TOTAL QUALITY MANAGEMENT

CHAPTER 2

Foundations of Quality
Management
LECTURE NOTES

DR. AMIRA OMAR

 Chapter 2
Foundations of Quality Management

TOTAL QUALITY MANAGEMENT

As organizations came to recognize the broad scope of quality, the concept of
total quality management (TQM), or simply total quality (TQ), emerged.
Total Quality (TO) is a people-focused management system that aims to
continually lower actual costs and increase customer satisfaction. TQ is a total
system approach (not a separate area or program) and an integral part of the
high-level strategy; it works horizontally across functions and departments,
involves all employees, top to bottom, and extends backward and forward to
include the supply chain and the customer chain. TQ stresses learning
adaptation to continual change as keys to organizational success.

Total Quality Management (TQM) is a comprehensive and structured

approach to organizational management that seeks to improve the quality of
products and services through ongoing refinements in response to continuous
feedback.

Analyzing the three words, we have:

• Total-- Make up of the whole
• Quality-- Degree of excellence a product or service provides
• Management-- Act, art, or manner of handling, controlling, directing etc.

Therefore,
• TQM is the art of managing the whole to achieve excellence.
• TQM is also defined as both a philosophy and a set of benchmarks
representing the foundation of a continuously improving organization.
• It applies quantitative methods and human resources to improve all the
processes within an organization and exceed customer needs at present
and in the future.

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 • TQM integrates fundamental management techniques, existing
improvement efforts, and technical tools under a disciplined approach.

Deming and Joseph M. Juran and Philip B. Crosby are regarded as true
"management gurus" in the quality revolution. Their insights into measuring,
managing, and improving quality have had profound impacts on countless
managers and entire corporations worldwide.

THE DEMING PHILOSOPHY

Unlike other management gurus and consultants, Deming stated, product or a
service possesses quality if it helps somebody and enjoys a good and
sustainable market. In Deming's view, variation is the main reason of poor
quality. For example, variations from specifications for part dimensions in
mechanical assemblies lead to inconsistent performance and failure—
likewise, inconsistencies in human behavior frustrate customers and damage
companies' reputations. To reduce variation, Deming advocated a never-
ending cycle of continuous improvement supported by statistical analysis.

The Deming philosophy focuses on continuous improvements in product and

service quality by reducing uncertainty and variability in design

TOTAL QUALITY MANAGEMENT 3

manufacturing and service processes, driven by top management leadership.
Deming also suggested that higher quality leads to higher productivity, which
in turn leads to long-term competitive strength. The Deming Chain Reaction
theory (see Figure 2.1) summarizes this view. Improvements in quality lead
to lower costs because they result in less rework, fewer mistakes, fewer delays
and snags, and better use of time and materials.
Lower costs, in turn, lead to productivity improvements. With better quality
and lower prices, a firm can achieve a higher market share and thus stay in
business, providing more and more jobs.
DEMING'S 14 POINTS
Deming proposed the 14 Points for achieving quality excellence. Although
management practices today are vastly different from when Deming first
began to preach his philosophy, the 14 Points still convey important insights
and provide guidance for managing effective organizations. We will briefly
consider the key lessons of each.
1. Create a vision and demonstrate commitment: Create and publish a
statement of the aims and purposes of the company or other
organization to all employees. The management must constantly
demonstrate their commitment to this statement.
2. Learn the new philosophy: To survive in today's competitive
environment, companies must take a customer-driven approach to
quality. To accomplish this, everyone, from the boardroom to the
stockroom, must learn and understand the principles of quality and
performance excellence. However, people change jobs, and
organizations generally have a short memory—both need to continually
renew themselves to learn new approaches and relearn many older ones.
This is often called "organizational learning.
3. Understand inspection: Deming encouraged workers to take
responsibility for their work rather than leave the problems for someone
else down the production line. He advocated more in-process inspection
and the use of statistical tools that would help to eliminate post-
production inspection. It should be used as an information-gathering
tool for improvement, not as a means of assuring quality.
4. Stop making decisions purely based on cost: purchasing departments
have long been driven by cost minimization and competition among
TOTAL QUALITY MANAGEMENT 4
 suppliers without regard for quality. However, Deming recognized that
the direct costs associated with poor quality materials that arise during
production or during warranty periods, as well as the loss of customer
goodwill, can far exceed the cost savings" perceived by purchasing.
Thus, purchasing must understand its role as a supplier to production
and its impact on the system. Deming also urged businesses to establish
long-term relationships with fewer suppliers, leading to loyalty and
opportunities for mutual improvement.
5. Improve constantly and forever: Improvements are necessary for
both design and operations. Improved design of goods and services
comes from understanding customer needs and continual market
surveys, and other sources of feedback and from understanding the
manufacturing and service delivery process. Improvements in
operations are achieved by reducing the causes and impacts of variation
and engaging employees to innovate and seek ways of doing their jobs
more efficiently and effectively.
6. Institute training: People are an organization's most valuable
resource; they want to do a good job and require training to do it well.
Not only does training improves quality and productivity, but it adds to
worker morale and shows workers that the company is dedicated to
investing in their future. Training must go beyond basic job skills like
running a machine or following the script when talking to customers.
Training should include tools for diagnosing, analyzing, and solving
quality problems and identifying improvement opportunities.
7. Institute leadership: Deming recognized that one of the biggest
obstacles to improvement was a lack of leadership. The job of
management is leadership, not supervision. Supervision is simply
overseeing and directing work; leadership means providing guidance to
help employees perform better.
8. Drive out fear: Create trust. Create a climate for innovation. Creating
a culture without fear is a slow process but can be destroyed rapidly
with a transition of leadership and a change in corporate policies.
Therefore, today's managers need to continue to be sensitive to fear's
impact on their organizations.
9. Optimize the teams' efforts: Teamwork helps to break down barriers
between departments and individuals. Barriers between functional

TOTAL QUALITY MANAGEMENT 5

 areas occur when managers fear they might lose power. Training and
employee involvement are important means of removing such barriers.
10.Eliminate exhortations for the workforce: Many early attempts to
improve quality focused only on behavioral change. They assume that
all quality problems are due to the workforce and overlook the major
source of problems—the systems that management designs. A well-
designed system that provides workers with the right tools and
environment will lead to higher levels of trust and motivation than
slogans and goals can achieve.
11.Eliminate Numerical Quotas and Management by Objective
(MBO):
(a) Eliminate numerical quotas for production. Instead, learn and
institute methods for improvement.
(b) Eliminate MBO [management by objective]. Instead, learn the
capabilities of processes and how to improve them.
12.Remove barriers that rob people of pride of workmanship:
In Deming's words, people on the factory floor and even in management
were often treated as "a commodity." Factory workers are often given
repetitive tasks; provided with poorer machines, tools, or materials; told
to run defective items to meet sales pressures, and report to supervisors
who know little about the job—and then are blamed when problems
occur. Effective organizations need to understand the factors that
motivate and engage workers and build an environment in which
workers take pride in what they do, understand the meaning of their
work, and are rewarded for their accomplishments.
13.Encourage education and self-improvement for everyone: A
fundamental mission of a business is to provide jobs, but business and
society also have the responsibility to improve the value of the
individual. Developing the worth of the individual is a powerful
motivation method. Today, many companies understand that elevating
the general knowledge base of their workforce—outside of specific job
skills—returns many benefits. However, others still view this task as a
cost that can be easily cut when financial trade-offs must be made.
14.Take action to accomplish the transformation: Any cultural change
begins with top management and includes everyone. However,
changing an organizational culture generally meets with skepticism and
resistance that many firms find difficult to deal with, particularly when
TOTAL QUALITY MANAGEMENT 6
 many of the traditional management practices Deming felt must be
eliminated are deeply deep-rooted in the organization's culture.

THE JURAN PHILOSOPHY

Juran focused on increasing conformance to specifications by eliminating
defects, supported extensively by statistical tools for analysis. Thus, his
philosophy fits well into existing management systems.
Juran suggested that quality should be viewed from both external and internal
perspectives; that is, quality is related to (1) product performance that results
in customer satisfaction and (2) freedom from product deficiencies, which
avoids customer dissatisfaction. Juran proposed the user-based definition of
quality, "fitness for use." How products and services are designed,
manufactured, delivered, and serviced in the field contributes to fitness for
use.
Thus, the pursuit of quality is viewed on two levels:
1. The mission of the firm as a whole is to achieve high design quality.
2. The mission of each department in the firm is to achieve high"
conformance quality.
Like Deming, Juran advocated a never-ending spiral of activities that
includes market research, product development, design, planning for
manufacture, purchasing, production process control, inspection and testing,
and sales, followed by customer feedback. The interdependency of these
functions emphasizes the need for an active leadership role in the quality
management process.
Juran's prescriptions focus on three major quality processes, called the Quality
Trilogy: (1) quality planning—the process of preparing to meet quality goals;
(2) quality control— -the process of meeting quality goals during operations;
and (3) quality improvement—the process of breaking through to
extraordinary levels of performance. When he proposed this structure, few
companies were engaging in any significant planning or improvement
activities. Thus, Juran was promoting a major cultural shift in management
thinking.

TOTAL QUALITY MANAGEMENT 7

THE CROSBY PHILOSOPHY
The essence of Crosby's quality philosophy is represented in what he calls the
Absolutes of Quality Management and the Basic Elements of Improvement;
Crosby's Absolutes of Quality Management include the following points:
• duality means conformance to requirements, not elegance. Crosby's
definition of quality is similar to the manufacturing perspective; quality
is judged solely on whether requirements have been met;
nonconformance is the absence of quality.
• There is no such thing as a quality problem. Problems originate in
functional departments. Thus, a firm may experience accounting
problems, manufacturing problems, design problems, technical support
problems, etc. In Crosby's view, these are quality problems, but the
burden of responsibility for solving them falls on these functional
departments and not on the quality department. The role of the quality
department should be to measure conformance, report results, and
provide leader and support to drive quality improvement. This Absolute
is similar to Deming's Third Point.
• There is no such thing as the economics of quality; doing the job right
the first time is always cheaper. Crosby supports the premise that
"economics of quality has no meaning. Quality is free; what costs
money are all actions that involve doing jobs right the first time. The
Deming chain reaction sends a similar message.
• The only performance measurement is the cost of quality which is the
expense of nonconformance. Crosby suggested that organizations
measure and publicize the cost of poor quality. This helps to call
problems to management's attention, select opportunities for corrective
action, and track quality improvement over time. Juran also supported
this concept.
• Only performance standard is "Zero Defects (ZD)" He explained it as
follows: Zero Defects is a performance standard. It is the standard of
the craftsperson regardless of his or her assignment … The theme of
ZD is to do it right the first time. That means concentrating on
preventing defects rather than just finding and fixing them.

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COMPARING DEMING, JURAN, AND CROSBY
Despite their significant differences in implementing organizational change,
the philosophies of Deming, Juran, and Crosby are more alike than different.
The quality of Each view as imperative to future competitiveness in global
markets:
1. It makes top management commitment an absolute necessity,
2. Demonstrates that quality management practices will save. Not cost
money;
3. places responsibility for quality on management, not the workers;
4. Stresses the need for continuous, never-ending improvement;
5. Acknowledges the importance of the customer and strong
management/worker partnerships;
6. recognizes the need for and difficulties associated with changing the
organizational culture.

PRINCIPLES. PRACTICES. AND TECHNIQUES OF TOTAL

QUALITY MANAGEMENT
James W, Dean, Jr., and David E. Bowen characterize total quality by its
principles, practices, and techniques in a classic research article. Principles
are the foundation- of the philosophy, practices are activities by which the
principles are implemented, and techniques are tools and approaches that help
managers and workers make the practices effective. All are vital for achieving
high quality and performance excellence.

1- QUALITY MANAGEMENT PRINCIPLES

Principle 1: Customer Focus
Organizations depend on their customers and therefore should understand
current and future customer needs, should meet customer requirements, and
strive to exceed customer expectations.
Principle 2: Leadership

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Leaders establish unity of purpose and direction of the organization. They
should create and maintain an internal environment where people can become
fully involved in achieving the organization's objectives.
Principle 3: Involvement of people
People at all levels are the essence of an organization, and their full
involvement enables their abilities to be used for the organization's benefit.
Principle 4: Process Approach
The desired result is achieved more efficiently when activities and related
resources are managed as a process.
Principle 5: System Approach to Management
Identifying, understanding, and managing interrelated processes as a system
contributes to the organization's effectiveness and efficiency in achieving its
objectives.
Principle 6: Continual Improvement
Continual improvement of the organization's overall performance should be a
permanent objective of the organization.
Principle 7: Factual Approach to Decision Making
Effective decisions are based on the analysis of data and information.
Principle 8: Mutually Beneficial Supplier Relationships
An organization and its suppliers are interdependent, and a mutually
beneficial relationship enhances the ability to create value.

2- QUALITY MANAGEMENT PRACTICES

Principle 1: Customer Focus
 Researching and understanding customer needs and expectations.
 Ensuring that the objectives of the organization are linked to customer
needs and expectations.

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  Communicating customer needs and expectations throughout the
organization.
 Measuring customer satisfaction and acting on the results.
 Systematically managing customer relationships.
 Ensuring a balanced approach between satisfying customers and other
interested parties (such as owners, employees, suppliers, local
communities, and society as a whole).

Principle 2: Leadership
 Considering the needs of all interested parties, including customers,
owners, employees, suppliers, local communities and society as a
whole.
 Establishing a clear vision of the organization's future.
 Setting challenging goals and targets.
 Creating and sustaining shared values, fairness and ethical role models
at all levels of the organization.
 Establishing trust and eliminating fear.
 Providing people with the required resources, training and freedom to
act with responsibility and accountability.
 Inspiring, encouraging, and recognizing people's contributions.
Principle 3: Involvement of people
 People understanding the importance of their contribution and role in
the organization.
 People identifying constraints to their performance.
 People accepting ownership of problems and their responsibility for
solving them.
 People evaluating their performance against their personal goals and
objectives.

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  People actively seeking opportunities to enhance their competence,
knowledge, and experience.
 People freely sharing knowledge and experience.
 People openly discussing problems and issues.
Principle 4: Process Approach
 Systematically defining the activities necessary to obtain a desired
result.
 Establishing clear responsibility and accountability for managing key
activities.
 Analyzing and measuring of the capability of key activities.
 Focusing on the factors such as resources, methods, and materials that
will improve key activities of the organization.
 Evaluating risks, consequences, and impacts of activities on customers,
suppliers, and other interested parties.
Principle 5: System Approach to Management
 Structuring a system to achieve the organization's objectives in the most
effective and efficient way.
 Understanding the interdependencies between the processes of the
system.
 Structured approaches that harmonize and integrate processes.
 Understanding organizational capabilities.
 Continually improving the system through measurement and
evaluation.

Principle 6: Continual Improvement

 Providing people with training in the methods and tools of continual
improvement.

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  Making continual improvement of products, processes, and systems an
objective for every individual in the organization.
 Establishing goals to guide and measures to track continual
improvement.
 Recognizing and acknowledging improvements.
Principle 7: Factual Approach to Decision Making
 Ensuring that data and information are accurate and reliable.
 Making data accessible to those who need it.
 Analyzing data and information using valid methods.
 Making decisions and taking action based on factual analysis, balanced
with experience and intuition.
Principle 8: Mutually Beneficial Supplier Relationships
 Pooling of expertise and resources with partners.
 Identifying and selecting key suppliers.
 Clear and open communication.
 Sharing information and future plans.
 Establishing joint development and improvement activities.

3- QUALITY MANAGEMENT TECHNIQUES

Techniques include a wide variety of tools to plan work activities, collect data,
analyze results, monitor progress, and solve problems. For instance, an Excel
chart showing trends in manufacturing defects as workers progress through a
training program is a simple tool to monitor the effectiveness of the training.

QUALITY MANAGEMENT SYSTEMS

Quality can be managed in different ways. Many organizations use a
centralized quality department; others have quality leaders who work in
different business units or parts of the organization (common to larger
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organizations); some have centralized committees of leaders from multiple
functions; still others rely on the senior leadership team to guide the quality
process (more predominant in smaller organizations).
Regardless of how quality is managed, organizations need a structured and
systematic approach to implement quality principles, practices, and
techniques. According to the ASQ online glossary, a quality management
system (QMS) can be considered a mechanism for managing and
continuously improving core processes to achieve maximum customer
satisfaction at the lowest overall cost to the organization." It applies and
combines standards, methods, and tools to attain quality-related goals. Thus a
quality management system represents a specific implementation of quality
concepts, standards, methods, and tools and is unique to an organization.
Creating an effective QMS requires
1-top management commitment,
2- resources availability,
3- communication,
4- integrated training across the organization,
5- integrated audits,
6- technical guidelines
QMS provides
• A basis for documenting processes used to control and improve
operations,
• drive innovation, and
• achieve the following objectives:
➢ Higher product conformity and less variation.
➢ Fewer defects, waste, rework, and human error.
➢ Improved productivity, efficiency, and effectiveness.

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Cost of Quality Measures
The concept of the cost of quality (COC) emerged in 1950s. Traditionally, the
reporting of quality-related costs had been limited to inspection and testing;
other costs were accumulated in overhead accounts.
To establish a cost of quality approach, one must identify the activities that
generate, measure them, report them in a way that is meaningful to managers,
and analyze them to identify areas for improvement. Quality costs can be
organized into four major Categories: prevention costs, appraisal costs,
internal failure costs, and external failure costs.
1- Prevention costs
Prevention costs are investments made to keep nonconforming products from
occurring and reaching the customer, including the following specific costs:
• Quality planning costs, such as salaries of individuals associated with
quality planning and problem-solving teams, the development of new
procedures, new equipment design, and reliability studies
• control costs, which include costs spent on analyzing production
processes implementing process control plans
• information systems cost expended to develop data requirements and
measurements
• Training and general management costs, including internal and external
training programs, clerical staff expenses, and miscellaneous supplies
2- Appraisal costs
Appraisal costs are associated with efforts to ensure conformance to
requirements, generally through data measurement and analysis to detect
nonconformances. Categories of appraisal costs include the following:
• Test and inspection costs associated with incoming materials, work-in-
process, and finished goods, including equipment costs and salaries
• Instrument maintenance costs due to calibration and repair of
measuring instruments
• Process measurement and control costs, which involve the time spent
by workers to gather and analyze quality measurements

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3- Internal failure costs
Internal failure costs are incurred as a result of unsatisfactory quality found
before the delivery of a product to the customer; some examples include the
following:
• Scrap and rework costs, including material, labor, and overhead
• Costs of corrective action, arising from time spent determining the
causes of failure and correcting production problems
• Downgrading costs, such as revenue lost when selling a product at a
lower price because it does not meet specifications
• Process failures, such as unplanned machine downtime or unplanned
equipment repair

4- External failure costs

External failure costs occur after poor-quality products reach the customer,
specifically
• Costs due to customer complaints and returns, including rework on
returned items, canceled orders, and freight premiums
• Product recall costs and warranty claims, including the cost of repair or
replacement as well as associated administrative costs
• Product liability costs resulting from legal actions and settlements

Costs such as service effort, product design, remedial engineering effort,

rework, in-process inspection, and engineering change losses must usually be
estimated or collected through special efforts. Some costs due to external
failure, such as customer dissatisfaction and future lost revenues, are
impossible to estimate accurately. Although prevention costs are the most
important, appraisal costs, internal failure, and external failure (in that order)
are usually easier to collect.

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