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
- 8 principles of Total Quality Management
- How is TQM implemented?
- TQM and the costs of quality
- Key takeaways:
- Connected Business Frameworks
- Other strategy frameworks
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
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. Unlike Six Sigma, the PDCA cycle focuses more on whether employees deem a solution to be effective and less on measuring concrete gains.
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.
- 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.
Connected Business Frameworks
Other strategy frameworks
- Porter’s Five Forces
- Ansoff Matrix
- Blitzscaling Canvas
- Business Analysis Framework
- Business Model Canvas
- Blue Ocean Strategy