receive at least 15 hours of TQM refresher courses along with information on such topics

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OPERATIONS MANAGEMENT with TQM
1st Semester SY 2023-2024
Ms. Marissa C. Bautista
Lesson: Total Quality Management (TQM)

as safety and customer negotiations. "We teach workers to read blueprints, to do

trigonometry and to learn English as a second language," Juskiw said in a USA Today
article (October 17, 1996) when his company won the Baldrige. Before 1987, most
workers received no formal training. The only exception was for workers with technical
jobs, who always have received technical training offsite. Since 1987, the company has
spent an astounding 4.7 percent of payroll on training each year. According to the latest
research at the Saratoga Institute, an HR consulting firm in Santa Clara, California,
most companies spend just over 1 percent of payroll on training. The average in Trident's
industry is 1.5 percent. The training has made a huge difference. Not only are workers
empowered to shut down the line for problems, they also proactively improve their work
processes through participation in a number of processes including the Total Quality
Roundtable. In 1997 alone, employees made more than 2,200 process improvement
suggestions. In the past several years, 98 percent of employees' suggestions have been
implemented in daily work routines. "We tell people: 'You own it. Fix it," says Lusk.
Clearly, they mean it. And they reward employees generously for their efforts. Say Thank
You Each year, the average Trident employee receives special recognition from the
company 10.6 times. In fiscal year 1997, company supervisors and managers handed
out more than 1,700 items—from hockey tickets to gift certificates for dinners for two—
to say thank you for a job well done. It's a rare company that tracks its recognition
efforts this closely. But to Trident managers, individual recognition is an extremely
important part of Trident's strategy to keep employees happy, productive, and working.
And it was a big key to moving toward the more family-oriented culture they were
striving for. The HR team believes employees need to know their work is appreciated
often. "If you want to change your culture, start thanking people," says Lusk. "And don't
wait until the end of the year." Trident's HR managers haven't left their recognition
efforts—or the measurement of their progress in each of the five major business
drivers—to chance. Measure Your Progress The lesson for all HR professionals is HR
can and should measure progress. If you don't track results, it's difficult to learn from
your efforts. In addition to tracking things like turnover and retention, HR at Trident
measures employee satisfaction and customer satisfaction twice a year. In 1997,
employee satisfaction ranked at a whopping 94 percent. Company managers also
measure many other aspects of the firm's five key business drivers as well. And while it
isn't uncommon for a company to measure business results, it is unusual for a company
to push the envelope on business measurement so diligently. You might say it's Trident's
way of climbing the quality mountain—one HR track at a time.

Source: Reprinted from Workforce, Vol. 77 No. 2, February 1998, pp. 44 45, case
prepared by Jennifer J. Laabs, with permission from ACC Communications, Inc.

Questions

1 The concept of "you own it, you fix it" reflects the degree to which employees are
empowered. Given this degree of empowerment and delegation of responsibility, a
question that might be asked is: Who needs a vice president of quality administration

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OPERATIONS MANAGEMENT with TQM
1st Semester SY 2023-2024
Ms. Marissa C. Bautista
Lesson: Total Quality Management (TQM)

and quality administrators in the human resources department? Would you eliminate
those jobs? Why or why not? (20 points)

2 How would company training in problem solving and interpersonal communications

be of benefit to quality improvement? (20 points)

3 Explain how the driver of employee satisfaction results in customer satisfaction. (20
points)

4 Do hockey tickets and dinners for two, motivate employees for productivity and
quality? Explain. (20 points)