Managing improvement – the TQM approach Chapter 20 Managing improvement – the TQM approach Source: Corbis/Munshi Ahmed

Improvement using the ideas of total quality management (TQM) Managing improvement Operations strategy Operations process improvement makes processes better Operations management Total quality management organizes process improvement Design Improvement Failure prevention and recovery stop processes becoming worse Planning and control

Total Quality Management Total quality management can be viewed as a natural extension of earlier approaches to quality management Prevents ‘out of specification’ products and services reaching market Solves the root cause of quality problems Broadens the organizational responsibility for quality Makes quality central and strategic in the organization Quality is strategic Teamwork Staff empowerment Involves customers and suppliers Quality systems Quality costing Problem solving Quality planning Statistics Process analysis Quality standards Error detection Rectification Inspection Quality control Quality assurance Total Quality Management

The internal customer–supplier concept involves understanding the relationship between processes External supplier External customer Process 1 Process 2 Process 6 Process 5 Process 4 Between each process, the requirements of the ‘customer’ process must be understood and met by the 'supplier’ process

The traditional cost of quality model Total cost of quality Cost of errors = costs of prevention and appraisal Costs Cost of quality provision = costs of internal and external failure Optimum amount of quality effort Amount of quality effort

The traditional cost of quality model with adjustments to reflect TQM criticisms Cost of errors = costs of prevention and appraisal Total cost of quality Costs Cost of quality provision = costs of internal and external failure Optimum amount of quality effort Amount of quality effort

The EFQM’s ‘Business Excellence’ model People results People Key performance results Leadership Policy and strategy Customer results Processes Partnerships and resources Society results

The quality gurus Quality is free – the optimum is zero defects Philip Crosby Quality is free – the optimum is zero defects W. Edwards Deming Deming’s 14 points How to use statistics Armand Feigenbaum Total quality control Kaoru Ishikawa Quality circles and cause-and-effect diagrams Joseph Juran Quality as fitness for use, rather than conformance to specification Genichi Taguchi Loss function Minimize variation

Total Quality Management Includes all parts of the organization Includes all staff of the organization Source: Corbis/Richard T Nowitz Includes consideration of all costs Includes every opportunity to get things right Includes all the systems that affect quality Never stops

The cost of rectifying errors increases more rapidly the longer they remain uncorrected in the development and launch process 10000 1000 Cost of rectifying error 100 10 1 Concept Design Prototype Pilot production Market use Stage in development and launch process

Increasing the effort spent on preventing errors occurring in the first place brings a more than equivalent reduction in other cost categories Total cost of quality Appraisal Internal failure Costs of quality Appraisal Prevention Time

The pattern of some TQM programmes which run out of enthusiasm Introduction Growth Levelling off Disillusionment Repackaging Learning and understanding Increasing enthusiasm Starting to hit the more difficult problems Waning enthusiasm Attempts to revitalize the programme Effectiveness of the TQM initiative

Key Terms Test Total quality management (TQM) A holistic approach to the management of quality that emphasizes the role of all parts of an organization and all people within an organization to influence and improve quality; heavily influenced by various quality ‘gurus’, it reached its peak of popularity in the 1980s and 1990s. Internal customers Processes or individuals within an operation that are the customers for other internal processes or individuals’ outputs. Internal supplier Processes or individuals within an operation that supply products or services to other processes or individuals within the operation.

Key Terms Test Service-level agreements (SLAs) Formal definitions of the dimensions and levels of service that should be provided by one process or operation to another. Quality There are many different approaches to defining this. We define it as consistent conformance to customers’ expectations. Prevention costs Those costs that are incurred in trying to prevent quality problems and errors occurring; an element within quality-related costs.

Key Terms Test Appraisal costs Those costs that are associated with checking, monitoring and controlling quality to see whether problems or errors have occurred; an element within quality-related costs. Internal failure costs Those costs that are associated with errors and failures that are dealt with inside an operation but yet cause disruption; an element within quality-related costs. External failure costs Those costs that are associated with an error or failure reaching a customer; an element within quality-related costs.

Key Terms Test ISO 9000 A set of worldwide standards that established the requirements for companies’ quality management systems, last revised in 2000. There are several sets of standards. Six Sigma An approach to improvement and quality management that originated in the Motorola Company but that was widely popularized by its adoption in the GE Company in America. Although based on traditional statistical process control, it is now a far broader ‘philosophy of improvement’ that recommends a particular approach to measuring, improving and managing quality and operations performance generally.

Key Terms Test European Quality Award (EQA) A quality award organized by the European Foundation for Quality Management (EFQM) and based on the EFQM excellence model. EFQM Excellence Model or Business Excellence Model A model that identifies the categories of activity that supposedly ensure high levels of quality; now used by many companies to examine their own quality-related procedures.