Total Quality Management TQM Meaning, Importance, Characteristics, Components

Table of Contents:-

• Meaning of TQM – Total Quality Management 
• Definition of TQM
• Importance of TQM
• Characteristics of TQM
• Components of TQM
• Principles of TQM

Meaning of TQM

Total Quality Management (TOM) is a philosophy that gradually evolved from management theories such as Management by Objective, quality circles, strategic planning, etc. To understand the concept, it is better first to understand the three terms constituting it, i.e., Total Quality and  Management.

1) Total: Everyone in the organisation creates and maintains the quality of the services and products offered. It is a comprehensive way of dealing with complex sets of interacting issues involving everyone at all levels and addressing all major subjects.

2) Quality: The organisation, through individual and collective actions, focuses on meeting customers’ (agreed) needs at the lowest cost, the first time and every time, hence, recognising that it is the consumer perception that identifies quality. Total quality, therefore, refers to the process of achieving quality according to some requirements laid down.

3) Management: While managing the system, continuous improvement should be emphasized rather than quick fixes. Then only Total Quality can be achieved. This requires everyone in the organisation to be responsible for managing their job. Total Quality Management represents a complete systems view for quality management. TQM builds on the idea that an organization is an interactive communication and control network.

Definition of TQM

According to Professor Leopald S. Vasin, “TQM is the control of all transformation processes of an organisation to best satisfy customer’s needs in the most economical manner”.

Total quality management is a management system for a customer-focused organisation that involves all employees continually improving all aspects of the organisation.

TQM = Customer – Driven Quality Management

The total quality management concept is an integrative system that uses strategy, data, and effective communication to integrate quality principles into the culture and activities of the organisation. At its core, Total Quality Management (TQM) is a management approach aimed at achieving long-term success through customer satisfaction. In a TQM effort, all members of an organisation participate in improving processes, products, services and the culture in which they work.

Importance of TQM

Quality experts in private industry and government feel that four key measurable areas of an organisation’s operations could demonstrate the impact of Total Quality Management practices on corporate performance. These benefit areas include the following points:

1) Improved Operational Performance

Organisations’ operational performance indicators measure the cost and quality of their products and services. Leading companies are using their measures to assess the impact of quality management on their functions. These measures include timeliness of delivery, reliability, order-processing time, product lead-time, production errors, quality costs, inventory turnover, and cost savings.

2) Better Employee Relations

One of the most important features in implementing a successful TQM system is attaining a highly involved and motivated workforce. Leading companies are using several key indicators to measure the extent to which their focus on quality leads to improvement in employee job satisfaction, attitude, and behaviour. These key indicators include employee satisfaction, employee attendance, employee turnover, safety and health, and several suggestions made to improve quality and/or lower costs.

3) Increased Financial Performance

The impact on a company’s “bottom line” or operating results was measured by several ratios. One important measure used is market share. Companies that build market share based on improved product/service quality and value believe it is the route to increased profitability. Other measures include productivity and profitability expressed as sales per employee, sales per a comparable retail store; return on assets; and return on sales.

4) Greater Customer Satisfaction

Many leading companies have changed their classic view that quality involves merely meeting technical specifications. They now recognise that the customer defines quality and that companies must focus on meeting customer needs and expectations. Customer satisfaction is defined in terms of new customer referrals, fewer customer complaints, and high customer retention.

5) Increases Efficiency

The main aim of implementing total quality management in a business is to improve process efficiency and achieve productivity by eliminating problems arising in work processes and systems. It addresses critical areas that need modifications, unnecessary tasks, redundant processes, and unproductive activities.

6) Creates a Good Corporate Culture

Total quality management is an approach where the customer is the focal point of the business rather than the department. Therefore, quality is transformed from an issue of the production department to a strategic business commodity to meet international challenges. The TQM philosophy revolves around developing a culture that advocates total commitment to customer satisfaction through continuous improvement.

7) Flexibility

TOM focuses on creating departmental teams to encourage knowledge between the departments. These interventions can improve overall organisational development and broadening of skills, resulting in improved performance in all departments. Moreover, this enables flexibility in maintaining cost competitiveness.

8) Promotes Supplier/Customer Satisfaction

Another benefit of implementing TQM in business processes is that it promotes the principle of internal supplier-customer satisfaction. For example, the HR branch is responsible for settling employee’s requests or queries within a specified time. Additionally, avoidance of errors allows the organisation to save time and money, which is then used in other processes.

9) Improves Organisational Development

Total quality management improves organisational development. It not only focuses on making changes in educating employees on the importance of quality but also strives to prevent mistakes in business processes instead of correcting them. Therefore, implementing TOM in the business will help improve production efficiency.

Characteristics of TQM

TQM is useful for small and large companies alike, to improve their competitive position in both the domestic and world marketplace. Adopting TQM as a method for conducting company business will have a positive impact on key areas of corporate performance. Important features of TQM that are common to many world-class quality organisations include:

1) Leadership

Top executives must provide active leadership to establish quality as a fundamental value to be incorporated into the company’s management philosophy.

2) Customer Satisfaction

Customer satisfaction is critical to remain competitive in the marketplace. Ultimately, customer satisfaction, both internal and external, drives quality efforts. Organisations, therefore, need to determine what customers want and must have processes in place to meet those customer needs.

3) Corporate Culture

Top executives need to establish a corporate culture that involves all employees in contributing to quality improvements.

4) Integrated Activities

Quality concepts need to be clearly articulated and thoroughly integrated throughout all activities of the company.

5) Totality

It implies that all areas, functions, activities, and employees are striving for optimum quality all the time.

6) Documentation

It is integrated people-machine-information relations that make the TQM effort happen. Documentation helps in the dissemination of information to all persons. The information will help persons visualising their work responsibilities and assignments in quality activity.

7) Foundation

A solid foundation for the whole organisational structure is imperative. If the company is well organised then it enables the broad scope of quality activities to be properly managed. Good organisational systems equip management and employees of the company to come to grips with customer requirements and satisfaction.

8) Strengthen Employee Commitment

Companies need to focus on employee involvement, teamwork and training at all levels. The focus should maintain employee commitment to constant quality improvement.

9) Improvements

There should be an endeavour to improve the quality activities of the business. This will help in achieving the highest levels of quality and competitiveness in operations, products and services.

Components of TQM

Following are the three major components of TQM:

1) Participative Management

Participative management refers to the intimate involvement of all members of a company in the management process, thus deemphasizing traditional top-down management methods. In other words, managers set policies and make critical decisions only with the input and guidance of the subordinates, who will have to implement and adhere to the directives. This technique improves upper management’s grasp of operations and, more importantly, is an essential motivator for workers who begin to feel as if they have ownership and control of the process in which they participate.

2) Teamwork

Teamwork, the third necessary ingredient for the success of TOM, involves the organization of cross-functional teams within the company. This multidisciplinary team approach helps workers to share knowledge, identify problems and opportunities, derive a comprehensive understanding of their role in the overall process, and align their work goals with those of the organization.

3) Continunus Process Improvement

Continuous process improvement, the second ingredient entails the recognition of small, incremental gains toward the goal of total quality. Large gains are accomplished by small, sustainable improvements over a long term. This concept necessitates a long-term approach by managers and the willingness to invest in the present for benefits that manifest in the future. Continuous improvement results in workers and management developing an appreciation for and confidence in TQM over time.

Principles of TQM

A standard is an agreement between participants to conduct their activities in a specific way. This fact is not always clear, and from time to time, one can hear from a quality industry heretic who advocates “really tough standards.” Such people must understand that an adamant set of rules would find few participants and, therefore, could not be a standard. Nevertheless, through the years, certain management practices have been generally recognised as good ideas and have achieved the status of principles.

Senior management can use these principles to guide their organisations toward improved performance. The codes are derived from the collective experience and knowledge of the international experts responsible for developing and maintaining the ISO 9000 standards.

The eight quality management principles are defined in ISO 9000:2005, Quality Management Systems Fundamentals and Vocabulary, and in ISO 9004:2000, Quality Management Systems Guidelines for Performance Improvements:

1) Customer Focus

Organisations depend on their customers and should understand present and future customer needs, meet customer requirements, and aim to exceed customer expectations. The organisation must be customer-focused. Everyone in the organisation must know that without the customer, there would be no purpose to their work, no pay cheque, no capital investment, and no company picnic. It must also be understood that the external customers are served by the internal customers (employees). Therefore, there is a need to focus on the requirements and expectations of internal and external customers.

Key Benefits

1. Flexible and fast responses to market opportunities achieve increased revenue and market share.
2. Increased effectiveness in the use of the organisation’s resources to enhance customer satisfaction.

3. improved customer loyalty leading to repeat business.

Applying the principle of customer focus generally leads to:

1. Researching and understanding customer needs and expectations.
2. Ensuring that the objectives of the organisation are linked to customer needs and expectations.
3. Communicating customer needs and expectations throughout the organisation.
4. Measuring customer satisfaction and acting on the results.
5. Systematically managing customer relationships.
6. Ensuring a balanced approach between satisfying customers and other stakeholders, such as owners, suppliers, employees, financiers, local communities, and society.

2) Leadership

Leaders establish unity of direction and purpose in the organization. They should maintain and create an internal environment in which employees can become fully involved in achieving the organizational objectives. The leadership of an organisation must be committed to continuous improvement This commitment must be visible throughout all layers of management. Management must “walk the talk”. Only when the administration is committed will employees excel at what they do. It takes time to change work cultures and work habits, but with perseverance, the message of enlightened management will prevail. Employees want to do a good job. All they need are the right tools and the suitable systems. These can be supplied only by top management.

Key Benefits

1. Employees will understand and be motivated towards the organisation’s goals and objectives.
2. Activities are evaluated, aligned, and implemented in a unified way.
3. Miscommunication between levels of an organisation will be reduced.

Applying the principle of leadership generally leads to the following:

1. Considering the needs of all interested groups, including customers, owners, suppliers, financiers, employees, society, and local communities.
   
2. Establishing a clear concept of the organisation’s future.
3. Setting challenging goals and targets.
4. Creating and sustaining shared values, fairness, and ethical role models at all levels of the organisation.
5. Establishing trust and eliminating fear,
6. Providing people with the required training, resources and freedom to act with accountability and responsibility.
7. Inspiring, encouraging, and recognising people’s contributions.

3) Involvement of People/Employee Involvement

Employees at all levels are the base of an organisation, and their full involvement in organisational activities enables their abilities to be used for the organisation’s benefit.

Soon after the commencement of training, management must provide opportunities for employees to apply what they have learned. They need to test their skills. They will not and should not be satisfied with the way things are. Every aspect of their job should be measured and evaluated against the new paradigms. This will bring new challenges to their supervisors. The supervisors, in turn, through their training will now be equipped with the attitudes and analytical skills to consider their suggestions. They will no longer feel the threat of losing control.

Key Benefits

1. Committed, motivated, and involved employees within the organisation.
2. Innovation and creativity in facilitating the organisational objectives. 
   
3. People being accountable for their performance.
4. Employees become eager to participate in and contribute to continual improvement.
   

Applying the principle of involvement of people generally leads to the following:

1. Employees understand the importance of their contribution and role in the organisation.
2. People identifying constraints to their performance.
3. Employees accept ownership of problems and take responsibility for solving them.
   
4. People evaluate their performance against their personal goals and objectives.
5. Employees actively seeking opportunities to enhance their competence, knowledge, and experience.
6. People freely sharing knowledge and experience.
7. Employees openly discuss problems and issues.

4) Process Approach

A desired result is achieved more efficiently when activities and related resources are managed appropriately.

Key Benefits

1. Shorter cycle times and lower costs through effective use of resources.
2. Improved, consistent, and predictable results.
3. Focused and prioritised improvement opportunities.

Applying the principle of process approach generally leads to:

1. Systematically defining the activities required to obtain a desired result.
2. Establishing clear responsibilities and accountability for managing activities. 
3. Analysing and measuring the capability of key activities. 
4. Identifying the interfaces of activities within and between the functions of the organisation. 
5. Focusing on the factors such as resources, methods, and materials that will improve key activities of the organisation.
6. Evaluating risks, outcomes and impacts of activities on suppliers, customers and other interested parties.

5) System Approach to Management

Understanding, identifying, and managing interrelated processes as a system contributes to the organisation’s efficiency and effectiveness in achieving its goals.

Key Benefits

1. Alignment and integration of the processes that will best achieve the desired results.
2. Ability to focus effort on the fundamental processes.
3. Providing confidence to interested parties as to the consistency, effectiveness, and efficiency of the organisation.

Applying the principle of system approach to management generally leads to:

1. Structuring a system to achieve the organisation’s objectives most effectively and efficiently.
2. Understanding the interdependencies between the functions of the system.
3. Structured approaches that harmonise and integrate processes.
4. A better understanding of the roles and responsibilities necessary for achieving common objectives can help reduce cross-functional barriers.
   
5. Understanding organisational capabilities and establishing resource constraints before action.
6. Targeting and defining how detailed activities within an approach should operate.
7. Continuous system improvement through measurement and evaluation.

6) Continual Improvement

Continual improvement of the organisation’s overall performance should be a permanent objective of the organisation.

Key Benefits

1. Performance advantage through improved organisational capabilities.
2. Alignment of improvement activities at all levels with an organization’s strategic objective.
   
3. Flexibility to react quickly to opportunities.

Applying the principle of continual improvement typically leads to:

1. Implementing a consistent organization-wide approach to continually improving the organization’s performance.
   
2. Providing employees with training in the methods and tools of continual improvement.
3. Making continual improvement of processes, products, and systems an objective for every employee in the organisation.
4. Establishing goals to guide and efforts to track continual improvement.
   
5. Recognising and acknowledging improvements.

7) Factual Approach to Decision-Making

Effective decisions are based on the intuitive and logical analysis of information and data.

Key Benefits

1. Informed decisions.
2. Increased ability to demonstrate the usefulness of past decisions through reference to factual records.
   
3. Increased ability to challenge, review, and change opinions and decisions.

Applying the principle of a factual process to decision-making generally leads to the following:

1. Ensuring that information and data are sufficiently reliable and accurate.
2. Making data accessible to those employees who require it.
3. Making decisions based on factual research, balanced with experience and intuition.
   
4. Analysing data and information using valid methods.

8) Mutually Beneficial Supplier Relationships

An organisation and its suppliers are interdependent, and a mutually beneficial relationship improves the ability to create value.

Key Benefits

1. Increased ability to create value for both groups.
2. Flexibility and speed of joint responses to changing market or customer expectations and needs.
3. Optimisation of costs and resources.

Applying the principles of mutually beneficial supplier relationships generally leads to the following:

1. Establishing relationships that balance short-term gains with long-term concerns.
2. Pooling of expertise and resources with partners.
3. Identifying and selecting key suppliers.
4. Clear and open communication.
5. Sharing information and plans.
6. Establishing joint development and improvement activities.
7. Inspiring, encouraging and recognising improvements and achievements by suppliers.