A Critical Review on TOTAL QUALITY MANAGEMNET ON PRODUCTION

PRESENTED BY: SOURAV DASH ROLL NO: 311SM1006 BRANCH: SCHOOL OF MANAGEMANT

ABSTRACT
The twenty-rst century harbors intense global competition where the playing eld and the rules of the game have changed. There is an urgent need for Pakistani businesses to change the way they operate. This paper introduces the total quality management (TQM) concept and argues that its implementation is the critical need of the hour for the survival of our industries both locally and internationally. The paper is divided into four segments: the rst discusses the changed environment in which businesses are operating; the second gives a brief introduction to the TQM philosophy and discusses TQM systems and tools; the third discusses the effect of TQM on productivity and explains what is meant by effective productivity; and the fourth presents some of the benets that were realized by international and local rms implementing TQM.

INTRODUCTION
Intense global competition and diminishing trade barriers are making it more and more difcult for companies to maintain their market share. Competition from companies operating in different markets has increased as advancements in telecommunications and information technology have broken down traditional barriers to entry (e.g. geographical and trade barriers). Export-based Pakistani industries are faced with increased threats from new entrants for example, over the past ve years Bangladesh has surpassed Pakistan in knitweargarment exports, while India and China are posing a serious threat to Pakistani exports in other textile markets. All other categories of Pakistani exporters are facing similar situations. With increasing pressures from the international community to meet the guidelines of the World Trade Organization (WTO), the Pakistani Government will not be in a position to maintain protectionist policies (import restrictions, tariffs and different types of subsidies) for local industries. Total quality management is a managements approach towards the quality, it can be in regard to products, customer satisfaction and employees satisfaction. The concept of TQM was developed by an American W. Edwards Deming and i.e. why it is called as Demings concept of TQM .He introduced this concept for improving the quality of various products and services. Earlier it was just related with the quality of products which a organization is producing but now other concepts like marketing, finance design, customer service has also joined the area. Which means that now good number of things are there to manage. TQM works on one belief that mistakes can be avoided and defects can be prevented. And management should believe in watching each and every step. TQM is now a days called as TPM (total productivity management) and an organization needs to consider ABCD for the effective application of TQM where A stands for accident cure , B stands for breakdown , C stands for cost reduction and D stands for damage. This policy of ABCD is in relation to product and if TQM needs to be introduced a positive attitude from the side of management and employees is required and then a collective effort will come up. TQM should give chance for unleashing employees creativity and potential. The aim of TQM is to reduce variations in quality of the products as well as in the working of whole organization. For the successful implementation of TQM, an organization must consider the commitment from all the level of organization. A concept of Six sigma is a part of

TQM. It is a strategy developed by Motorola and it helps to detect the defects and to remove them. TQM talks about the satisfaction of customer, supplier, employees etc. and it requires continuous improvement. If the workers of an organization are efficiently working then their morale will go up. TQM works effectively if the organization works in a family manner. Here management is like a father, employees are the children and manager is like mother and as father and mother takes care for their home collectively the same way , management and managers are supposed to take care for their organization with the help of tool called TQM. Total quality management is called total because entire organization is involved, Quality means degree of excellence. And management in literal sense means getting things done by others. In a TQM effort, all members of an organization participate in improving processes, products, services and the culture in which they work. The earlier introduced quality management concept is now taken over by Total quality management. To have effective TQM the first requirement is strong internal motivation and emotional involvement for implementation. So the concept of TQM talks about adopting the new policy, creating quality products, eliminate defects, estimate for breakdown, accidents etc . Hence TQM should be purpose driven so first the whole organization should be willing to accept the change then only TQM can actually affect the organization in a positive way.

TQM model
A simple model for TQM is depicted . The model consists of two main components: (1) TQM philosophy; (2) TQM systems and tools. TQM cannot exist without a complete acceptance of its philosophy by at least the top management. Once the basic TQM philosophy is accepted by the top management then different systems and tools can be initiated to propagate and facilitate a culture based on such a philosophy.

TQM philosophy

TQM systems and tools

Structure of TQM

TQM philosophy
TQM philosophy consists of four basic beliefs, which are as follows: (1) Absolute customer focus; (2) Employee empowerment, involvement and ownership; (3) Continuous improvement; and (4) Use of systematic approaches to management. The core of the TQM philosophy is absolute customer focus. Belief in employee empowerment, involvement and ownership, continuous improvement and the use of systematic management help the organization achieve continual increase of customer satisfaction at a continually lower real cost. The individual components of the TQM philosophy and their interrelationships, which are further, discussed in subsequent sections.

Components of TQM philosophy and their interrelationships

TQM and productivity:

Increasing competition in the global market necessitates that

productivity should not be considered as an indicator of efciency only; it must also measure effectiveness. Yet the distinction between the two is often overlooked. For example, a company that produces according to process specications may be using its resources efciently, but unless it is producing what its customers want it may not be using them effectively. There is no point in churning out well-made products that nobody wants. To be protable, a company must judge productivity and value from the perspective of the customer, not from the engineer. Hence, internal processes must only be geared towards producing products and services that the customers nd useful and valuable. The TQM philosophy ensures effective efciency by encouraging companies to plan products and develop systems that deliver products only according to the expectations of the customer. Several studies have validated that in the long run, companies that adopt TQM achieve greater effective productivity, protability and market share for most kinds of products and market situations. A look at the individual components of the philosophy shows why.

Productivity and absolute customer focus

Delighted customers are the prime determinant of sustainable competitive advantage for any organization. To retain customers and entice new ones a company needs to focus on providing value to the customer and that too in a manner that is more effective than that of its competitors. Customer satisfaction transforms into customer delight when goods or services exceed customers expectations. Thus, understanding what the customer wants is crucial. When a company directs all its efforts towards this goal, it automatically produces only what is required by its customers. This leads to higher sales and

operating prots for the company as customers pay more and buy more when it comes to quality products that they want. It also curbs inventory pileup of both unsold and returned/rejected inventory as well as recall costs, warranty claims and product liability costs. When care is also taken to satisfy the requirements of internal customers, items are produced according to specications thereby minimizing defective items, the cost of rework and subsequently throughput time. Hence, customer focus enhances effective productivity by reducing internal and external failure costs along with ensuring that only those goods are produced that are in demand. Productivity and employee According to Evans and Lindsay (1996), 60 per cent to 90 per cent of the costs of total quality are difcult to control by management alone. When workers themselves are committed to delivering quality, they take greater initiative towards meeting product and process specications; detecting and eliminating bottlenecks; improving product and process designs and setting realistic yet challenging performance targets. Diversity in views and experiences encourages creative ideas for serving the customer and this invariably fosters productivity.
Productivity and continuous improvement

The ever-changing tastes of customers and pressure from competitors induce rms to adopt proactive strategies to retain and/or gain market share. Hence, continuous improvement is essential for the very survival of a company. Both incremental and breakthrough improvements enhance productivity by decreasing costs and/or improving performance. Performance is enhanced through greater responsiveness, shorter cycle times for new products or services, better products, shorter throughput time and unique marketing, engineering or production strategies. Costs decline by reducing errors, defects and wastage.

Effects of TQM on performance

Hendricks and Singhal (1997) carried out a study to empirically prove that TQM improves the performance of organizations. Based upon the concepts of TQM the study tried to prove that implementing an effectiveTQM would improve the protability of the rm; increase revenues; and reduce costs. DATA ANALYSIS: The sample for the study consisted of 463 rms. All the rms had won quality awards and had nancial data available for a period of ten years starting from six years before the year in which they had won the award. The performance of these rms was compared with that of a control group that had not made any efforts towards TQM. The results were adjusted for the performance of the rms in the control group. The results of broad parameters From year
Percentage change in operating income
10.41 8.88 14.77 35.06 107.12

Percentage change in sales

Percentage change in total cost/sales

0.27 -0.45 -0.39 -0.94 -1.27

Percentage change in number of employees

0.35 2.33 5.56 13.69 17.00

Percentage change in assets

-6 to - 1

6.21 2.8 6.26 18.15 63.74

-1.93 1.8 8.24 17.52 45.46

-4 to - 1

-1 to +1 -1 to +3 -6 to +3

TQM and profitability In seven out of ten years, the rms in the sample showed higher increase in percentage changes in the operating income as compared to the control group with the magnitude of changes in positive years being higher thanthose in negative years. Furthermore, the changes in operating income-based measures are more signicant over longer intervals. Over a period of ten years (2 6 to +3) the average percentage change of the test sample over the control group is 107 per cent.Other operating income-based measures also provide strong evidence that rms with effective TQM have outperformed other rms in the control group and thus proves the hypothesis that TQM efforts improve the operating income of organizations. For example, the control adjusted percentage changes in operating income/employee, operating income/assets and operating income/sales over the ten-year period from (2 6 to +3) are 22.09 per cent, 20.92 per cent and 19.82 per cent respectively. Individual examples of TQM effects on international firms:
Granite Rock Inc.

In 1993 after four years of TQ efforts, customer accounts at Granite Rock, increased by 38 per cent, when overall construction spending in its market area declined by over 40 per cent. Motorola Due to TQ efforts Motorolas employee productivity improved 100 per cent from 1988 to 1994 at an annual compound rate of 12.2 per cent. Motorola has driven down manufacturing time for pagers from 40 days to less than one hour. 3M 3M dental products division, a Minnesota- based supplier of dental products competing in a $4 billion global market with over 100 competitors, has doubled global sales and market share over the past 10 years and, from 1991 to 1996, doubled its rate of prot.

CONCLUSION
Considering the current state of global competition, it is imperative for Pakistani businesses to develop a customer-focused culture as soon as possible. This would ensure that their resources are efciently and effectively utilized to produce only those products and services which the customer wants and is willing to pay a premium for. This point towards developing a TQ culture. Before any of this can be achieved, senior executives of organizations will have to fully understand and believe in the TQ philosophy without which achievement of maximum benets would not be possible no matter how many material resources are invested. The systems and tools cannot promise signicant or sustainable results without the visible commitment of the top management to the TQM philosophy.

BIBLOGRAPHY
EMERALD FOR NIT, online library. TQM Text book, prof. S.K Sarangi. Becker, S.W. (1993), TQM does work: ten reasons why misguided attempts fail, Management Review, May, pp. 30, 32-33. Brown, S. (1998), New evidence on quality in manufacturing plants: a challenge to lean production, Production and Inventory Management Journal, Vol. 39 No. 1, pp. 24-9. Clemmer, J. (1992), Firing on All Cylinders, Irwin, New York, NY. Creech, B. (1994), The Five Pillars of TQM, Truman Talley Books/Dutton, New York, NY. Crosby, P.B. (1980), Quality Is Free, Mentor, Somerset, NJ. Harari, O. (1993), The eleventh reason why TQM doesnt work, Management Review, May, pp. 31, 34-36. Kanji, G.K. (1995), Total Quality Management: Proceedings of the First World Congress, Chapman & Hall, London.