Quality Management

Philosophies

Quality management adopts a number of management principles that can be used to guide organizations towards improved performance.

Learning Objectives

Recognize how top management can improve quality performance

Key Takeaways

Key Points

  • There are eight primary quality management principles.
  • The principles are the basis of the ISO 9001:2008 quality management system standard.
  • One of the permanent quality objectives of an organization should be the continual improvement of its overall performance.

Key Terms

  • value: The degree of importance you give to something.
  • ISO 9001:2008: The ISO 9000 family of standards are related to quality management systems and designed to help organizations ensure that they meet the needs of customers and other stakeholders while meeting statutory and regulatory requirements related to the product.
  • Quality Management: Process of ensuring that an organization or product is consistent. It can be considered to have four main components: quality planning, quality control, quality assurance, and quality improvement. Quality management is focused not only on product/service quality, but also the means to achieve it.

The Principles of Quality Management

Quality management adopts a number of management principles that can be used by top management to guide their organizations towards improved performance. The principles include:

  • Customer focus: Since the organizations depend on their customers, they should understand current and future customer needs, should meet customer requirements, and try to exceed the expectations of customers. An organization attains customer focus when all people in the organization know both the internal and external customers and also what customer requirements must be met to ensure that both the internal and external customers are satisfied.
  • Leadership: Leaders of an organization establish unity of purpose and direction of it. They should go for creation and maintenance of such an internal environment, in which people can become fully involved in achieving the organization’s quality objective.
  • Involvement of people: People at all levels of an organization are the essence of it. Their complete involvement enables their abilities to be used for the benefit of the organization.
  • Process approach: The desired result can be achieved when activities and related resources are managed in an organization as process.
  • System approach to management: An organization’s effectiveness and efficiency in achieving its quality objectives are contributed by identifying, understanding, and managing all interrelated processes as a system.
  • Continual improvement: One of the permanent quality objectives of an organization should be the continual improvement of its overall performance.
  • Factual approach to decision making: Effective decisions are always based on the data analysis and information.
  • Mutually beneficial supplier relationships: Since an organization and its suppliers are interdependent, therefore, a mutually beneficial relationship between them increases the ability of both to add value.

These eight principles form the basis for the quality management system standard ISO 9001:2008.

TQM

Total quality management (TQM) is an integrative philosophy of management for continuously improving the quality of products and processes.

Learning Objectives

Explain the principles of Total Quality Management (TQM)

Key Takeaways

Key Points

  • TQM functions on the premise that the quality of products and processes is the responsibility of everyone who is involved with the creation or consumption of the goods or services offered by an organization.
  • Satisfying the customer involves making sure both internal and external customers are happy.
  • The internal suppliers are the subordinates who answer to a particular supervisor. Satisfying them involves giving them the tools and motivation they need to do their jobs.
  • It is important to go beyond satisfaction, making the customer – and supplier – feel important and valued, and part of the process.
  • “Lean” focuses on eliminating the wasteful use of time, energy or resources, and instead focusing activities completely on the creation of value.
  • The focus of the Six Sigma management strategy is to reduce defect by minimizing variation in processes.

Key Terms

  • Total Quality Management (TQM): A strategic approach to management aimed at embedding awareness of quality in all organizational processes.
  • poka-yoke: A methodology of using low-cost techniques to error-proof production processes.

Total Quality Management (TQM) is an integrative philosophy of management for continuously improving the quality of products and processes.

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TQM Practices Are Used in Many Industries: Here, two aviation structural mechanics are collaborating on the wing of a F/A-18C Hornet, performing routine maintenance in the hangar bay. TQM practices ensure each person involved with a product is responsible for its quality.

Overview

TQM functions on the premise that the quality of products and processes is the responsibility of everyone involved in the creation or consumption of the goods or services the organization offers. TQM capitalizes on the involvement of management, the workforce, suppliers, and even customers in order to meet or exceed customer expectations.

Considering the practices of TQM as discussed in six empirical studies, Cua, McKone, and Schroeder (2001) identified nine common TQM practices:

  1. Cross-functional product design;
  2. Process management;
  3. Supplier quality management;
  4. Customer involvement;
  5. Information and feedback;
  6. Committed leadership;
  7. Strategic planning;
  8. Cross-functional training; and
  9. Employee involvement.

Basic Principles of Total Quality Management

The basic principles for the Total Quality Management philosophy of doing business are to satisfy the customer, satisfy the supplier, and continuously improve the business processes.

Satisfy the Customer

The first, and major, TQM principle is to satisfy the customer–the person who pays for the product or service. Customers want to get their money’s worth from a product or service they purchase.

Satisfy the Users: If the user of the product is different than the purchaser, then both the user and customer must be satisfied, although the person who pays gets priority.

Company Philosophy: A company that seeks to satisfy the customer by providing them value for what they buy and the quality they expect will get more repeat business, referral business, and reduced complaints and service expenses. Some top companies not only provide quality products but also give extra service to make their customers feel important and valued.

Internal Customers: Within a company, a worker provides a product or service to his or her supervisors. If the person has any influence on the wages the worker receives, that person can be thought of as an internal customer. A worker should have the mindset of satisfying internal customers in order to keep his or her job and to get a raise or promotion.

Chain of Customers:Often in a company, there is a chain of customers–each improving a product and passing it along until it is finally sold to the external customer. Each worker must not only seek to satisfy the immediate internal customer, but must also look up the chain to try to satisfy the ultimate customer.

Satisfy the Supplier

A second TQM principle is to satisfy the supplier, which is the person or organization from whom you are purchasing goods or services.

External Suppliers: A company must look to satisfy their external suppliers by providing them with clear instructions and requirements and then paying them fairly and on time. It is in the company’s best interest that its suppliers provide quality goods or services if the company hopes to provide quality goods or services to its external customers.

Internal Suppliers: A supervisor must try to keep workers happy and productive by providing good task instructions, the tools they need to do their job, and good working conditions. The supervisor must also reward the workers with praise and good pay.

Get Better Work: The reason to do this is to get more productivity out of the workers, as well as to keep the good workers. An effective supervisor with a good team of workers will certainly satisfy his or her internal customers.

Empower Workers: One area of satisfying the internal suppler is by empowering the workers. This means allowing them to make decisions on things that they can control. This not only takes the burden off the supervisor, but it also motivates these internal suppliers to do better work.

Continuous Improvement

The third principle of TQM is continuous improvement. You can never be satisfied with the method used, because there always can be improvements. The competition is always improving, so it is necessary to strive to keep ahead of the game.

Work Smarter, Not Harder: Some companies have tried to improve by making employees work harder. This may be counterproductive, especially if the process itself is flawed. For example, trying to increase worker output on a defective machine may result in more defective parts. Examining the source of problems and delays and then solving those problems is what works best. Often, the process has bottlenecks that are the real cause of the problem. Those are what should be removed.

Worker Suggestions: Workers are often a source of continuous improvements. They can provide suggestions on how to improve a process and eliminate waste or unnecessary work.

Quality Methods: There are also many quality methods, such as just-in-time production, variability reduction, and poka-yoke, that can improve processes and reduce waste.

Quality Inspections and Standards

Companies ensure the quality of products and services by adhering to ISO standards and performing quality audits to ensure compliance.

Learning Objectives

Recognize the ISO’s role in ensuring quality standards

Key Takeaways

Key Points

  • The Quality Management System (QMS) standards were created by the International Organization for Standardization (ISO) in 1987, and are reviewed and updated every few years. These standards are used to certify the processes and systems of an organization, but not the product or service itself.
  • In 1994 three major standards were released as part of the ISO 9000:1994 series. Major revisions were made in 2008.
  • A quality audit is the systematic examination of a quality system, and is carried out by internal or external auditors. It is a key element in ISO 9001 standards.
  • Since 2008, the focus of quality audits has shifted from simply procedural adherence to measuring the effectiveness of actual QMS’s.

Key Terms

  • ISO 14000: a set of standards related to environmental management designed to help organizations reduce the negative environmental effect of their operations, meet legal requirements, and continually improve
  • International Organization for Standardization (ISO): An international standard-setting body composed of representatives from various national standards organizations. Founded on February 23, 1947, the organization promulgates worldwide proprietary, industrial, and commercial standards.
  • Quality Audit: The process of systematic examination of a quality system carried out by an internal or external quality auditor or audit team. It is an important part of an organization’s quality management system and is a key element in the ISO quality system standard, ISO 9001.
  • Quality Management System (QMS): The organizational structure, procedures, processes, and resources needed to implement quality management.
  • ISO 9000: a set of standards related to quality management systems and designed to help organizations ensure that they meet the needs of customers and other stakeholders while meeting statutory and regulatory requirements related to the product

Quality Standards

The International Organization for Standardization (ISO) created the Quality Management System (QMS) standards in 1987. They were the ISO 9000:1987 series of standards, comprising ISO 9001:1987, ISO 9002:1987, and ISO 9003:1987; which were applicable in different types of industries, based on the type of activity or process (designing, production, or service delivery).

The standards are reviewed every few years by the ISO. The version in 1994 was called the ISO 9000:1994 series; consisting of the ISO 9001:1994, 9002:1994 and 9003:1994 versions.

A major revision occurred in 2008, and the series was called ISO 9000:2000 series. The ISO 9002 and 9003 standards were integrated into one single certifiable standard: ISO 9001:2008. After December 2003, organizations holding ISO 9002 or 9003 standards had to complete a transition to the new standard.

The ISO 9004:2009 document gives guidelines for performance improvement over and above the basic standard (ISO 9001:2000). This standard provides a measurement framework for improved quality management, similar to and based upon the measurement framework for process assessment.

The Quality Management System standards created by ISO are meant to certify the processes and the system of an organization, not the product or service itself. ISO 9000 standards do not certify the quality of the product or service.

In 2005 the International Organization for Standardization released a standard, ISO 22000, meant for the food industry. This standard covers the values and principles of ISO 9000 and the HACCP standards. It gives one single integrated standard for the food industry and is expected to become more popular in the coming years in the industry.

ISO has also released standards for other industries. For example, Technical Standard TS 16949 defines requirements in addition to those in ISO 9001:2008 specifically for the automotive industry.

ISO has a number of standards that support quality management. One group describes processes (including ISO/IEC 12207 & ISO/IEC 15288), and another describes process assessment and improvement (ISO 15504).

Quality Audits

A quality audit is the process of systematic examination of a quality system carried out by an internal or external quality auditor or audit team. It is an important part of organization’s quality management system and is a key element in the ISO quality system standard, ISO 9001.

Quality audits are typically performed at predefined time intervals and ensure that the institution has clearly defined internal system monitoring procedures linked to effective action. This can help determine if the organization complies with the defined quality system processes and can involve procedural or results-based assessment criteria.

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Quality Check: Quality assurance inspectors regularly perform audits.

With the upgrade of the ISO 9000 series of standards from the 1994 to 2008 series, the focus of the audits has shifted from purely procedural adherence towards measurement of the actual effectiveness of the Quality Management System (QMS) and the results that have been achieved through the implementation of a QMS.

Audits are an essential management tool to be used for verifying objective evidence of processes, to assess how successfully processes have been implemented, for judging the effectiveness of achieving any defined target levels, to provide evidence concerning reduction and elimination of problem areas.

For the benefit of the organisation, quality auditing should not only report non-conformance and corrective actions, but also highlight areas of good practice. In this way, other departments may share information and amend their working practices, which contributes to continual improvement.

Quality audits can be an integral part of compliance or regulatory requirements. One example is the US Food and Drug Administration, which requires quality auditing to be performed as part of its Quality System Regulation (QSR) for medical devices (Title 21 of the US Code of Federal Regulations part 820).

Several countries have adopted quality audits in their higher education system (including New Zealand, Australia, Sweden, Finland, Norway, and the USA). Initiated in the UK, the process is focused primarily on procedural issues rather than on the results or the efficiency of a quality system implementation.

Audits can also be used for safety purposes. Evans and Parker (2008) describe auditing as one of the most powerful safety monitoring techniques and “an effective way to avoid complacency and highlight slowly deteriorating conditions,” especially when the auditing focuses not just on compliance but effectiveness.

The processes and tasks that a quality audit involves can be managed using a wide variety of software and self-assessment tools. Some of these relate specifically to quality in terms of fitness for purpose and conformance to standards, while others relate to quality costs or (more accurately) to the cost of poor quality. In analyzing quality costs, a cost of quality audit can be applied across any organization rather than just to conventional production or assembly processes.

Reducing Waste and Environmental Impacts

Reducing waste by more efficient manufacturing is a key goal of management, with supply chain sustainability seen as a key component.

Learning Objectives

Explain the benefits of reducing waste

Key Takeaways

Key Points

  • Waste minimization is often achieved through more efficient manufacturing processes and the usage of better materials, but often requires some initial investment.
  • Governments often provide incentives to companies for waste minimization, including subsidies and reduced taxes for companies that take steps to reduce waste.
  • A more sustainable supply chain is increasingly seen as leading to a more profitable supply chain, and, thus, managers are increasingly looking for ways to make their supply chains more sustainable.
  • Collaboration is seen as a way of achieving the goal of supply chain sustainability.
  • Many companies avoid collaboration due to a fear of a loss of commercial control.

Key Terms

  • Supply Chain Sustainability: An essential component to delivering long-term profitability. It has replaced monetary cost, value, and speed as the dominant topic of discussion among purchasing and supply professionals.
  • Collaboration: Working together to achieve a common goal.

Reducing Waste: The Incentives

In industrial production, using more efficient manufacturing processes and better materials will generally reduce the production of waste. The application of waste minimization techniques has led to the development of innovative and commercially successful replacement products. Waste minimization has proven benefits to industry and the wider environment.

Waste minimization often requires investment, which is, at least in theory, usually compensated by the savings. However, waste reduction in one part of the production process may create waste production in another part.

There are government incentives for waste minimization, which focus on the environmental benefits of adopting waste minimization strategies.

In the United Kingdom, several pilot schemes, such as The Catalyst Project and the Dee Waste Minimisation Project, have shown the efficacy of such policies. Fourteen companies in Merseyside took part in the Catalyst Project; the project generated overall savings of £9 million and landfill waste was reduced by 12,000 tonnes per year. ).

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Colorful recycling containers: By producing using materials that are recyclable, landfill waste can be minimized.

Supply Chain Sustainability

Supply chain sustainability is a business issue affecting an organization’s supply chain or logistics network in terms of environmental, risk, and waste costs.

Sustainability in the supply chain is increasingly seen among high-level executives as essential to delivering long-term profitability and has replaced monetary cost, value, and speed as the dominant topic of discussion among purchasing and supply professionals.

One of the key requirements of successful sustainable supply chains is collaboration. The practice of collaboration, such as sharing distribution to reduce waste by ensuring that half-empty vehicles do not get sent out and that deliveries to the same address are on the same truck, is not widespread because many companies fear a loss of commercial control by working with others.

Investment in alternative modes of transportation, such as use of canals and airships, can play an important role in helping companies reduce the cost and environmental impact of their deliveries.

Sustainability has been found to be a major component of supplier relationship management as an efficient way to cut costs among retailer giants such as Wal-Mart. In fact, under Wal-Mart’s Supplier Energy Efficiency Project (SEEP), which is aimed at eliminating emissions from the company’s supply chain, suppliers reduced GHG emissions by 3,300 metric tons and saved $200,000 in energy costs.

Realizing the efficiency that effective supplier relationship management creates, Wal-Mart has asked suppliers to be more efficient in managing their environmental footprint.

Looking to the supply chain to maximize efficiency and cut costs is a key cost-cutting measure; using the same suppliers in a tight-knit relationship saves time and energy. As industry leaders continue to add in cost-cutting measures, we are likely to see this trend continue in supply chain sustainability for sustained improvement in relationship building and cost reduction.