PRINCIPLES OF TOTAL QUALITY:EMPOWERMENT, COST OF QUALITY

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LESSON 36

PRINCIPLES OF TOTAL QUALITY

BROAD CONTENTS

Definitions of Total Quality

Total Quality Practices

Principles of Total Quality

Scope of Total Quality Management (TQM)

Empowerment

Cost of Quality

36.1

DEFINITIONS OF TOTAL QUALITY:

1. According to Crosby:

· Quality is not only free, it is profit maker

· Increase of 5% -10% in profitability by concentrating on quality

· Quality provides a lot of money for free

2. PandG Total Quality Management (TQM) Definition:

Total Quality is the unyielding and continually improving effort by everyone is an

organization to understand, meet, and exceed the expectations of customers.

3. A V. Feigenbaum:

As already discussed in lecture 34, A V. Feigenbaum introduced comprehensive approach

to quality in 50s by virtue of which, quality of products and services were influenced by the

following 9Ms:

Market

Money

Material

Management

Machines

Men/Women

Motivation

Mechanizations

Modern Information Methods

Mounting Products Requirements

As already discussed in the previous lecture, total quality is a people-focused management system

that aims at continual increase in customer satisfaction at continually lower real cost. Not a

separate area or program.

· Integral part of high-level strategy

· Works horizontally across functions and departments

· Involves all employees, top to bottom

· Extends backward and forward to include "supply chain and customer chain"

36.2

TOTAL QUALITY PRACTICES:

It includes the following:

· Encouraging openness

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Creating climates of trust and eliminate fear

Listening and providing feedback

Leading and participating in group meetings

Solving problems with data

Clarifying goals and resolving conflicts

Delegating and coaching

Implementing change

Making continuous improvement a way of life

36.3

PRINCIPLES OF TOTAL QUALITY:

There are three basic principles of total quality. These are as follows:

· Customer Focus

· Participation and Team work

· Continuous improvement (CI) and learning

36.4

SCOPE OF TOTAL QUALITY MANAGEMENT:

The figure 36.1 below depicts the scope of Total Quality Management (TQM). It is explained in

the ensuing paragraphs.

Figure 36.1: Scope of Total Quality Management (TQM)

Infrastructure: Basic management system necessary to function as a high performing

organization.

Practices: Activities that occurs within a management system to achieve high performance

objectives.

Tools: A wide variety of graphical and statistical methods to plan work activities, collect data

analyze results, monitor progress, and solve problems.

36.5

EMPOWERMENT:

Empowerment means that managers must relinquish some of power that they previously held.

Power shift creates management fears that workers will abuse this privilege.

Employees have authority and responsibility to make things happen. No one can be best at

everything. But when all of us combine our talents, we can be best at virtually anything.

Everyone in organization is "captain of his game". He thinks of his work unit as his "own

business", and perceives that his "work unit" is key part of "corporate enterprise". It builds

"confidence in workers" by showing them that company has confidence in them "to make

decision" on their own. Empowerment can be viewed as vertical teamwork between managerial

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and non-managerial personnel. People can be trusted to make important decisions about

management of their work activities. When people make decisions about management of their

work, its result is greater organizational effectiveness.

As a whole participation and empowerment assumes that employees are willing to improve their

"daily work process" and "relationships". Employee participation is essential active,

enthusiastic participation by employees essential to success of performance improvement

initiative.

Workers know what goes wrong and where hurdle in their processes. If given targets and

support they are best to develop creative and effective ideas for "positive change".

Problem for many project based organization reduction of "bureaucratic red tape" "that prevents

employees from seizing the initiative.

36.5.1 Participative Management:

Participative organizations are those that give:

· Information

· Knowledge

· Power

· Rewards to all employees so that everyone can be involved in organization's

performance Participative management. It is essential basis for empowered

workforce. Put "everybody's intellect" to work good thinking is not solely province

of managers. Different points of view can help shape better decision.

Participative management require that "responsibility and accountability" takes to

lowest possible level empowerment- for three eyes only creation of "corporate" spirit of

participation required that workforce have information, involvement and influence.

Participative management does not imply abrogation by management of its

responsibility it does imply workforce involvement in decision making process, but

final decision on corporate matters remains responsibility of manager.

When empowered employees become convinced that their duty is to their "process" not

to their "boss", wonderful things begin to happen. Teams shoulder responsibility for

their "process", and new, more "cooperative style" of work evolves.

Empowerment encourages "innovation" because employees have authority to "try out"

new ideas and make decisions that result in new ways of doing things. Access to

information when employees are given access to information their willingness to

cooperation and to use empowerment is enhanced.

Due to this "Accessibility", Teams "Manage and Control Opportunity" More

Effectively Than under old "Hierarchical Rules and Structure" where access to info

provided on A Need to Know Basis".

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36.5.2 Accountability:

Employees empowered to make decision, yet also held accountable for results.

Accountability is not to punish person or to generate immediate, short term results.

Intent is to ensure that empowered employees are:

Giving their best efforts

a) Working toward "agreed-upon goals"

b) Behaving responsibly toward each other

36.5.3 Empowerment Some Key Principles:

· People are valuable resource because they have "knowledge and ideas".

· People want to participate.

· When people participate, they feel empowered; they think like owners.

· When people participate, they look for ways to improved opportunities.

· When people have importance into "corporate and department decisions", better

solutions are developed.

· People should be treated fairly and with respect.

Organizations should make long term commitment for development of people because

it makes them valuable to organization. People can develop knowledge to make

important decision about management of their work activities.

36.5.4 Six Ways of Empowering Employees for Quality Improvement in Projects:

Involve employees in developing strategies for continuous improvement.

Provide employees with skills required solving problems and making decisions.

Define involvement and empowerment based on mission of organization.

Establish organizational and individual goals.

Establish customer-driven performance measurement at individual level.

Involve and empower everyone to focus on continuous improvement.

Successful empowerment of employees requires:

Employees should be provided with:

o Education

o Resources

o Encouragement

Policies and procedures should be examined for needless restrictions.

Atmosphere of trust should be fostered rather than resentment and punishment for

failure.

Information should be shared "freely" rather than "closely guarded" as "source of

control and power".

36.6

COST OF QUALITY:

To verify that a product or service meets the customer's requirements requires the measurement

of the cost of quality. For simplicity's sake, the costs can be classified as "the cost of

conformance" and "the cost of nonconformance." Conformance costs include items such as

training, indoctrination, verification, validation, testing, maintenance, calibration, and audits.

Nonconforming costs include items such as scrap, rework, warranty repairs, product recalls, and

complaint handling.

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Trying to save a few project dollars by reducing conformance costs could prove disastrous. For

example, an American company won a contract as a supplier of Japanese parts. The initial

contract called for the delivery of 10,000 parts. During inspection and testing at the customer's

(that is, Japanese) facility, two rejects were discovered. The Japanese returned all 10,000

components to the American supplier stating that this batch was not acceptable. In this example,

the nonconformance cost could easily be an order of magnitude greater than the conformance

cost. The moral is clear:

Feigenbaum divided cost of quality into two categories and four sub categories:

Costs of Control

o Prevention costs

o Appraisal costs

Costs of Failure of Control

o Internal defect costs

o External defect costs

Figure 36.2: Cost of Quality

Prevention costs are the up-front costs oriented toward the satisfaction of customer's

requirements with the first and all succeeding units of product produced without defects.

Included in this are typically such costs as design review, training, quality planning, surveys

of vendors, suppliers, and subcontractors, process studies, and related preventive activities.

Appraisal costs are costs associated with evaluation of product or process to ascertain how

well all of the requirements of the customer have been met. Included in this are typically

such costs as inspection of product, lab test, vendor control, in-process testing, and internal

external design reviews.

Internal failure costs are those costs associated with the failure of the processes to make

products acceptable to the customer, before leaving the control of the organization. Included

in this area are scrap, rework, repair, downtime, defect evaluation, evaluation of scrap, and

corrective actions for these internal failures.

External failure costs are those costs associated with the determination by the customer

that his requirements have not been satisfied. Included are customer returns and allowances,

evaluation of customer complaints, inspection at the customer, and customer visits to

resolve quality complaints and necessary corrective action.

Prevention costs are expected to actually rise as more time is spent in prevention activities

throughout the organization. As processes improve over the long run, appraisal costs will go

down as the need to inspect in quality decreases. The biggest savings will come from the

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internal failure areas of rework, scrap, reengineering, redo, etc. The additional time spent in up-

front design and development will really pay off here. And, finally, the external costs will also

come down as processes yield first-time quality on a regular basis. The improvements will

continue to affect the company on a long-term basis in both improved quality and lower costs.

Also, as project management begins to mature, there should be further decreases in the cost of

both maintaining quality and developing products.

Prevention costs actually decrease without sacrificing the purpose of prevention if we can

identify and eliminate the costs associated with waste, such as waste due to:

Rejects of completed work

Design flaws

Work in progress

Improperly instructed manpower

Excess or noncontributing management (who still charge time to the project)

Improperly assigned manpower

Improper utilization of facilities

Excessive expenses that do not necessarily contribute to the project (that is, unnecessary

meetings, travel, lodgings, etc.)

Table 36.1: Cost of Quality

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