Chapter 1

Introduction to Total
Quality Management
 Defining Quality
 non-existence of defects
 controlled process improvement
 non-stop improvement of all systems and
processes
 observed through the eyes of the customers
 understanding of customer's expectations
(effectiveness)
 exceeding those expectations (efficiency) is
required 2
Type of Employee Understanding of Quality
banker service
healthcare worker quality healthcare
hotel/restaurant employee customer satisfaction
manufacturer quality product
 Quality Perspectives
transcendent &
product-based user-based
needs
Marketing
Customer

products value-based Design

and manufacturing-
services based
Manufacturing
Distribution

Information flow
Product flow
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Transcendent Definition:
• "Quality is neither mind nor matter, but a third entity independent
of the two…even through Quality cannot be defined, you know
what it is."
Product-Based Definition:
"Quality refers to the amounts of the unpriced attributes contained
in each unit of the priced attribute."

User-Based Definition:
"Quality is fitness for use." (J.M. Juran, ed., Quality Control
Handbook, p2).

Manufacturing-Based Definition:
• "Quality [means] conformance to requirements." "Quality is the
degree to which a specific product conforms to a design or
specification."
Value-Based Definition:
"Quality means best for certain customer conditions. These conditions
are (a) the actual use and (b) the selling price of the product."
 Quality Types
In general, quality is meeting and exceeding
customer expectations at a price that he is
willing to pay to possess the product or service.

There are 3 types of quality:

quality of design
quality of conformance
quality of performance
 Quality of Design
• is all about set of characteristics that the
product or service must minimally have to
satisfy the requirements of the customer based
on market research
• influenced by product type, cost, profit policy,
demand of the product, availability of parts and
materials and product reliability
• must be simple and less expensive to meet
customers' expectations
 Quality of Conformance
• meeting the standards or user-based
characteristics defined in the design phase after
the product is manufactured or while the
service is delivered.
• extent of conformance to expected level of
reliability and uniformity at a specified cost
with quality requirements based on the study
made on quality design
 Quality of Performance
• how sound the product functions or service
performs when put to use
• measures the degree to which the product or
service pleases the customer from the angle of
quality of design together with the quality of
conformance
• meeting customer expectation is the focus of
quality of performance
 Three Levels of Quality
• Organizational level: meeting external
customer requirements
• Process level: linking external and internal
customer requirements
• Individual level: meeting internal customer
requirements

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 Quality Paradigms
• 1. Custom-Craft Paradigm: Focuses on the product
and product performance relative to customer
demands. Each product unit is designed and built
exactly the way the customer wants it.

• Requirements: Skilled craftsperson, basic hand

tools, demand for unique product.

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 Quality Paradigms
• 2. Mass Production and Sorting Paradigm: The
focus is on production rates. Products are designed
and built, then customers generated.

• Requirements: Interchangeable parts, factory

power, unskilled labor pool, large customer pool,
hard-selling.

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 Quality Paradigms
• 3. Statistical Quality Control Paradigm: Is similar
to the mass production and sorting paradigm with
the difference that more attention is given to
production processes. Products are designed and
built, statistical process control and statistical
sampling are used, then customers are generated.

• Requirements: Interchangeable parts, factory

power, unskilled labor pool, large customer pool,
hard-selling, statistical methods.
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 Quality Paradigms
• 4. Total Quality Management Paradigm: Involves
customers and suppliers in addition to mass
production and statistical methods. Potential
customers tell the producer what to design and
build. Using proactive and reactive quality
strategies and tools the producer deliver a product
the customers want.
• Requirements: Interchangeable parts, factory
power, statistical methods, empowered employees,
supplier partnerships, customer relationships.
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 Quality Paradigms
• 5. Techno-craft Paradigm: The sociotechnical
counterpart to the custom-craft paradigm. Each
unit is designed and build exactly the way the
customer wants it built.
• Requirements: Interchangeable parts, factory
power, statistical methods, empowered employees,
supplier partnerships, customer relationships,
customer aided design, customer aided
manufacturing.

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Comparison of Quality
Paradigms
 Cost of Quality
Cost of quality (COQ) is defined as a
methodology that allows an organization to
determine the extent to which its resources are
used for activities that prevent poor quality, that
appraise the quality of the organization’s
products or services, and that result from
internal and external failures.
 Cost of Quality
There are four categories:
• Prevention costs are costs incurred to keep
failure and appraisal costs to a minimum.
• Appraisal costs are costs incurred to
determine the degree of conformance to
quality requirements.
 Cost of Quality
• Internal failure costs are costs associated
with defects found before the customer
receives the product or service.
• External failure costs are costs associated
with defects found after the customer
receives the product or service.
 PREVENTION COSTS
Prevention costs are incurred to prevent or
avoid quality problems. These costs are
associated with the design, implementation,
and maintenance of the quality management
system. They are planned and incurred before
actual operation, and they could include:
 PREVENTION COSTS
Product or service requirements: Establishment of
specifications for incoming materials, processes,
finished products, and services
• Quality planning: Creation of plans for quality,
reliability, operations, production, and inspection
• Quality assurance: Creation and maintenance of the
quality system
• Training: Development, preparation, and maintenance
of programs
 APPRAISAL COSTS
Appraisal costs are associated with measuring and
monitoring activities related to quality. These costs are
associated with the suppliers’ and customers’ evaluation
of purchased materials, processes, products, and
services to ensure that they conform to specifications.
They could include:
 APPRAISAL COSTS
• Verification: Checking of incoming material, process
setup, and products against agreed specifications
• Quality audits: Confirmation that the quality system is
functioning correctly
• Supplier rating: Assessment and approval of suppliers
of products and services
 INTERNAL FAILURE COSTS
Internal failure costs are incurred to remedy defects
discovered before the product or service is delivered to
the customer. These costs occur when the results of
work fail to reach design quality standards and are
detected before they are transferred to the customer.
They could include:
 INTERNAL FAILURE COSTS
• Waste: Performance of unnecessary work or holding
of stock as a result of errors, poor organization, or
communication
• Scrap: Defective product or material that cannot be
repaired, used, or sold
• Rework or rectification: Correction of defective
material or errors
• Failure analysis: Activity required to establish the
causes of internal product or service failure
 EXTERNAL FAILURE COSTS
External failure costs are incurred to remedy defects
discovered by customers. These costs occur when
products or services that fail to reach design quality
standards are not detected until after transfer to the
customer. They could include:
 EXTERNAL FAILURE COSTS
• Repairs and servicing: Of both returned products and
those in the field
• Warranty claims: Failed products that are replaced or
services that are re-performed under a guarantee
• Complaints: All work and costs associated with
handling and servicing customers’ complaints
• Returns: Handling and investigation of rejected or
recalled products, including transport costs
 Defining TQM
A core definition of total quality management
(TQM) describes a management approach to
long-term success through customer
satisfaction. In a TQM effort, all members of
an organization participate in improving
processes, products, services, and the culture in
which they work.
 PRIMARY ELEMENTS OF
TQM
1. Customer-focused: The customer ultimately
determines the level of quality. No matter
what an organization does to foster quality
improvement—training employees,
integrating quality into the design process, or
upgrading computers or software—the
customer determines whether the efforts were
worthwhile.
 PRIMARY ELEMENTS OF
TQM
2. Total employee involvement: All employees
participate in working toward common goals.
Total employee commitment can only be obtained
after fear has been driven from the workplace,
when empowerment has occurred, and when
management has provided the proper environment.
High-performance work systems integrate
continuous improvement efforts with normal
business operations. Self-managed work teams are
one form of empowerment.
 PRIMARY ELEMENTS OF
TQM
3. Process-centered: A fundamental part of TQM
is a focus on process thinking. A process is a
series of steps that take inputs from suppliers
(internal or external) and transforms them into
outputs that are delivered to customers (internal or
external). The steps required to carry out the
process are defined, and performance measures
are continuously monitored in order to detect
unexpected variation.
 PRIMARY ELEMENTS OF
TQM
4. Integrated system: Although an organization
may consist of many different functional
specialties often organized into vertically
structured departments, it is the horizontal
processes interconnecting these functions that are
the focus of TQM.
 PRIMARY ELEMENTS OF
TQM
Micro-processes add up to larger processes, and
all processes aggregate into the business processes
required for defining and implementing strategy.
Everyone must understand the vision, mission,
and guiding principles as well as the quality
policies, objectives, and critical processes of the
organization. Business performance must be
monitored and communicated continuously.
 PRIMARY ELEMENTS OF
TQM
An integrated business system may be modeled after the
Baldrige Award criteria and/or incorporate the ISO 9000
standards. Every organization has a unique work culture,
and it is virtually impossible to achieve excellence in its
products and services unless a good quality culture has
been fostered. Thus, an integrated system connects
business improvement elements in an attempt to
continually improve and exceed the expectations of
customers, employees, and other stakeholders.
 PRIMARY ELEMENTS OF
TQM
5. Strategic and systematic approach: A critical
part of the management of quality is the strategic
and systematic approach to achieving an
organization’s vision, mission, and goals. This
process, called strategic planning or strategic
management, includes the formulation of a
strategic plan that integrates quality as a core
component.
 PRIMARY ELEMENTS OF
TQM
6. Continual improvement: A large aspect of TQM
is continual process improvement. Continual
improvement drives an organization to be both
analytical and creative in finding ways to become
more competitive and more effective at meeting
stakeholder expectations.
 PRIMARY ELEMENTS OF
TQM
7. Fact-based decision making: In order to know
how well an organization is performing, data on
performance measures are necessary. TQM
requires that an organization continually collect
and analyze data in order to improve decision
making accuracy, achieve consensus, and allow
prediction based on past history.
 PRIMARY ELEMENTS OF
TQM
8. Communications: During times of
organizational change, as well as part of day-to-
day operation, effective communications plays a
large part in maintaining morale and in motivating
employees at all levels. Communications involve
strategies, method, and timeliness.
 Core concepts for TQM
1. Customer satisfaction – be customer focused.
2. Internal customers are real
3. All work is process. Make it a good place to work,
create a work culture, which will lead to satisfied
customers.
4. Measurement – measure the work
5. Teamwork – top management must be involved
6. People make quality – Do it right first time, quality is
an attitude, empowering.
7. Continuous improvement cycle
8. Prevention
 BENEFITS OF TQM

1. Creates a good corporate culture

2. Better reviews from customers
3. Better performance from employees
 Shifting from Traditional
Management to TQM
1. Focus from internal activities to customer
2. Assignment of responsibility of quality from
the workers to the management
3. TQM is an organization-wide movement
4. Quality assurance rather than checking
5. Decisions based on facts and figures
6. TQM depends on cyclic thinking
 TQM and Reengineering
Reengineering sometimes called Business Process
Reengineering (BPR), involves a complete rethinking
and transformation of key business processes, leading to
strong horizontal coordination and greater flexibility in
responding to changes in environment. Because work is
originated around processes rather than function,
reengineering often involves a shift to horizontal
structure based on teams.
 TQM and Reengineering
TQM and BPR share a cross-functional
relationship. Quality specialists tend to focus on
incremental change and gradual improvement of
processes, while proponents of reengineering
often seek radical redesign and drastic
improvement of processes.
 TQM and Reengineering
Quality management, often referred to as TQM or
continuous improvement, means programs and
initiatives, which emphasize incremental
improvement in work processes, and outputs over
an open-ended period of time. In contrast,
reengineering, also known as business process
redesign or process innovation, refers to prudent
initiatives intended to achieve radically
redesigned and improved work processes in a
specific time frame.
 TQM and Reengineering
Reengineering can be used to first produce good
basic design that dramatically improves a
business process. TQM can be used to work out
bugs, perfect the process, and gradually improve
both effeciency and effectiveness.
TQM is the way of achieving the objective of
“total quality”. The techniques used for
continuous improvement and process
reengineering are the tools of TQM.