TOTAL QUALITY MANAGEMENT (TQM)

Anju Jain (PMBX1010)

Flow of presentation
1. 2. 3. 4. 5.

What is TQM: Definition and Concepts The Evolution of TQM: How it came to be. Benefits of TQM Cost Impact and Measurements Real life example Tata Steel

Definition: Total Quality Management

It is an integrated organizational effort designed to improve quality at every level. It is about meeting quality expectations as defined by the customer. Total : Involves every one and encompasses everything the company does Quality: Conformance to the requirements Management : Integrates all organizational functions. Quality can and must be managed The emphasis of total quality management is to: "design and build quality in, rather than trying to inspect and repair it".

Concepts
Total quality management is based on the following principles: Concentration towards meeting various and ever-increasing more sophisticated customers' requirements. Concentration on processes and their continuous improvement. The correct way for achieving quality is total activities management in valuechain. The emphasis is on prevention, not on inspection at the end of the product manufacturing process. Every employee is to be engaged in quality improvement and responsible for his work quality. It is only by team-work that processes can be improved and high quality achieved. Decision making is to be based on accurate and relevant information. Enterprise is to cooperate with those suppliers who are able to ascertain qualitative inputs.

How it came to be..

Developed by American management consultants E. Edwards Deming, Joseph M. Juran and Armand V Feigenbaum. Though originated in 1960s and gained prominence in 1980s. It was embraced by the Japanese managers enthusiastically so much that the Deming Prize was introduced by JUSE (Union of Japanese Scientists and Engineers)

Indian Companies which won the award

2003: Mahindra & Mahindra Ltd., the world's first tractor company to win. 2008: Tata steel: the first integrated steel plant in Asia to win Deming award.

Benefits

Elimination of non-value-adding activities (such as setting up machines and ordering materials). Reduction of inventories, lead-times, and defects. Streamlining production flow. Suppliers cooperation. Increasing the flexibility of the workforce.

TQM - Cost Impact and Measurement

TQM is expected to bring down costs related to inspection, rework, scrap and warranty repairs and thus result in financial benefits along with better efficiency and productivity. To help implement TQM, managerial accountants usually need to
Do a cost benefit analysis of TQM implementation overhead versus its cost advantages Do benchmarking against the best practices companies Periodically report and analyze cost-of-quality since TQM involves Continuous Improvement Use costing techniques such as Activity Based Costing that give more emphasis to the processes involved in creating a product or delivering a service Identify the value added for the customer by each activity and thus control non-value adding activities

Tata Steel

Tata Steel has been pursuing TQM for business excellence formally since the late 1980s. The key TQM elements as practiced by the company were:
Policy management Daily management Problem Solving and Task Achieving

Won the Deming Application Prize in FY 2008-09. Live Case

The Task: To keep in check price rises, limit price volatility and eventually control costs. Action: Included innovations and improvement initiatives using Total Quality Management precepts. Result: As a result of these focused strategies, the Division achieved a savings of Rs. 725 crores in FY 10, comprising Rs. 275 crores through strategic initiatives and Rs. 450 crores in price reductions

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