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Total Quality Management

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Title: Total Quality Management


1
Total Quality Management
Week 4 Leadership, Commitment,
Strategy Prepared by Khalid Dahleez Faculty of
Commerce the Islamic University of Gaza This
material was collected from different sources
2
Total Quality Management Model major features
3
The total quality management approach
  • What is quality management?
  • something that is best left to the experts ?
    wrong answer
  • Quality cannot be achieved on a company-wide
    basis if it is left to the experts.
  • Using the traditional control techniques is NOT
    the way to achieve quality.
  • Quality is not the responsibility of the QC or QA
    departments only.
  • TQM is far more than shifting the responsibility
    of detection of problems from the customer to the
    producer.

4
The total quality management approach
  • TQM requires a comprehensive approach that must
    first be recognized and then implemented.
  • Today, managers must plan strategically to
    maintain a hold on market share, let alone
    increase it.
  • Consumers choice? quality or price?
  • TQM is an approach to improving the
    competitiveness, effectiveness and flexibility of
    a whole organization.
  • For an organization to be truly effective, each
    part of it must work properly together towards
    the same goals.

5
The total quality management approach
  • The methods and techniques used in TQM can be
    applied throughout any organization
    (manufacturing, public service, health care,
    education and hospitality industries).
  • Toward TQ, management must focus on developing a
    problem-prevention mentality.
  • Many people will need to undergo a complete
    change of mindset.
  • The correct mindset may be achieved by looking at
    the sort of barriers that exist in key areas.

6
The total quality management approach
  • Staff will need to be trained and shown how to
    reallocate their time and energy to studying
    their processes in teams, searching for causes of
    problems, and correcting the causes, not the
    symptoms? a positive management.
  • The managements of many firms may think that
    their scale of operation is not sufficiently
    large, that their resources are too slim.

7
Quality Assessment - Questions
  • Managers should examine the existing quality
    performance by asking the following questions
  • Is any attempt made to assess the costs arising
    from errors, defects, waste, customer complaints,
    lost sales, etc?
  • Are the organizations quality systems-documentati
    on, procedures, operations etc-in good order?
  • Have personnel been trained in how to prevent
    errors and quality problems?
  • What is being done to motivate and train
    employees to do work right first time?

8
Quality Assessment - Questions
  • If satisfactory answers given to most of these
    questions? an organization in the way to using
    quality procedures and management.
  • If answers to the previous questions indicate
    problem areas, it will be beneficial to review
    the top managements attitude to quality.
  • Time and money spent on quality-related
    activities are not limitations of profitability.

9
Ten Points for Senior Management TQM Foundation
  • The Organisation needs long term commitment to
    constant improvement.
  • Adopt the philosophy of zero errors/defects to
    change the CULTURE to right first time.
  • Train the people to understand the
    CUSTOMER-SUPPLIER relationship.
  • Do not buy products or services on price alone.
    Look at the TOTAL cost.
  • Recognize that improvement of the SYSTEM needs to
    be managed.
  • Adopt modern methods of SUPERVISION and TRAINING
    eliminate fear.

10
Ten Points for Senior Management TQM Foundation
  • 7. Eliminate Barriers between departments by
    managing the PROCESS improve COMMUNICATION and
    TEAMWORK.
  • 8. Eliminate the following
  • Arbitrary goals without methods,
  • All Standards based only on numbers,
  • Barriers to pride of workmanship,
  • Get FACTS by Using the correct TOOLS.
  • 9. Constantly educate and retrain develop the
    EXPERTS in the business
  • 10. Develop a SYSTEMATIC approach to manage the
    implementation of TQM.

11
Leadership as a Major Component of TQM
  • Teach Institute Leadership - Deming
  • Leadership is managements job.
  • Most managers/supervisors do not truly know (how
    to perform) the duties of the employees they
    supervise.
  • Three Steps to Quality - A.V. Feigenbaum
  • Quality Leadership, with a strong focus on
    planning
  • Modern Quality Technology, involving the entire
    work force
  • Organizational Commitment, supported by
    continuous training and motivation
  • Leadership cant be delegated - Juran

12
Leadership as a Major Component of TQM
  • One of the main categories of Malcolm Baldrige
    National Quality Award (leadership 125 points)
  • EFQM Model (Leadership 10)
  • ISO 9000 Quality Management Principles
    (leadership people involvement)
  • British Model (TQM, combined with effective
    leadership, results in an organization doing the
    right things, first time)

13
Leadership as a Major Component of TQM
  • Leaders must have (Yoshio Kondo)
  • a dream (vision and shared goals)
  • strength of will and tenacity of purpose
  • ability to win the support of followers
  • ability to do more than their followers,without
    interfering when they can do it alone
  • successes
  • ability to give the right advice

14
Leadership Commitment
  • Leaders establish unity of purpose, direction,
    and internal environment of the organization.
    They create the environment in which people can
    become fully involved in achieving the
    organizations objectives.
  • The ability of top management to establish,
    practice, and lead a long-term vision for the
    firm, driven by changing customer requirements,
    as opposed to an internal management control
    role.
  • Lack of top management commitment is one of the
    reasons for the failure of TQM efforts (Brown et
    al. 1994).
  • A predominant requirement for quality management
    is that strong commitment from top management is
    vital.
  • To be an effective leader in most modern firms,
    the top manager must continue to develop and
    learn.

15
Leadership Commitment
  • Knowledge of the business and continual learning
    are essential prerequisites to effective
    leadership (DuBrin, 1995).
  • In order to effectively lead the firm, top
    management must be committed to provide education
    and training to employees and regarding them as
    valuable resources of the firm.
  • Top management must be committed to allocating
    sufficient resources to prevent, as well as
    repair, quality problems.
  • Top management should discuss quality frequently
    by having session on the topic and asking
    questions about quality at every staff meeting.
  • Top management must train and coach employees to
    assess, analyze, and improve work processes
    (Deming, 1986).

16
Characteristics of excellent leadership - Dr.
Curt Reimann, director of the Malcolm Baldrige
National Quality Award
  • Visible, committed, and knowledgeable They
    promote the emphasis on quality and know the
    details and how well the company is doing.
    Personal involvement in education, training, and
    recognition. Accessible to and routine contact
    with employees, customers, and suppliers.
  • A missionary zeal The leaders are trying to
    effect as much change as possible through their
    suppliers, through the government, and through
    any other vehicle that promotes quality. They are
    active in promoting quality outside the company.
  • Aggressive targets Going beyond incremental
    improvements and looking at the possibility of
    making large gains, getting the whole work force
    thinking about different processes not just
    improving processes.

17
Characteristics of excellent leadership - Dr.
Curt Reimann, director of the Malcolm Baldrige
National Quality Award
  • Strong drivers Cycle time, zero defects, six
    sigma, or other targets to drive improvements.
    Clearly defined customer satisfaction and quality
    improvement objectives.
  • Communication of values Effecting cultural
    change related to quality. Written policy,
    mission, guidelines, and other documented
    statements of quality values, or other bases for
    clear and consistent communications.
  • Organization Flat structures that allow more
    authority at lower levels. Empowering employees.
    Managers as coaches rather than bosses.
    Cross-functional management processes and focus
    on internal as well as external customers.
    Interdepartmental improvement teams.
  • Customer contact CEO and all senior managers
    are accessible to customers.

18
Good Leaders
  • Give priority attention to customers and their
    needs
  • Empower, rather than control, subordinates.
  • Emphasize improvement rather than maintenance.
  • They emphasize prevention.
  • Encourage collaboration rather than competition.
  • They train and coach, rather than direct and
    supervise.

19
Good Leaders
  • Learn from problems.
  • They continually try to improve communications.
  • They continually demonstrate their commitment to
    quality.
  • Choose suppliers on the basis of quality, not
    price.
  • Establish organizational systems to support the
    quality effort.
  • Encourage and recognize team effort.

20
Role of TQM leaders
  • All are responsible for quality improvement
    especially the senior management CEOs
  • Ensure that the teams decision is in harmony
    with the quality statements of the organization
  • Senior TQM leaders must read TQM literature and
    attend conferences to be aware of TQM tools and
    methods
  • Senior managers must take part in award and
    recognition ceremonies for celebrating the
    quality successes of the organization
  • Coaching others and teaching in TQM seminars
  • Senior managers must liaise with internal
    ,external and suppliers through visits, focus
    groups, surveys
  • They must live and communicate TQM.

21
Effective leadership
  • Effective leadership starts with the Chief
    Executives vision, capitalizing on market or
    service opportunities, continues through a
    strategy that will give the organization
    competitive advantage, and leads to business or
    service success.
  • Together, effective leadership and TQM result in
    the company or organization doing the right
    things, right first time.
  • The five requirements for effective leadership
    are the following

22
Effective leadership
  • Developing and publishing clear documented
    corporate beliefs and objectives a mission
    statement
  • The beliefs and objectives should address
  • The definition of the business.
  • A commitment to effective leadership Quality
  • Target sectors and relationships with customers.
  • Indications for future direction. (principal
    plans)
  • Commitment to monitoring performance against
    customers' needs and expectations, and continuous
    improvement.
  • Developing clear and effective strategies and
    supporting plans for achieving the mission and
    objectives.

23
Effective leadership
  • Identifying the critical success factors and
    critical processes.
  • Reviewing the management structure
  • Empowerment encouraging effective employee
    participation
  • particular attention must be paid to the
    following
  • Attitudes
  • The key attitude for managing any winning
    organization may be expressed as I will
    personally understand who my customers are and
    what are their needs and expectations of me.
  • This attitude must start at the top, then it must
    percolate down to be adopted by every employee.

24
Effective leadership
  • Abilities
  • Every employee must be able to do what is needed
    and expected of him or her.
  • Training and its effectiveness
  • Participation
  • For effective employees participation in making
    the company or organization successful, employees
    must be trained to
  • E Evaluate the situation and define their
    objectives.
  • P Plan to achieve those objectives fully.
  • D Do, implement the plans.
  • C Check that the objectives are being
    achieved.
  • A Amend, take corrective action if they are not.

25
Leadership Guiding the Organization in the
Pursuit of Excellence Key Issues
  • Are leaders actively engaged in campus
    activities?
  • Are leaders actively engaged with public,
    professional, and/or academic groups?
  • Is the leadership and governance structure
    clearly defined and understood?
  • Are senior leaders effective role models?
  • Do leaders promote leadership at all levels?
  • Are leadership goals established?
  • Are there informal and formal methods for
    reviewing leadership and governance effectiveness
    throughout the organization?
  • Are ethics and integrity emphasized?
  • Are the organizations pertinent legal and
    regulatory risks and issues addressed?
  • Do leaders encourage public responsibility and
    attention to the organizations impact on the
    physical and social environment?

26
Leadership benefits
  • for policy and strategy formulation, establishing
    and communicating a clear vision of the
    organisation's future
  • for goal and target setting, translating the
    vision of the organisation into measurable goals
    and targets
  • for operational management, empowered and
    involved people achieve the organisation's
    objectives
  • for human resource management, having an
    empowered, motivated, well informed and stable
    workforce.

27
LEADERSHIP FOR INSPIRING CHANGE IN QUALITY
  • Why leadership for change?
  • Eighty per cent of TQM initiatives fail because
    they do not have the backing of the senior
    management.
  • Commitment is the foundation of an effective TQM
    initiative.
  • Leadership is the key in promoting commitment.
  • Leadership and commitment go hand in hand.
  • TQM needs leaders who are committed to change.
  • Leadership for Total Quality - Total quality is
    defined as performance leadership in meeting
    customer requirements by doing the right the
    first time.

28
Change Leadership
  • The most challenging aspect of business is
    leading and managing change
  • The business environment is subject to fast-paced
    economic and social change
  • Modern business must adapt and be flexible to
    survive
  • Problems in leading change stem mainly from human
    resource management
  • Leaders need to be aware of how change impacts on
    workers

29
Leadership in TQM Role Model
TRANSFORMATIONAL LEADERS VERSUS TRANSACTIONAL
MANAGERS Transformational leaders They provide
mission for others to follow and they expect the
same high standards from their people. They are
interested in ends rather than
means. Transactional managers They are good
at achieving short-term results, foster teamwork
and work in a practical manner. Evidently,
transformational leaders and transactional
managers need to work together.
30
Leadership Characteristics Jim Collins, Good To
Great
  • Level One
  • Highly capable
  • Contributes through talent, knowledge, skills,
    and good work habits
  • Level Two
  • Team member
  • Contributes individual capabilities to the group
    and works effectively with others
  • Level Three
  • Competent manager
  • Organizes people and resources toward the
    effective and efficient pursuit of predetermined
    objectives

31
Leadership Characteristics Jim Collins, Good To
Great
  • Level Four
  • Catalyst leader
  • Makes a commitment to and vigorous pursuit of a
    clear and compelling vision, stimulating higher
    performance standards
  • Level Five
  • Executive leader
  • Builds enduring greatness through a paradoxical
    blend of personal humility and professional will

32
How all leaders drive the organisation towards a
position of Business Excellence
Give Receive Training
Develop Goals
Communicate Effectively
Leadership
Recognition
Make Themselves Accessible
Listen Respond to People
33
Comparison of Traditional Management and TQM
34
STRATEGY AND THE STRATEGIC PLANNING PROCESS
  • Evidence suggests that those companies with
    strategies based on TQM have achieved stunning
    successes.
  • Most of these successful companies will attribute
    their progress to a quality-based strategy that
    was developed through a formal structured
    approach to planning.
  • Total Quality begins with a strategic decision
    a decision that can only be made by top
    management and that decision, simply put, is
    the decision to compete as a world-class company.
    Total Quality concentrates on quality performance
    in every facet of the business and the
    primary strategy to achieve and maintain
    competitive advantage. It requires taking a
    sys-tematic look at an organization looking at
    how each part interrelates to the whole process.
    In addition, it demands continuous improvement
    as a way of life.

35
STRATEGY AND THE STRATEGIC PLANNING PROCESS
  • Professors Andrews, Christensen, and others in
    the Policy group at the Harvard Business School
    argue that corporate strategy is the pattern of
    decisions in a company that
  • determines, shapes, and reveals its objectives,
    purposes, or goals
  • produces the principal policies and plans for
    achieving these goals and
  • defines the business the company intends to be
    in, the kind of economic and human organization
    it intends to be, and the nature of the economic
    and non economic contribution it intends to make
    to its shareholders, employees, customers, and
    communities.

36
STRATEGY AND THE STRATEGIC PLANNING PROCESS
  • Michael Porter describes the development of a
    competitive strategy as a broad formula for how
    a business is going to compete, what its goals
    should be, and what policies will be needed to
    carry out those goals.
  • Strategic Planning is a deliberate process used
    by organizations to develop a mission, vision,
    guiding values, strategic objectives, and
    specific strategies for achieving the objectives.

37
Strategic Planning
  • Strategic business planning is similar to
    strategic quality planning.
  • 7 steps to strategic planning
  • Customer needs
  • Customer positioning
  • Predict the future
  • Gap analysis
  • Closing the gap
  • Alignment
  • Implementation

38
TQM - Strategy Approach
  • an approach to improving the competitiveness,
    effectiveness and flexibility of a whole
    organisation..... a way of planning, organising
    and understanding each activity and it depends on
    each individual at each level. TQM is a way of
    ...... bringing everyone into the processes of
    improvement (Oakland 1995)
  • a TQM programme promotes "quality" as a strategic
    imperative. Comprehensive TQM programme requires
    re-evaluation how organisational members address
    the quality of their work and production /service
    processes.

39
TQM supported by policy commitment
  • culture practice
  • change strategy organisational renewal
  • injection of energy
  • staff encouraged to practice positive,
    initiative taking behaviours
  • a prevention ethic
  • quality improvement teams/circles
  • use of methods and techniques (tools)

40
The organisations mission, values, strategic
direction the manner in which it achieves them
Employees
Use Appropriate Information
Legislation
Benchmarking
Competitors
Set Targets
Communicate to all
Strategy Planning
Review Improve
Develop Changes
Check Understanding
41
Strategic Management Process
Strategic Planning
Feedback
42
FACTORS DETERMINING COMPETITIVE STRATEGY
STRENGTHS WEAKNESSES
OPPORTUNITIES THREATS
Factors External to the Company
Factors Internal to the Company
COMPETITIVE STRATEGY
PERSONAL VALUES
BROADER SOCIETAL EXPECTATIONS
43
Objective Setting through SWOT
  • SWOT ANALYSIS
  • Internal Strengths Weaknesses
  • External Opportunities Threats

OT
SW
44
STRATEGIC PLANNING PROCESS (major questions)
  • Following a SWOT analysis, the strategic plan
    will involve a process to search for the answers
    to the following questions
  • Who are we?
  • What are we known for?
  • What do we do better than 90 of our competitors?
  • What do our competitors beat us on?
  • What do we wish to be known for?
  • Where are we headed as an organization?
  • Where do we wish to be headed?
  • How would we get there?
  • What would it take to get us there?

45
Components of Strategy
  • The major role that quality plays in strategic
    planning can best be understood by examining the
    components of a strategy
  • Mission, vision, and guiding values
  • Product/market scope
  • Competitive edge (differentiation)
  • Supporting policies
  • Objectives
  • Organizational culture

46
Quality statements
  • Besterfield
  • The quality statements include the vision
    statement, mission statement, and quality policy
    statement.
  • Once developed, they are only occasionally
    reviewed and updated. They are part of the
    strategic planning process.
  • There may be considerable overlap among the three
    statements.

47
Quality statements
48
Quality Statements
  • Vision statement is the declaration of what an
    organization should look like five to ten years
    in the future.
  • Mission statement answers the questions that
    who we are ,who are the customers ,what we do and
    how we do it. This statement is usually one
    paragraph or less in length ,is easy to
    understand and describes the function of the
    organization.
  • Quality policy statement is a guide for
    everyone in the organization as to how they
    should provide products and service to the
    customers
  • It should be written by CEO with feed back from
    work force and be approved by quality council.

49
STRATEGIC QUALITY MANAGEMENT (Environment)
  • Environment
  • The major determinant of a mission is the
    environment in which the firm plans to operate
    the general environment, the industry
    environment, and the competitive environment.
    Strategy is essentially the process of
    positioning oneself in that environment as
    trends and changes unfold. Thus, it is necessary
    to identify trends in the environment and how
    they affect the strategy of the firm.

50
STRATEGIC QUALITY MANAGEMENT
  • Product/Market Scope
  • This answers the questions What am I selling and
    to whom am I selling it? The answers are more
    complex than they appear.
  • in todays heightened competitive environment, a
    product or service is not simply sold to anyone
    who will buy it.
  • To be effective, value must be sold to a
    particular market or customer segment.
  • Strategic planning involves the determination of
    these strategy components, and quality plays a
    major role in this process.

51
Vision statement
  • A short declaration of what an organization
    aspires to be in the future. It is an ideal state
    that an organization continually strives to
    achieve. It is timeless, inspirational, and
    becomes deeply shared within the organization.
  • Successful vision a concise statement of the
    desired end provides a succinct guideline for
    sound decision making.
  • Although mission and vision are often used as
    synonymous, sometimes a distinction is made in
    which case mission evolves from the vision.
  • Example We will be the provider of safe,
    reliable, cost-effective products and services
    that satisfy the electric-related needs of all
    customer segments. Florida Power Light
    Company.

52
Vision statement
  • A vision reflects where the organization is
    headed or wishes to be. It is like a destination
    dreamed up by the organization. Every decision
    made by the organization must be informed by its
    vision. An organizations
  • vision must come from top management, and must be
    well articulated and understood by all. The
    guiding values reflect the beliefs that shape and
    mold the decisions and choices an organization
    makes.

53
Mission statement
  • The mission statement answers the following
    questions who we are, who are our customers,
    what we do, and how we do it.
  • This statement is usually one paragraph or less
    in length, is easy to understand, and describes
    the function of the organization. It provides a
    clear statement of purpose for employees,
    customers, and suppliers.
  • Example Our mission is to improve continually
    our products and services to meet our customers
    needs, allowing us to prosper as a business and
    provide a reasonable return to our shareholders.
    Ford Motor Company.

54
Mission statement
  • The mission is the primary overall purpose of an
    organization and its expressed reason for
    existence. The simplest statement of mission
    might be to meet the needs/values of
    constituents.
  • Example The mission of NCR is stated simply
    Create Value for Our Stakeholders. Stakeholders
    are identified as employees, shareholders,
    suppliers, communities, and customers.13 The
    mission can be operationalized by statements of
    how it will be implemented for each stakeholder.

55
Mission Vision
  • If the vision deals with what, the mission
    deals with why and how. It identifies the
    roles or activities to which an organization is
    committed and provides overall direction for
    achieving the mission.
  • The mission provides the guide map, milestones
    for achieving the vision.
  • Example To be the leading manufacturer and
    supplier of measurement and computing solutions
    whilst achieving the highest levels of customer
    satisfaction, quality, and business ethics and
    contributing to Indias technological, economic
    and social needs. Hewlett-Packard India.

56
Quality policy statement
  • Besterfield
  • The quality policy is a guide for everyone in the
    organization as to how they should provide
    products/service to the customers. It is written
    after obtaining feedback from the workforce and
    is approved by the quality council.
  • A quality policy is a requirement of ISO9000.
  • Some common characteristics are
  • Quality is first priority Continually improve
    the quality Equal or exceed the competition
    Meet the needs of internal and external
    customers, etc.

57
Quality policy statement
  • Example Xerox is a quality company. Quality is
    the basic business principle of Xerox. Quality
    means providing our external and internal
    customers with innovative products and services
    that fully satisfy their requirements. Quality is
    the job of every employee. Xerox Corporation.

58
Vision Plan Statement
Vision statement describes how a firm wants to be
seen in its chosen business. Vision describes
standards, values, and beliefs of the
organization. Intent of a vision statement is to
communicate the firms values, aspirations and
purpose, so that employees can make decisions
that are consistent with and supportive of these
objectives. Plan statement is a detailed road map
of actions what and how organization intended
execute that plan in future. Organization may
have many kinds of plan - Strategic business
performance plan - Quality goal plan -
Quality improvement plan
59
Vision Plan Statement
Strategic business performance plan can be
divided into long- and short-term business
performance plans that include, for example,
market share, profits, annual sales, exports, and
sales growth. Quality goal plan can involve, for
example, conformity rate, defect rate, internal
failure costs, external failure costs,
performance, reliability, and durability.
Quality improvement plan aims for quality
improvement, which are actions taken throughout
the organization to increase the effectiveness
and efficiency of activities and processes in
order to provide added benefits to both the
organization and its customers (ISO 8402, 1994).
60
Strategic Quality Goals and Objectives
  • Goals must be focused
  • Goals must be concrete
  • Goals must be based on statistical evidence
  • Goals must have a plan or method with resources
  • Goals must have a time-frame
  • Goals must be challenging yet achievable

61
Top Management Commitment
  • Above all, demonstration of commitment by top
    management is essential. This commitment is
    demonstrated by behaviors and activities that are
    exhibited throughout the company. Categories of
    behaviors include the following
  • Signaling Make statements or take actions that
    support the vision of quality, such as mission
    statements, creeds, or charters directed toward
    customer satisfaction. Publix supermarkets
    Where shopping is a pleasure and JC Penneys
    The customer is always right are examples of
    such statements.

62
Top Management Commitment
  • Focus Every employee must know the mission, his
    or her part in it, and what has to be done to
    achieve it. What management pays attention to and
    how management reacts to crisis is indicative of
    this focus. When all functions and systems are
    aligned and when practice supports the culture,
    everyone is more likely to support the vision.
    Johnson and Johnsons cool reaction to the
    Tylenol scare is such an example.
  • Employee policies These may be the clearest
    expression of culture, at least from the
    viewpoint of the employee. A culture of quality
    can be easily demonstrated in such policies as
    the reward and promotion system, status symbols,
    and other human resource actions.

63
Commitment and policy
  • TQM must start at the top with the chief
    Executive or equivalent.
  • The Leader (Top Management) is responsible for
    coordination the work between the different
    departments in the company (Marketing, Design
    Production, Purchasing, Distribution, and Service
    Functions).
  • The middle management must explain the principles
    of TQM to the people for whom they are
    responsible, and ensure that their own commitment
    is communicated.
  • The chief Executive must accept the
    responsibility for and commitment to a quality
    policy in which he must really believe.
  • Within each and every department of the
    organization at all levels, starting at the top,
    basic changes of attitude will be required to
    operate TQM.

64
Commitment and policy
  • Controls, systems and techniques are very
    important in TQM, but they are not the primary
    requirement.
  • TQM requires from the management total
    commitment, which must then be extended to all
    employees at all levels and in all departments.
  • Going into organizations sporting
    poster-campaigning for quality instead of belief,
    one is quickly able to detect the falseness.
  • The opposite is an organization where TQ means
    something, can be seen, heard, felt.
  • Commitment is an essential element of a TQM
    drive. Commitment must exist at every level. it
    is adherence to plans, principles and procedures.

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Supporting Policies
  • Policies are guidelines for action and decision
    making that facilitate the attainment of
    objectives. Taken together, a companys policies
    delineate its strategy fairly well. Tell me your
    policies and I can tell you your strategy.
  • A firms policy choices are essential as drivers
    of differentiation. They determine what
    activities to perform and how to perform them.

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Supporting Policies
  • The role of policies as a critical element of
    strategy is displayed in the policy wheel.
  • In the center are the mission (the purpose of the
    organization), the differentiation (how to
    compete in the market), and the key objectives of
    the business. The spokes of the wheel represent
    the functions of the business.
  • Each function requires supporting policies
    (functional strategies) to achieve the hub. If
    the firms strategy calls for competing on
    quality, then this becomes the impetus for policy
    determination.
  • Each functional policy supports this central
    strategy and the objectives that are determined
    during the planning process.

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Supporting Policies
  • The quality policy
  • Every organization should develop and state its
    policy on quality, together with arrangements for
    its implementation.
  • The contents of the policy should be made known
    to all employees.
  • Management must be dedicated to the regular
    improvement of quality, not simply a one-step
    improvement to an acceptable plateau.

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Supporting Policies
  • Ideas must be set out in a quality policy that
    requires top management to
  • Establish an organization for quality.
  • Identify customers needs and perception of needs
  • Assess the ability of the organization to meet
    these needs economically.
  • Ensure that bought-in materials and services
    reliably meet the required standards of
    performance and efficiency.
  • Concentrate on the prevention rather than
    detection philosophy.
  • Educate and train for quality improvement.
  • Review the quality management systems to maintain
    progress.
  • The quality policy must be publicized and
    understood at all levels of the organization.

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Elements of a Quality Policy
  • organisation structure for quality roles,
    responsibilities
  • how client/customer needs perceptions are
    identified
  • product-service development
  • technical/economic resource allocation
  • QMS scheme operation
  • how suppliers supplies are required to meet
    standards
  • prevention zero defects
  • communication, knowledge, information staff
    development
  • audit of QMS in operation
  • partnership with staff, customers suppliers.
  • physical manifestation not just conceptual

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STRATEGIC QUALITY MANAGEMENT (Competitive
Advantage)
  • Differentiation
  • Michael Porter, in his landmark book Competitive
    Strategy, identified two generic competitive
    strategies
  • (1) overall cost leadership and
  • (2) differentiation.
  • Cost leadership in turn can be broad in market
    scope (e.g., Ivory Soap, Emerson Electric, Black
    Decker) or market segment focused (e.g., La
    Quinta Motels, Porter Paint).
  • The second strategy involves differentiating the
    product or service by creating something that is
    perceived by the buyer as unique.
  • Differentiation, frequently called the
    competitive edge, answers the question Why
    should I buy from you?
  • Differentiation can also be broad in scope
    (American Airlines in on-time service,
    Caterpillar for spare parts support) or focused
    (e.g., Godiva chocolates, Mercedes automobiles).
  • Thus, there are four generic strategies, but each
    depends on something different something unique
    or distinguishing. Even an effective cost
    leadership strategy must start with a good
    product.

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STRATEGIC QUALITY MANAGEMENT (Competitive
Advantage)
  • Differentiation may depend on one or more or a
    combination of Quality dimensions (Performance,
    Features, Reliability, Conformance, Durability,
    Serviceability, Aesthetics, Perceived quality)
  • but the point is that when differentiating based
    on quality, quality must be defined in terms that
    meet customer expectations, even if this is only
    what the customer perceives as quality.

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STRATEGIC QUALITY MANAGEMENT (Competitive
Advantage)
  • Market Segmentation (Niche) Quality
  • Quality means different things to different
    people. In terms of strategic quality management,
    this means that the firm must define that segment
    of the industry, that generic strategy, and that
    particular customer group which it intends to
    pursue. This can be called a segmented quality
    strategy.

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WHEEL OF COMPETITIVE STRATEGY

Competitive Strategy is a combination of the Ends
(Goals) for which the firm is striving and the
Means (Policies) by which is it seeking to get
there
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Summary Slide
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    (subject to indirect Questions)
    9,10,14,15,18,19,20,25,26,27,28,33
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