TQM - Total Quality Management

Posted by Unknown on 2:26 PM with 1 comment

One movement that swept U.S. corporations in the 1980s involves maximizing quality and minimizing costs through total quality management (TQM). This refers to constantly improving the quality of products and the firm’s processes so as to consistently deliver increasing value to customers. TQM constantly asks, “How can we do this cheaper, faster, or better?” It involves worker teams and benchmarking. In its broader form, TQM applies quality improvement methods to all firm processes from production to customer service, sales and marketing, and even finance. By improving quality and reducing costs in all these areas Hewlett-Packard achieved spectacular results. Other companies that have successfully used TQM are Xerox, Motorola, Marriott, Harley-Davidson, and Ford.
Five rules determine the success of a TQM program:
1.   The corporate executive officer (CEO) must strongly and visibly support it with words and actions.
2.   The TQM program must clearly show how it benefits customers and creates value for the firm.
3.  The TQM program must have a few clear strategic goals; that is, it must ask, “What is the firm trying to accomplish?”
4.  The TQM program must provide quick financial returns and compensation – people need to see early and concrete result to continue to support the program.
5.  The TQM program should be tailored to a particular firm; that is, one firm cannot simply copy someone else’s TQM program.

Despite some glaring success from using TQM programs (e.g., Motorola was able to cut $700 million in manufacturing costs over five years), only about a third American corporations polled indicated that their TQM program had a significant impact in increasing the quality of their products, reducing costs, and increasing their competitiveness. The most frequent reason for failure for TQM programs is the failure of upper management to show a strong personal involvement and commitment to the program. Other reasons for failure were that TQM programs often were not strongly linked to the overall business strategy of the firm or aimed at delivering increasing value to customers.