Total Quality Management
Total Quality Management is a management method used to achieve customer satisfaction and produce high-quality goods and services. Continuous improvement is a mainstay at any organization, and it is important at every level-not just at the executive ranks.
To achieve optimal efficiency and productivity, processes must be continuously improved to ensure consistency and reduced variation. Adapting to changes in customer preferences compels organizations to produce consistently high-quality products.
To ensure this consistency in quality, organizations can implement standards such as total quality management, Six Sigma, and ISO 9001. TQM requirements are defined by the following principles:
Customer Focus: TQM is driven by a strong orientation towards satisfying both external and internal customers, meaning that every process is scrutinized in terms of its value to the customer. Integrative Mechanisms: TQM emphasizes the need for integrative mechanisms that facilitate problem-solving, information sharing, and cooperation across different areas of business. This means that processes and teams are not siloed; instead, they work together towards common quality objectives. Collaboration Across Functions: TQM encourages breaking down barriers between departments or functions, fostering a culture of collaboration. This multidisciplinary cooperation is aimed at enhancing the organization's ability to solve quality-related issues more effectively. Team-Based Approach: The approach under TQM moves away from individual accomplishments and towards team-based work. This change in dynamics helps to ensure that quality is everyone’s responsibility and that solutions benefit from diverse perspectives. Continuous Improvement: TQM is not a one-time effort but a continuous one. It involves an iterative process of continuous improvement, where feedback is continually collected and acted upon to enhance product quality and customer satisfaction. Organizational Agility
To be successful, teams and organizations need people to collaborate with each other rather than compete against one another.
Collaboration is about interpersonal relationships derived from good leadership, and collaboration among diverse teams enables organizations to remain agile and competitive.
Customer Relationship Management
Customer relationship management (CRM) is a multifaceted process, typically using information technologies, that fosters two-way exchanges with customers so that firms “intimately” know their needs, wants, and buying patterns.
By employing predictive analytics on large data sets—referred to as big data—companies can discern patterns and trends. Value Chain
The Value Chain was created by Michael Porter and it’s divided into primary activities and support activities, all contributing to the overall margin of the company.
Research and Development: Although not traditionally included in Porter's model, it's sometimes added to represent the innovation aspect. It involves the creation of new products or the improvement of existing ones. Inbound Logistics: Refers to the receiving, warehousing, and inventory control of input materials. Operations: This is where inputs are converted into the final product form. It includes all the processes involved in producing the product or service. Outbound Logistics: Covers the distribution of the finished product or service to the customers. Marketing and Sales: Encompasses the strategies and tasks involved in getting buyers to purchase the product, including sales processes, advertising, and promotions. Service: After-sale support and services that maintain the value of the product, like customer support, warranty services, and repairs. Support Activities:
Firm Infrastructure: Includes company-wide activities such as finance, legal, quality management, and strategic planning that support the primary activities. Human Resource Management: Encompasses the recruitment, hiring, training, and development of employees. Technology Development: Relates to the activities that improve the product and the process, which in an IT context could be new software development tools or IT infrastructure improvements. Procurement: The process of acquiring the various resource inputs needed for the production process, from raw materials to services and equipment. Margin:
This represents the value added during the process, which is the difference between the total value and the collective cost of performing the value activities.
The margin is essentially the company's profit. The value chain model is often used to identify ways to create greater value for customers and to find competitive advantages by analyzing and optimizing each activity.
In IT, this might mean finding more efficient software development methodologies, improving supply chain systems, or implementing more effective cybersecurity measures.
Deming’s 14 Points of Quality
W. Edwards Deming is renowned for his work in quality management and his 14 Points of Quality are key principles for transforming business effectiveness.
Six Sigma
Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects in any process.
Sigma refers to the Greek letter used in statistics as a measure of standard deviation, which indicates the degree of variation in a set of processes. The goal of Six Sigma is to reach a level where the processes produce no more than 3.4 defects per million opportunities, equating to a process being defect-free 99.99966% of the time. Implementation of Six Sigma:
Managers identify defects and work comprehensively to eliminate the root causes and minimize defects to the lowest possible level. Teams across the organization may be formed to tackle process improvements and prevent defects. Impact and Adoption:
Motorola developed Six Sigma, and General Electric is noted for its successful application, which has popularized the method. Many companies now integrate Six Sigma with lean manufacturing principles to enhance efficiency and quality, a practice known as Lean Six Sigma.
IOS 9001
ISO 9001 is an internationally recognized standard for Quality Management Systems (QMS). It is published by the International Organization for Standardization (ISO) and is part of the ISO 9000 family of standards
Here's a brief explanation for each:
Customer Focus: Organizations should understand and meet customer needs and strive to exceed their expectations. Leadership: Leaders should establish a clear vision and direction for the organization, setting an environment in which people can contribute to achieving the organization's quality objectives. Engagement of People: Engaging, empowering, and valuing people at all levels of the organization enhances their ability to contribute to value creation. Process Approach: Efficient and effective processes are achieved by understanding them as interrelated systems that function predictably. Improvement: Organizations should focus on continuous improvement to maintain current performance and to create new opportunities in response to internal and external conditions. Evidence-based Decision Making: Decisions should be based on the analysis of data and information to increase the likelihood of desired outcomes. Relationship Management: An organization should manage its relationships with interested parties, such as suppliers, to sustain success. U.S. companies became interested in it due to its importance to overseas customers, particularly in the European Union.
Compliance with ISO 9001 is often a requirement for doing business in certain markets.
The certification is seen as a step in the right direction towards quality improvement, rather than an end goal, implying that organizations should continuously work on improving their quality management systems. It is mentioned that in the context of COVID-19, ISO developed new standards to improve the safety and efficacy of ventilators, showcasing the standard's adaptability and focus on continual improvement.
Technology and Organizational Agility
Broadly, Technology is the methods, processes, systems, and skills used to transform resources (inputs) into products (outputs).
According to Joan Woodward, three basic technologies characterize how work is done: small batch, large batch, and continuous process.
Small Batch Production:
Customized: This method is typically used for custom or specialized products. Flexible: It allows for flexibility and adaptation to specific customer requirements. Lower Volume: Production runs are smaller, and there's often a higher cost per unit. Ex: Local Tailor - Custom suit-making is a prime example of small batch production. Each garment is tailored to the individual's measurements and preferences. Large Batch Manufacturing
Standardized: Used for mass production of standardized items. Economies of Scale: Benefits from economies of scale, leading to a lower cost per unit. Efficiency: The process is often automated to increase efficiency. Ex: Automobile Manufacturing- Many car manufacturers use large batch production to create thousands of identical vehicles before introducing a new model or version. Continuous Process
Nonstop Operation: The production runs 24/7, continuously manufacturing products. High Volume: Ideal for commodities and basic goods with consistent demand. Consistency: It ensures a consistent and uniform product quality. Ex: Chemical Plants - Facilities that produce chemicals like ammonia or plastic materials often run continuous processes, as these products are in constant demand and the production process benefits from uninterrupted operation.
Mass Customization
Mass Customization represents a modern approach in manufacturing that combines the high volume of mass production with the personalization typically associated with custom-made products.
Here's how it's applied across different industries:
Car manufacturers like Toyota and BMW offer customers the ability to customize various features of their car, from the color of the paint to the type of engine and interior finishes, while still producing on a large scale. Retailers such as Nike and Tailored Brands allow customers to design their own sneakers or suits by choosing from a range of styles, colors, and materials, often enabled by online design tools. Companies like Dell and HP provide options to customize the hardware specifications of computers, such as memory, storage, and graphics capabilities, to meet each customer's specific needs. Many other sectors are embracing this trend, from personalized food and nutrition products to custom-printed books and on-demand media content. Mass customization leverages advanced production technologies and flexible processes to produce goods that meet individual customer preferences without sacrificing the efficiency and economies of scale typically seen in mass production.
Computer-Integrated Manufacturing (CIM)
Mass customization synergizes the efficiency of mass production with the individuality of custom-made goods, and it's largely enabled by advancements in computer-integrated manufacturing (CIM).
Here's how CIM components facilitate mass customization:
Computer-Aided Design (CAD): CAD systems allow for the intricate and precise design of products with software tools. They enable designers to create complex and customizable product specifications that can easily be altered to fit individual customer preferences. Computer-Aided Manufacturing (CAM): CAM systems transform CAD designs into physical products. They direct manufacturing machinery on how to fabricate parts and assemble products, making it possible to switch from making one customized product to another quickly and with little downtime. Lean Manufacturing
Lean Manufacturing is an operation that strives to achieve the highest possible productivity and total quality, cost-effectively, by eliminating unnecessary steps in the production process and continually striving for improvement.
Time-based Competition (TBC)
Time-based Competition (TBC) is a business strategy that focuses on reducing the total time required to develop and deliver products and services to customers.
Here's how TBC's key organizational elements contribute to this goal:
Optimizing logistics involves streamlining the movement of materials, information, and products throughout the production process and delivery chain. This reduces lead times and increases responsiveness to customer needs. Just-In-Time (JIT) Operations: JIT is a strategy that aims to minimize inventory and increase efficiency. By producing and supplying goods only as they are needed, companies can reduce waste and speed up the production cycle. Concurrent engineering involves the simultaneous design and development of products to reduce the time from concept to market. Cross-functional teams work in parallel rather than sequentially, accelerating product development.
Section 2: Total Quality Management
