Mind your Business - 10 May 2004

Total Quality Management and ISO 9000

The News

It took years for large-scale British car manufacturing to catch up with modern production
methods. © Photolibrary Group

There was a time when a business checked the quality of its output through random
checks at the end of the production process. Such checks should have ensured that the
majority of the products leaving the production line were satisfactory; if problems did
occur at a later stage following consumption, repairs could be effected or replacements
provided.

Such an attitude tended to reflect a product-orientated approach where the focus was on
the product and the production process. The UK then entered a period of economic
decline from the mid-seventies, precipitated by the oil crisis of 1973 and the coal miners'
strike of 1972 and 1974. By the end of the seventies, it became clear that, as the
conservative election posters claimed, 'Britain was not working'! Not only was
unemployment rising but also more efficient and effective producers from southeast Asia
were overtaking the country's manufacturers in particular.

The malaise that seemed endemic throughout British industry was characterised by the car
industry - poor industrial relations records, an 'us and them' mentality throughout the
industry, poor quality products (the term 'rust bucket' was not unheard of in relation to
British built cars) bits not working and falling off and poor after sales service all reduced
the competitiveness of British manufacturing.

The last twenty-five years therefore have seen remarkable changes to the way in which
most businesses operate. Part of the change that has occurred has been the drive towards
Total Quality Management (TQM). For many people, the concept conjures up some
American management guru with a flip chart and overhead projector offering words of
wisdom to transform a business in an easy to handle two-day training session. Whilst such
in-service training certainly did occur and could rightly be criticised, the overall impact
has been a change in thinking about the way in which business is conducted. This move
has been labelled as a 'market led' or 'market orientated' approach where the focus is on
the needs and requirements of the consumer.

Quality control is now seen as being the responsibility in everyone in an organisation. ©

Photolibrary Group

Total Quality Management is, as its name implies, related to the monitoring of quality
throughout the organisation by everyone in that organisation. This means that if problems
are spotted during the production process, it is the responsibility of that person to solve
the problem before it goes any further through the process. This way, problems should be
identified before they ever get near the consumer but if they do, every effort is made to
sort the problem out with the minimum of fuss.

To support the emphasis on quality, firms are also looking to get external verification for
the standards that they are projecting to their customers. The use of the kite mark from the
British Standards Institute, the CE mark indicating that the product complies with all EU
directives and the International Standards Organisation (ISO) 'badges' send signals to
customers throughout the world that a business takes its quality management processes
seriously.

Many firms still have a long way to go in meeting the exacting quality standards that
customers are increasingly expecting. The British for example, have been accused of not
complaining enough when standards fall below those expected. One only has to listen to
top chef Gordon Ramsay when he visits restaurants to know that such standards -
especially when hidden from public view - can be way below those that are necessary for
gaining a competitive advantage and in meeting environmental and health requirements.

Theory

Total Quality Management (TQM) is a business philosophy that seeks to encourage

both individual and collective responsibility to quality at every stage of the production
process from initial design and conception through to after sales service.

Many businesses may not use the term TQM anymore but the philosophy is still very
much part of most business thinking. It is seen as being a way in which a business can
add value to its product and to gain competitive advantage over its rivals. The former
may allow a business to charge a higher price for its product or service whilst the latter
can be a key feature of its marketing programme.

TQM requires a change in the way in which businesses operate. It implies a number of
things if it is to work successfully:

• Management structures have to be more consultative and less hierarchical.

• Workers have to be empowered to be able to make decisions at all levels of the
organisation.
• Workers have to be trained and involved in the building of the philosophy.
• Communication links between workers and management and between the
business and all aspects of the supply chain must be excellent.
• Commitment to TQM must be backed by action, which the customer can see, and
experience.
• Commitment to the process must be led by the senior management of the business
- paying 'lip service' will invariably end up in failure.

TQM can be addressed in a business in a number of ways. The most common are:

• A policy of zero defects - any problems in the production process are filtered out
before they get anywhere near the customer.
• Quality chains - each stage of the production process is seen as being a link in
the chain right down to the relationship between one worker in the process and
another.
• Quality circles - meetings of those directly involved in the production process to
discuss and solve problems and make improvements to the production process.
 • Statistical monitoring - the use of data and statistics to monitor and evaluate
production processes and quality.
• Consumer feedback - using market research and focus groups to identify
consumer needs and experiences and to build these into the process.
• Changing production methods - many businesses, where appropriate, have
looked at the layout of their production processes - it could be the move to open
plan offices, the development of teams or the use of cell production to improve
worker commitment to the philosophy.

TQM invariably involves some sort of cost. Re-organising the business in any of the
ways above not only involves capital cost but also the cost of training staff. High quality
change management is therefore an essential ingredient of the success of such strategies.

Costs can however be saved if the change is successful. The cost of replacing damaged or
faulty goods can be high - if the business waits until the end of the process other
resources will have been wasted. The improved communication between suppliers and
the firm should help to reduce defective components.

Other benefits may involve the effect on customer loyalty and repeat purchases, as well
as winning over customers from rivals. Image and reputation can take many years to win
but only a short time to lose so the stakes for the business are high.

To prove that the business has rigorous quality standards, external certification by a
respected body is seen as being important. Such external certification could be through
the Investors in People programme - a recognised standard in the training and
professional development of staff in a business - and through such bodies as the ISO.

Two certificates are particularly sought after - ISO 9000 and ISO 14000. The former is
concerned with quality management in relation to customer requirements, customer
satisfaction, adherence to regulations and the pursuit of continuous improvement.

ISO 14000 is related to the impact of the firm's activities on the environment and the
firm's attempts to improve its performance in this respect. Getting certification means that
the company can send a message to companies throughout the world, which recognise
this standard - currently, around 90 countries - of the quality that they can expect when
dealing with the company.

The standards for the ISO 9000 family deal with the following areas:

1. Quality management systems - establishing and monitoring the process whereby

product and service quality are maintained.
2. Management responsibility - how the management establish, maintain, monitor
and communicate their commitment to the standards.
3. Resource management - how the business provides the resources - both physical
and human - to enable the standards to be met and maintained.
 4. Product realisation requirements - how businesses establish and monitor
quality from concept to final product or service delivery.
5. Measurement, analysis and improvement requirements - how businesses use
data to monitor their quality control and how this data is used to improve quality
provision.

The terminology related to quality management could be regarded as being a bit 'nineties'
but the philosophy is still one that drives many businesses as they seek to find ways in
which, in an increasingly competitive global market, they can gain some form of
competitive advantage or add value to their business.

Tasks

1. Read this case study relating to a firm attempting to gain accreditation within the
ISO 9000 family.
(http://www.usfc.com/ShippingForms/HollandISOCaseStudy.pdf).
2. In groups, discuss the approach that a business might take to gaining certification.
Consider the costs, benefits, obstacles and challenges that might face a business in
seeking to gain the standard.
3. Produce a short report or presentation outlining your ideas to present to the rest of
the group.
4. Discuss the different issues raised by each group in the activity. What does this
tell you about TQM as a business philosophy?