During the recent years the world of business has changed vastly. We the people of different walks of life cannot be able to imagine that what is going to be the future picture if this change continues rapidly like this speed. Today there are very much competition in-between them and for that reason each and every business organization are trying to offer competitively better facilities for their customers better than the competitors.
We have learn much about the Introduction to Cost and Managerial Accounting. But don’t know how they are applied in the real lives. To find this out i.e. how they are applied in the real lives we were given this project. We tried our best to fetch all the possible information and include them in a relevant manner.
Management systems are usually implemented in response to current conditions. Such systems and the terms to describe them change with time and use in new contexts. Much of the current management literature, in education and other industries, focuses on systems that can be described under the umbrella term, Total Quality Management, or TQM. TQM contains a mix of original ideas and those with historical antecedents. The following is a brief overview of TQM and how it is being applied in community colleges.
TQM is a management system- a philosophy, set of tools, and organizational models. It is known by names other than Total Quality Management, including: the Deming Management Method; in the United States Total Quality Improvement and Total Quality Commitment; in Japan- Total Quality Control, Company- Wide Quality Control, and kaizen, which in Japanese means gradual, unending improvement, doing little things better, setting and achieving ever higher standards.
The components of TQM are a blend of ideas developed by three major theorists. W. Edwards Deming applied statistical thinking to the control of variation of work processes. He is best known for his fourteen points. J. M. Juran added insight into managing for quality and describing the quality trilogy: quality planning, quality control, and quality improvement. Philip B. Crosby developed ways to motivate and organize for quality. His less technical approach is based on the ideas of “zero defects” and “conformance to requirements”. Most quality improvement programs follow the ideas of one or more of these theorists.
01.02 Historical Review
The history of quality control is undoubtedly as old as industry itself. During the Middle Ages, quality was to a large extent controlled by the long periods of training required by the guilds. This training instilled pride in workers for quality of a product.
The concept of specialization of labor was introduced during the Industrial Revolution. As a result, a worker no longer made the entire product, only a portion. This change brought about a decline in workmanship. Because most products manufactured during that early period were not complicated, quality was not greatly affected. In fact, because productivity improved there was a decrease in cost, which resulted in lower customer expectations. As products became more complicated and jobs more specialized, it became necessary to inspect products after manufacture.
In 1924, W. A. Shewhart of Bell Telephone Laboratories developed a statistical chart for the control of product variables. This chart is considered to be the beginning of statistical quality control.
In 1950, W. Edwards Deming, who learned statistical quality control from Shewhart, gave a series of lectures on statistical methods to Japanese engineers and on quality responsibility to the CEOs of the largest organizations in Japan. Joseph M. Juran made his first trip to Japan in 1954 and further emphasized management’s responsibility to achieve quality. Using these concepts the Japanese set the quality standards for the rest of the world to follow.
In 1960, the first quality control circles were formed for the purpose of quality improvement. Simple statistical techniques were learned and applied by Japanese workers.
Emphasis on quality continued in the auto industry in the 1990s when the Saturn automobile ranked first in customer satisfaction (1996). In addition, ISO 9000 became the worldwide model for a quality management system. ISO 14000 was approved as the worldwide model for environmental management systems.
Total Quality Management
02.01 Total Quality Management (TQM) defined
Total Quality Management (TQM) is an enhancement to the traditional way of doing business. It is a proven technique to guarantee survival in world‑class competition. Only by changing the actions of management will the culture and actions of an entire organization be transformed. TQM is for the most part common sense. Analyzing the three words, we have
Total ‑ Made up of the whole
Quality‑ Degree of excellence a product or service provides.
Management‑ Act, art, or manner of handling, controlling, directing, etc
Therefore, TQM is the art of managing the whole to achieve excellence. The Golden Rule is a simple but effective way to explain it: Do unto others as you would have them do unto you.
TQM is defined as both a philosophy and a set of guiding principles that represent the foundation of a continuously improving organization. It is the application of quantitative methods and human resources to improve all the processes within an organization and exceed customer needs now and in the future. TQM integrates fundamental management techniques, existing improvement efforts, and technical tools under a disciplined approach.
02.02 TQM; Basic Concepts
While there are significant differences among the theorists and their approaches to implementation, they share basic concepts that are the foundation of TQM.
02.02.01 Continuous Improvement of Quality. Fundamental to all TQM systems is improving the quality of the products and services provided by an organization. Such quality improvement results in greater productivity and enhances the ability of an organization to remain vital, employ people, and serve customers. A focus on continuous quality improvement helps an organization do things right.
02.02.02 Central Focus on the Customer. Also central to all TQM is a focus on the customer, the internal and external recipients of an organization’s products. Their needs and desires define quality for the producer whose job it is to meet or exceed the customer’s needs and expectations. A focus on customers helps an organization to do the right things.
02.02.03 Systematic Improvement of Operations. All work occurs in processes that begin and end somewhere. These work processes account for 80- 85 percent of the quality of work and productivity of employees. Management is responsible for systems within an organization; therefore, managers, not employees, must shoulder blame when something goes wrong with the system.
TQM calls for studying work processes quantitatively, using individuals or teams, to find places that breakdowns or unnecessary complexities occur in processes, and then to identify solutions that prevent them in the future. Study of work processes helps to reduce costs while ensuring that quality is built into a service or product since quality cannot be inspected into it at the end of the processes.
02.02.04 Open Work Environments. Continuous quality improvement requires an atmosphere for innovation where suggestions for improvement are solicited and respected and where supervisors and managers are open to disagreement, conflict, and challenge. Activities for the improvement of work processes, especially when teams are involved, help to break down barriers that occur between departments or between supervisors and those supervised.
02.02.05 Long- Term Thinking. TQM is also characterized by long- term thinking which helps mold the future by understanding the consequences of current actions. Such thinking requires decision making that is based on data, both hard and soft, and related to real problems, not symptoms. It requires time. It shies away from quick fixes arrived at by discussion and intuition. Long- term thinking works best in organizations where managers plan to stay, and thus have a stake in the consequences of their decisions.
02.02.06 Development of Human Resources. Organizations that follow TQM principles are organized to help people do their jobs; they are seriously committed to employee learning and development. Such development begins with a thorough orientation to the organization, including its mission, values, and information about where the job fits into the organization. It involves educating people to perform to the quality standards of a specific job before requiring them to work independently.
TQM expects managers to respect the ability of well trained employees to know the work they do better than anyone, and therefore, to be the best at improving it. Human resource development includes providing the training to learn the communication, quantitative, and team- participation skills required in an open, quality improvement work environment. Development programs provide extensive education to help individuals keep up- to- date on their jobs and to prepare themselves for new responsibilities.
02.02.07 Management Responsibility for TQM Leadership. Managers need to lead the transformation of the organization to the new culture of continuous quality improvement. They must accept personal responsibility for continuous quality improvement and be dedicated to empowering others in the organization to accept personal responsibility for it, too. This approach taps the collective genius of the organization to identify and solve problems. The leader’s focus is on policy, structure, and systems to sustain continuous quality improvement. Within this context, quality is the first among equals of the organization’s functions. Quality is at the top of the agenda for every meeting, every communication. The leader’s goal is to help people, things, and machines do a better job; the leader’s role is that of facilitator, catalyst, and coach.
As previously stated, TQM requires a cultural change. Table I ‑I compares the previous state with the TQM state for typical quality elements. This change is substantial and will not be accomplished in a short period of time. Small organizations will be able to make the transformation much faster than large organizations.
02.03 New and Old Cultures
|Quality Element||Previous State||TQM|
|Priorities||Second to service and cost||First among equals of service and cost|
|Procurement||Price||Life‑cycle costs, partnership|
|Manager’s Role||Plan, assign, control and enforce||Delegate, coach, facilitate and mentor|
An organization will not begin the transformation to TQM until it is aware that the quality of the product or service must be improved. Awareness comes about when an organization loses market share or realizes that quality and productivity go hand‑in‑hand. It also occurs if TQM is mandated by the customer or if management realizes that TQM is a better way to run a business and compete in domestic and world markets.
Automation and other productivity enhancements might not help a corporation if it is unable to market its product or service because the quality is poor. The Japanese learned this fact from practical experience. Prior to World War 11, they could sell their products only at ridiculously low prices, and even then it was difficult to secure repeat sales. Until recently, corporations have not recognized the importance of quality. However, a new attitude has emerged‑‑quality first among the equals of cost and service. To sum it up, the customer wants value.
02.05 Implementing Total Quality Management Concepts
Since World War 11, the Japanese have been very successful using the American ideas for total quality improvement they learned from Deming and Juran. In the late 1970s Americans became interested in the success of Japanese firms and discovered that their management processes were the cornerstone of that success. Some American companies adopted TQM and applied it successfully, notably Ford Motor Company, Hewlett Packard, Campbell Soup Company, and the Paul Revere Insurance Company. Others were less successful, largely it seems, because they were unable to accomplish the cultural and organizational changes required to implement TQM principles.
The TQM implementation process begins with senior management and, most important, the CEO’s commitment. The importance of the senior management role cannot be overstated. Leadership is essential during every phase of the implementation process and particularly at the start. In fact, indifference and lack of involvement by senior management are frequently cited as the principal reasons for the failure of quality improvement efforts. Delegation and rhetoric are insufficient involvement is required.
Senior management needs to be educated in the TQM concepts. In addition to formal education, managers should visit successful TQM organizations, read selected articles and books, and attend seminars and conferences. The next step is for senior management to develop an implementation plan.
Timing of the implementation process can be very important. Is the organization ready to embark on the total quality journey? There may be some foreseeable problems, such as a reorganization, change in senior management personnel, interpersonal conflicts, a current crisis, or a time consuming activity. These problems may postpone implementation to a more favorable time.
The next step is the formation of the quality council initiation of these duties is a substantial part of the implementation of TOM. The development of core values, a vision statement, a mission statement, and a quality policy statement, with input from all personnel, should be completed first.
The active involvement of middle managers and first line supervisors is essential to the success of the TQM effort. They are accountable for achieving many of the organization’s performance goals and objectives, and they form enduring links in the communication chain from senior management to the front line workers. Without middle management’s early and active support, the TQM effort could fail. Senior management needs to ensure that managers at all levels have an opportunity, as soon as possible, to develop ownership in the TQM effort and a chance to acquire the insight and skills necessary to become leaders. One way to accomplish this concept is to have a retreat. The retreat will focus on TQM training, leadership skills, and active involvement in the development of the organization’s statements.
If there is a union, there should be early discussions with the representatives on TQM. Managers should involve union leaders by sheling with them implementation plans for TQM. As the quality effort progresses, managers and union leaders should work together on quality improvement activities.
At this stage of the implementation process, it is important to communicate TQM to the entire organization. Communication is important throughout the implementation stage. Communication is necessary to create TQM awareness interest, desire, and action. Everyone needs to be trained in quality awareness and problem solving. This training is conducted when the employee is placed on a project team or the work group is ready for the training.
Customer, employee, and supplier surveys must be conducted to benchmark the attitudes of these three stakeholders. Information from these surveys provides ideas for quality improvement projects. The quality council determines the quality improvement projects. In addition the council establishes the project teams and work groups and monitors their progress. The organization has to be patient and not rush the teams for solutions that don’t eliminate the root causes. There is often a tendency to rush the implementation process. TECSTAR, a small business, was able to achieve savings of more than $3 million the first year of its TQM program. On the other hand, Karlee, a Malcolm Baldrige
Implementation of TQM is described in the next chapter, on leadership. This section gives information concerning the obstacles associated with implementation.
Many organizations, especially small ones with a niche, are comfortable with their current state. They are satisfied with the amount of work being performed, the profits realized, and the perception that the customers are satisfied. Organizations with this culture will see little need for TQM until they begin to lose market share.
Once an organization embarks on TQM, there will be obstacles to its successful implementation. The first eight most common were determined by Robert J. Masters after an extensive literature search and the last obstacle added by the authors They are given below.
- Lack of Management Commitment
- Inability to Change Organizational Culture
- improper Planning
- Lack of Continuous Training and Education
- Incompatible Organizational Structure and Isolated Individuals And Departments
- Ineffective Measurement Techniques and Lack Of Access
- Paying Inadequate Attention To Internal and External Customers
- Inadequate Use of Empowerment Arid Teamwork
- Failure to Continually Improve
02.07 Benefits of TQM
According to a survey of manufacturing firms in Georgia, the benefits of TQM are improved quality, employee participation, teamwork, working relationships, customer satisfaction, employee satisfaction, productivity, communication, profitability, and market share.
TQM is a good investment as shown by a ten‑year study by Hendricks and Singhai. They showed that there is a strong link between TQM and financial performance. The researchers selected a group of 600 publicly traded organizations that had won awards for effectively implementing TQM. They then selected a control group similar in size and industry to the award winners. Performance of both groups was compared during the five years prior to the award and five years after winning the award. No difference was shown between the two groups prior to the award. However, as shown below the award group far outstripped the control group during the five‑year period after the award.
|Growth in Operating Income||43%||91%|
|Increase in Sales||32%||69%|
|Increase in Total Assets||37%||79%|
The study also showed that stock price performance for the award winners was 114% while the S&P was 80%. In addition, the study showed that small organizations out performed larger organizations. Recent studies have shown that only about 30% of manufacturing organizations have successfully implemented TQM.
Some Related Topics and Explanations
There is no universal definition of leadership and indeed many books have been devoted to the tonic of leadership). In his book Leadership, James MacGregor Bums describes a leader as one who instills purposes, not one who controls by brute force. A leader strengthens and inspires the followers to accomplish shared goals. Leaders shape the organization’s values, promote the organization’s values, protect the organization’s values and exemplify the organization’s values. Ultimately, Bums says, “Leaders and followers raise one another to higher levels of motivation and morality … leadership becomes moral in that it raises the level of human conduct and ethical aspiration of both the leader and the led, and thus has a transforming effect on both.”‘ Similarly, Daimler Chrysler’s CEO Bob Eaton defines a leader as “. . . someone who can take a group of people to a place they don’t think they can go.” “Leadership is we, not me; mission, not my show; vision, not division; and community, not domicile.” As the above illustrates, leadership is difficult to define in anything other than lofty words.
The Malcolm Baldrige National Quality Award has a more grounded definition of leadership in its core values. As stated in its core values and concepts, visionary leadership is-
“An organization’s senior leaders should set directions and create a customer focus, clear and visible values, and high expectations. The directions, values, and expectations should balance the needs of all your stakeholders. Your leaders should ensure the creation of strategies, systems, and methods for achieving excellence, stimulating innovation, and building knowledge and capabilities. The values and strategies should help guide all activities and decisions of your organization. Senior leaders should inspire and motivate your entire workforce and should encourage all employees to contribute, to develop and learn, to be innovative, and to be creative,
Senior leaders should serve as role models through their ethical behavior and their personal involvement in planning, communications, coaching, development of future leaders, review of organizational performance, and employee recognition. As role models, they can reinforce values and expectations while building leadership, commitment, and initiative throughout your organization.”
Leadership can be difficult to define. However, successful quality leaders tend to have certain characteristics.
03.01.01 Leadership Concepts
In order to become successful, leadership requires an intuitive understanding of human nature the basic needs, wants, and abilities of people. To be effective, a leader under‑
- People, paradoxically, need security and independence at the same time.
- People are sensitive to external rewards and punishments and yet are also strongly self‑motivated.
- People like to hear a kind word of praise. Catch people doing something right, so you can pat them on the back.
- People can process only a few facts at a time; thus, a leader needs to keep, things simple.
- People trust their gut reaction more than statistical data.
- People distrust a leader’s rhetoric if the words are inconsistent with the leader’s actions.
03.01.02 Role of TQM Leaders
Everyone is responsible for quality, especially senior management and the CEO; however, only the latter can provide the leadership system to achieve results., For instance, in the 1980’s, General Electric’s CEO, Jack Welch, instituted leadership training courses at all levels of the organization. The General Electric training courses taught leadership approaches and models and provided the opportunity for teams to develop solutions to real business problems. Many of the solutions the teams developed were implemented. Jack Welch supported the development of a leadership system whereby quality control leaders were developed at all levels in all functions of the organization, including research, marketing, manufacturing, sales, finance, and human resources. Senior managers need to be provided with the skills to implement quality control techniques and actively participate in the quality council.
Senior management has numerous responsibilities. Senior management must practice the philosophy of Management by Wandering Around (MBWA). Management should get out of the office and visit customers, suppliers, departments within the organization, and plants within the organization. That way, managers learn what is happening with a particular customer, supplier, or project. MBWA can substantially reduce paperwork. Encourage subordinates to write only important messages that need to be part of the permanent record. For example, Kinko’s executives perform normal operating duties for two or three days at one location. This approach is an excellent technique for gaining firsthand information.
The idea is to let employees think for themselves. Senior management’s role is no longer to make the final decision, but to make sure the team’s decision is aligned with the quality statements of the organization. Push problem solving and decision making to the lowest appropriate level by delegating authority and responsibility.
Senior managers must stay informed on the topic of quality improvement by reading books and articles, attending seminars, and talking to other TQM leaders. The leader sends a strong message to subordinates when that leader asks if they have read a part ocular book or article.
Se Managers must find time to celebrate the success of their organization’s quality efforts by personally participating in award and recognition ceremonies. This activity is an excellent opportunity to reinforce the importance of the effort and to promote TQM. A phone call or handshake combined with a sincere “thank you for a job well done” is a powerful form of recognition and reward. One of the duties of the quality council is to establish or revise the recognition and reward system. In particular, senior management’s incentive compensation must include quality improvement performance. Also, provisions must be made to reward teams as well as creative individuals.
Senior managers must be visibly and actively engaged in the quality effort by sending on teams, coaching teams, and teaching seminars. They should lead by demonstrating, communicating, and reinforcing the quality statements. As a rule of thumb, they should spend about one third of their time on quality.
A very important role of senior managers is listening to internal and external customers and suppliers through visits, focus groups, and surveys. This information is translated into core values and process improvement projects.
Another very important role is communication. The objective is to create awareness of the importance of TQM and provide TQM results in an ongoing manner. The TQM message must be “sold” to personnel, for if they don’t buy it, TQM will never happen. In addition to internal efforts, there must be external activities with customers and suppliers, the media, advertising in trade magazines, and interaction with the quality community.
By following the preceding suggestions, senior managers should be able to drive fear out of the organization, break down barriers, remove system roadblocks, anticipate and minimize resistance to change, and, in general, change the culture. Only with the involvement of senior management can TQM be a success.
03.02 Customer Satisfaction
The most important asset of any organization is its customers. An organization’s success depends on how many customers it has, how much they buy, and how often they buy. Customers that are satisfied will increase in number, buy more, and buy more frequently. Satisfied customers also pay their bills promptly, which greatly improves cash flow the lifeblood of any organization.
Increasingly, manufacturing and service organizations are using customer satisfaction as the measure of quality. The importance of customer satisfaction is not only due to national competition but also due to worldwide competition.
Since customer satisfaction is hard to measure, the measurement often is not precise. As with most attitudes, there is variability among people, and often within the same person at different times. Often, due to the difficulty of measuring feelings, customer satisfaction strategies are developed around clearly stated, logical customer opinions, and the emotional issues of a purchase are disregarded. This can be a costly mistake.
Customer satisfaction should not be viewed in a vacuum. For example, a customer may be satisfied with a product or service and therefore rate the product or service highly in a survey, and yet that same customer may buy another product or service. It is of little benefit to understand a customer’s views about a product or service if the customer’s views about competitors’ product or service are not understood. The value customers place on one product compared to another may be a better indicator of customer loyalty. Customer loyalty can be sustained only by maintaining a favorable comparison when compared with competitors. As mentioned before customer satisfaction is not a simple concept to understand or to measure.
03.03 Benefits of Employee Involvement
Involving employees, empowering them and bringing them into the decision making process provides the opportunity for continuous process improvement. The untapped ideas, innovations, and creative thoughts of employees can make the difference between success and failure. Competition is so fierce that it would be unwise not to use every available tool.
Employee involvement improves quality and increases productivity, because
- Employees make better decisions using their expert knowledge of the process.
- Employees are more likely to implement and support decisions they had a part in making.
- Employees are better able to spot and pinpoint areas for improvement.
- Employees are better able to take immediate corrective action.
- Employee involvement reduces labor/management friction by encouraging more effective communication and cooperation.
- Employee involvement increases morale by creating a feeling of belonging to the organization.
- Employees are better able to accept change because they control the work environment.
- Employees have an increased commitment to unit goals because they are involved.
03.04 Continuous Process Improvement
Quality based organizations should strive to achieve perfection by continuously improving the business and production processes. Of course, perfection is impossible because the race is never over; however, we must continually strive for its attainment.
Improvement is made by-
- Viewing all work as a process, whether it is associated with production or business activities.
- Making all processes effective, efficient, and adaptable.
- Anticipating changing customer needs.
- Controlling in process performance using measures such as scrap reduction, cycle time, control charts, and so forth.
- Maintaining constructive dissatisfaction with the present level of performance.
- Eliminating waste and rework wherever it occurs.
- Investigating activities that do not add value to the product or service, with the aim of eliminating those activities.
- Eliminating nonconformities in all phases of everyone’s work, even if the increment of improvement is small.
- Using benchmarking to improve competitive advantage.
- Innovating to achieve breakthroughs.
- Incorporating lessons learned into future activities.
- Using technical tools such as statistical process control (SPC), experimental design, benchmarking, quality function deployment (QFD), and so forth.
03.05 PDCA Cycle
The basic Plan Do Check Act (PDCA) cycle was first developed by Shewhart and then modified by Deming. It is an effective improvement technique.
The four steps in the cycle are exactly as stated. First, plan carefully what is to be done. Next, carry out the plan (does it). Third, study the results did the plan work as intended, or was the results different? Finally, act on the results by identifying what worked as planned and what didn’t. Using the knowledge learned, develop an improved plan and repeat the cycle. The PDSA cycle is a simple adaptation of the more elaborate problem solving method discussed in the next section.
03.06 Problem Solving Method
Process improvement achieves the greatest results when it operates within the framework of the problem solving method, In he initial stages of a program, quick results are frequently obtained because the solutions are obvious or an individual has a brilliant idea, However, in the Ion, term, a systematic approach will yield the greatest benefits ,
The problem solving method (also called the scientific method) has many variations depending, to some extent, on the use; however, they are all similar. shown is the relationship to the PDCA cycle.
The phases are integrated because each phase is dependent upon the previous phase. Continuous process improvement is the objective, and these phases are the framework to achieve that objective.
03.07 Identify the Opportunity
The objective of this phase is to identify and prioritize opportunities for improvement. It consists of three parts: identify the problem, form the team (if one is not in existence) and define the scope.
Problem identification answers the question, “What are the problems?” The answer leads to those problems that have the greatest potential for improvement and have the greatest need for solution. Problems can be identified from a variety of inputs.
03.08 Performance Measures
The final concept of Total Quality Measurement (TQM) is performance measures. One of the Malcolm Baldrige National Quality Award core values is managing by fact rather than by gut feeling. Managing an organization without performance measures is like a captain of a ship navigating without instrumentation. The ship would most likely end up traveling in circles, as would an organization. Measures play a vital part in the success or failure of an organization.
Performance measures are used to achieve one or more of the following seven objectives:
- Establish baseline measures and reveal trends.
- Determine which processes need to be improved.
- Indicate process gains and losses.
- Compare goals with actual performance.
- Provide information for individual and team evaluation.
- Provide information to make informed decisions.
- Determine the overall performance of the organization.
- Few in number
- Relevance to customer:
The quality council has the overall responsibility for the performance measures. It ensures that all the measures are integrated into a total system of measures. To develop the system, the quality council will obtain appropriate information from all of the stall holders. They will utilize the core values, goals, mission, and vision statements as well as the objectives and criteria given above. With this information, the strategic measurement system is created.
An example of a system that emphasizes percent improvement might contain the functions and metrics as given below:
- Percent reduction in cost of poor quality
- Percent reduction in nonconformities
- Percent of certified suppliers
- Percent reduction in supplier base
- Percent reduction in corrective action cycle time
- Percent increase in inventory turnover
- Percent reduction in data transactions
- Percent increase in materials shipped direct to work in process by the supplier
- Percent increase in output dollars per employee
- Percent reduction in floor space utilization
- Percent reduction in cycle time
- Percent reduction in setup time
- Percent reduction in lot/batch size
- Percent increase in number of jobs mastered per employee
- Percent of processes capable of Cp = 2.0
- Percent reduction in down time
- Percent reduction in warranty costs
- Percent reduction in design changes
- Percent increase in on time delivery
- Percent reduction in new product introduction time
- Percent increase in new product sales revenue as a percent of total sales revenue
- Percent increase in new patents granted
- Customer perception as a leader in innovation
- Percent of management time spent on or leading innovation
03.09 Quality Control Circles (QCCs)
To involve employees in productivity and efficiency improvement activities, a team-based environment must be developed in which they can participate actively in improving their process, product, or service performance. One such employee participation program is quality control circles (QCCs).
QC-circle activities are usually directed towards improvements in the workplace. They focus on such areas as-
03.09.01 Case Studies: Survey by NPC, Malaysia
A 2002 survey on quality control circles (QCCs) by the National Productivity Corporation (NPC) of Malaysia revealed that the majority of the respondents were from the manufacturing (42.0%) and service (31.0%) sectors. Most of the projects undertaken were related to members’ own workplaces, work processes, service delivery, and product development. The vast majority (95.1%) of the respondents said that QCC activities had helped reduce operational costs, with savings reported ranging from US$125.00 to US$2 million, with the median of US$50,000.
Benchmarking is a systematic method by which organizations can measure themselves against the best industry practices. It promotes superior performance by providing an organized framework through which organizations learn how the “best in class” do things, understand how these best practices differ from their own, and implement change to close the gap. The essence of benchmarking is the process of borrowing ideas and adapting them to gain competitive advantage. It is a tool for continuous improvement.
Benchmarking is an increasingly popular tool. It is used extensively by both manufacturing and service organizations, including Xerox, AT&T, Motorola, Ford, and Toyota. Benchmarking is a common element of quality standards, such as the Chrysler, Ford, and General Motors Quality System Requirements. These standards, sfiptdate that quality goals and objectives be based on competitive products and benchmarking, both inside and outside the automotive industry. The Malcolm Baldrige National Quality Award similarly requires that applicants benchmark external organizations.
Benchmarking is the systematic search for best practices, innovative ideas, and highly effective operating procedures. Benchmarking considers the experience of others and uses it. Indeed, it is the common sense proposition to learn from others what they do right and then imitate it to avoid reinventing the wheel. Benchmarking is not new and indeed has been around for a long time. In fact, in the 1800s, Francis Lowell, a New England
03.10.01 Reasons to Benchmark
Benchmarking is a tool to achieve business and competitive objectives. It is power and extremely effective when used for the right reasons and aligned with organization strategy. It is not a panacea that can replace all other quality efforts or management processes. Organizations must still decide which markets to serve and determine the strengths that will enable them to gain competitive advantage. Benchmarking is one tool to help organizations develop those strengths and reduce weaknesses.
By definition, benchmarking requires an external orientation, which is critical in a world where the competition can easily be on the other side of the globe. An external outlook greatly reduces the chance of being caught unaware by competition. Benchmarking can notify the organization if it has fallen behind the competition or failed to take advantage of important operating improvements developed elsewhere. In short, benchmarking can inspire managers (and organizations) to compete.
In contrast to the traditional method of extrapolating next year’s goal from last year’s performance, benchmarking allows goals to be set objectively, based on external information. When personnel are aware of the external information, they are usually much more motivated to attain the goals and objectives. Also, it is hard to argue that an objective is impossible when it can be shown that another organization has already achieved it.
Benchmarking is time and cost efficient because the process involves imitation and adaptation rather than pure invention. Benchmarking partners provide a working model of an improved process, which reduces some of the planning, testing, and prototyping effort. As the old saying goes, Why reinvent the wheel?
The primary weakness of benchmarking, however, is the fact that best in class performance is a moving target. For example, new technology can create quantum leap performance improvements, such as the use of electronic data interchange (EDI). Automobile makers no longer use paper to purchase parts from suppliers. A computer tracks inventory and transmits orders directly to a supplier’s computers. The supplier delivers the goods, and payment is electronically transmitted to the supplier’s bank. Wall Mart uses bar code scanners and satellite data transmission to restock its stores, often in a matter of hours. These applications of EDI save tens of thousands of worker hours and whole forests of trees, as well as helping to meet customer requirements.
For functions that are critical to the business mission, organizations must continue to innovate as well as imitate. Benchmarking enhances innovation by requiring organizations to constantly scan the external environment and to use the information obtained to improve the process. Potentially useful technological breakthroughs can be located and adopted early.
Organizations that benchmark, adapt the process to best fit their own needs and culture. Although the number of steps in the process may vary from organization to organization, the following six steps contain the core techniques.
- Decide what to benchmark.
- Uaderstand current performance
03.11 Quality Management Systems
The International Organization for Standardization (ISO) was founded in 1946 in Geneva, Switzerland, where it is still based. Its mandate is to promote the development of international standards to facilitate the exchange of goods and services worldwide. ISO is composed of more than 90 member countries. The United States representative is the American National Standards Institute (ANSI)
The ISO Technical Committee (TC) 176 developed a series of international standards for quality systems, which were first published in 1987 new standards (ISO 9000, 9001, and 9004) were intended to be advisory and were developed for use in two party contractual situations and internal auditing. However, with their adoption by the European Community (EC) and a worldwide emphasis on quality and economic competitiveness, the standards have become universally accepted.
03.12 TQM Concept in Japan
TQM, also known as Total Quality Control (TQC), is a management tool for improving total performance. TQC means organized Kaizen activities involving everyone in a company – managers and workers – in a totally systemic and integrated effort toward improving performance at every level. It is to lead to increased customer satisfaction through satisfying such corporate cross-functional goals as quality, cost, scheduling, manpower development, and new product development. In Japan, TQC activities are not limited to quality control only. Elaborate system of Kaizen strategies has been developed as management tools within the TQC approach. TQC in Kaizen is a movement aimed at improvement of managerial performance at all levels.
According to the Japan Industrial Standards, “implementing quality control effectively necessitates the cooperation of all people in the company, including top management, managers, supervisors, and workers in all areas of corporate activities such as market research and development, product planning, design, preparation for production, purchasing, vendor management, manufacturing, inspection, sales and after-sale services, as well as financial control, personnel administration, and training & education. Quality control carried out in this manner is called company-wide quality control or total quality control (TQC).” Quality control in Japan deals with quality of people. It is the fundamental concept of the Kaizen-style TQC. Building quality into its people brings a company a half-way towards producing quality products.
03.12.01 Education and Training
As a natural follow-up to the concept of building quality into people, TQC starts with education and training of managers and workers. The major aim of these awareness and training programs is to implant TQC thinking in all employees.
TQC education and training is a continuous process. Separate courses for different organizational levels are organized to reach everyone in the company.
03.12.02 Seven main feature of the TQM movement in japan
- Company-wide TQC, involving all employees, organization, hardware, and software
- Emphasis on education and training for top management, middle management and workers
- Quality control (QC) circle activities by small groups of volunteers
- TQC audits
- Application of statistical methods
- Constant revision and upgrading of standards
- Nation-wide TQC promotion
03.12.03 Areas Targeted by TQM in Japan
- Product Quality Improvement
- Quality assurance
- New product development
- Improvements in the Workplace
- Cost reduction
- Productivity improvement
- Education and training
- Organizational / systems development
- Cross-functional management
- Policy deployment
- Quality deployment
- Supply, Production, and Selling Chain
- Supply management
- Meeting production quotas
- Meeting delivery schedules
03.13 TQM Concept in Community College Administration
Community colleges, too, have adopted TQM, primarily to improve their management processes. While the number of colleges that has implemented TQM systems is not large, an increasing number are experimenting with various elements of it. They have approached implementation in a variety of ways.
Perhaps the most common model is for senior leadership to become interested in TQM, to study various applications, and then, to initiate TQM practices from the top- down. At most of these colleges, TQM is first applied to leadership team processes or related administrative functions. Incorporation of TQM principles into the curriculum and academic administration may follow administrative application.
TQM has also been introduced to community colleges by mid- level managers who have come in contact with its principles through a curriculum designed and provided by the college for local business and industry. These managers begin to introduce TQM practices within their own areas. This grassroots approach often spreads laterally before upward. Other colleges have actually become involved in TQM along with a consortium of businesses in their service area. Business and college participants learn both TQM and about the challenges they have in common. The consortium then becomes a critical link with the community, as well as a source of problem solving, support, and encouragement for TQM.
It is legitimate to question why any leader would be attracted to TQM since the model demands basic changes in established management practices. However, a rationale for experimenting with TQM is not difficult to articulate. At its best, TQM can provide a focus and structure for institutional effectiveness that includes the dimensions of quality and accountability and operationalizes them throughout the college. TQM can provide a structure for involving faculty and staff in college problem solving and decision making in ways that are meaningful to them and to the college. TQM can also provide a model for transforming a stagnant college organization to a new level of fitness.
Even more fundamental is the fact that the values espoused by TQM are the values of community colleges: commitment to quality, respect for people, focus on process, and the expectation of continuous learning.
Limitations of theStudy
The subject Introduction to Cost and Managerial Accounting is a vast one and due to the in short supply of time we could not complete many of the major portions. If we have had as much as necessary time and given apposite information, it was for sure that we could have industrial a much better report on this topic.
Actually the business organizations of Bangladesh are not stressing too much on the practice in total quality management rather they are practicing traditional management approach in their organization.
Another problem that we have to face in one of the well known organization we had to go for almost two times to fix an appointment with the manager. Finally when we met him, he was not willing to give us information not even the company profile which has nothing to maintain secrecy. At last we decided to drop the study on their organization.
This was not at all an easy project to complete. Gathering information was also a difficult task. What ever the limitations were, we made our best effort to overcome them and anchor safe.No matter how good we do in designing the project but it’s the knowledge that we gather that remains us till the end and satisfies us. At last, we hope that our attempt behind this project is a successful one and will surely bear the expected fruit.
- Course materials provided by course instructor Mr. Quamrul Islam
- Besterfield, Dale H. ; Besterfield, Glen H. ; Total Quality Management
- Edgeman, Rick L.; On Leaders and Leadership
- Fredendall, Lawrence D.; Robbins, Tina L. Journal of Managerial
- Juliette, Jandel-Leavitt; TQM Case Study
- Microsoft ® Encarta ® Reference Library 2005
- Needham, Robbie Lee; Total Quality Management
In a prior career, I used to be the director of Systems Engineering for a major telecommunications manufacturer. The role of systems engineering is to provide technical support for sales. The duties include such tasks as technical presentations, gathering customer requirements, designing networks and project managing the testing and implementation of our products. One of the major aspects of the job was coordinating feature sets and timeframes between the customer and our engineering. Large customers are always looking for additional features that can set them apart from their competition. They always leverage the vendor into producing new product enhancements and try to accelerate the delivery. This phenomenon creates a dichotomy and trade-off between quality and costs.
The relationships between cost management and quality management are an interesting one. Everyone in this world is a consumer of some sort. We all buy things and we all want only the best products for the best price. But, where is the line to be drawn for how much do we pay for quality? Most competitive companies have goals to put out the best product for the best price. They have many different slogans such as “quality is #1” or “customer service is #1.” Nevertheless, how much should a company spend on quality before it starts to cut into profit? What are effects of rushing a product to market in respect to quality and costs? First, let me define a few terms:
Quality management is one of the hardest jobs of a manager to control. The goal behind good quality management is improving business processes, optimizing the performance of your business, and maximizing profitability. By definition, quality is a degree of excellence, superiority in kind. (Mish p. 963) Management is defined as the conducting or supervising of something. (Mish p. 722) This leads us to the definition of quality management being the supervising of a degree of excellence. Most companies aim to achieve a certain degree of excellence without exceeding budget.
Cost management is what drives companies to the top or sends them crashing and burning to the bottom of the business food chain. Cost management is defined as the conducting or supervising of (Mish p. 963) the amount or equivalent paid or charged for something. (Mish p. 295) When a business purchases a product or service, just like a consumer, there is a responsibility for the purchaser to find the best price available. This will keep the costs down for the purchasers company and will keep the company competitive with prices.
Large customers hope to influence their vendors to provide specific product differences that would make them unique in the marketplace, thus giving them a competitive advantage. The proliferation of microcomputer technology has made it possible to change functionality of a product by introducing new software programming. Most customers are unaware of the intricacies of software programming, testing and controls. Their perception is that software development is quick and easy, with little costs as compared to hardware development.
My company on the other hand has multiple large customers, each hoping to influence our product development and time to market. Each of these customers wants different product features that will make them unique in the marketplace. Our engineers are detailed oriented and prefer to layout a program of design and delivery based on the goals of senior management and marketing direction. Introducing new requirements in the middle of product development disrupts their orderly processes, increases cost, and causes tension internally between sales, marketing, and engineering.
The type of company culture influences the outcome of the customers’ requests. If the company is primarily sales driven, the likelihood that engineering will have to adjust their plans is high. Engineering driven companies on the other hand, many be more staunch in their stance and maintain the existing development schedule. Management must decide whether the proposed changes to the product adds value long term, and is the customer willing to pay for the additional feature development short term. Managers from some cultures are less flexible because it is a sign of weakness.
A company never wants to discourage customer feedback on features because it helps to set practical implementations of the product that design engineers may never think of. In addition, if the product diverges to far from what the majority of customers need the product will no longer be viable in the market.
Let us assume that the customer requests for product changes have received approval. We now look at cost versus quality trade-offs that will ultimately influence the final product. Adding features to the product development requires additional resources. In software development, additional employees with specific programming language expertise may be required. It will also influence how the software is tested. Testing the software will require additional time and possibly additional automated test equipment. Additional lines of code may require more memory in the hardware to store the increased code. Each of these factors adds cost to the product and needs carefully evaluation prior to development.
The addition of new features adds additional work, which effects time to market. Management will need to evaluate the trade-offs of missing the original schedule versus added costs. Missing the original schedule will influence other customers who are counting on our company to help them meet their goals. These are difficult decisions because they affect more than the requesting customer and our company. This decision will affect several more companies that do business with us.
Meeting the original schedule means that we must compress the additional work. Management can address this issue by employing more people or demanding longer work hours from existing employees. This aspect is where most of the quality issues will show up. New employees are unknown commodities that require training and additional supervision. Until they are up to speed with our companies’ specific products, techniques, policies, etc, they are bound to make mistakes. Longer work hours for current employees create additional emotional stress, lack of focus, and possibly company resentment. All these factors add up to poorer quality
The potential for added revenues versus the assured increase in development cost requires careful analysis by management. Typically, management will require sales to gather additional, specific information about the customer requirements so we are not developing the wrong feature. Sales must try to negotiate further commitments from the customer to purchase our products and possibly help fund some of the development. Sales will also need to assess whether other customers might have the same needs. Do the needs exactly line up or are there variances. Can engineering design the features to accommodate the variances?
Marketing is tasked to evaluate how these new features might set us apart from our competitors. Do the new features add enough value to allow us to increase price? Can we make greater advertising claims and get our companies name better known in the industry?
Politics and personal feelings always play into these decisions. Engineers who design products have an emotional attachment to their work. When asked to change the design, a natural resistance occurs. The owner of the company may be friends with a VP of our customer. A biased decision to add features based on friendships versus logical business decisions. Sales representatives are looking for attention on their clients and themselves. Sometimes there is a tendency to mislead our company about the potential for future business
Relating Cost Management to Quality Management
Changes in product design influences cost and quality. Many factors go into a decision to change design and implement new features. All these factors affect cost and quality requiring carefully management and planning. Quality management can become very expensive, so there comes a point in a business where a manager must recognize the issue of cost over sacrifices for quality. Your market will also dictate the extent of quality implementation. Auto manufacturer Ferrari knows if they produce a quality product, there are enough consumers out there who will spend the money to own the name and quality vehicles they produce. The other extreme has manufacturers such as the Yugo Car Company producing very cost effective vehicles that anyone could afford; however, quality levels are reported to be low. Other companies like Honda, Ford, and GM created a balance between cost and quality. This balance between cost and quality allowed them to become some of the most successful companies in the world today.
Quality management is essential for a business to survive and keep consumers happy. In addition, cost is always an issue no matter how much money one has. In order for a company to become as successful as they can be, there must be a balance of the two. Having the right management staff and experience in quality management and cost management can make a business very successful or can cause it to fail miserably. Change decisions cannot be made lightly and hundreds of factors influence the outcome. Good management is the ability to balance these factors using proven processes and sound logic. Systems engineering is the catalyst and moderator between the company and the customer. We influence through various forms of logic, economics and human relations factors.
You can also order a custom term paper, essay, thesis, dissertation or research paper on quality management from our professional custom research paper writing service which provides high-quality custom written papers.
0.00 avg. rating (0% score) - 0 votes
Tags: management essays, quality management essay, research paper on quality, term paper on quality management