Total Quality Management (TQM)
Total Quality Management or TQM
TQM stands for Total Quality Management which defines managing the whole organization and supply chain to achieve customer satisfaction, for both internal and external customers. It is an organization or companywide culture that must be adopted by every department through employee involvement.
What is the objective of TQM?
The objective is to create a culture of quality throughout the organization, where everyone is committed to delivering products and services that meet or exceed customer expectations, customer satisfaction being the ultimate focus area.
TQM aims for quality at the source of production and places the onus on individuals for their own work and within the production process. It aims to reduce quality defects by statistical quality control, internal quality audits, teamwork, quality standards, collaboration with suppliers and consumers to clearly understand what is required of the final product.
Total quality management is a path which takes planning, meticulous data collection, process checks, analysis, resources and commitment from everyone in the company to achieve the ultimate goal, satisfying and exceeding customer’s needs.
History of TQM and why it came about
TQM gained great traction during the post-World War II era. During this time there was a widespread perception of declining product quality, particularly in industries such as manufacturing in America. This quality crisis led to increased customer dissatisfaction, rising costs of poor quality, and loss of market share for many companies.
Also, during the same time Japanese companies embraced quality management principles introduced by Dr. W. Edwards Deming and other quality experts. Japanese manufacturers, notably Toyota, demonstrated significant improvements in product quality, cost efficiency, and customer satisfaction through approaches like Kaizen (continuous improvement) and Just-in-Time manufacturing.
This also provided competition globally to American manufacturers which were already starting to see declining sales due to declining quality and consumer preference for better quality imported products.
Can Total Quality Management increase business profitability?
Yes absolutely, the principles which made TQM a success on the post war era can still be applied today in both the commercial front end of the business as well as the Operations of the business delivering improvement in profitability from both areas.
As a simple example in some of the following points below think of a well known pie brand in your local bakery and how the maker would apply TQM.
Front end: Sales, Marketing and Customer Satisfaction
Reputation and Brand Value by consistently delivering high-quality products and services through TQM practices enhances a company’s reputation and brand value. A strong reputation for consistent quality and reliability can attract new customers, retain existing ones, and command premium prices, contributing to increased profitability over time.
As an example think of a pie brand in the local bakery you regularly purchase, most likely your repeat purchase is due to brand recognition for good quality delicious pie at an acceptable price with quality consistency you can rely on.
Improved Customer Satisfaction by consistently delivering high-quality products and services that meet or exceed customer requirements, businesses can enhance customer satisfaction, loyalty, and retention. Satisfied customers are more likely to repeat purchases, recommend the company’s product to others through word of mouth.
Competitive Advantage enabling businesses to differentiate themselves from competitors by delivering superior quality products and services. Companies that consistently meet high-quality standards and exceed customer expectations can gain a competitive edge in the market, attract more customers, and command premium prices, ultimately driving increased profitability.
Returns and Warranty Costs By minimizing product defects, ensuring reliability and a consistent high-quality output of goods and services, businesses can lower their warranty expenses and improve profitability.
Back end: Manufacturing and Operations
Cost Reduction through focusing on improving processes to eliminate waste, reduce defects, and increase efficiency. As a simple example if a pie shop currently making pies for $1 and out of this figure $0.20 is scrap pies due to defects on incorrect filling reducing this waste by half would add $0.10 in extra gross profit margin.
By streamlining operations and reducing the costs associated with rework, scrap, and defects, businesses can lower their overall production costs, thereby increasing profitability by increased margin per unit or by passing on these savings to consumers thus increasing units sold and higher overall margin.
Enhanced Operational Efficiency TQM encourages continuous improvement and employee involvement in problem-solving and decision-making processes. By empowering employees to identify and address inefficiencies, bottlenecks, and quality issues, businesses can optimize their operations, increase productivity, and reduce costs, leading to improved profitability.
How can I introduce TQM to my organization?
Where to start? How to introduce TQM as a company culture change that will be customer centric can seem like a daunting task. As many large challenges, focus your organization on initial smaller steps first. Culture change doesn’t happen immediately, and a good understanding of the concepts will accelerate the process. As a guide these can include:
1) Obtain commitment and support from Senior management as TQM initiatives are more likely to succeed when leaders are actively involved and demonstrate their commitment to quality improvement.
2) Create a Vision and Mission, develop a clear vision and mission statement that articulates the organization’s commitment to quality and continuous improvement. This helps align everyone in the organization towards common goals.
3) Provide training and education to employees at all levels about the principles and practices of TQM. Ensure that everyone understands the importance of quality, customer focus, and continuous improvement.
This is a very important step as everyone in the organization must correctly understand the concepts of Quality management, customer centricity and improvement tools available. It may be required to provide ongoing refresher training on production, specification, work methods and quality to succeed in changing the culture of the organization.
4) Foster collaboration and involvement from different departments by solving issues and problems together as a team. Break down the silos, Every department should have a daily meeting and managers from other areas should attend cross functional meetings to solve challenges together.
References:
Dr. W. Edwards Deming 14 points on Quality for management to follow here
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