Principles of Total Quality Management

Total quality management is based on three basic principles;

  1. Customer focus,
  2. Continuous improvement and learning, and
  3. Empowerment and team work

Customer Focus

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.

Customers expect certain things and if the organization does not meet those expectations, the customers are dissatisfied. The only way for the organization to keep a high level of customer satisfaction and still operate efficiently, is in mastering the art of an optimum level performance that ensures that customers’ expectations are consistently met.

The means by which customer expectations are generated include:

  • Word-of-mouth communication
  • Personal needs,
  • Experience, and
  • External communications that influence customers’ expectations.

Friends, consumer groups, and the government play a role in shaping expectations. Customers will shop in places where service standards are designed to meet such expectations. High discrepancy between expectations and perceptions of the service results in customer’s dissatisfaction. Le Boeuf [1987] cited a study on the reasons why customers quit the relationship with a particular supplier:

  • 3% move away giving no reasons,
  • 5% develop other supplier relationships,
  • 9% leave for competitive reasons,
  • 14% are dissatisfied with the product,
  • 68% quit because of an attitude of indifference toward the customer by the owner, manager, or some employees.

Le Boeuf claimed that businesses spend 6 times more to get new customers than to keep old customers. Customer loyalty is worth 10 times the price of a single purchase, in the average case. There is an old saying in service industries that if customers like the service, they will tell three people. If they don’t like the service, they will tell eleven people. It illustrates the different “speed rates” of spreading around good and bad news about the company.

Hence we conclude that, if an organization doesn’t want to lose their customers then it must keep an eye on the focus (expectation) of customer.

Continuous Improvement and Learning

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.

Continuous improvement is designed to utilize the resources of the organization to achieve a quality-driven culture. Individuals must think, act, and speak quality. An organization attempts to reach a single-minded link between quality and work execution by educating its constituents to “continuously” analyse and improve their own work, the processes, and their work group.

Empowerment and Teamwork

Empowerment

The dictionary definition of empowerment is to invest people with authority. Its purpose is to tap the enormous reservoir of potential contribution that lies within every worker. An operational definition follows:

“Empowerment is an environment in which people have the ability, the confidence, and the commitment to take the responsibility and ownership to improve the process and initiate the necessary steps to satisfy customer requirements within well-defined boundaries in order to achieve organizational values and goals.”

Empowerment should not be confused with delegation or job enrichment. Delegation refers to distributing and entrusting work to others. Employee empowerment requires that the individual is held responsible for accomplishing a whole task. The employee becomes the process owner—thus, the individual is not only responsibly but also accountable. Job enrichment is aimed at expanding the content of an individual’s job, whereas empowerment focuses on expanding on the context of the job such as its interactions and interdependencies to other functions of the organization.

Three necessary conditions to create the empowered environment:

Everyone must understand the need for change:

People fear change. The effective communication of why the organization needs to change is critical to success. In addition, people need to understand the role they will play in the change process.

The system needs to change to the new paradigm:

The system needs to change to reinforce and motivate individual and group accomplishments. Individuals and groups must understand that freedom to act and (sometimes to fail) is not only OK but is encouraged. If the union environment is not willing to engage employees in an empowerment culture, success will be difficult.

The organization must enable its employees:

Enablement means providing information, education, and skill. To ask people to change work habits without providing them with the tools for change only increases resistance to the change process. Additional factors that should be considered before determining if organization can enable its employees are strategy and technology.

Teamwork

Teamwork because many heads are more knowledgeable than one. Each member of the team has special abilities that can be used to solve problems. Many processes are so complex that one person cannot be knowledgeable concerning the entire process.

Second, the whole is greater than the sum of its members. The interaction within the team produces results that exceed the contributions of each member.

Third, team members develop a rapport with each other that allows them to do a better job.

Finally, teams provide the vehicle for improved communication, thereby increasing the likelihood of a successful solution.

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