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Total Quality Management (TQM) Cost of Quality

The cost of doing things wrong, that is, the
MODULE No. 1 price of nonconformance.

Four categories of costs are associated with

Defining Quality quality. Called the cost of quality, they are:

Quality – the ability of a product or service to Prevention costs. Cost associated with reducing
meet customers needs the potential for defective parts or services.
(e.g. training, quality improvement program).
Total quality management systems are driven by
identifying and satisfying customer needs. Total Appraisal costs – cost related to evaluating
quality management takes care of the customer. products, processes, parts and services (e.g.
Consequently, we accept the definition of quality testing, labs, inspectors)
as adopted by the American Society for Quality.:
“The totality of features and characteristics of a Internal failure – costs that result from
product or service that bears on its ability to production of defective parts or services before
satisfy stated or implied needs.” delivery to customers (e.g. rework, scrap,
downtime).
Others, however, believe that definitions of
quality fall into several categories. Some External costs – cost that occur after delivery of
definitions are user based. They process that defective parts or services (e.g. rework, returned
quality “lies in the eyes of the beholder.” goods, liabilities, lost goodwill, costs to society)
Marketing people like this approach and so do
customers. To them, higher quality means Ethics and Quality Management
better performance, nicer features, and other
(sometimes costly) improvements. To
For operations managers, one of the most
production managers, quality is manufacturing
important jobs is to deliver healthy, safe and
based. They believe that quality means
quality products and services to customers. The
conforming to standards and “making it right the
development of poor –quality products, because
first time.” Yet a third approach is product
inadequate design and production processes,
based, which views quality as a precise and
results not only in higher production costs but
measurable variable. In this view, for example,
leads to injuries, lawsuits, and increased
really good ice cream has high butterfat levels.
government regulation.
Implications of Quality W. Edwards Deming insisted management
accept responsibility for building good systems.
Here are three other reasons why quality is The employee cannot produce products that on
important. average exceed the quality of what the process
is capable of producing.
Company reputation. An organization can
expect its reputation for quality – be it good or Joseph M. Juran, a pioneer in teaching the
bad – to follow it. Quality will show up in Japanese how to improve quality. Juran
perceptions about the firm’s new products, believes strongly in top-management
employment practices, and supplier relations. commitment, support, and involvement in the
Self-promotion is not a substitute for quality quality effort. He is also a believer in teams that
products. continually seek to raise quality standards.
Juran varies from Deming somewhat in focusing
Product liability – The courts increasingly hold on the customer and defining quality as fitness
organizations that design, produce, or distribute for use, not necessarily the written
faulty products or services liable for damages or specifications.
injuries resulting from their use. Impure foods
that cause illness, nightgowns that burn, tires Armand Feigenbaum, his 1961 book, Total
that fall apart, or auto fuel tanks that explode on Quality Control, laid out 40 steps to quality
impact can all lead to huge legal expenses, improvement processes. He viewed quality not
large settlements or losses, and terrible as a set of tools but as a total field that
publicity. integrated the processes of a company. His
work in how people learn from each other’s
Global implications. In this technological age, successes led to the field of cross-functional
quality is an international, as well as OM teamwork.
concern. For both a company and a country to
compete effectively in the global economy, Philip B. Crosby. Quality is Free was Crosby’s
products must meet global quality, design, and attention –getting book published in 1979.
price expectations. Inferior products harm a Crosby believed that in the traditional trade-off
firm’s profitability and a nation’s balance of between the cost of improving quality and the
payments. cost of poor quality, the cost of poor quality is
understated. The cost of poor quality should

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include all of the things that are involved in not ecological impact of products and
doing the job right the first time. Crosby coined activities.
the term zero defects and stated, “there is
absolutely no reason for having errors or defects  Compliance with regulatory
in any product or service.” requirements and opportunities for
competitive advantage.
International Quality Standards
 Reduction in need for multiple audits.
ISO 9000 – a set of quality standards
developed by the International Standards This standard is being accepted worldwide.
Organizations (ISO)
Total Quality Management
“ISO” is a Greek for equal or uniform, as
uniform throughout the world. Management of an entire organization so that
if excels in all aspects of products and
Quality is so important globally that the world is services that are important to the customer.
uniting around a single quality standard, ISO
9000. ISO 9000 is the only quality standard with
Total qualify management (TQM) refers to a
international recognition. In 1987, 91 member
quality emphasis that encompasses the entire
nations (including the U.S.) published a series of
organization, from supplier to customer. TQM
quality assurance standards, known collectively
stresses a commitment by management to have
as ISO 9000. The U.S., through the American
a continuing companywide drive toward
National Standards Institute, has adopted the
excellence in all aspects of products and
ISO 9000 series as the ANSI/ASQ Q9000
services that are important to the customer.
series. The focus of the standards is to
establish quality management procedures, we
TQM is important because quality decisions
should note, say nothing about the actual quality
influence each of the 10 decisions made by
of the product – they deal entirely with standards
operations managers. Each of those 10
to be followed.
decisions deals with some aspect of identifying
and meeting customer expectations. Meeting
To become ISO 9000 certified, organizations go
those expectations requires an emphasis on
through a 9-to-18-month process that involves
TQM if a firm is to compete as a leader in world
documenting quality procedures, an on-site
markets.
assessment, and an on-going series of audits of
their products or services. To do business
Quality expert W. Edwards Deming used 14
globally – and especially in Europe – being listed
points (listed below) to indicate how he
in the ISO directory is critical. As of 2005, there
implemented TQM.
were well over 600,000 certifications awarded to
firms in 152 countries.
Deming’s 14 Points for Implementing Quality
Improvement
ISO revised its standards in 2000 into more of a
quality management systems, which is detailed
1. Create consistency of purpose.
in its ISO 9001 : 2000 component. Leadership
2. Lead to promote change.
by top management and customer requirements
3. Build quality into the product ;stop
and satisfaction play a much larger role, while
depending on inspections to catch
documented procedures receive
problems.
4. Build long-term relationships based on
ISO 14000 performance instead of awarding
business on the basis of price.
An environmental management standard 5. Continuously improve product, quality
established by the International Standards and service.
Organization (ISO). 6. Start training.
7. Emphasize leadership.
The continuing internationalization of quality is 8. Drive our fear.
evident with the development of ISO 14000 is an 9. Break down barriers between
environmental management standard that departments.
contains five core elements (1) environmental 10. Stop haranguing workers.
management, (2) auditing, (3) performance 11. Support, help, and improve.
evaluation, (4) labeling, and (5) life-cycle 12. Remove barriers to pride in work.
assessment. The new standard could have 13. Institute a vigorous program of
several advantages : education and self-improvement.
14. Put everybody in the company to work
 Positive public image and reduced on the transformation.
exposure to liability.

 Good systematic approach to pollution Total Quality Management (TQM)

prevention through the minimization of

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functionality refers to those functions that will

MODULE No. 2 satisfy a customer.

Reliability. A car should not breakdown often.

This is the reliability attribute to quality.
TQM Evolution Reliability is measured by mean (average) time
between failures (MTBF). Reliability is an
indicator of durability of products. For instance,
Introduction the MTBF of a car can be specified as 1000
hours of running or 10000 kilometers.
Total Quality Management (TQM) is customer
oriented management philosophy and strategy. Usability. A product should be easily usable.
It is centered on quality so as to result in The customer should be able to use the product
customer delight. The word “Total” implies that easily without the help of experts. For instance,
all members of the organization make consistent repairing a car may need the help of a
efforts to achieve the objective of customer mechanic, but the car can be driven by the
delight through systematic efforts for owner himself, if he is trained accordingly.
improvement of the organization. Thus, each product should be made so that a
person can use if with minimum training.
TQM addresses the concepts of product quality, Usability can also be measured by the time
process control, quality assurance and quality taken for training an operator for error-free
improvement, all of which are aimed at customer operation of a system.
delight. Therefore, it is important to get the right
meaning, interpretation and understanding of the Maintainability refers to the ease with which a
term quality and related term. This will provide a product can be maintained in the original
strong foundation for TQM. condition. Products may be become defective
while in use or in transit. It should be repairable
so as to retain the original quality of the product
Definition of Quality at the lowest cost at the earliest possible time.

Juran, one of the quality guru, defined quality as Efficiency. This is applicable to most products.
fitness for use. A very concise definition indeed, Efficiency is the ratio of output to input. If a car
for a term that has so many dimensions ! gives a mileage of 20 kms per litre of gasoline
Quality of a product or service in simple terms is and another car with identical features gives 15
its suitability for use by the customer. Quality kms per litre, then the former is more efficient
has to be perceived by the customer. than the latter. Another example is the
Perception of the supplier is also important, but brightness of a lamp at a given input voltage.
the customer experience of quality of a product
or service is more important. Quality does not Portability. This is more important in the
mean an expensive product ; on the contrary, it context of software. Portability is defined as a
is fitness for use of the customer. set of attributes that bear on the ability of
software to be transferred from one environment
to another. The environment may be
Dimensions of Quality organizational, hardware or software
environment. Any program purchased such as
an accounting software, should be usable in
Quality has many dimensions. The dimension of may different machines without any problem.
quality are nothing, but the various features of a This is portability. This feature is applicable
product or service. even to consumer goods such as bulbs, razors,
etc.
Product Quality
Service Quality
Functionality refers to the core features and
characteristics of a product. The definition of
functionality as per ISO / IEC 9126 : 1991 : Unlike products, every service is made to order.
Therefore, the service quality has additional
“A set of attributes that bear on the existence of features. In availing a service, the customer
a set of functions and their specified properties. interacts more with the service provider.
The functions are those that satisfy stated or
implied needs.” The quality of service depends to a large extent
on understanding the correct requirements of
For instance, a car has to have a seating the customer through such interactions. Each
capacity for five persons ; a steering wheel, an service has to be designed specifically for the
accelerator, a break, a clutch, head lights, gears, customer. Hence, quality of service design is an
four wheels, etc. The functionality of a car important feature. Service delivery is another
represents each one of the functions mentioned feature of service quality. Thus, the additional
above and many others listed above. Thus, features of service quality are :

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Quality of Customer Service. Customer Evolution of Quality

service is important in every business. In a
service industry, meeting customers and finding Quality has been evolving for decades.
out their implied requirements is more
challenging. Therefore, ability to satisfy Dr. Walter A. Shewhart (1891 – 1967). He
customer depends on the quality of customer advocated Statistical Quality Control (SQC) and
service. This includes but is not limited to: Acceptable Quality Level (AQL). AQL is the
foundation of today’s Six Sigma. He is
 How well the customer is received ? considered to be the father figure of SQC, who
 How well the implied requirements are developed control charts for quality assessment
elucidated? and improvement. Dr. Shewhart also developed
 How well the customer is the Plan, Do, Check, Act (PDCA) cycle for
treated/handled/satisfied? continuous improvement, which is in use even
today.
Quality of Service Design. Since services are
usually made to order, it is important that the Deming W. Edwards (1900 – 1993). He
service is designed as per the requirements of modified the PDCA cycle of Shewhart to the
the specific customer. For instance, a software Plan, Do, Study and Act (PDSA) cycle. He also
product developed for a specific bank takes into advocated extensive use of statistics and control
account the unique requirements of the bank. charts and focused on product improvement and
Quality of service design in turn depends on the service conformance by reducing variations in
quality of customer service. the process.

Quality of Delivery. Quality of delivery is Deming stressed on the importance of suppliers

important in any sector, but more crucial in case and customers for the business development
of services. Defects on delivery should be zero and improvement. He believed that people do
to satisfy the customers. their best and it is the system that must change
to improve quality. His 14 points formed the
Additional attributes of quality, which are basis for his advise to Japanese top
applicable to both products and services, are management. The 14 points are applicable to
given below: every industry in product and service sector.

Timeliness. Delivery on schedule as per Joseph M. Juran (1904).

requirements of the customer is a must both in
the product sector as well as in service sector. Juran’s Fitness of Quality
No customer likes waiting. Timeliness is critical
for many products and services.  Quality of Design – through market
research, product and concept.
Aesthetics. A product or service should not
only perform well but also appear attractive.  Quality of conformance – through
Therefore, aesthetics is an important element of management, manpower and
quality. Aesthetics may include, but not limited technology.
to the appearance of the product, the finish,
color, etc.  Availability – through reliability,
maintainability and logistic support.
Regulatory requirements as stipulated by the
government should be fulfilled by the product or  Full Service – through promptness,
service. competence and integrity.

Requirements by Society. The products Juran’s Quality Planning Roadmap

should be fulfill both the stated and implied
requirements imposed by society. The customer  Identify your customer.
requirement should not violate society or  Determine their needs.
regulatory requirements. Thus to satisfy a  Translate them into your language.
customer, a product cannot be built in such a  Develop a product that can respond to
way as to violate the requirements of society of the needs.
a safe and healthy product. For instance,
 Develop processes, which are able to
providing belts for persons sitting in the front
produce those product features.
seat in a car is a requirement of the society.
 Prove that the process can produce the
product.
Conformance to Standards. Product of
service should conform to the stated and implied  Transfer the resulting plans to the
requirements of customers. Where applicable, operating force.
they should conform to applicable standards
such as national standards, international
standards and industry standards.

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Philip B. Crosby (1926).

Crosby’s Four Absolute of Quality

 Quality is conformance to requirements,

nothing more or nothing less and
certainly not goodness or elegance.
 Quality has to be achieved by
prevention and not by appraisal.
 The performance standard must be zero
defect and not something close to it.
 The measurement of quality is the price
of non-conformance, i.e. how much the
defects in design, manufacture,
installation and service cost the
company. It is not indexes, grade one
to grade two.

Armand V. Feigenbaum.

Feigenbaum’s Cycle of Time Reduction

Methodology

 Define process.
 List all activities
 Flowchart the process.
 List the elapsed time for each activity.
 Identify non-value adding tasks.
 Eliminate all possible non-value adding
tasks.

Kaoru Ishikawa (1915 – 1989). He strongly

advocated the use of cause and effect diagrams
to provide a true representation of the
organizational impacts and procedures. He
developed Fishbone and Ishikawa diagram for
cause and effect diagram.