Total Quality Management - TQM

Total Quality Management - TQM

The “Body of Knowledge” for Total Quality Management embraces:

* The concepts of Total Quality;
* Application of the concepts of Total Quality to:
o products and services
o processes
o people
* through the provision of appropriate
o values, policies and objective
o planning
o processes and measurement
o leadership, training and motivation
o organisation

Total Quality is a way of life. Total Quality is not a programme with a defined end point. A total Quality strategy will be effective only through long-term commitment and dedicated application by executive management and all employees. It requires the consistent application of the appropriate human and technical processes, tools and techniques.
Concepts:
Definition

The Institute of Management Services defines Total Quality Management as:

"A strategy for improving business performance through the commitment and involvement of all employees to fully satisfying agreed customer requirements, at the optimum overall costs, through the continuous improvement of the products and services, business processes and people involved."

The concept of Total Quality Management can be expressed as “Achieving success through delighting our customers”.

Customers being the internal user, the external customer or end-user, together with the other stakeholders, i.e.

* shareholders
* employees
* suppliers

It also requires consideration of the environmental needs of the community.
Key concepts of Total Quality

Total Quality Management is a strategy for business success, based on the following concepts:
Total Quality means:

* achieving strategic goals through customer focus and continuous improvement
* delighting the customer, satisfying needs and expectations
* anticipating the needs of the market
* understanding and managing customer expectations
* understanding the aims and capabilities of the your own organisation
* all employees taking ownership of the products and services delivered

Total Quality requires:

* management leadership and long term commitment
* managers to act as role models who lead and empower change
* a management culture of partnership, learning together, guidance and support for employees
* clearly defined business objectives communicated by managers and supervisors, understood and “owned” by all employees. “Ownership” can be viewed as the “acceptance of accountability”.
* Encouraging and empowering all employees to adopt “ownership” behaviour. Ownership of their outputs, ownership of customers problems, ownership of improvement actions.
* A focus on success through people
o solutions by consensus
o recognition of success
o a “no blame” attitude
o education and training based on defined user needs
o teamwork
o effective communication including listening, providing feedback and provision of visual communication

Total Quality Management is an organisation wide process based on:

* best use of the resources of the total organisation
* organisational flexibility and response to change
* defined internal and external customer/supplier relationships embracing:
o external customers
o internal customers
o external suppliers
o internal suppliers

bound together in long term business relationships

* measurement of performance. The standard is the “agreed customer requirement”and the required performance is
o absolute conformance to agreed customer requirements
o customer satisfaction
o process efficiency
o anticipating customer needs and expectations
o delivering products and services that delight customers
o benchmarking - identifying and adopting world-wide best practice
o measuring and monitoring continuous improvement

The focus for Total Quality

is continuous improvement aimed at achieving total “customer delight”, perceived “value for money” at optimum cost to the organisation. This requires everyone within the organisation to:

* use a defined process for Quality delivery
* continuously identify improvement opportunities
* deliver improvement through structured problem solving
* identify and use error prevention and corrective feedback mechanisms
* focus on Process design, reduction in variability and capability assurance
* develop Cross-Functional Process Management

TQM and BS 5750/ISO 9000/EN 29000

The standard provides a basic guideline for Quality Management and Quality Systems.

TQM and BS 5750/ISO 9000/EN 29000 are complimentary, whereby the Standard provides a structure which can underpin continuous improvement - the philosophy of TQM.

Part 0 of the Standard refers to Total Quality Management whilst the remainder is concerned with Quality Assurance.

Traditionally certification has been limited to specific areas for organisation, but recent development permits Company Wide registration.

This is a logical progression towards Quality Systems and Total Quality Management.
Organisation

Adopting Quality as the fundamental principle by which the organisation will conduct its business, requires that it organises itself to support this objective. This involves developing an appropriate organisation structure and a Quality function appropriate to the needs of the organisation.

Business organisation structure: spans of control, reporting lines, work group missions and outputs should be reviewed to ensure that these support management leadership, teamworking and effective communication.

Quality support organisation: the functions of the support organisation might include:

* training of the senior management and other groups of employees in Total Quality
* providing “facilitation” and support in the application of the Total Quality process
* supporting management in the development of strategy, objectives and goals in the respect of the implementation of the Total Quality process
* co-ordinating the application of the Quality management process and the production of Quality plans
* establishing and operating cross-functional process management in conjunction with the individual process owners
* providing direct support for business-wide improvement projects
* tracking cost of Quality
* establishing initial and ongoing Quality training needs, developing training material and training Quality trainers
* developing specific new processes and process applications to support Total Quality, e.g.: statistical process control (SPC)
* co-ordinating, where necessary, the development of Quality management systems by departments, providing a company response to vendor assessments by potential customers
* integrating safety, product liability and consumer considerations into products, services and business processes

SUMMARY

Total Quality is a customer focused improvement process, a strategy for business success involving every employee within the organisation.

References:
Total Quality Management, Institute of Management Services, Philosophy, Concepts and Fundamental Processes

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Business Planning

Business (Corporate) Planning is the process of deciding what tactical action and direction to take, in all areas of business activity, in order to secure a financial and market position commensurate with the strategic objectives of the organisation. To put it another way, it is the comprehensive planning for the whole of the business and involves defining the overall objectives for the organisation, and all the actions that must be adopted in order that those objectives are achieved.
Illustration:
If only we spent as much time doing our jobs, as we waste in these budget meetings, we would be a lot better off. This planning stuff is all very well, but has anyone ever worked out how much it costs? Anyway, all we can ever do is write down what we think will happen, then wait until it hasn’t happened, and finally argue about why it didn’t. Sometimes I wonder if it is all worthwhile.

Statements like these occur because:

* No one has taken the trouble to explain the purpose and benefits of planning;
* The planning methods are wrong;
* Plans are imposed from above, rather than worked out and agreed with the people who are going to have to carry them out;
* So-called planning is often no more than totalling up the various departments’ forecasts, and calling them the company plan.

In general it can be assumed that FIVE important features of Corporate Planning prevail, they are:

1. Objectives and objective setting;
2. Flexibility - the ability to be adaptable within the plan;
3. Growth - anticipating opportunities for new markets;
4. Synergy - the sum of joint efforts being greater than either one;
5. Time span - the critical length of the plan - long termism is increasingly risk managed in today’s business environment.

Corporate planning is, like most business activities, only as good as the people who do it. Its methods and approach do, however, stack the cards in its favour. In nearly every business, competition and technical change has increased, is increasing, and will continue to increase, and won’t stop. It cannot be ignored, so better to be part of a success story through effective corporate planning than flounder with those competitors who have failed to grasp the nettle.

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Pareto Analysis (the 80:20 rule)

The Pareto effect.

In practically every industrial country a small proportion of all the factories employ a disproportionate number of factory operatives. In some countries 15 percent of the firms employ 70 percent of the people. This same state of affairs is repeated time after time. In retailing for example, one usually finds that up to 80 percent of the turnover is accounted for by 20 percent of the lines.

This effect, known as the 80 : 20 rule, can be observed in action so often that it seems to be almost a universal truth. As several economists have pointed out, at the turn of the century the bulk of the country’s wealth was in the hands of a small number of people.

This fact gave rise to the Pareto effect or Pareto’s law: a small proportion of causes produce a large proportion of results. Thus frequently a vital few causes may need special attention wile the trivial many may warrant very little. It is this phrase that is most commonly used in talking about the Pareto effect – ‘the vital few and the trivial many’. A vital few customers may account for a very large percentage of total sales. A vital few taxes produce the bulk of total revenue. A vital few improvements can produce the bulk of the results.

The Pareto effect is named after Vilfredo Pareto, an economist and sociologist who lived from 1848 to 1923. Originally trained as an engineer he was a one time managing director of a group of coalmines. Later he took the chair of economics at Lausanne University, ultimately becoming a recluse. Mussolini made him a senator in 1922 but by his death in 1923 he was already at odds with the regime. Pareto was an elitist believing that the concept of the vital few and the trivial many extended to human beings.

Much of his writing is now out of favour and some people would like to re-name the effect after Mosca, or even Lorenz. However it is too late now – the Pareto principle has earned its place in the manager’s kit of productivity improvement tools.

This method stems in the first place from Pareto’s suggestion of a curve of the distribution of wealth in a book of 1896. Whatever the source, the phrase of ‘the vital few and the trivial many’ deserves a place in every manager’s thinking. It is itself one of the most vital concepts in modern management. The results of thinking along Pareto lines are immense.

For example, we may have a large number of customer complaints, a lot of shop floor accidents, a high percentage of rejects, and a sudden increase in costs etc. The first stage is to carry out a Pareto analysis. This is nothing more than a list of causes in descending order of their frequency or occurrence. This list automatically reveals the vital few at the top of the list, gradually tailing off into the trivial many at the bottom of the list. Management’s task is now clear and unavoidable: effort must be expended on those vital few at the head of the list first. This is because nothing of importance can take place unless it affects the vital few. Thus management’s attention is unavoidably focussed where it will do most good.

Another example is stock control. You frequently find an elaborate procedure for stock control with considerable paperwork flow. This is usually because the systems and procedures are geared to the most costly or fast-moving items. As a result trivial parts may cost a firm more in paperwork than they cost to purchase or to produce. An answer is to split the stock into three types, usually called A, B and C. Grade A items are the top 10 percent or so in money terms while grade C are the bottom 50-75 percent. Grade B are the items in between. It is often well worthwhile treating these three types of stock in a different way leading to considerable savings in money tied up in stock.

Production control can use the same principle by identifying these vital few processes, which control the manufacture, and then building the planning around these key processes. In quality control concentrating in particular on the most troublesome causes follows the principle. In management control, the principle is used by top management looking continually at certain key figures.

Thus it is clear that the Pareto concept – ‘the vital few and the trivial many’ – is of utmost importance to management.

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Pareto Analysis Step by Step

Pareto Analysis is a statistical technique in decision making that is used for the selection of a limited number of tasks that produce significant overall effect. It uses the Pareto Principle (also know as the 80/20 rule) the idea that by doing 20% of the work you can generate 80% of the benefit of doing the whole job. Or in terms of quality improvement, a large majority of problems (80%) are produced by a few key causes (20%). This is also known as the vital few and the trivial many.

In the late 1940s quality management guru Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who observed that 80% of income in Italy went to 20% of the population. Pareto later carried out surveys on a number of other countries and found to his surprise that a similar distribution applied.

The 80/20 rule can be applied to almost anything:

• 80% of customer complaints arise from 20% of your products or services.
• 80% of delays in schedule arise from 20% of the possible causes of the delays.
• 20% of your products or services account for 80% of your profit.
• 20% of your sales-force produces 80% of your company revenues.
• 20% of a systems defects cause 80% of its problems.

The Pareto Principle has many applications in quality control. It is the basis for the Pareto diagram, one of the key tools used in total quality control and Six Sigma.

In PMBOK Pareto ordering is used to guide corrective action and to help the project team take action to fix the problems that are causing the greatest number of defects first.

Pareto Analysis

Seven steps to identifying the important causes using Pareto Analysis [1]:

1. Form a table listing the causes and their frequency as a percentage.
2. Arrange the rows in the decreasing order of importance of the causes, i.e. the most important cause first.
3. Add a cumulative percentage column to the table.
4. Plot with causes on x-axis and cumulative percentage on y-axis.
5. Join the above points to form a curve.
6. Plot (on the same graph) a bar graph with causes on x-axis and percent frequency on y-axis.
7. Draw a line at 80% on y-axis parallel to x-axis. Then drop the line at the point of intersection with the curve on x-axis. This point on the x-axis separates the important causes on the left and less important causes on the right.

This is a simple example of a Pareto diagram using sample data showing the relative frequency of causes for errors on websites. It enables you to see what 20% of cases are causing 80% of the problems and where efforts should be focussed to achieve the greatest improvement.

The value of the Pareto Principle for a project manager is that it reminds you to focus on the 20% of things that matter. Of the things you do during your project, only 20% are really important. Those 20% produce 80% of your results. Identify and focus on those things first, but don't totally ignore the remaining 80% of causes.