TQM concepts
- 2. INTRODUCTION TO TQM What is TQM? TQM is the integration of all functions and processes within an organization in order to achieve continuous improvement of the quality of goods and services. The goal is customer satisfaction. “ No doubt , humans are always deficient” (Al-Quran)
- 3. TQM six basic Concepts • Management commitment to TQM principles and methods & long term Quality plans for the Organisation • Focus on customers – internal & external • Quality at all levels of the work force. • Continuous improvement of the production/business process. • Treating suppliers as partners • Establish performance measures for the processes.
- 5. Cost of Quality Three Views of quality Costs Higher quality means higher cost. • Quality attributes such as performance and features cost more in terms of labor, material, design and other costly resources. • The additional benefits from improved quality do not compensate for additional expense. The cost of improving quality is less than the resulting savings. • The saving result from less rework, scrap and other direct expenses related defects. • This is said to account for the focus on continuous improvement of processes in Japanese firms.
- 6. Three Views of quality Costs Quality costs are those incurred in excess of those that would have been incurred if the product were built or the service performed exactly right the first time. This view is held by adherents of TQM philosophy. Costs include not only those that are direct, but also those resulting from lost customers, lost market share and the many hidden costs and foregone opportunities not identified by modern cost accounting systems.
- 7. Quality Costs COST OF QUALITY IS THE COST OF NON QUALITY 1: 10:100 Rule “A stitch in time saves nine”
- 8. Types of Quality Costs The cost of quality is generally classified into four categories 1. Cost of Prevention 2. Cost of Appraisal 3. Cost of Internal Failure 4. Cost of External Failure
- 9. Quality Costs Cost of Prevention • Prevention costs include those activities which remove and prevent defects from occurring in the production process. • Included are such activities as quality planning, production reviews, training, and engineering analysis, which are incurred to ensure that poor quality is not produced. Appraisal • Those costs incurred to identify poor quality products after they occur but before shipment to customers. e.g. Inspection activity.
- 10. Quality Costs Internal Failure • Those incurred during the production process. • Include such items as machine downtime, poor quality materials, scrap, and rework. External Failure • Those incurred after the product is shipped. • External failure costs include returns and allowances, warranty costs, and hidden costs of customer dissatisfaction and lost market share.
- 11. Benefits of TQM • Greater customer loyalty • Market share improvement • Higher stock prices • Reduced service calls • Higher prices • Greater productivity