The Total Quality Management (TQM) framework is a technique based on the premise that employees continuously work on their ability to provide value to customers. Importantly, the word “total” means that all employees are involved in the process – regardless of whether they work in development, production, or fulfillment.
Understanding the TQM framework
The TQM framework was developed by management consultant William Deming who introduced it to the Japanese manufacturing industry.
Today, Toyota is perhaps the best example of the TQM framework in action. The carmaker has a “customer first” focus and a commitment to continuous improvement through “total participation”.
The focus of the TQM framework is the continual improvement of all processes with an organization, irrespective of whether they have a direct impact on customer satisfaction.
Improvement comes from identifying and then removing or reducing errors that commonly occur in supply chain management, manufacturing, employee training, and customer experience.
The process of problem-solving and adding value to the customer experience is one where every individual takes an active role.
8 principles of Total Quality Management
While there is no universal approach to implementing a TQM framework, many businesses use the following eight principles. These are evergreen principles that can be applied to any industry and are incorporated in more modern management techniques.
The TQM framework acknowledges that the customer is the final determiner of whether company processes are sufficiently high quality.
If the customer is not satisfied, then the company must refocus its efforts on understanding consumer needs and expectations on a deeper level.
2. Employee engagement
Engaged employees are empowered employees who are not fearful of losing their jobs. As a result, they have the confidence and experience to suggest and implement continuous improvement across many systems.
3. Process approach
Refining process is a fundamental component of the TQM framework. Here, refinement means processes are followed in a logical order to ensure consistency and increased productivity.
Flowcharts and visual action plans can be produced so that employees understand their responsibilities.
4. System integration
System integration means that every single employee in a company has a reasonable understanding of policies, standards, and objectives.
It is vital employees understand their roles and how they contribute to the greater success of the company – no matter how insignificant those contributions may seem.
5. Strategic and systematic approach
A business must develop strategies that are quality-centric.
Company mission statements and their associated goals and values should also reflect the quality-first approach to customer satisfaction.
6. Continual improvement
Continual improvement is important in developing a competitive advantage and also in meeting stakeholder expectations.
Toyota’s model for continual improvement places a high emphasis on employee participation, eliminating waste, and reducing bureaucracy.
These factors increase innovation and reduce costs, which ultimately flow to the consumer.
7. Decision-making based on facts
Informed decisions are derived from a deep understanding of a business’s market and its target audience.
Wherever possible, data should be collected to support employee experience and intuition concerning creating value for consumers.
Communication is an often overlooked yet vitally important part of any successful company.
It plays a key role in clarifying expectations while also increasing employee morale and motivation.
Communication also increases collaboration and innovation between previously separate departments in a single company.
How is TQM implemented?
TQM is implemented by following the PDCA cycle, a model that originated in the 1920s that is a core component of many modern quality frameworks.
Although the model was created by engineer and statistician Walter Shewhart, Deming was the one who was responsible for its wide distribution and so it is often called the Deming cycle.
With that said, below is a look at each of the four stages that comprise this cycle:
The most important stage where affected stakeholders come together to determine the root cause of a problem via detailed research or analysis such as the Fishbone diagram, 5 Whys, or Failure Mode and Effects Analysis (FMEA).
In the second stage, the stakeholders develop solutions to the problems identified in the planning stage.
Where a before-and-after check is performed to determine the effectiveness of the solution.
Any data can be compared to expected outcomes to ensure objectives are being met. Successful solutions should then be incorporated into broader processes and procedures to avoid problem recurrence.
In the context of the TQM framework, the fourth and final stage encourages decision-makers to present the results of the test to relevant stakeholders to tell them what has occurred and to chart a way forward.
TQM and the costs of quality
A fundamental component of the Total Quality Management framework is that the cost of doing something the right way is far less than doing it the wrong way and having to fix the mistake.
Nevertheless, some critics of the framework consider that the process of maintaining quality has an associated cost that cannot be recouped by the business.
To counter this view, Deming along with colleagues Joseph M. Juran and Armand V. Feigenbaum reframed the cost of quality as the cost of not producing a quality deliverable. These costs, they posited, were applicable across four categories:
- Prevention costs – or costs related to the creation of work areas that are safe and efficient. Prevention costs also encompass planning, training, and the conducting of regular reviews. The researchers noted that activities related to prevention were often allocated a minuscule amount of the company’s budget.
- External failure costs – these are costs incurred once a product has been released in the market, such as returns, repairs, recalls, or warranty claims.
- Internal failure costs – or the cost of any failure before the product has been released. Typical internal failures include faulty machinery, improper or poor quality raw materials, product design that requires multiple revisions, and scrapped product runs.
- Appraisal costs – these cover the cost of inspection and testing during the product development lifecycle, such as the evaluation of supplier materials.
Total Quality Management vs. Six Sigma
Similar to total quality management, Six Sigma also seeks to reduce errors.
The specificity of Six Sigma is that if limits govern a process error that separates good and bad process outcomes, the Six Sigma approach has a process mean (average) that is six standard deviations from each limit.
This, Motorola found, provided enough buffer for natural variation in process outcomes to fall within the lower and upper limits.
Six Sigma usually goes through the following process:
And with the help of the following implementation roles:
- Toyota’s Lean Manufacturing: Toyota’s successful implementation of TQM principles through Lean Manufacturing has not only improved product quality but also reduced waste and increased production efficiency.
- Ford’s Six Sigma Initiatives: Ford extensively utilizes Six Sigma methodologies to enhance product quality, eliminate defects, and optimize manufacturing processes.
- Honda’s Quality Circles: Honda’s commitment to quality circles allows employees to actively participate in identifying and resolving quality-related issues, contributing to continuous improvement.
- Marriott International’s Customer-Centric Approach: Marriott’s TQM approach revolves around ensuring exceptional customer experiences, personalized services, and high levels of customer satisfaction.
- Ritz-Carlton’s Service Excellence: Ritz-Carlton has set industry standards for service quality by emphasizing attention to detail, employee training, and service consistency.
- Boeing’s Quality Control: Boeing’s aerospace products adhere to rigorous quality control standards to ensure safety, reliability, and compliance with industry regulations.
- Amazon’s Customer Service Excellence: Amazon’s relentless focus on customer service quality and satisfaction has made it a leader in the e-commerce industry.
- Mayo Clinic’s Patient-Centric Care: Mayo Clinic’s TQM approach prioritizes patient safety, medical excellence, and continuous improvement in healthcare delivery.
- Johnson & Johnson’s Product Safety: Johnson & Johnson is dedicated to ensuring the safety and quality of its healthcare products through robust quality assurance practices.
- FedEx’s Supply Chain Efficiency: FedEx places a strong emphasis on logistics efficiency, on-time deliveries, and error reduction to maintain its industry-leading position.
- Microsoft’s Software Quality Assurance: Microsoft’s TQM practices include rigorous software testing, security measures, and continuous improvement to provide reliable and secure products.
- Apple’s Product Quality: Apple maintains high product quality standards and user experience by implementing TQM principles in product design, manufacturing, and customer support.
- Southwest Airlines’ Employee Empowerment: Southwest Airlines promotes employee engagement and empowerment, leading to exceptional customer service and operational efficiency.
- Samsung’s Quality Assurance: Samsung ensures the quality, performance, and reliability of its electronic products through comprehensive quality assurance processes.
- Starbucks’ Coffee Excellence: Starbucks maintains the quality of its coffee beans, beverage preparation, and customer experience across its global chain of coffeehouses.
Diverse Industry Applications:
- General Electric’s Six Sigma Success: General Electric’s extensive use of Six Sigma methodologies has resulted in substantial cost savings, process improvements, and enhanced quality control across its diverse business divisions.
- Walmart’s Supply Chain Management: Walmart leverages TQM principles in its supply chain management to reduce costs, minimize errors, and improve inventory control.
- The TQM framework is an approach to long-term success by increasing customer satisfaction through the reduction or elimination of errors.
- At its core, the TQM framework emphasizes a total commitment to long-term change through a cohesive and collaborative approach to employee problem-solving.
- The TQM framework utilizes eight principles with a focus on customers, communication, employees, and incremental improvements.
- TQM Overview: Total Quality Management (TQM) is a management approach that focuses on continuous improvement and the provision of value to customers. It was developed by management consultant William Deming and introduced to the Japanese manufacturing industry.
- Customer-Centric: TQM places the customer at the center of quality determination. Customer satisfaction is the ultimate measure of the effectiveness of company processes.
- Employee Engagement: Engaged employees are empowered to contribute to continuous improvement, as they are not afraid of repercussions. They actively participate in identifying and implementing improvements across various systems.
- Process Approach: TQM emphasizes refining processes to ensure consistency and increased productivity. Flowcharts and visual action plans are used to ensure logical process order.
- System Integration: All employees in a company should understand the policies, standards, and objectives. Each employee’s role and contribution to the company’s success are significant, regardless of their function.
- Strategic Approach: TQM encourages the development of quality-centric strategies, ensuring that company goals and values reflect a customer-first approach.
- Continual Improvement: TQM promotes a culture of continuous improvement, aiming to gain a competitive advantage, meet stakeholder expectations, and reduce costs.
- Data-Driven Decision-Making: Informed decisions are made by collecting data to understand the market, target audience, and customer needs, enhancing the ability to add value to the customer experience.
- Communication: Effective communication plays a pivotal role in increasing employee morale, collaboration, and innovation. It fosters a holistic understanding of the company’s objectives.
- Implementation Process – PDCA Cycle: TQM is implemented through the Plan-Do-Check-Act (PDCA) cycle, a model introduced by Walter Shewhart and popularized by Deming.
- Plan (P): Stakeholders collaborate to identify the root cause of a problem through analysis methods like Fishbone diagrams or 5 Whys.
- Do (D): Solutions to identified problems are developed and implemented based on employee feedback and effectiveness.
- Check (C): Effectiveness of solutions is assessed through before-and-after comparisons, ensuring objectives are met. Successful solutions are integrated into broader processes.
- Act (A): Results of the test are presented to stakeholders, and a plan for moving forward is charted.
- Costs of Quality: TQM emphasizes that the cost of ensuring quality is less than fixing mistakes. Critics’ concerns about quality costs are countered by viewing them as the cost of not producing quality deliverables.
- Cost Categories: Costs of quality are divided into prevention costs (creating safe and efficient work areas), external failure costs (post-release issues), internal failure costs (pre-release issues), and appraisal costs (inspection and testing).
- TQM vs. Six Sigma: TQM and Six Sigma both focus on reducing errors and continuous improvement. Six Sigma is data-driven and aims to reduce defects by setting specific process error limits (Six Sigma level).
- Key Benefits: TQM leads to long-term success by enhancing customer satisfaction through error reduction and continuous improvement. It emphasizes a collaborative approach to employee problem-solving and a commitment to change.
Connected Agile & Lean Frameworks
- Business Models
- Business Strategy
- Business Development
- Distribution Channels
- Marketing Strategy
- Platform Business Models
- Network Effects
Main Case Studies: