What Is Total Quality Management (TQM), and Why Is It Important?

Total Quality Management

Investopedia / Katie Kerpel

What Is Total Quality Management (TQM)?

Total quality management (TQM) is the continual process of detecting and reducing or eliminating errors in manufacturing, streamlining supply chain management, improving the customer experience, and ensuring that employees are up to speed with training. Total quality management aims to hold all parties involved in the production process accountable for the overall quality of the final product or service.

Key Takeaways

  • Total quality management (TQM) is an ongoing process of detecting and reducing or eliminating errors.
  • It is used to streamline supply chain management, improve customer service, and ensure that employees are trained.
  • The focus is to improve the quality of an organization's outputs, including goods and services, through the continual improvement of internal practices. 
  • Total quality management aims to hold all parties involved in the production process accountable for the overall quality of the final product or service.
  • There are often eight guiding principles to TQM that range from focusing on customers, continually improving, and adhering to processes.
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What's Total Quality Management?

Understanding Total Quality Management (TQM)

Total quality management is a structured approach to overall organizational management. The focus of the process is to improve the quality of an organization's outputs, including goods and services, through the continual improvement of internal practices. The standards set as part of the TQM approach can reflect both internal priorities and any industry standards currently in place.

Industry standards can be defined at multiple levels and may include adherence to various laws and regulations governing the operation of a particular business. Industry standards can also include the production of items to an understood norm, even if the norm is not backed by official regulations.

History of Total Quality Management

TQM history often dates back to the early 1900s when Walter A. Shewhart introduced modern quality control. Shewhart introduced a landmark piece of industrial work titled Economic Control of Quality of Manufactured Product in 1931. This exposition is considered one of the founding and basic principles of manufacturing quality control.

Decades later, further developments on Shewhart's work introduced new standards in quality management. Joseph M. Juran published a 1954 book called What Is Total Quality Control? The Japanese Way. The work was based on Juran's experience from being invited to Japan by Japanese scientists and engineers. Juran later co-authored Quality Planning and Analysis, another bestseller in TQM.

Another prominent figure in TQM history is W. Edwards Deming. Also posted in Japan after the Second World War, Deming became involved with the Union of Japanese Scientists and Engineers (JUSE). His career work included several TQM frameworks (Deming's 14 Points, Deming's Seven Deadly Diseases of Management, and The Deming Wheel).

The exact origin of the phrase total quality management is not known, though several parties (mentioned above) are credited to helping develop the general concept.

Primary Principles of Total Quality Management

TQM is considered a customer-focused process that focuses on consistently improving business operations management. It strives to ensure all associated employees work toward the common goals of improving product or service quality, as well as improving the procedures that are in place for production. There are a number of guiding principles that define TQM.

Focus on Customers

Under TQM, the customers define whether or not your products are high quality. Customer input is highly valued, as it allows a company to better understand the needs and requirements in the manufacturing process. For example, customer surveys may reveal insufficient durability of goods. This input is then fed back into TQM systems to implement better raw material sourcing, manufacturing processes, and quality control procedures.

Commitment by Employees

For TQM to be successful, employees must buy into the processes and system. This includes clearly communicating across departments and leaders what goals, expectations, needs, and constraints are in place. A company adopting TQM principles must be willing to train employees and give them sufficient resources to complete tasks successfully and on time. TQM also strives to reduce attrition and maintain knowledgeable workers.

Improve Continuously

As a company learns more about its customers, processes, and competition, it should gradually evolve and strive for incremental, small improvements. This concept of continuous improvement helps a company adapt to changing market expectations and allows for greater adaptability to different products, markets, customers, or regions. Continuous improvement also drives and widens the competitive advantage a company has built over related companies.

Adherence to Processes

TQM's systematic approach relies heavily on process flowcharts, TQM diagrams, visual action plans, and documented workflows. Every member along the process must be aware and educated on their part of the process to ensure proper steps are taken at the right time of production. These processes are then continually analyzed to better understand deficiencies in the process.

Strategic and Systematic Approach

A company's processes and procedures should be a direct reflection of the organizations vision, mission, and long-term plan. TQM calls for a system approach to decision-making that requires a company to dedicate itself to integrating quality as its core component and making the appropriate financial investments to making that happen.

Data Utilization

The systematic approach of TQM only works if feedback and input is given to evaluate how the process flow is moving. Management must continually rely on production, turnover, efficiency, and employee metrics to correlate the anticipated outcomes to the actual results. TQM relies heavily on documentation and planning, and only by utilizing and analyzing data can management understand if those plans are being met.

Integrate Systems

One way to utilize data is to integrate systems. TQM strategies believe systems should talk to each other, convey useful information across departments, and make smart decisions. When goods or inventory is used in one area, another department should have immediate access to that ERP information. By linking data sources and sharing information across systems, TQM strives to allow everyone to be on the same page at the same time.

Communication

Though data may transfer between departments freely, there is a human element to coordinating processes and making sure an entire production line is operating efficiently. Whether it is normal day-to-day operations or large organizational changes, effective communication plays a large part in TQM to motivate employees, education members along a process, and avoid process errors.

Successful TQM requires company-wide buy-in of every principle mentioned above. If a company does not receive complete buy-in, the benefits of TQM quickly diminish.

Advantages and Disadvantages of TQM

When implemented correctly, TQM results in a company making a product for less. By emphasizing quality and minimizing waste, companies that engage in TQM provide more consistent products that yield stronger customer loyalty.

As TQM touches every department across an organization, a company may reap substantial savings from materials sourcing, production, distribution, or back-office functions. Companies that successfully implement TQM can usually react quicker to change and proactively plan ahead to avoid obsolescence.

To fully reap the benefits of TQM, a company must fully engage TQM principles. This requires substantial buy-in from every department across an organization. This level of commitment is very difficult to achieve, requires substantial financial investment, and necessitates all levels of management to engage in TQM.

The conversion to TQM may be lengthy, and workers may feel resistant to change. A company may be required to replace processes, employees, equipment, or materials in favor for an untested, partially-developed TQM plan. In addition, more skilled workers may decide to leave the company if they feel TQM processes do not utilize their skillset appropriately.

Total Quality Management

Pros
  • Delivers stronger, higher quality products to customers

  • Results in lower company-wide costs

  • Minimizes waste throughout the entire production and sale process

  • Enables a company to become more adaptable

Cons
  • May require substantial financial investment to convert to TQM practices

  • Often requires conversion to TQM practices over a long period of time

  • May be met with resistance to change

  • Requires company-wide buy-in to be successful

Industries Using Total Quality Management

While TQM originated in the manufacturing sector, its principles can be applied to a variety of industries. With a focus on long-term change rather than short-term goals, it provides a cohesive vision for systemic change. With this in mind, TQM is used in many industries, including, but not limited to, manufacturing, banking and finance, and medicine.

These techniques can be applied to all departments within an individual organization as well. This helps ensure all employees are working toward the goals set forth for the company, improving function in each area. Involved departments can include administration, marketing, production, and employee training.

What Does Total Quality Management Do?

TQM oversees all activities and tasks needed to maintain a desired level of excellence within a business and its operations. This includes the determination of a quality policy, creating and implementing quality planning and assurance, and quality control and quality improvement measures.

What Is an Example of TQM in Practice?

Perhaps 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 of 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. Effective quality management resulted in better automobiles that could be produced at an affordable price.

What Are the Principles of TQM?

Various iterations of TQM have been developed, each with its own set of principles. Still, certain core elements persist. These include good leadership, emphasis on quality, customer priority, error-correction and improvement as an on-going process, and job training.

What Is a TQM Diagram?

A TQM diagram is a visual depiction of the business and process layout. The diagram usually shows different processes or steps, allowing for management to see a process, analyze weaknesses or risks in the flow, and strategically adjust how things are done.

The Bottom Line

Total quality management is the strategic framework that encourages everyone in an organization to focus on quality improvement. The theory holds that by being operationally excellent, customer satisfaction will increase. There are many principles that drive TQM, but the overall purpose is to eliminate errors, streamline processes, and maximize efficiency.

Article Sources
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  1. American Society for Quality. "Walter A. Shewhart."

  2. American Society for Quality. "Joseph M. Juran."

  3. British Library. "W Edwards Deming."

  4. Toyota. "Section 4. Plant Construction and Expansion Item 4. Development and Deployment of the Toyota Production System."