Total Quality and Strategic Management

UNIT- IV
S. Sakthitharan 09BA201

TOTAL QUALITY MANAGEMENT

Management commitment 2) Leadership 3) Customer focus 4) Total participation 5) Process analysis and improvement
1)

Principles of TQM - 1
y Quality must be managed y Every business has customers and is a supplier y Processes must be improved y Every employee is responsible for quality y Problems must be prevented, not just fixed y Quality must be measured

Principles of TQM - 2
y Quality improvements must be continuous y The quality standard is defect free y Goals are based on customer requirements y Costs must be calculated over the life cycle of the

product y Management must be involved and lead the quality process

Continual Improvement
y Kaizen, which in Japanese means gradual,

unending improvement, is a principle that focuses on improving every aspect of the business.
y First, we must understand...
THE CUSTOMER THE NEEDS and ISSUES HOW THE FIRM IS FAILING TO MEET THEM

...Then Apply PDCA

y Plan. With the process identified and analyzed, the team now

plans for the change that takes place to improve the process.
y Do. The team implements the plan, assuming it has been

determined that doing so does not pose unnecessary risk to other parts of the system.
y Check. The team proceeds to analyze the results of the change to

verify that it actually improved the process. If not, the team reexamines the plan to locate any errors in its reasoning.
y Act. Once the change has been verified, accepted, and

documented, the team puts in place the changes, equipment, or whatever is required to make the change in the process routine and move on to define and research the next issue.

Total Quality Management (TQM) Systems

y Emphasize total commitment to the customer

through continuous improvement using:

 

Data-driven, problem-solving approaches Empowerment of employee groups and teams

y Benefits  Increases customer satisfaction  Cuts costs  Reduces time-to-market for innovative products

Copyright 2004 South-Western. All rights reserved.

Total Quality Management Principles

y Customer satisfaction
 

Going beyond customer expectations Surprise the customer!

y Kaizen Japanese term for continuous improvement



Always look to make an incremental improvement somewhere

y Poka yoke Japanese for a foolproof solution



Solutions that are so good, the problem never happens again

y Quality circles


Keep everyone involved and well-informed (in the loop)

y Hoshin Japanese for policy deployment



A planning and review method that requires a statement of objectives, how they will be achieved, and how we know theyre accomplished (...like an MBO plan)

Total Quality and Competitive Advantage

y Ultimately

competitive advantage lies in their innovative capacity. y While innovative products are the final results that generate value for the firm, it is the underlying quality systems, culture, and infrastructure that generates and supports innovation. y Three dynamic capabilities that are the principal sources of sustainable competitive advantage y customer focus (service & satisfaction), y continuous improvement, and y innovation.

Is Total Quality Management Enough For Competitive Advantage?

"We fail more often not because we fail to solve the problem we face, but because we fail to face the right problem." (Russell L. Ackoff)

For Competitive Advantage

y The Total Quality Management (TQM) philosophy of

doing business emphasizes lowering costs by reducing waste, helping suppliers provide quality products and satisfying the customer with quality goods and services. y Companies that can produce goods at lower costs than their competitors, while delivering quality products that satisfy their customers will have an advantage over those companies that do not duplicate those feats. y Implementing TQM can help a company gain a competitive advantage in their business.

Questions you may have include

y How can a company reduce costs?
Getting products- Walmart Making products- Toyota and Honda Manufacturing cost reduction

y What does helping suppliers and workers do?

Quality supplies Quality workers

y How does customer satisfaction give an advantage?

Potential Competitive Advantage

y Achieving lower overall costs than

rivals
 Performing

activities differently (cheaper

process)
y Possessing the capability to

differentiate the firms product or service and command a premium price

 Performing

different (valuable) activities

The Evolution in SM thinking Strategic management is an ongoing process that assesses the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented

Major concepts that are introduced by the quality gurus like Deming, Juran, Crosby, ..
Reduction of variation, continuous improvement of products and services to meet customers needs, costs of quality or costs of poor quality. breakthrough projects, zero defects, cross functional management systematic approach to quality, and strategic focus to quality with respect to customer satisfaction, competitiveness, profitability, quality planning, and organization wide commitment

Strategic Quality Management,

y The advancement of these concepts y Evolutionary development of quality management,
namely, from

inspection, to statistical quality control, to quality assurance, to total quality control and finally to total or strategic quality management

Deming's philosophy on quality management

y For Successful implementation of strategic quality

management Top management must orient themselves to constantly innovate and commit resources to support innovation and continuous improvement
y But Successful implementation is not an easy task.

What is Strategy?
y Strategy consists of a set of moves and approaches that

management employs to run the organization y It is managements game plan to

    

Attract and please customers Stake out a distinctive position Conduct operations Compete successfully Achieve organizational objectives

Without a strategy the organization is like a ship without a rudder, going around in circles.

What is a Strategic Plan?

Where organization is headed -- Strategic vision and business mission Short and long term performance targets -Strategic and financial objectives Action approaches to achieve targeted results -A comprehensive strategy

Why Are Strategies Needed?

To proactively shape how an organizations services will be delivered. To mould the independent actions and decisions of employees into a coordinated, organization-wide game plan

Typical Steps in Strategic Planning

1. 2. 3. 4. 5. 6. 7.

Environmental Analysis: External & Internal Developing a Mission and Vision Setting Primary Strategic Directions & Goals Crafting Strategy and Action Plans for Each Goal Implementing and Executing the Strategy Evaluating Performance Initiating Corrective Adjustments

Strategy -- What to Look For

Actions to diversify Actions to strengthen resources & capabilities How functional activities are managed Efforts to pursue new opportunities Actions to excel over rivals Responses to changing external circumstances Actions to alter geographic coverage Actions to merge or acquire other outfits Actions to form alliances and collaborative partnerships

Pattern of Actions That Define Strategy

Strategy Implementation and Execution

Implementation and execution is an action-oriented, make-ithappen process involving people management, developing competencies and capabilities, budgeting, policy-making, motivating, culture-building, and leadership

References
y http://www.school-for-

champions.com/competition/tqm.html y Evans, J.R (2008) TQM (1st edn) cengage learning y http://www.isixsigma.com/index.php?option=com_ k2&view=item&id=1489:introduction-andimplementation-of-total-quality-managementtqm&Itemid=179