Total Quality Management

Operations Management

TQM is composed of three paradigms:

Total: Involving the entire organization, supply chain, and/or product life cycle Quality: With its usual definitions, with all its complexities. Management: The system of managing with steps like Plan, Organize, Control, Lead, Staff, provisioning and organizing

As defined by the International Organization for Standardization (ISO): "TQM is a management approach for an organization, centered on quality, based on the participation of all its members and aiming at long-term success through customer satisfaction, and benefits to all members of the organization and to society." ISO 8402:1994 One major aim is to reduce variation from every process so that greater consistency of effort is obtained. In Japan, TQM comprises four process steps, namely: 1. Kaizen Focuses on "Continuous Process Improvement", to make processes visible, repeatable and measurable. 2. Atarimae Hinshitsu The idea that "things will work as they are supposed to" . 3. Kansei Examining the way the user applies the product leads to improvement in the product itself. 4. Miryokuteki Hinshitsu The idea that "things should have an aesthetic quality" TQM requires that the company maintain this quality standard in all aspects of its business. This requires ensuring that things are done right the first time and that defects and waste are eliminated from operations. A comprehensive definition Total Quality Management is the organization wide management of quality. Management consists of planning, organizing, directing, control, and assurance. Total quality is called total

because it consists of two qualities: quality of return to satisfy the needs of the shareholders, and quality of products. Origins The origin of the expression Total Quality Management is unclear. "Total Quality Control" was the key concept of Armand Feigenbaum's 1951 book, Quality Control: Principles, Practice, and Administration. In a chapter titled "Total Quality Control" Feigenbaum grabs on to an idea that sparked many scholars' interest in the following decades. The expression Total Quality Control existed together with the Japanese expression "Company Wide Quality Control" (CWQC) and the differences between the two expression was unclear. Major influencers for both expressions were W. Edwards Deming, Joseph Juran, Philip B. Crosby, and Kaoru Ishikawa, known as the big four. The expression Total Quality Management started to appear in the 1980s and there are two theories of its origin: One theory is that Total Quality Management was created as an misinterpretation from Japanese to English since no difference exist between the words "control" and "management" in Japanese.
[1]

. According to William Golomski (American quality scholar and consultant, 1924-2002) was

TQM first mentioned by Koji Kobayashi at NEC (Nippon Electrical Company) in his speech when he received the Deming Prize in 1974. The American Society for Quality says that the term Total Quality Management was used by the U.S. Naval Air Systems Command in 1984 to describe its Japanese-style management approach to quality improvement since they did not like the word control in Total Quality Control. The word management should then have been suggested by one of the employees, Nancy Warren. This is consistent with the story that the United States Navy Personnel Research and Development Center began researching the use of statistical process control (SPC), the work of Juran, Crosby, and Ishikawa, and the philosophy of W. Edwards Deming to make performance improvements in 1984. This approach was first tested at the North Island Naval Aviation Depot.

TQM and contingency-based research TQM has not been independent of its environment. In the context of management accounting systems (MCSs), Sim and Killough (1998) show that incentive pay enhanced the positive effects of TQM on customer and quality performance. Ittner and Larcker (1995) demonstrated that product focused TQM was linked to timely problem solving information and flexible revisions to reward systems. Chendall (2003) summarizes the findings from contingency-based research concerning management control systems and TQM by noting that TQM is associated with broadly based MCSs including timely, flexible, externally focused information; close interactions between advanced technologies and strategy; and non-financial performance measurement. Possible lifecycle Abrahamson (1996) argued that fashionable management discourse such as Quality Circles tends to follow a lifecycle in the form of a bell curve, possibly indicating a management fad

CASE STUDY: SONA KOYO Steering Ltd The SONA KOYO Steering Ltd is the Indian Market leader in the steering gear systems. The Rs286-crore-turnover company won the prestigious Deming quality medal last year from the Union of Japanese Scientists and Engineers (JUSE). "The Deming process is like getting a doctorate. In PhD there is no syllabus. One has to choose an area that has not been researched previously by somebody else and come out with your own findings," says Dr Surinder Kapur, chairman and managing director, Sona Koyo Steering Systems Limited, a postgraduate in mechanical engineering from Michigan State University, USA, with a doctorate in fluid dynamics. A great admirer of Toyota Production System (TPS), Dr Kapur yearns for Sona Koyo to be able to resemble the Japanese auto company. But he knows that the journey will be a long one. Here he talks about his company's journey into the rigorous world of the Deming quality processes and the efforts required to keep improving further from there. When did the company start practising the Deming quality process? What had it been practising earlier?

At Sona Koyo, quality was built into process right from its inception. Machines were arranged into a cellular layout (product layout). Quality checks were made part of the process and were done by the operators. In 1999-2002, when their net profit came down to a record low, they were determined to do something about it. There was a marked change in the quality process when Toyota Production Systems' (TPS) expert ,M.Tanaka from Koyo Seiko, Japan, started guiding them in the early '90s. Many pokayoke (fool proofing) systems were installed to avoid operator mistakes. That is when they started gaining a real understanding of TPS. Problem solving was made a necessary process in production management. They learnt how to become capable of supplying products just-in-time to customers. Their quality system was strengthened in line with ISO-9002 in 1997.

What

was

the

TQM

journey

to

Deming

like?

In 1997 Maruti Udyog Limited suggested that Sona Koyo join the first total quality management (TQM) cluster of 10 suppliers to be trained in the TQM methodology. When they began to implement and experience TQM, the 'managers' model lines, daily work management, gap analysis and root cause analysis with scientific tools were introduced. Guidance and education from Prof. Yoshikazu Tsuda, a JUSE counselor and member of Deming 'prize committee' and learning and sharing with other cluster companies provided them with a great learning opportunity, especially in learning to focus more on customers' requirements. The policy deployment exercise with 'management for objectives' (MFO) began to help the organisation to focus on the company's objectives, thus helping all the employees look at one direction. The teachings of TQM with emphasis on 'learning through experiencing' began to give the company a direction towards customer focus. The quality visits by top management and reviews of MFOs clearly defined the accountability of senior and divisional managers. They formed a separate team to coordinate TQM activities. Initially, a team of three engineer level people was formed in 1999. In 2001, this was upgraded to a quality system division under a general manager. Under this division, four departments - TQM, total productivity maintenance (TPM), quality management systems (QMS) and environmental management systems (EMS) were formed to be headed by a manager. What roadblocks did they face and how were they sorted out?

There were three noticeable roadblocks. These were (1) understanding about TQM across the organisation, (2) involvement of all the employees and (3) obtaining the commitment of managers. These were overcome by imparting training at all levels and making `quality visits' to all the divisions by the top management. The path to the Deming award must have included implementing concepts like lean manufacturing, TPM and other?

They started implementing TPS - Toyota Production System - techniques in 2000 taking guidance from a TPS expert through their collaborator. The techniques helped in increasing their

productivity and reducing waste. To speed up the process of shop floor activities, in 2000, Sona Koyo decided to get the assistance of the Japanese Institute of Plant Maintenance (JIPM) to implement TPM techniques. TPM has helped Sona Koyo to reduce rejects as well as breakdown of machines. It has helped in achieving zero defects in various areas. The development of new products like the Actuator and the cost- effective collapsible column gave them the confidence to apply for the Deming award. What are the details of the benefits the company started deriving after it started practicing TQM? The company specifies the benefits through this table: Area Business Scope Before (97) Manual Steering, 5 customers After (03) Hydraulic steering, customers Customer Rejections Manufacturing expenses Schedule v/s supply Sales per employee Accidents Training employee Suggestions employee BSC - Balanced Score Card per 2 10.4 20.6 per 92% Rs 32 lacs 18 36 Hours 99% Rs 45 lacs 1 57.4 hours 99.7% Rs 63 lacs 1 70 hours 1579 ppm 7.5% of sales 213 ppm 5.2% of sales power 18 Now (07) Electric steering, customers 29 ppm 4.3% of sales power 43

How has the TQM / Deming medal helped the company collect the customer/market information post sales?

Earlier, they were collecting information on product quality in the field from the customers. They started visiting car dealers to gather this information. Apart from these two sources, today, they collect this information from end users (drivers). they have been learning to implement quality function deployment (QFD) techniques to capture and utilise the customer voice. What does the new tag, a Deming company mean to domestic as well as overseas markets? The award has helped to enhance the brand equity of Sona Koyo. Customers, prospective employees, shareholders, industry observers and the general public now take them more seriously. The biggest impact will be on export plans. The award has catapulted Sona Koyo into the radar screens of global auto majors looking for low cost but world class suppliers. The company can now leverage the Deming Prize to rapidly scale-up exports. While bidding for export orders they no longer need to convince prospective customer about the business practices and product quality. Prior to receiving the Deming medal, they were confident of achieving an export volume of, perhaps, Rs40-50 crore by 2008-09. But now they are positive of crossing Rs100 crore by that year.

Improving Financial Services through TQM: A Case Study The work described in this case study was undertaken in a young, rapidly expanding company in the financial services sector with no previous experience with Total Quality Management (TQM). The quality project began with a two-day introductory awareness program covering concepts, cases, implementation strategies and imperatives of TQM. The program was conducted for the senior management team of the company. This program used interactive exercises and real life case studies to explain the concepts of TQM and to interest them in committing resources for a demonstration project. The demonstration project, which used the Seven Steps of Problem Solving (similar to DMAIC), was to show them how TQM concepts worked in practice before they committed resources for a company-wide program. Step 1. Define the Problem 1.1) Selecting the theme: A meeting of the senior management of the company was held. Brainstorming produced a list of more than 20 problems. The list was prioritized using the weighted average table, followed by a structured discussion to arrive at a consensus on the two most important themes -- customer service and sales productivity. Under the customer service theme, "Reducing the Turnaround Time from an Insurance Proposal to Policy" was selected as the most obvious and urgent problem. The company was young, and therefore had few claims to process so far. The proposal-to-policy process therefore impacted the greatest number of customers. An appropriate cross functional group was set up to tackle this problem. 1.2) Problem = customer desire current status: Current status: What did the individual group members think the turnaround is currently? As each member began thinking questions came up. "What type of policies do we address?" Medical policies or non-medical? The latter are take longer because of the medical examination of the client required. "Between what stages do we consider turnaround?" Perceptions varied, with each

person thinking about the turnaround within their department. The key process stages were mapped:

Several sales branches in different parts of the country sent proposals into the Central Processing Center. After considerable debate it was agreed at first to consider turnaround between entry into the computer system at the Company Sales Branch and dispatch to the customer from the Central Processing Center (CPC). Later the entire cycle could be included. The perception of the length of turnaround by different members of the team was recorded. It averaged: Non-Medical Policies Medical Policies 17 days 35 days

Invoking the slogan from the awareness program "In God we trust, the rest of us bring data" the group was asked to collect data and establish reality. Armed with a suitably designed check sheet they set about the task. Customer desire: What was the turnaround desired by the customer? Since a customer survey was not available, individual group members were asked to think as customers -- imagine they had just given a completed proposal form to a sales agent. When would they expect the policy in hand? From the customer's point of view they realized that they did not differentiate between medical and non-medical policies. Their perception averaged out six days for the required turnaround.

"Is this the average time or maximum time that you expect?" they were asked. "Maximum," they responded. It was clear therefore that the average must be less than six days. The importance of "variability" had struck home. The concept of sigma was explained and was rapidly internalized. For 99.7 percent delivery within the customer limit the metric was defined. Customer desire: Average+3 Sigma turnaround = less than 6 days Current status: Non-medical policies (Average 19/Sigma 15) Average+3 sigma= 64 days Medical (Average 37/Sigma 27) Average+3 sigma= 118 days The Problem was therefore defined: Reduce Average+3 sigma of turnaround for: Non-Medical Policies From 64 to 6 days Medical Policies From 118 to 6 days The performance requirement appeared daunting. Therefore the initial target taken in the Mission Sheet (project charter) was to reduce the turnaround by 50 percent -- to 32 and 59 days respectively. Step 2. Analysis of the Problem In a session the factors causing large turnaround times from the principles of JIT were explained. These were: Input arrival patterns

Waiting times in process - Too many handovers - Non-value added activities, etc.

Processing times Scheduling Transport times

Deployment of manpower

Typically it was found that waiting times constitute the bulk of processing turnaround times. Process Mapping (Value Stream Mapping in Lean) was undertaken to calculate time without waiting. The aggregate results are summarized below: Number of operations 84 Number of handovers 13 In-house processing time (estimated) 126 -mins. Range of individual stage time 2 to 13 mins. Could this be true? Could the turnaround be 126 minutes for internal processing without waiting? The group started to question of the status quo. The change process had begun. To check this estimate it was decided to collect data -- run two policies without waiting and record the time at each stage. The trial results amazed everyone: Policy No. 1 took 100 minutes and Policy No. 2 took 97 minutes. Almost instantly the mindset changed from doubt to desire: "Why can't we process every proposal in this way?" Step 3. Generating Ideas In the introductory program of TQM during the JIT session the advantages of flow versus batch processing had been dramatically demonstrated using a simple exercise. Using that background a balanced flow line was designed as follows: 1. Determine the station with the maximum time cycle which cannot be split up by reallocation -8 minutes. 2. Balance the line to make the time taken at each stage equal 8 minutes as far as possible. 3. Reduce the stages and handovers -- 13 to 8. 4. Eliminate non-value added activities -- transport -- make personnel sit next to each other. 5. Agree processing to be done in batch of one proposal. Changing the mindset of the employees so they will accept and welcome change is critical to building a self-sustaining culture of improvement. In this case, the line personnel were involved in a Quality Mindset Program so that they understood the reasons for change and the concepts

behind them and are keen to experiment with new methods of working. The line was ready for a test run. Step 4. Testing the Idea Testing in stages is a critical stage. It allows modification of ideas based upon practical experience and equally importantly ensures acceptance of the new methods gradually by the operating personnel. Stage 1: Run five proposals flowing through the system and confirm results. The test produced the following results: Average turnaround time: < 1 day In-house processing time: 76 mins. There was jubilation in the team. The productivity had increased by 24 percent. The head of the CPC summarized: "I gave five files for processing, and went for a meeting. Emerging from the meeting about 30 minutes later I was greeted by the dispatch clerk jubilantly reporting, "'Madam, the TQM files are ready for dispatch.'" The mindset was dramatically changed and line personnel were now keen to push the implementation. Stage 2: It was agreed to run the new system for five days -- and compute the average and sigma of the turnaround to measure the improvement. It was agreed that only in-house processing was covered at this stage and that the test would involve all policies at the CPC but only one branch as a model. This model, once proved, could be replicated at other branches. The test results showed a significant reduction in turnaround: 1. For all non-medical policies From 64 to 42 days or 34% 2. For policies of the model branch From 64 to 27 days of 60% The Mission Sheet goal of 50 percent reduction had been bettered for the combined model branch and CPC. Further analysis of the data revealed other measures which could reduce the

turnaround further. Overall reduction reached an amazing 75 percent. Turnaround, which had been pegged at 64 days, was now happening at 99.7 percent on-time delivery in 15 days. Step 5. Implementing the Ideas Regular operations with the new system was planned to commence. However, two weeks later it was still not implemented. One of the personnel on the line in CPC had been released by his department for the five-day trial to sit on the line but was not released on a regular basis. The departmental head had not attended the TQM awareness program and therefore did not understand why this change was required. There were two options -- mandate the change or change the mindset to accept the change. Since the latter option produces a robust implementation that will not break down under pressures it was agreed that the group would summarize TQM, the journey and the results obtained in the project so far and also simulate the process with a simple exercise in front of the department head. This session was highly successful and led to the release of the person concerned on a regular basis.

Step 6. Check the Result The process was run for one month with regular checks. The results obtained were marginally better than the trials conducted in Step 5: Average 11 days Sigma 9 days Average+3 sigma 38 days

Step 7. Standardize Control/Document the Improvement Story

Essentially the in-house processes in two centers of processing -- the CPC and one sales branch -- had been impacted so far. To make sure that the gains were held, control charts

were introduced in both locations. Sample x-bar and sigma-control charts for the CPC are shown below:

A special "Grind It In" session was conducted for line personnel to ensure that the control chart was updated every day, and any deterioration was dealt with by finding and killing the root causes of the problems.

Customer reaction: Sales management and sales agents (internal customers) clearly noticed the difference. For instance one sales manager reported that a customer had received a policy within a week of giving a proposal and was so amazed that he said, "If you give such service I will give you the next policy also!"

Adoption of a similar process at the CPC and the model branch for medical policies has already reduced the average+3 sigma of turnaround time by 70 percent -- from 118 days to 37 days. The corresponding all-India reduction was from 118 days to 71 days -- a 60 percent reduction.

The project objective of 50 percent in the first stage has been achieved. A quality improvement story was compiled by the project Leader for training and motivating all employees.

Future Actions Non-medical policies: Goal to reduce turnaround from 42 days to about 15 days. 1. Roll out process to branches to achieve 24 days throughout the country. 2. Minimize rework by analyzing, prioritizing and training sales branches to avoid the causes of rework. 3. Working with the bank to improve the turnaround time of banking checks. 4. Considering processing proposals while check clearance is in progress. Medical policies: Goal to reduce turnaround from 71 days to about 24 days. 1. Roll out process to branches to reduce turnaround from 71 to 37 days. 2. Streamline the process of medical exam of the client from 37 to 24 days.