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Saturday, June 26, 2010

TQM and ISO 9000

There was a time when a business checked the quality of its output through random checks at the end of the production process. Such checks should have ensured that the majority of the products leaving the production line were satisfactory; if problems did occur at a later stage following consumption, repairs could be effected or replacements provided.
Such an attitude tended to reflect a product-orientated approach where the focus was on the product and the production process. The UK then entered a period of economic decline from the mid-seventies, precipitated by the oil crisis of 1973 and the coal miners' strike of 1972 and 1974. By the end of the seventies, it became clear that, as the conservative election posters claimed, 'Britain was not working'! Not only was unemployment rising but also more efficient and effective producers from southeast Asia were overtaking the country's manufacturers in particular.
The malaise that seemed endemic throughout British industry was characterised by the car industry - poor industrial relations records, an 'us and them' mentality throughout the industry, poor quality products (the term 'rust bucket' was not unheard of in relation to British built cars) bits not working and falling off and poor after sales service all reduced the competitiveness of British manufacturing.
The last twenty-five years therefore have seen remarkable changes to the way in which most businesses operate. Part of the change that has occurred has been the drive towards Total Quality Management (TQM). For many people, the concept conjures up some American management guru with a flip chart and overhead projector offering words of wisdom to transform a business in an easy to handle two-day training session. Whilst such in-service training certainly did occur and could rightly be criticised, the overall impact has been a change in thinking about the way in which business is conducted. This move has been labelled as a 'market led' or 'market orientated' approach where the focus is on the needs and requirements of the consumer.
Engineer checks factory pipe
Quality control is now seen as being the responsibility in everyone in an organisation. © Photolibrary Group
Total Quality Management is, as its name implies, related to the monitoring of quality throughout the organisation by everyone in that organisation. This means that if problems are spotted during the production process, it is the responsibility of that person to solve the problem before it goes any further through the process. This way, problems should be identified before they ever get near the consumer but if they do, every effort is made to sort the problem out with the minimum of fuss.
To support the emphasis on quality, firms are also looking to get external verification for the standards that they are projecting to their customers. The use of the kite mark from the British Standards Institute, the CE mark indicating that the product complies with all EU directives and the International Standards Organisation (ISO) 'badges' send signals to customers throughout the world that a business takes its quality management processes seriously.
Many firms still have a long way to go in meeting the exacting quality standards that customers are increasingly expecting. The British for example, have been accused of not complaining enough when standards fall below those expected. One only has to listen to top chef Gordon Ramsay when he visits restaurants to know that such standards - especially when hidden from public view - can be way below those that are necessary for gaining a competitive advantage and in meeting environmental and health requirements.


Theory

Total Quality Management (TQM) is a business philosophy that seeks to encourage both individual and collective responsibility to quality at every stage of the production process from initial design and conception through to after sales service.
Many businesses may not use the term TQM anymore but the philosophy is still very much part of most business thinking. It is seen as being a way in which a business can add value to its product and to gain competitive advantage over its rivals. The former may allow a business to charge a higher price for its product or service whilst the latter can be a key feature of its marketing programme.
TQM requires a change in the way in which businesses operate. It implies a number of things if it is to work successfully:
  • Management structures have to be more consultative and less hierarchical.
  • Workers have to be empowered to be able to make decisions at all levels of the organisation.
  • Workers have to be trained and involved in the building of the philosophy.
  • Communication links between workers and management and between the business and all aspects of the supply chain must be excellent.
  • Commitment to TQM must be backed by action, which the customer can see, and experience.
  • Commitment to the process must be led by the senior management of the business - paying 'lip service' will invariably end up in failure.
TQM can be addressed in a business in a number of ways. The most common are:
  • A policy of zero defects - any problems in the production process are filtered out before they get anywhere near the customer.
  • Quality chains - each stage of the production process is seen as being a link in the chain right down to the relationship between one worker in the process and another.
  • Quality circles - meetings of those directly involved in the production process to discuss and solve problems and make improvements to the production process.
  • Statistical monitoring - the use of data and statistics to monitor and evaluate production processes and quality.
  • Consumer feedback - using market research and focus groups to identify consumer needs and experiences and to build these into the process.
  • Changing production methods - many businesses, where appropriate, have looked at the layout of their production processes - it could be the move to open plan offices, the development of teams or the use of cell production to improve worker commitment to the philosophy.
TQM invariably involves some sort of cost. Re-organising the business in any of the ways above not only involves capital cost but also the cost of training staff. High quality change management is therefore an essential ingredient of the success of such strategies.
Costs can however be saved if the change is successful. The cost of replacing damaged or faulty goods can be high - if the business waits until the end of the process other resources will have been wasted. The improved communication between suppliers and the firm should help to reduce defective components.
Other benefits may involve the effect on customer loyalty and repeat purchases, as well as winning over customers from rivals. Image and reputation can take many years to win but only a short time to lose so the stakes for the business are high.
To prove that the business has rigorous quality standards, external certification by a respected body is seen as being important. Such external certification could be through the Investors in People programme - a recognised standard in the training and professional development of staff in a business - and through such bodies as the ISO.
Two certificates are particularly sought after - ISO 9000 and ISO 14000. The former is concerned with quality management in relation to customer requirements, customer satisfaction, adherence to regulations and the pursuit of continuous improvement.
ISO 14000 is related to the impact of the firm's activities on the environment and the firm's attempts to improve its performance in this respect. Getting certification means that the company can send a message to companies throughout the world, which recognise this standard - currently, around 90 countries - of the quality that they can expect when dealing with the company.
The standards for the ISO 9000 family deal with the following areas:
  1. Quality management systems - establishing and monitoring the process whereby product and service quality are maintained.
  2. Management responsibility - how the management establish, maintain, monitor and communicate their commitment to the standards.
  3. Resource management - how the business provides the resources - both physical and human - to enable the standards to be met and maintained.
  4. Product realisation requirements - how businesses establish and monitor quality from concept to final product or service delivery.
  5. Measurement, analysis and improvement requirements - how businesses use data to monitor their quality control and how this data is used to improve quality provision.
The terminology related to quality management could be regarded as being a bit 'nineties' but the philosophy is still one that drives many businesses as they seek to find ways in which, in an increasingly competitive global market, they can gain some form of competitive advantage or add value to their business.

Tasks

  1. Read this case study relating to a firm attempting to gain accreditation within the ISO 9000 family. .
  2. In groups, discuss the approach that a business might take to gaining certification. Consider the costs, benefits, obstacles and challenges that might face a business in seeking to gain the standard.
  3. Produce a short report or presentation outlining your ideas to present to the rest of the group.
  4. Discuss the different issues raised by each group in the activity. What does this tell you about TQM as a business philosophy?

Related Web sites for research

Mark Scheme

Since this is a discussion-based activity, the answers will depend very much on how the various groups approach the issues. There are however a number of key things to think about as you go through the process.
  • Try to have some type of business in mind - it could be one you have visited or a business that someone works for. Failing that, use a business that everyone is familiar with - for example, a supermarket, take away restaurant and so on.
  • When thinking about the approach, consider the way in which the business might introduce the idea to its workforce that they will be seeking certification - will it depend for example on the current commitment to TQM processes already, on the management and organisation structure of the business, on the layout of the business, whether it is a small business or a large multi-national one and so on?
  • The case study highlights a number of the issues you will need to think about - try to identify from your reading the key points it makes and think about how this would relate to your business.
  • The costs might involve not only the physical and human costs but also the time that will need to be invested. Time is money so they say, will the time spent and the cost of that time be recouped by the benefits that the firm might expect to receive and is their a way of being able to quantify such benefits?
  • There are likely to be many challenges, but what are the most significant challenges for the business you are looking at and why? It may be getting the staff on board, it may be the sheer weight of the organisation that will be needed, it could be the cost of getting the resources needed to be able to meet the standard effectively




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