GE16701 - TOTAL QUALITY MANAGEMENT

UNIT – I
INTRODUCTION

Introduction - Need for quality - Evolution of quality - Definitions of quality - Dimensions of

product and service quality - Basic concepts of TQM - TQM Framework - Contributions of
Deming, Juran and Crosby - Barriers to TQM - Quality statements - Customer focus -
Customer orientation, Customer satisfaction, Customer complaints, Customer retention -
Costs of quality

INTRODUCTION – NEED FOR QUALITY

Till 300 years ago, people used the power of their own muscles, animals or the force of wind and
flowing water to do all works. With the invention of the ‘steam engine’ they got a powerful method
of running their machines. This provided a tremendous boost to Industry. Goods started getting
produced in larger quantities using machines. This led to the beginning of the factory system. The
significant change from hand-made goods to machine-made goods, which began in Britain in 18th
century, is known as the Industrial Revolution. Why it was called Revolution? Because of the large
scale changes it brought about our economy, society and culture. IR soon spread to other nation like
Germany, France, and Portugal. As these countries became industrialized, they needed two things:
1. Raw materials for manufacturing and
2. New markets to sell the goods they made.
They found both raw materials as well as new markets to sell their goods in the non industrialized
countries of Asia and Africa. So they started annexing to meet the needs of their new factories.
Soon they became jealous of each other, and wanted their own empires to grow. They started
fighting among themselves. This finally led to a great war in which several nations of the world
were involved. It came to be known as World War- I (August 1914-1918). Millions of soldiers and
other people were killed or wounded. Cities were destroyed and there was shortage of food and
everything else. In 1939, there was another war, called World War II. It lasted for 6 years and ended
in 1945 after USA dropped atomic bombs over two Japanese cities – Hiroshima and Nagasaki.
After world war – II, most Japanese companies had to start literally from Scratch. Everyday brought
new challenges to managers and workers alike, and everyday meant progress. They observed hard
working ability and bringing new-new technologies are not enough need a culture change towards
“TOTAL COMMITMENT and TOTAL IMPROVEMENT”. They also felled that human resource
of Japan is highest important and precious but they need more training for continuous development.
Fortunately Japan called / invited American Experts like Edward Deming, Joseph M.Juran and
others in 1950s and early 1960s. In quality movement world wide the Globalization took an
important role in 2000. Due to transmission to open economy, a domestic and international
competition starts. Gradually TQM considered as the ultimatum for continuous improvement and
sustainable growth in present day business.
However, in 21 st century, high growth of economy- the new millennium brought about increased
emphasis on worldwide quality and the Internet. Japanese and other world’s business organization
started not only for quality product and services for External customer satisfaction but started
satisfying them by trying to achieve the highest business excellence model – Deming Award,
Malcolm Baldrige National Quality Award, CII – EXIM Award and TPM Award and others.

EVOLUTION OF QUALITY

1920s
 Some of the first seeds of quality management were planted as the principles of scientific
management swept through U.S. industry.
 Businesses clearly separated the processes of planning and carrying out the plan, and union
opposition arose as workers were deprived of a voice in the conditions and functions of their
work.
 The Hawthorne experiments in the late 1920s showed how worker productivity could be
impacted by participation.
1930s
 Walter Shewhart developed the methods for statistical analysis and control of quality.
1950s
 W. Edwards Deming taught methods for statistical analysis and control of quality to Japanese
engineers and executives.
 Joseph M. Juran taught the concepts of controlling quality and managerial breakthrough.
 Armand V. Feigenbaum’s book Total Quality Control, a forerunner for the present
understanding of TQM, was published.
 Philip B. Crosby’s promotion of zero defects paved the way for quality improvement in many
companies.
1968
 The Japanese named their approach to total quality companywide quality control.
 Kaoru Ishikawa’s synthesis of the philosophy contributed to Japan’s ascendancy as a quality
leader.
Today
 TQM is the name for the philosophy of a broad and systemic approach to managing
organizational quality.
 Quality standards such as the ISO 9000 series and quality award programs such as the Deming
Prize and the Malcolm Baldrige National Quality Award specify principles and processes that
comprise TQM.
DEFINITION OF QUALITY:

 Some definitions that are accepted in various organizations:

 “Quality is customer satisfaction,”
 “Quality is Fitness for Use.”
 Predictable degree of uniformity and dependability at low cost and suited to the
market -Deming
 Fitness for use - Juran
 Conformance to requirements - Crosby

Quantification of Quality
Q=P/E
P = Performance
E = Expectation
Q = Quality

DIMENSIONS OF QUALITY

1. Performance (Will the product do the intended job?) Potential customers usually evaluate a
product to determine if it will perform certain specific functions and determine how well it
performs them. For example, you could evaluate spreadsheet software packages for a PC to
determine which data manipulation operations they perform. You may discover that one
outperforms another with respect to the execution speed.
2. Reliability (How often does the product fail?) Complex products, such as many appliances,
automobiles, or airplanes, will usually require some repair over their service life. For example, you
should expect that an automobile will require occasional repair, but if the car requires frequent
repair, we say that it is unreliable. There are many industries in which the customer’s view of
quality is greatly impacted by the reliability dimension of quality.
3. Durability (How long does the product last?) This is the effective service life of the product.
Customers obviously want products that perform satisfactorily over a long period of time. The
automobile and major appliance industries are examples of businesses where this dimension of
quality is very important to most customers.
4. Serviceability (How easy is it to repair the product?) There are many industries in which the
customer’s view of quality is directly influenced by how quickly and economically a repair or
routine maintenance activity can be accomplished. Examples include the appliance and automobile
industries and many types of service industries (how long did it take a credit card company to
correct an error in your bill?).
5. Aesthetics (What does the product look like?) This is the visual appeal of the product, often
taking into account factors such as style, color, shape, packaging alternatives, tactile characteristics,
and other sensory features. For example, soft-drink beverage manufacturers have relied on the
visual appeal of their packaging to differentiate their product from other competitors.
6. Features (What does the product do?) Usually, customers associate high quality with products
that have added features; that is, those that have features beyond the basic performance of the
competition. For example, you might consider a spreadsheet software package to be of superior
quality if it had built-in statistical analysis features while its competitors did not.
7. Perceived Quality (What is the reputation of the company or its product?) In many cases,
customers rely on the past reputation of the company concerning quality of its products. This
reputation is directly influenced by failures of the product that are highly visible to the public or
that require product recalls, and by how the customer is treated when a quality-related problem with
the product is reported. Perceived quality, customer loyalty, and repeated business are closely
interconnected. For example, if you make regular business trips using a particular airline, and the
flight almost always arrives on time and the airline company does not lose or damage your luggage,
you will probably prefer to fly on that carrier instead of
its competitors.
8. Conformance to Standards (Is the product made exactly as the designer intended?) We usually
think of a high-quality product as one that exactly meets the requirements placed on it. For
example, how well does the hood fit on a new car? Is it perfectly flush with the fender height, and is
the gap exactly the same on all sides? Manufactured parts that do not exactly meet the designer’s
requirements can cause significant quality problems when they are used as the components of a
more complex assembly. An automobile consists of several thousand parts. If each one is just
slightly too big or too small, many of the components will not fit together properly, and the vehicle
(or its major subsystems) may not perform as the designer intended.

DEFINITION OF TQM

Total Quality Management

“TQM is the management approach of the organization, centered on quality, based on the
participation of all its members and aiming at long-term success through customer satisfaction, and
benefits to all members of the organization and to society”- ISO
Meaning
Total-Made up of the whole
Quality- Degree of excellence a product or service provides.
Management- Act, art or manner of handling, controlling, directing

In short, TQM is the art of managing the whole to achieve excellence.

W. EDWARDS DEMING PHILOSOPHY:
W. Edwards Deming was educated in engineering and physics at the University of Wyoming and
Yale University. He worked for Western Electric and was influenced greatly by Walter A.
Shewhart, the developer of the control chart. After leaving Western Electric, Deming held
government jobs with the U.S. Department of Agriculture and the Bureau of the Census. During
World War II, Deming worked for the War Department and the Census Bureau. Following the war,
he became a consultant to Japanese industries and convinced their top management of the power of
statistical methods and the importance of quality as a competitive weapon. This commitment to and
use of statistical methods has been a key element in the expansion of Japan’s industry and
economy. The Japanese Union of Scientists and Engineers created the Deming Prize for quality
improvement in his honor. Until his death in 1994, Deming was an active consultant and speaker;
he was an inspirational force for quality improvement in this country and around the world. He
firmly believed that the responsibility for quality rests with management; that is, most of the
opportunities for quality improvement require management action, and very few opportunities lie at
the workforce or operator level. Deming was a harsh critic of many American management
practices.

The Deming philosophy is an important framework for implementing quality and productivity
improvement. This philosophy is summarized in his 14 points for management. We now give a
brief statement and discussion of Deming’s 14 points

1. Create a constancy of purpose focused on the improvement of products and services.

Deming was very critical of the short-term thinking of American management, which tends to be
driven by quarterly business results and doesn’t always focus on strategies that benefit the
organization in the long run. Management should constantly try to improve product design and
performance. This must include investment in research, development, and innovation will have
long-term payback to the organization.
2. Adopt a new philosophy that recognizes we are in a different economic era.
Reject poor workmanship, defective products, or bad service. It costs as much to produce a
defective unit as it does to produce a good one (and sometimes more). The cost of dealing with
scrap, rework, and other losses created by defectives is an enormous drain on company resources.
3. Do not rely on mass inspection to “control” quality.
All inspection can do is sort out defectives, and at that point it is too late—the organization already
has paid to produce those defectives. Inspection typically occurs too late in the process, it is
expensive, and it is often ineffective. Quality results from prevention of defectives through process
improvement, not inspection.
4. Do not award business to suppliers on the basis of price alone, but also consider quality.
Price is a meaningful measure of a supplier’s product only if it is considered in relation to a
measure of quality. In other words, the total cost of the item must be considered, not just the
purchase price. When quality is considered, the lowest bidder frequently is not the low-cost
supplier. Preference should be given to suppliers who use modern methods of quality improvement
in their business and who can demonstrate process control and capability. An adversarial
relationship with suppliers is harmful. It is important to build effective, long-term relationships.
5. Focus on continuous improvement.
Constantly try to improve the production and service system. Involve the workforce in these
activities and make use of statistical methods, particularly the statistically based problem-solving
tools discussed in this book.
6. Practice modern training methods and invest in on-the-job training for all employees.
Everyone should be trained in the technical aspects of their job, and in modern quality- and
productivity-improvement methods as well. The training should encourage all employees to
practice these methods every day. Too often, employees are not encouraged to use the results of
training, and management often believes employees do not need training or already should be able
to practice the methods. Many organizations devote little or no effort to training.
7. Improve leadership, and practice modern supervision methods.
Supervision should not consist merely of passive surveillance of workers but should be focused on
helping the employees improve the system in which they work. The number one goal of supervision
should be to improve the work system and the product.
8. Drive out fear.
Many workers are afraid to ask questions, report problems, or point out conditions that are barriers
to quality and effective production. In many organizations the economic loss associated with fear is
large; only management can eliminate fear.
9. Break down the barriers between functional areas of the business.
Teamwork among different organizational units is essential for effective quality and productivity
improvement to take place.
10. Eliminate targets, slogans, and numerical goals for the workforce.
A target such as “zero defects” is useless without a plan for the achievement of this objective. In
fact, these slogans and “programs” are usually counterproductive. Work to improve the system and
provide information on that.
11. Eliminate numerical quotas and work standards.
These standards have historically been set without regard to quality. Work standards are often
symptoms of management’s inability to understand the work process and to provide an effective
management system focused on improving this process.
12. Remove the barriers that discourage employees from doing their jobs.
Management must listen to employee suggestions, comments, and complaints. The person who is
doing the job knows the most about it and usually has valuable ideas about how to make the process
work more effectively. The workforce is an important participant in the business, and not just an
opponent in collective bargaining.
13. Institute an ongoing program of education for all employees.
Education in simple, powerful statistical techniques should be mandatory for all employees. Use of
the basic SPC problem-solving tools, particularly the control chart, should become widespread in
the business. As these charts become widespread and as employees understand their uses, they will
be more likely to look for the causes of poor quality and to identify process improvements.
Education is a way of making everyone partners in the quality improvement process.
14. Create a structure in top management that will vigorously advocate the first 13 points.
This structure must be driven from the very top of the organization. It must also include concurrent
education/training activities and expedite application of the training to achieve improved business
results. Everyone in the organization must know that continuous improvement is a common goal.

JURAN’S 10 POINTS FOR QUALITY IMPROVEMENT

1. Build Awareness of Need and Opportunity for Improvement

 Realize that all processes are improvable
Taking an example of mistakes published in a newspaper the previous day, Juran say that they
should:
 Survey the staff, asking them why the mistakes were made
 After a week, select the top ten reasons
 Decide how to make sure those mistake-causing steps will not be repeated
 Keep track of the number of mistakes being made to ensure they are decreasing
This is a beginning of a quality improvement program.
2. Set Goals for Improvement
Juran’s formula for results is as follows:
 Establish specific goals to be reached
 Establish plans for reaching the goals
 Assign clear responsibility for meeting the goals
 Base the rewards on results achieved
3. Organize to Reach your Goals
 Establish quality council
 Identify problems
 Select projects
 Appoint teams
 Designate facilitators
4. Provide Training
Any company that has been actively engaged in moving toward TQM in the past few years knows
how important education and training are. The concepts, methods and tools for modern quality
management are new for most of the members of a company -- managers, professionals and
workforce. The investment in education and training is high but the rewards are great.
5. Carry Out Projects to Solve Problems
Large improvements are usually the result of interdepartmental or even cross-functional quality
improvement teams. These teams tackle the chronic problems that have been coming in the way of
company progress for a long time. These are the vital few problems that create the breakthroughs in
quality by reducing waste and improving customer satisfaction dramatically.
6. Report Progress
The important thing here is the progress expected and the actual progress achieved. Necessary
actions to improve the status can be initiated to reduce the variance. Information on progress also
provides management the confidence on the improvement activity and further support, if required.
7. Give Recognition
Recognition is a means of providing morale to both those involved in the improvement activity and
all others in an organization. This is an important activity to be done by management as
improvements provide a change for betterment resulting in savings to a company. At times, the
improvements are made possible against lot of criticisms. Recognition rejuvenates the spirits and
makes it possible for improvement in areas in other spheres.
8. Communicate Results
Lesson learnt during an improvement process requires to be shared to create an awareness of the
approach taken and the possibility to learn and improve further. It also provides an outlook to
people in other areas toward the basis for triggering similar improvements in their areas.
9. Keep Score
A company’s goals are achieved step-by-step. Each step taken takes it nearer to the targeted goals.
Further steps to be taken involve an action based on the result in the previous steps. Tracking a
progress and measuring it provides management the leverage to control the process.
10. Maintain Momentum by Making Annual Improvement a Part of the Regular Process of a
Company
Actions taken in the above steps involve people. Sustaining their involvement in an improvement
activity is required to achieve long-term organizational goals and to remain competitive.
THE JURAN TRILOGY

Juran views quality as fitness for use.

Juran Trilogy is designed to reduce the cost of quality over time.
1. QUALITY PLANNING
1. Determine internal & external customers.
2. Their needs are discovered.
3. Develop product / service features.
4. Develop the processes able to produce the product / service features.
5. Transfer plans to operations.
2. QUALITY CONTROL
1. Determine items to be controlled.
2. Set goals for the controls.
3. Measure actual performance.
4. Compare actual performance to goals.
5. Act on the difference.
3. QUALITY IMPROVEMENT
1. Establishment of quality council.
2. Identify the improvement projects.
3. Establish the project teams with a project leader.
4. Provide the team with the resources.

CROSBY’S FOURTEEN POINTS:

1. Management Commitment
2. Quality Improvement Team
3. Quality Measurement
4. Cost of Quality Evaluation
5. Quality Awareness
6. Corrective Action
7. Establish an Ad Hoc Committee for the Zero Defects Program
8. Supervisor Training
9. Zero Defects Day
10. Goal Setting
11. Error Cause Removal
12. Recognition
13. Quality Councils
14. Do It Over Again
OBSTACLES (BARRIERS) IN IMPLEMENTING TQM:

 Lack of management commitment

 Lack of faith in and support in TQM activities among management personnel
 Inability to change organizational culture
 Misunderstanding about TQM concept
 Improper planning
 Lack of employee’s commitment
 Lack of effective communication
 Lack of continuous training and education.
 Lack of interest or incompetence of leaders
 Ineffective measurement technique of and lack of assess to data and result
 Non-application of proper tools and techniques
 Inadequate use of empowerment and team work
 Inadequate attention to internal and external customer
 Delay and non-implementation of quality improvement team’s recommendation

BENEFITS OF TQM

Customer satisfaction oriented benefits:

1. Improvement in product quality
2. Improvement in product design
3. Improvement in production flow
4. Improvement in employee morale and quality consciousness
5. Improvement in product service
6. Improvement in market place acceptance

Economic improvement oriented benefits:

1. Reduction in operating costs
2. Reduction in operating losses
3. Reduction in field service costs
4. Reduction in liability exposure

QUALITY STATEMENTS
a) Vision statement,
b) Mission statement, and
c) Quality policy statement

a) Vision statement
1. The vision statement is a short declaration of what on organization aspires to be tomorrow.
2. It is the ideal state that might never be reached; but on which one will work hard continuously to
achieve. Successful visions provide a brief guideline for decision making.
3. The vision statement should be coined in such a way that the leaders and the employees working
in the organization should work towards the achievements of the vision statement.

b) Mission statement
The mission statement describes the function of the organization. It provides a clear statement of
purpose for employees, customers, and suppliers.
The mission statement answers the following questions:
Who we are?
Who are our customers?
What we do? And
How we do it?

c) Quality policy statement

1. The quality policy is a guide for everyone in the organization as to how they provide products
and service to the customers.
2. It should be written by the CEO with feedback from the workforce and be approved by the
quality council.
3. A quality policy is a important requirement of ISO 9000 quality systems.

Common Characteristics are

Quality is first among equals
Meet the needs of the internal and external customers
Equal or exceed the competition
Continually improve the quality
Include business and production practices
Utilize the entire workforce

CUSTOMER SATISFACTION
 The most important asset of any organization is its customers
 success depends on how many customer it has
- How much they buy
- how often they buy
 If customer satisfied buy more and buy frequently.
 Satisfied customers also pay their bills promptly, which greatly improve cash flow- the life
blood of the organization.
 The important of customer satisfaction is not only due to national competition but also
worldwide competition.
 Malcolm baldrige national quality award -30% point for Customer satisfaction
  Understanding the customer needs and expectation is essential to winning new business and
keep existing business.
 An organization must give its customers a quality product or services to meet their needs at
a reasonable price.
 which includes on-time delivering and outstanding services
 For example, a customer may be satisfied with a product or service and therefore rate the
product or service highly in a survey and yet same customer may buy another product.
 To attain this level the organization need to continuously examine their quality system.

A simplistic definition of customer satisfaction is illustrated by the Teboul model. The circle
represents the customer’s needs and the square depicts the product or service offered by the
organization. Total satisfaction is achieved when the offer matches the need, or the circle is
superimposed on the square. The goal is to cover the expected performance level better than the
competitors.

The customer as satisfying perceives that part of the square that lies within the circle and the part of
the square outside the circle is perceived as unnecessary. It is important that the organization listens
to the “voice of the customer” and ensures that its marketing, design, production and distribution
processes truly meet the expectations of the customer.
Since customer satisfaction is hard to measure, the measurement of ten is not precise. As with most
of the attitude, there is variability among people and often within the same person at different times
often due to the difficulty of measuring feelings. Therefore, customer satisfaction strategies are
developed around clearly stated, logical customer opinions and the emotional issues of a purchase
are disregarded. This can be a costly mistake.

Types of Customer:

There are two distinct types of customers-- external and internal.

An external customer can be defined in many ways, such as the one who uses the product or
service, the one who purchases the product or service, or the one who influences the sale of the
product or service.

External customer exists outside the organization and generally falls into three categories-- current,
prospective and lost customers. Each category provides valuable customer satisfaction information
for the organization. Every employee in an organization should know how his or her job enhances
the total satisfaction of the external customer. Performance should be continually improved in order
to retain existing customers and to gain new ones.

CUSTOMER PERCEPTION OF QUALITY.

In an organization there is no acceptable quality level because the customer's needs, values and
expectations are constantly changing and becoming more demanding.
An American Society for Quality (ASQ) survey reveals the following end-user perception of
quality
 Performance
 Features
 Service
 Warranty
 Price
 Reputation
The factors of performance, features, service and warranty are the parts of a product or service
quality. Therefore, it is evident that product quality and service are more important than price.
Although this information is based on the retail customer, it appears, to some extent, to be true for
the commercial customer also.
Performance:
Performance involves “fitness for use.” It is a phrase that indicates that the product and service is
ready for the customers use at the time of sale. Other considerations are as follows:
• Availability which is the probability that a product will operate when needed
• Reliability which is freedom from failure over time
• Maintainability which is the ease of keeping the product operable
Features:
Identifiable features or attributes of a product or service are psychological, time-oriented,
contractual, ethical and technological. Features are secondary characteristics of the product or
service. For example, the primary function of an automobile is transportation, whereas a car stereo
system is a feature of an automobile.
Service:
An emphasis on customer service is emerging as a method for organizations to give the customer-
added value. However, customer service is an intangible, i.e. it is made up of many small things, all
geared to changing the customer’s perception. Intangible characteristics are those traits that are
though not quantifiable yet contribute greatly to customer satisfaction.
Providing excellent customer service is different from and more difficult to achieve than excellent
product quality. Organizations that emphasize service never stop looking for and finding ways to
serve their customers better, even if their customers are not complaining. For instance, at Baptist
Hospital in Pensacola, FL, janitors, after cleaning a room, ask if there is anything they can do for
the patient. Often patients will have a request for a window shade to be drawn or a door closed.
Warranty:
A product warranty represents the organization’s public promise of a quality product backed up by
a guarantee of customer satisfaction. Ideally, it also represents a public commitment to guarantee a
level of service sufficient to satisfy the customer.A warranty forces the organization to focus on the
customer’s definition of product and service quality. An organization has to identify the
characteristics of product and service quality and the importance the customer attaches to each of
those characteristics. A warranty generates feedback by providing information on the product and
service quality. It also forces the organization to develop a corrective action system.

Finally, a warranty builds marketing muscle. The warranty encourages customers to buy a service
by reducing the risk of the purchase decision and it generates more sales from existing customers by
enhancing loyalty.
Price:
Today’s customer is willing to pay a higher price to obtain value. Customers are constantly
evaluating one organization’s products and services against those of its competitors to determine
who provides the greatest value. However, in our highly competitive environment, each customer’s
concept of value is continually changing. Ongoing efforts should be made by everyone having
contact with customers to identify, verify and update each customer’s perception of value in relation
to each product and service.
Reputation:
Most of us find ourselves rating organizations by our overall experience with them. Total customer
satisfaction is based on the entire experience with the organization, not just the product. Good
experiences are repeated to six people and bad experiences are repeated to 15 people. Therefore, it
is more difficult to create a favorable reputation.
Customers are willing to pay a premium for a known or trusted brand name and often become
customers for life. Because it costs five times as much to win a new customer as it does to keep an
existing one, customer retention is an important economic strategy for any organization. Although it
is difficult for an organization to quantify improved customer satisfaction yet it is very easy to
quantify an increase in customer retention. Investment in customer retention can be
a more effective bottom-line approach than concentrating on lowering operational costs. An
effective marketing retention strategy is achieved through using feedback form information
collecting tools.

CUSTOMER COMPLAINTS
Unlike the customer's feedback the customer complaints are reactive, and they are important in
gaining data on customer perceptions.
A dissatisfied customer can easily become a lost customer because of their frustrations. This
customer dissatisfaction becomes a measure for organizational process improvement measures.
Every single complaint should be accepted, analyzed, and acted upon to again win over
customer's confidence. Since more than 50% of the dissatisfied customers will buy again if they are
complaint has been heard and resolved.
By adopting a positive approach the complaints can be seen as an opportunity to obtain
information and provide a positive service to the customer.

WAYS TO GET CUSTOMER FEEDBACK OR COMPLAINT

1. Comment cards
2. Questionnaires
3. Focus groups
4. Toll free telephone lines
5. Customer visits
6. Report cards
7. The Internet
8. Employee feedback
9. Mass customization
10. The American Customer Satisfaction Index

1. Comment Card
 A low cost method of obtaining feedback from customers involves a comment card, which
can be attached to the warranty card and included with the product at the time of purchase.
 The intent of this card is to get simple information such as name, address, age, occupation
and what influenced the customer’s decision to buy the product.
 Generally people respond only if something very good or very bad has happened.
2. Customer Questionnaire
  A customer questionnaire is a popular tool for obtaining opinion and perceptions about an
organization and its products and services. However they can be costly and time consuming.
 Surveys may be administered by mail or telephone.
 In the questionnaire the customer is asked to furnish answers relating to the quality of
product and services.
3. Focus Groups
 Customer focus groups are a popular way to get feedback, but they too can be very
expensive.
 These groups are very effective for gathering information on customer expectations and
requirements.
 A group of customers is assembled in a meeting room to answer a series of questions.
 These carefully structured questions are asked by a skilled moderator.
4. Toll-Free Telephone Numbers
 Toll-free telephone numbers are an effective technique for receiving complaint feedback.
 Organizations can respond faster and more cheaply to the complaint.
5. Customer Visits
Visits to a customer’s place of business provide another way to gather information. An
organization can proactively monitor its product’s performance while it is in use and thereby
identify any specific or recurring problems. Senior managers should be involved in these visits
and not delegate them to someone else. However, it is a good idea to take along operating
personnel so that they can see firsthand how the product is performing.
6. Report Card
Another very effective information-gathering tool is the report card. It is usually sent to each
customer on a quarterly basis. The data are analyzed to determine areas for improvement.
7. The Internet and Computers
Some managers are beginning to monitor discussions that take place on the Internet to find out
what customers are saying about their products. Internet users frequently seek advice regarding
their everyday activities or activities related to specific interests, hobbies or sports. Newsgroups,
electronic bulletin boards and mailing lists can be scanned using keyword searches if one knows
that company’s product is of interest to participants in certain activities, hobbies or professions.
Ideally, messages that compare a company’s products with those of its competitors can be
uncovered. In the newsgroups, it is best to read the views and discussions of others and not
intervene in the discussion with the organization’s perspective on the product or service.
Intervening will most likely end the discussion. Monitoring interest conversations is timely, the
cost is minimal and it can be a source of creative ideas. One of the drawbacks of monitoring
Internet conversations, however, is that the conversations can be unfocused.
8. Employee Feedback
Employees are often an untapped source of information. Companies are listening more to the
external customer but are still not listening to employees. Employees can offer insight into
conditions that inhibit service quality in the organization. Employee groups can brainstorm
ideas to come up with solutions to problems that customers have identified.
9. Mass Customization
Capturing the voice of customers using data of what customer want instead of what customer is
thinking about buying and manufacturing exact what they want.

CUSTOMER RETENTION
 Customer retention is the process of retaining the exiting customers.
 It is obvious that customer retention is more powerful and effective than customer
satisfaction
 Customer care can be defined as every activity which occurs within an organization that
ensures that a customer is not only satisfied but also retained
The following research findings will enable us to understanding the real significance customer
retention
The important research findings are
1. Over 60% of an organization future revenue will come from exiting: customers
2. A 2% increase in customer retention has an equivalent impact upon profitability as a 10%
reduction in operation costs
3. Upto 96% of unhappy customer do not infact complaints. But they are three times more
likely to communicate a bad experience to other customers than good one.
4. 91 % of unhappy customer will never purchase products and services from you again.

5. If you make an effort to remedy customer complaints 82 to 95% of them will stay on with
you

6. It cost 5 times as much to attract a new customer as it costs to keep an old one.

Thus the customer retention is more essential than attracting new customer
 UNIT-II
TQM PRINCIPLES

Leadership - Strategic quality planning, Quality Councils - Employee involvement -

Motivation, Empowerment, Team and Teamwork, Quality circles Recognition and Reward,
Performance appraisal. Continuous process improvement - PDCA cycle, 5S, Kaizen - Supplier
partnership - Partnering, Supplier selection, Supplier Rating by Analytical Hierarchical Processing
(AHP)

LEADERSHIP
Leader:
A leader is one who heads an organization or a department or group of people to carry out certain
tasks assigned to them or accepted by them as a single entity, to the satisfaction of one and all.

Leadership:
The ability of a leader to manage or lead the group of people effectively to carryout the task.

According to the James McGregor a leader is one instill purposes, not one who controls the team
members by brute force.

According to “Malcolm Baldridge National Quality Award”, “An organization’s senior leader
should set directions and creates customer focus, clear & visible values, and high expectation”.

Characteristics of Quality Leaders

There are 12 behaviors or characteristics that successful quality leaders demonstrate. These are as
follows:
1. They give priority attention to external and internal customers and their needs. Leaders
place themselves in the customers’ shoes and service their needs from that perspective. They
continually evaluate the customers’ changing requirements.
2. They empower, rather than control, subordinates. Leaders have trust and confidence in the
performance of their subordinates. They provide the resources, training and work environment
to help subordinates do their jobs. However, the decision to accept responsibility lies with the
individual.
3. They emphasize improvement rather than maintenance. Leaders use the phrase “If it isn’t
perfect, improve it” rather than “If it ain’t broke, don’t fix it.” There is always room for
improvement, even if the improvement is small. Major breakthroughs sometimes happen, but it
is the little ones that keep the continuous process improvement on a positive track.
4. They emphasize prevention. “An ounce of prevention is worth a pound of cure” is certainly
true. It is also true that perfection can be the enemy of creativity. We cannot always wait until
 we have created the perfect process or product. There should be a balance between preventing
problems and developing better, but no perfect, processes.
5. They encourage collaboration rather than competition. When functional areas, departments
or work groups are in competition, they may find subtle ways of working against each other or
withholding information. Instead, there should be collaboration among and within units.
6. They train and coach, rather than direct and supervise. Leaders know that the development
of human resource is a necessity. As coaches, they help their subordinates learn to do a better
job.
7. They learn from problems. When a problem exists, it is treated as an opportunity rather than
something to be minimized or covered up. “What caused it?” and “How can we prevent it in
the future?” are the questions quality leaders ask.
8. They continually try to improve communications. Leaders continually disseminate
information about the TQM effort. They make it evident that TQM is not just a slogan.
Communication is two way-- ideas will be generated by people when leaders encourage them
and act upon them. For example, on the eve of Operation Desert Storm, General Colin Powell
solicited enlisted men and women for advice on winning the war. Communication is the glue
that holds a TQM organization together.
9. They continually demonstrate their commitment to quality. Leaders walk their talk—their
actions, rather than their words, communicate their level of commitment. They let the quality
statements be their decision-making guide.
10. They choose suppliers on the basis of quality, not price. Suppliers are encouraged to
participate in project teams and become involved. Leaders know that quality begins with
quality materials and the true measure is the lifecycle cost.
11. They establish organizational systems to support the quality effort. At the senior
management level, a quality council is provided and at the first-line supervisor level, work
groups and project teams are organized to improve the process.
12. They encourage and recognize team effort. They encourage, provide recognition to and
reward individuals and teams. Leaders know people like to know that their contributions are
appreciated and important. This action is one of the leader’s most powerful tools.

The 7 Habits of Highly Successful People

1. Be Proactive: Proactive people think beforehand and are ready to face a situation. Reactive
people react as per the situation and react on whims and emotions. A proactive person can plan
beforehand for an eventuality. If you are well prepared then you can face a situation or solve a
problem more efficiently.
2. Begin with the end in Mind: “If you don’t know where to go then you will reach nowhere” goes
an old saying. Start a task with set goals. Goals are important as they tell you where to go. They
help in focusing your approach as well. Remember the famous incident from Mahabharata where
Guru Dronacharya asks his disciple about what they could see during target practice. Arjuna gives
the most perfect answer as he was focusing on the target. Because of his focused approach Arjuna
became one of the best archers of his time.
3. Put First Things First: Because of multitude of tasks and assignments one needs to prioritize.
This helps in giving more attention to more important things at hand.
4. Think win-win: Think about mutual benefits rather than your own benefit alone. Everybody
wants to have an upper hand in life and in business dealings. But this is practically not possible. So
best way is to find is the middle of the road.
5. Seek first to understand, then to be understood: First give other people ample time to express
themselves. This will help on many fronts. The other person gets enough opportunity to say what he
wants to say. You get an opportunity to understand other’s perspective. You get enough time to
strategize accordingly.
6. Synergy: The best example of team work can be learnt from a pleasant orchestra or ‘jugalbandi’
in Indian classical music. Especially in Indian classical music you will observe how maestros bury
their egos and come out with astounding performances.
7. Sharpen the Saw: Skill building or practice is very important. Nobody is perfect and perfection
is a thing which can never be achieved in one’s lifetime. Moreover, it always pays to practice as
much as you can.

STRATEGIC QUALITY PLANNING

Seven Steps to Strategic Planning
There are seven basic steps to strategic quality planning. The process starts with the principle that
quality and customer satisfaction are the center of an organizations future. It brings together all the
key stakeholders.
1. Customer needs: The first step is to discover the future needs of the customers. Who will they
be? Will your customer base change? What will they want? How will the organization meet and
exceed expectations?
2. Customer positioning: Next, the planners determine where the organization wants to be in
relation to the customers. Do they want to retain, reduce, or expand the customer base? Products or
services with poor quality performance should be targeted for breakthrough or eliminated. The
organization needs to concentrate its efforts on areas of excellence. No two individual is same, so
every type of customer should be treated as per his/her profile. You cannot sell a premium product
to a price conscious customer.
3. Predict the future: Next, the planners must look in to their crystal balls to predict future
conditions that will affect their product or service. Demographics, economic forecasts and technical
assessments or projections are tools that help predict the future. More than one organizations
product or service has become obsolete because it failed to foresee the changing technology. If the
top management can foresee the future then it helps enable the organization to prepare for future
changes. Let us take example of SONY. With rapid change in technology SONY has changed its
product portfolio, so it is now MP3 player instead of Walkman which we get from SONY.
4. Gap analysis: Gap analysis is about the difference between what needs to be done and what are
we currently doing. It can give a clue about whether the organization should increase or decrease
capacity for a particular product.
5. Closing the gap: If there are gaps then long term plans should be about how to fill that gap.
6. Alignment (with vision and mission): Whatever quality goals an organization is chalking out it
should not lose focus from the long term vision and mission of the organization.
7. Implementation: Once every plan about goals is ready then the next step should be to plan about
the methodologies of implementation.

EMPLOYEE INVOLVEMENT
It is the total involvement from every person at all levels in the organization. Employee
involvement is one approach to improve quality and productivity. It is a means to better meet the
organization’s goals for quality and productivity
ASPECTS OF EMPLOYEE INVOLVEMENT
1. Employee motivation
2. Employee Empowerment
3. Teams and Team work
4. Recognition and Reward Schemes
5. Performance Appraisal

EMPLOYEE MOTIVATION

MOTIVATION:
“Motivation means a process of stimulating people to accomplish desired goals.” Motivation is the
process of inducing people inner drives and action towards certain goals and committing his
energies to achieve these goals.
IMPORTANCE OF MOTIVATION:
a. Motivation improves employee involvement.
b. Motivation promotes job satisfaction and thus reduces absenteeism and turnover.
c. Motivation helps in securing a high level of performance and hence enhances efficiency
and productivity.
d. Motivation creates a congenial working atmosphere in the organization and thus promotes
interpersonal cooperation.

THEORIES OF MOTIVATION:
Though there are many theories of motivation, the Maslow’s hierarchy of needs theory and
Herzberg’s two factor theory are more important from our subject of view.
MASLOW’S HIERARCHY OF NEEDS:

Maslow has set up a hierarchy of five levels of basic needs. Beyond these needs, higher levels of
needs exist. These include needs for understanding, esthetic appreciation and purely spiritual needs.
In the levels of the five basic needs, the person does not feel the second need until the demands of
the first have been satisfied, nor the third until the second has been satisfied, and so on. Maslow's
basic needs are as follows:
Physiological Needs:
These are biological needs. They consist of needs for oxygen, food, water, and a relatively constant
body temperature. They are the strongest needs because if a person were deprived of all needs, the
physiological ones would come first in the person's search for satisfaction.
Safety Needs:
When all physiological needs are satisfied and are no longer controlling thoughts and behaviors, the
needs for security can become active. Adults have little awareness of their security needs except in
times of emergency or periods of disorganization in the social structure (such as widespread
rioting). Children often display the signs of insecurity and the need to be safe.
Needs of Love, Affection and Belongingness:
When the needs for safety and for physiological well-being are satisfied, the next class of needs for
love, affection and belongingness can emerge. Maslow states that people seek to overcome feelings
of loneliness and alienation. This involves both giving and receiving love, affection and the sense of
belonging.
Needs for Esteem:
When the first three classes of needs are satisfied, the needs for esteem can become dominant.
These involve needs for both self-esteem and for the esteem a person gets from others. Humans
have a need for a stable, firmly based, high level of self-respect, and respect from others. When
these needs are satisfied, the person feels self-confident and valuable as a person in the world.
When these needs are frustrated, the person feels inferior, weak, helpless and worthless.
Needs for Self-Actualization:
All of the foregoing needs are satisfied, then and only then are the needs for self-actualization
activated. Maslow describes self-actualization as a person's need to be and do that which the person
was "born to do." "A musician must make music, an artist must paint, and a poet must write." These
needs make themselves felt in signs of restlessness. The person feels on edge, tense, lacking
something, in short, restless. If a person is hungry, unsafe, not loved or accepted, or lacking self-
esteem, it is very easy to know what the person is restless about. It is not always clear what a person
wants when there is a need for self-actualization. The hierarchic theory is often represented as a
pyramid, with the larger, lower levels representing the lower needs, and the upper point
representing the need for self-actualization. Maslow believes that the only reason that people would
not move well in direction of self-actualization is because of hindrances placed in their way by
society. He states that education is one of these hindrances.

HERZBERG’S TWO FACTOR THEORY:

This theory is also called motivation-hygiene theory. This theory is based on two factors:
1. Motivation factors or satisfiers, and 2. Hygiene factors or dissatisfiers.
Motivational factors:
1. Achievement
2. Recognition
3. Work itself
4. Responsibility
5. Advancement and growth
Hygiene factors:
1. Supervisors
2. Working conditions
3. Interpersonal relationship
4. Pay and security
5. Company policy and administration
According to Herzberg, maintenance or hygiene factors are necessary to maintain a reasonable level
of satisfaction among employees. These factors do not provide satisfaction to the employees but
their absence will dissatisfy them. Therefore these factors are called dissatisfiers
On the other hand, motivational factors create satisfaction to the workers at the time of presence but
their absence does not cause dissatisfaction. It can be noted that Herzberg’s dissatisfiers are roughly
equivalent to Maslow’s lower levels, and the motivators are similar to the Maslow’s upper levels.
EMPOWERMENT:
Empowerment is investing people with authority. Its purpose is to tap the enormous reservoir of
potential contribution that lies within every worker. The principles of empowering people are given
below:
1. Tell people what their responsibilities are.
2. Give authority.
3. Set standards for excellence.
4. Render training.
5. Provide knowledge and information.
6. Trust them.
7. Allow them to commit mistakes.
8. Treat them with dignity and respect.
CHARACTERISTICS OF EMPOWERED EMPLOYEES:
1. They feel responsible for their own task.
2. They are given a free hand in their work.
3. They balance their own goals with those of the organization.
4. They are well trained, equipped, creative, and customer oriented.
5. They are critical, have self-esteem, and are motivated.
6. They are challenged and encouraged.
7. They monitor and improve their work continuously.
8. They find new goals and change challenges.

TEAM AND TEAMWORK:

TEAM:
A team is defined as a group of people working together to achieve common objectives or goals.
TEAMWORK:
Teamwork is the cumulative actions of the team during which each member of the team
subordinates his individual interests and opinions to fulfill the objectives or goals of the group.
NEED FOR TEAMWORK:
1. Many heads are more knowledgeable than one.
2. The whole is greater than the sum of its members.
3. Team members develop a rapport which each other.
4. Teams provide the vehicle for improved communication.
TYPES OF TEAMS:
1. Process improvement team.
2. Cross – functional team.
3. Natural work teams.
4. Self – Directed / Self – Managed work teams.
CHARACTERISTICS OF SUCCESSFUL TEAMS:
1. Sponsor
2. Team Charter
3. Team Composition
4. Training
5. Ground Rules
6. Clear Objectives
7. Accountability
8. Well-Defined decision procedure
9. Resources
10. Trust
11. Effective Problem Solving
12. Open Communication
13. Appropriate Leadership
14. Balanced Participation
15. Cohesiveness
1. Sponsor: In order to have effective liason with the quality council, there should be a sponsor.
The sponsor is a person from the quality council; he is to provide support to the organization.
2. Team Charter: A team charter is a document that defines the team’s mission, boundaries, the
background of the problem, the team’s authority and duties, and resources. It also identifies the
members and their assigned roles – leader, recorder, time keeper and facilitator.
3. Team Composition: The size of the team should not exceed ten members except in the case of
natural work teams or self-directed teams. Teams should be diversed by having members with
different skills, perspective and potential.
Wherever needed, the internal and external customers and suppliers should be included as a team
member.
4. Training: The team members should be trained in the problem-solving techniques, team
dynamics and communication skills.
5. Ground Rules: The team should have separate rules of operation and conduct. Ground rules
should be discussed with the members, whenever needed it should be reviewed and revised.
6. Clear Objectives: The objective of the team should be stated clearly. Without the clear
objective, the team functions are not to be effective.
7. Accountability: The team performance is accountable. Periodic status report of the team should
be given to the quality council. The team should review its performance to determine possible team
process weaknesses and make improvements.
8. Well-defined Decision Procedures: The decision should be made clearly at the right time by the
team.
9. Resources: The adequate information should be given to the team wherever needed. The team
cannot be expected to perform successfully without the necessary tools.
10. Trust: Management must trust the team to perform the task effectively. There must also be trust
among the members and a belief in each other.
11. Effective Problem-Solving: Problem-solving methods are used to make the effective decision.
12. Open Communication: Open communication should be encouraged i.e., everyone feels free to
speak in the team whatever they are thinking, without any interruptions.
13. Appropriate Leadership: Leadership is important in all the team. Leader is a person who leads
the team, motivates the team and guides the team in a proper direction.
14. Balanced Participation: Everyone in a team should be involved in the team’s activities by
voicing their opinions, lending their knowledge and encouraging other members to take part.
15. Cohesiveness: Members should be comfortable working with each other and act as a single
unit, not as individuals or subgroups.

ELEMENTS OF EFFECTIVE TEAM WORK:

1. Purpose
2. Role and responsibilities
3. Activities
4. Effectiveness
5. Decisions
6. Results, and
7. Recognition.
STAGES OF TEAM DEVELOPMENT:
Each term takes some time to start functioning effectively towards problem solving. Each
team goes through six distinct stages in its development. These are farming, storming, norming,
performing maintenance and evaluating.
1. Farming stage: When a team is created, it consists of group of individuals and team work does
not exist at this stage. Team’s purpose, members’ roles, acceptance of roles, authority and process
of functioning are learnt in the formation process.
2. Storming stage: Initial agreements and role allocations are challenged and reestablished at this
stage of team development. At this stage, hostilities and personal needs often emerge which may be
resolved.
3. Norming stage: During norming stage of team development, formal and\ informal relationships
get established among team members. Openness and cooperation have been observed as signs of
team’s behaviour.
4. Performing stage: At this stage, the team starts operating in successful manner. Trust, openness,
healthy conflict and decisiveness of a group’s performance can be reached at this stage.
5. Maintenance stage: Functioning of team does not deteriorate overtime. At this stage, the
performance of teamwork at the earlier stage will be maintained for some period of time.
6. Evaluating stage: At this stage, team’s performance is to be evaluated in view of the set targets.
Both self-evaluation and management-based evaluation form this stage of team development.
COMMON BARRIERS TO TEAM PROGRESS:
1. Insufficient training.
2. Incompatible rewards and compensation.
3. First-line supervisor resistance.
 4. Lack of planning.
5. Lack of management support.
6. Access to information systems.
7. Lack of Union support.
8. Project scope too large.
9. Project objectives are not significant.
10. No clear measures of success.
11. No time to do improvement work.

RECOGNITION AND REWARD:

Recognition is a process whereby management shows acknowledgement of an employee’s
outstanding performance. Recognition is a form of employee positive motivation. Recognition of
employees is highly essential as people find themselves in a accepted and winning role. To sustain
employee’s interest and to propel them towards continuous improvement, it is essential to recognize
the people. This acknowledgement may be of financial, psychological or both in nature.

Reward is a tangible one, such as increased salaries, commissions, cash bonus, gain sharing, etc; to
promote desirable behavior.

METHODS TO RECOGNIZE PEOPLE:

1. Develop a behind the scenes awards specifically for those whose actions are not usually in the
lime light, make sure such awards are in the lime light.
2. Create best ideas of the year booklet and include everyone’s picture name and description of their
best ideas.
3. Feature the quality team of the month and put their picture in a prominent place.
4. Honor peers who have helped you by recognizing them at your staff meetings.
5. Let people attend meetings, committees etc; in your place when you are not available.
6. Involve teams with external customers and suppliers, sending them on appropriate visits to solve
problems and look for opportunities.
7. Invite a team for coffee or lunch at any time, not necessarily when you need them for something.
8. Create a visibility wall to display information, posters, and pictures, thanking individual
employees and their teams, and describing their contributions.
9. When you are discussing an individual or group ideas with other people, peers, or higher
management make sure that you give them credit.

NEED FOR RECOGNIZATION:

1. Improve employee’s morale
2. Show the company’s appreciation for better performance
3. Create satisfied workplace
4. Create highly motivated workplace.
5. Reinforce behavioral patterns.
 6. Stimulate creative efforts.
TYPES OF REWARDS:
1. Intrinsic rewards
2. Extrinsic rewards
Intrinsic rewards are related to feelings of accomplishment of self-worth.
Extrinsic reward are related to pay or compensation issues.

INTRINSIC VS EXTRINSIC REWARDS

INTRINSIC REWARDS EXTRINSIC REWARDS
Related to feeling of accomplishment or self Related to pay or compensation issues
worth 1. Profit sharing
1. Non monetary forms of recognition to 2. Gain sharing
acknowledge achievement of quality 3. Employment security
improvement goals 4. Compensation time
2. Celebrations to acknowledge achievement 5. Individual based performance systems
of quality improvement goals 6. Quality based performance appraisals
3. Regular expression of appreciation by
managers and leaders to employees to
acknowledge achievement of quality
improvement goals
4. 360o performance appraisals feedback
from co-workers, subordinates or customers
is incorporated into performance appraisal
5. Formal suggestion system available for
individuals to make quality improvement
suggestion
6. Developmental based performance
appraisals
7. Quality based promotion

EFFECTS OF RECOGNITION AND REWARD SYSTEM:

1. Recognition and reward go together for letting people know that they are valuable members for
the organization.
2. Employee involvement can be achieved by recognition and reward system.
3. Recognition and reward system reveals that the organization considers quality and productivity
as important.
4. It provides the organization an opportunity to thank high achievers.
5. It provides employees a specific goal to achieve.
6. It motivates employees to improve the process.
7. It increases the morale of the workers.
PERFORMANCE APPRAISAL:
The performance appraisal is used to let employees know how they are performing. The
performance appraisal becomes a basis for promotions, increase in salaries, counseling and other
purposes related to an employee’s future.

IMPORTANCE OF PERFORMANCE APPRAISALS:

1. It is necessary to prevail a good relationship between the employee and the appraiser.
2. Employee should be informed about how they are performing on a continuous basis, not just at
appraisal time.
3. The appraisal should highlight strength and weakness and how to improve the performance.
4. Employee should be allowed to comment on the evaluation and protest if necessary.
5. Everyone should understand that the purpose of performance appraisal is to have employee
involvement.
6. Errors in performance evaluations should be avoided.
7. Unfair and biased evaluation will render poor rating and hence should be eliminated.

BENEFITS OF EMPLOYEE INVOLVEMENT:

1. Employees make better decisions using their expert knowledge of the process
2. Employees are better able to spot and pin-point areas for improvement.
3. Employees are better able to take immediate corrective action.
4. Employee involvement reduces labour / management friction.
5. Employee involvement increases morale.
6. Employees have an increased commitment to goals because they are Involved.