ESTABLISHING A CUSTOMER-FOCUSED TOTAL QUALITY CULTURE IT13 - FINALS

Total Quality Management, TQM, is a method by which
management and employees can become involved in the
continuous improvement of the production of goods and services.
TQM is a management philosophy that seeks to integrate all
organizational functions (marketing, finance, design, engineering,
and production, customer service, etc.) to focus on meeting
customer needs and organizational objectives.
• The various departments of the organization can work
towards achieving the organization's goals and
collaborate for fast decision-making.
• Data can be collected for strategic and operating
decisions.

TQM is the foundation for activities, which include:

• Commitment by senior management and all employees
• Meeting customer requirements
• Reducing development cycle times
• Just in time/demand flow manufacturing
• Improvement teams
• Reducing product and service costs
• Systems to facilitate improvement
• Line management ownership
• Employee involvement and empowerment
• Recognition and celebration
• Challenging quantified goals and benchmarking
• Focus on processes / improvement plans
• Specific incorporation in strategic planning

Principles of TQM

Executive Management – Top management should act as
the main driver for TQM and create an environment that
ensures its success.

Training – Employees should receive regular training on
the methods and concepts of quality.

Customer Focus – Improvements in quality should
improve customer satisfaction.

Decision Making – Quality decisions should be made
based on measurements.
A key variable is a significant indicator of business activity, whose

Methodology and Tools – Use of appropriate
sudden and unpredictable change warrants immediate action by
methodology and tools ensures that non-conformance
management. Key variables are also referred to as key success
incidents are identified, measured and responded to
factors as they help in explaining the success or failure of the
consistently.
organization.

Continuous Improvement – Companies should
continuously work towards improving manufacturing and
Although key variables differ from business to business, they have
quality procedures.
certain characteristics in common:

Company Culture – The culture of the company should
• They are important in explaining the success or failure of
aim at developing employee’s ability to work together to
the business unit.
improve quality.
• Key variables require examination and in-depth

Employee Involvement – Employees should be
evaluation.
encouraged to be pro-active in identifying and addressing
• They must be measurable, either directly or via a
quality related problems.
surrogate or substitute.
• Key variables are volatile; they can change rapidly for
Impact of Information Technology on control systems design
reasons often beyond the control of the manager.
Information technology has benefited traditional control systems in
• Changes in key variables are not easily predictable.
many ways:
• Management action is required when a significant change
• Data can be managed more easily, and at a reasonable
occurs in any key variable.
cost.
• Predictable variables are of little use as key variables.
 ESTABLISHING A CUSTOMER-FOCUSED TOTAL QUALITY CULTURE IT13 - FINALS

Delays in the control process may occur for the following reasons:
Input Variables
When the management overreacts to a problem.

When the management is faced with a complex problem
The input variables are related to raw material, the throughput that it is unable to solve, the gap between performance
variables to production, processing and manufacturing, and the and expectations is reduced.
output variables to marketing. Key input variables could include the
A dominant team member can block informal planning
following: efforts by bringing in his own solution to a new problem

Raw material availability to be solved.

Raw material quality

Raw material costs Implications for the control structure

Production Variables Important parameters on which the control structure is to be based

The key variables related to production are: include:

Capacity utilization
Efficiency and effectiveness

Losses
Economies of scale

Quality control
Coordination

Maintenance
Assignment of responsibility for profit

Costs

Delivery Limitations of Indicators

Marketing Variables Indicators are used to understand an organization’s current state

Order book position of affairs and for initiating corrective action. However, there has to

Market share be consensus on what the indicator really means and conveys.

Institutional sales Performance indicators have the following limitations:

Asset Management Variables (a) The absence of consensus among managers on the use of

Asset turnover indicators

Working capital turnover (b) Problems encountered during the measurement of indicators
(c) Lack of clear specification of the unit of measurement
KEY SUCCESS VARIABLES AND THE CONTROL PARADIGM (d) Lack of consistent information leading to incorrect conclusions.

The control system should be designed to fit in with the hierarchical These limitations can be overcome by developing systematic and
structure of an organization. Control experts should weigh the pros scientific methods to improve the quality of the data on which
and cons of different organizational structures. Through decision-making is based.
decentralization, the management gives autonomy to the
managers of the various units of the organization.
Responsibility centers are set up to coordinate and control various
activities. Each responsibility center has its own goals and
strategies. The control system designers should design the control
systems in a way that helps managers to achieve their unit’s goals
without conflicting with the overall organizational goals. This can
be understood more clearly by analyzing the dynamics of the
control process.

Dynamics of the Control Process

After identifying the key success variables of a firm, it is important

to examine the dynamics of the control system. A control system
has two sets of dynamic interactions: reinforcing interactions and
balancing interactions. The interactions can be seen as cause and
effect relationships in organizations.