TOTAL QUALITY MANAGEMENT

TOTAL QUALITY MANAGEMENT may be defined as “managing the entire organization so that it excels on all
dimension of products and services that are important to customer.” It has two fundamental operational goals,
namely:

1. Careful design of the product or service.

2. Ensuring that the organization’s systems can consistently produce the design.

These two goals can only be achieved if the entire organization is oriented toward them hence the term total quality
management. TQM became a national concern in the US in the 1980s primarily as a response to Japanese quality
superiority in manufacturing automobiles and other durable goods such as room air conditioners. A widely cited
study of Japanese and U.S. air-conditioning manufacturers showed that the best-quality American products had
higher average defect rates than those of the poorest Japanese manufacturers. So severe was the quality shortfall in
the United States that improving it throughout industry.

SIX SIGMA QUALITY

Six Sigma is a set of methodologies and tools used to improve business processes by reducing defects and errors,
minimizing variation, and increasing quality and efficiency. The goal of Six Sigma is to achieve a level of quality that is
nearly perfect, with only 3.4 defects per million opportunities. This is achieved by using a structured approach called
DMAIC (Define, Measure, Analyze, Improve, Control ) to identify and eliminate causes of variation and improve
processes.

SIX SIGMA refers to the philosophy and methods companies such as General Electric and Motorola use to eliminate
defects in their products and processes. A defect is simply any component that does not fall within the customer’s
specification limits. Each step or activity in a company represents an opportunity for defects to occur and six-sigma
programs seek to reduce the variation in the processes that lead to these defects. Indeed, six sigma advocates see
variations as the enemy of quality, and much of the theory underlying Six Sigma is devoted to dealing with this
problem. A process that is in Six-Sigma control will produce no more than two defects out of every billion units.
Often, this is stated as four defects per million units, which is true if the process is only running somewhere within
one sigma of the largest specification.

One of the benefits of six sigma thinking is that it allows managers to readily describe the performance of a process
in terms of its variability and to compare different processes using a common metric. This metric is defects per
million opportunities (DPMO). This calculation requires three pieces of data:

1. Unit – The item produced or being serviced.

2. Defect – Any item or event that does not meet the customer’s requirements.
3. Opportunity – A chance for a defect to occur.

A straightforward calculation is made using the following formula:

Number of defects

DPMO = x 1,000,000

Number of opportunities for error per unit x Number of units

ISO 9000

ISO 9000 is a series of international quality standards that have been developed by the International Organization for
Standardization. More than 100 countries now recognize the 9000 series. The idea behind the standards is defects
can be prevented through the planning and application of best practices at every stage of business – from design
through manufacturing and then installation and servicing. These standards focus on identifying criteria by which
any organization, regardless of whether it is manufacturing or service oriented, can ensure that product leaving its
facility meets the requirements of its customers. These standards ask a company to first document and implement
its systems for quality management, and then to verify, by means of an audit conducted by an independent
accredited third party. The compliance of those systems to the requirements of the standards.

Fundamentally these standards can be grouped into two categories:

 Requirements-These mandatory standards dictate what a company shall do. Companies become registered
to or compliant with one of the requirements standards. There are four requirements standards:
- ISO 9001 Model for quality assurance: design, development, production, installation and servicing
- ISO 9002 Model for quality assurance: production, installation and servicing
- ISO 9003 Model for quality assurance: final inspection and test
- ISO 10012 Requirements for measuring equipment
 Guidelines-These assist a company to interpret the requirements standards, suggesting what a company
should do. There are also four guidelines: ISO 8402 Quality management and quality assurance vocabulary
- ISO 9000 Guidelines for selection and use
- ISO 9004 Quality management and quality system elements
- ISO 10011 Guidelines for auditing quality systems
- ISO 10013 Guidelines for quality manuals

Regardless of whether an organization is involved in a total manufacturing operation, including design, or only
inspection and testing process, it can develop a quality management system based on one of the ISO 9000
requirements standards. By design, these standards can accommodate variation from company to company and
between economic sectors. It is simply up to each individual business to interpret the appropriate requirements
standard in light of its own processes.

The principal standards within the group are ISO 9001, 9002 and 9003. These are the requirements standards, and all
of the other standards within the series are related to these three. Of the three, ISO 9001 is the most
comprehensive. Divided into 20 specific elements, it provides a foundation for basic quality management and
continuous improvement practices. Each of its 20 elements covers a particular area of an organization's business
processes:

1. Management Responsibility
2. Quality Planning
3. Contract Review
4. Design Control
5. Document and Data Control
6. Purchasing
7. Control of Customer-Supplied Product
8. Identification and Traceability
9. Process Control
10. Inspection and Testing
11. Control of Inspection, Measuring and Test Equipment
12. Inspection and Test Status
13. Control of Nonconforming Product
14. Corrective and Preventive Action
15. Storage, Handling, Packaging, Preservation and Delivery
16. Control of Quality Records
17. Internal Quality Audits
18. Training
19. Servicing
20. Statistical Techniques
ISO 9002 and ISO 9003 are derivatives of the 9001 requirements standard. Much work and expense may be needed
to be accredited at the highest level, which is 9001. Furthermore, some firms may not need ISO 9001 accreditation.
For example, note that in Exhibit 8.11, ISO 9003 covers quality in production's final inspection and testing. A firm can
be accredited at this level of final production only. This would essentially guarantee the firm's quality of final output
and be attractive to customers. A broader accreditation would be ISO 9002, which extends from purchasing and
production through installation.

ISO 9000 CERTIFICATION

Why is it important to become ISO 9000 certified? For one reason, it is essential from a purely competitive
standpoint. Consider the situation where you need to purchase parts for your firm, and several suppliers offer similar
parts at similar prices. Assume that one of these firms been ISO 9000 certified and the others have not. From whom
would you purchase? There is no doubt that the ISO 9000-certified company would have the inside track in your
decision making. Why? Because ISO 9000 specifies the way the supplier firm operates as well as quality standards,
delivery times, service levels, and so on.
There are three forms of certification:

1. First party: A firm audits itself against ISO 9000 standards.

2. Second party: A customer audits its supplier.
3. Third party: A "qualified" national or international standards or certifying ager serves as auditor.