Quality Management

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What is 'Quality Management'

Quality management is the act of overseeing all activities and tasks needed to maintain a desired level of excellence. This includes the determination of a quality policy, creating and implementing quality planning and assurance, and quality control and quality improvement. It is also referred to as total quality management (TQM).

BREAKING DOWN 'Quality Management'

At its core, quality management (TQM) is a business philosophy that champions the idea that the long-term success of a company comes from customer satisfaction. TQM requires that all stakeholders in a business work together to improve processes, products, services and the culture of the company itself.

The Origins of Quality Management

While TQM seems like an intuitive process, it came about as a revolutionary idea. The 1920s saw the rise in a reliance on statistics and statistical theory in business, and the first-ever known control chart was made in 1924. People began to build on theories of statistics and ended up collectively creating the theory of statistical process control (SPC). However, it wasn't successfully implemented in a business setting until the 1950s.

It was during this time that Japan was faced with a harsh industrial economic environment. Its citizens were thought to be largely illiterate, and its products were known to be of low quality. Key businesses in Japan saw these deficiencies and looked to make a change. Relying on pioneers in statistical thinking, companies such as Toyota integrated the idea of quality management and quality control into their production processes.

By the end of the 1960s, Japan completely flipped its narrative and became known as one of the most efficient export countries, with some of the most admired products. The effective quality management resulted in better products that could be produced at a cheaper price.

An Example of Quality Management

The most famous example of TQM is Toyota's implementation of the Kanban system. A kanban is a physical signal that creates a chain reaction, resulting in a specific action. Toyota used this idea to implement its just-in-time (JIT) inventory process. To make its assembly line more efficient, the company decided to keep just enough inventory on hand to fill customer orders as they were generated.

Therefore, all parts on Toyota's assembly line are assigned a physical card that has an associated inventory number. Right before a part is installed in a car, the card is removed and moved up the supply chain, effectively requesting another of the same part. This allows the company to keep its inventory lean and not overstock unnecessary assets.

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