Total Quality Management (TQM) is a management framework based on the belief that an organization can build long-term success by having all its members, from low-level workers to its highest ranking executives, focus on improving quality and, thus, delivering customer satisfaction.
TQM requires organizations to focus on continuous improvement, or kaizen. It focuses on process improvements over the long term, rather than simply emphasizing short-term financial gains.
Principles of TQM
TQM prescribes a series of ways for organizations to accomplish this, with the pathway to successful continuous improvement centered on the use of strategy, data and effective communication to instill a discipline of quality into the organization's culture and processes.
More specifically, TQM puts a spotlight on the processes that organizations use to produce their products, and it calls for organizations to define those processes, continuously monitor and measure their performance, and use that performance data to drive improvements. Furthermore, it calls for all employees, as well as all organizational departments, to be part of this process.
TQM's objectives are to eliminate waste and increase efficiencies by ensuring that the production process of the organization's product (or service) is done right the first time.
This management framework was initially applied to companies in the manufacturing sector, but, over the decades, organizations in other sectors have adopted it, as well.
Implementation principles and processes
TQM dates back to the 1920s, when the science of statistics was applied to quality control in an industrial setting. Walter A. Shewhart, an engineer at Western Electric and Bell Telephone Laboratories, created a statistical control chart in the mid-1920s, and then published Economic Control of Quality of Manufactured Product in 1931. Many still refer to his statistical quality control method as the Shewhart cycle. It is also called the Deming cycle, or the PDCA (plan, do, check, act) model.
Quality control methods evolved in subsequent decades, with industrial engineer Joseph Juran first employing Shewhart's methods and, later, in 1951, publishing his influential book Juran's Quality Control Handbook.
W. Edwards Deming further developed Shewhart's ideas in post-World War II Japan, where the U.S. government had positioned him to advise Japanese leaders on the rebuilding efforts taking place there in the late 1940s and 1950s. Working with the Union of Japanese Scientists and Engineers, Deming taught and lectured on statistical quality control, while adding his own ideas about quality control in the process. Among these teachings was Deming's belief that ordinary workers had a role to play in quality control.
Juran also lectured in Japan during the 1950s.
The method that evolved during the 1950s and 1960s eventually became known as Total Quality Management. Many credit the Japanese application of TQM as a significant contributor to the country's economic recovery following World War II, as well as its midcentury industrial successes.
Organizations worldwide took note of Japan's successes using TQM. United States producers throughout the 1970s and 1980s adopted quality and productivity methods, including TQM, to better compete in the increasingly global marketplace.
Although Deming, Juran, Shewhart and others published numerous papers and books on TQM, many organizations adopted only parts of the TQM principles, and evolved some of TQM's ideas to meet their own needs.
Moreover, as business needs for efficiency, productivity and quality have further evolved, many organizations have adopted other, more modern management techniques. So, although TQM is still influential, other management techniques, such as Six Sigma and lean manufacturing, which better address organizational goals for the 21st century, have replaced it in many businesses.
Importance of TQM
TQM can have an important and beneficial effect on employee and organizational development. By having all employees focus on quality management and continuous improvement, companies can establish and uphold cultural values that create long-term success to both customers and the organization itself. TQM’s focus on quality helps identify skills deficiencies in employees, along with the necessary training, education or mentoring to address those deficiencies.
With a focus on teamwork, TQM leads to the creation of cross-functional teams and knowledge sharing. The increased communication and coordination across disparate groups deepens institutional knowledge and gives companies more flexibility in deploying personnel.
Benefits of TQM
The benefits of TQM include:
- Less product defects. One of the principles of TQM is that creation of products and services is done right the first time. This means that products ship with fewer defects, which reduce product recalls, future customer support overhead and product fixes.
- Satisfied customers. High-quality products that meet customers’ needs results in higher customer satisfaction. High customer satisfaction, in turn, can lead to increased market share, revenue growth via upsell and word-of-mouth marketing initiated by customers.
- Lower costs. As a result of less product defects, companies save cost in customer support, product replacements, field service and the creation of product fixes. The cost savings flow to the bottom line, creating higher profit margins.
- Well-defined cultural values. Organizations that practice TQM develop and nurture core values around quality management and continuous improvement. The TQM mindset pervades across all aspects of an organization, from hiring to internal processes to product development.
Examples of TQM
Automobile manufacturer Toyota is one example of TQM. The adoption of TQM and kaizen at Toyota led to higher product and work quality at all levels of the organization. Toyota adopted a related practice called statistical quality control (SQC) in 1949. In 1951, Toyota launched the Creative Idea Suggestion System, which was based on a suggestion system used at Ford.
In 1965, Toyota was awarded the Deming Application Prize for major advances in quality improvement. In 1994, the "Toyota Group Executive TQM Training Course" was established, providing TQM training for new executives. Toyota's TQM initiatives continue to the current day. In 2011, Toyota announced that more than 40 million suggestions (to date) were generated by the Creative Idea Suggestion System.
Another example of TQM is Tata Steel, a steel-making company based in India and a subsidiary of the Tata Group. Tata Steel adopted TQM in the 1980s. The company was awarded the Deming Application Prize in 2008. Tata Steel used TQM methodologies to gain a deep understanding of customers. They sought to ensure value creation in a system that covered customers and suppliers.
In 2008, Tata Steel created the Performance Improvement Committee (PIC) to drive continuous performance improvement. Performance Improvement (PI) Groups were established for iron making, steel making, flat rolling, long rolling, maintenance and more.
As part of their 2008-2009 annual report, Tata Steel reported that their TQM initiatives resulted in a $150MM bottom line impact on their business.