Total Quality Management
Presented by
C. Christopher Lee
Associate Professor of Management
Lee (2012): Critical Issues on TQM
1. Customer & Quality
2. Quality Measurements
3. Process Improvement
4. 3 σ (sigma), 4 σ, 5 σ, 6 σ
5. Continuous Improvement
6. Quality & Profitability
7. Total Commitment
Customer & Quality
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The first step of TQM is to define the quality.
Customers set an expectation for a
product/service.
When the expectation is met, customers are
satisfied.
When customers are satisfied, they validate the
quality of the product/service.
Therefore, Quality = Customer Satisfaction
Review Question (RQ): Who defines the quality?
Why?
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Quality Measurements
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After defining the quality for a product/service, the next
step is to quantify the quality.
A manager should form a team including workers, quality
specialist.
The manager should lead the team to determine a proper
measurement for each process of a product/service; A
quality goal can become a measurable number.
The quality goal is now set scientifically.
Workers will collect the data for the measurement,
process & analyze the data, and improve the process.
RQ: Why does TQM quantify the quality?
RQ: Why do Workers have to be involved in quantifying
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the quality (planning)?
Product Control vs. Process Control
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Product Control = Quality Control (old):
• Before TQM, we implemented quality control by
checking the defect rate of finished goods. This is
product control.
• This approach does NOT improve the quality.
• When you check the quality of finished goods, damages
were already done.
• Summary: Product control is not TQM.
• Reality Check: Still many business organizations
conduct “quality control” approach, and think they are
implementing TQM.
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RQ: Why doesn’t Quality Control improve the quality
actually?
Product Control vs. Process Control (continued)
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Process Control = Process Improvement, Quality
Improvement, TQM (new): TQM asks you to check the
quality in each process of a whole business operation.
• If a process shows low quality, you must stop the whole
operation, and everyone must solve the particular
process immediately.
• By improving each process, the whole operation (total
quality) is improved, and the quality of the fished good
is improved.
Summary: OLD
NEW
Product Control
Process Control
Quality Control
Quality Improvement - TQM
RQ: Why is “quality improvement” better than “quality
control”?
Striving for 6 σ
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SPC: Statistical Process Control
3 σ : Less than 3 defects per 1000
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4 σ : Less than 3 defects per 10,000
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Contender for Deming Prize
6 σ : Less than 3 defects per 1,000,000
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Leader in the industry
Contender for Malcom Baldridge Award
5 σ : Less than 3 defects per 100,000
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Industry standard, Supply chain management
World Leader
Motorola (early 90s); Toyota (1965-early 2000s)
RQ: Why did Toyota lose the 6-sigma reputation in 2000s?
Continuous Improvement
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OLD: If it is not broken, don’t fix it.
NEW: Even if you achieved a quality goal, never
stop improving the process.
TQM = Continuous improvement
= Never-ending process
If you stop improving, a competitor will take over
your territory soon.
To simply survive, you need to continuously
improve the quality.
3σ  4σ  5σ  6σ
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RQ: Why is TQM a never-ending process?
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Relationship b/w Quality & Profitability
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REVENUE:
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1. Words of Mouth:
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1. Lower WIP:
Higher Quality
Higher Satisfaction
Worlds of Mouth
Higher Sales
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2. Higher Price:
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Quality
Higher Quality
Less Defects
Less WIP
Less Production Cost
2. Lower Returns:
Higher Quality
Higher Perception
Higher Price
Higher Revenue
 Revenue
COST:
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& Cost
Higher Quality
Less Defects
Less Returns
Less Operations Cost
 Profit
!!!
Interlinking Quality and Profitability Performance
RQ: What is the relationship b/w quality & profitability?
Total Commitment
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Time & Cost: Improving a process takes a lot of
resources (time & cost). Imagine a business operation
that involves more than 100 processes.
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Long-Term Project: Therefore, TQM must be a longterm project.
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Total Quality: Every process in the organization must get
involved in quality improvement.
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Top Management Support: Top management must
commit fully to this TQM project, otherwise the TQM will
fail miserably. Without support of CEO/President of a firm,
TQM will never be implemented successfully.
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RQ: Why does TQM fail without total commitment & full
support by top management?