1.0 INTRODUCTION The challenge for
business today is to produce quality products or services efficiently. A company that meets this
challenge can use quality as a
competitive weapon. This note explores the competitive implications of
quality, focusing on the philosophy of
total quality
management which is an aspect of
the topic of quality. Total
quality management (TQM) stresses three principles: customer satisfaction, employee involvement, and
continuous improvements in quality. TQM
also involves benchmarking, product and services design, process design, purchasing, and problem-solving. For most companies, superior product quality
is at the core of their business strategy.
For these companies, attaining near-perfect product quality is seen as the principal means of capturing market share
in global competition. The prominence of
product quality in business strategy for many firms has come from the painful knowledge that one may lose
business to lower-priced products, but
one wins it back with superior product quality. Achieving superior product quality within a business
requires a long-term process of changing
the fundamental culture of the organization.
2.0 OBJECTIVES
At the end of this note, you should be able to:
(i) Define quality from the customer's perspective.
(ii) Describe the principles of a TQM program and how the elements
fit together to make improvements in
quality and productivity
(iii) Identify
(iv) Discuss how TQM programs improve quality through
benchmarking, product and service
design, quality function deployment, and quality conscious purchasing
(v) Distinguish among the various tools for improving quality and
explain how each should be used.
(vi) Discuss the nature and benefits of NAFDAC and international
standards for quality programs and
environmental management programs.
3.0 MAIN CONTENT
3.1 Quality: A Management Philosophy Starting in the 1970s, Japanese manufacturers, with the help of
American consultants such as W. Edwards
Deming and Joseph M. Juran, began making
quality a competitive priority. Deming's philosophy was that quality is
the responsibility of management, not
the workers, and the management must
foster an environment for detecting and solving quality problems.
Juran believed that continuous
improvement, hands-on management, and training are fundamental to achieving excellence in
quality. Foreign competitors with
superior goods may dominate the local market with inferior alternatives.
A good example is the imported and local
rice in Nigeria. Manufacturers need to
listen to the customers or lose market share. This realization has
helped the Japanese manufacturers over
the years. The global economy of the 1990s and beyond dictates that companies provide the
customer with an ever widening array of
products and services having high level of quality.
3.1.1 Customer-Driven Definition of Quality Customers define quality in various ways. Generally, quality may
be defined as meeting or exceeding the
expectations of the customer. However, quality has multiple dimensions in the mind of the
consumer, and one or more of the
following definitions may apply at any one time.
(a) Conformance to specifications
Customers expect the products or services they buy to meet or
exceed certain advertised levels of
performance. When Nestle advertises milo as "the drink of future champions, the expectation of the
customers is high as to the pleasure
they will derive from taking milo. They will be expecting to gain
energy, strength or vitality. If they
derive all these or even more, then milo conforms to specification.
(b) Value Another way customers
define quality is through value, or how well the product or service, serves its intended
purpose at a price customers are willing
to pay. How much value a product or service has in the mind of the
customers depends on the customer's
expectations before purchasing it. For example if you spent N 10 to buy an Eleganza ball point
pen and it served you well for 3 weeks,
you might feel that the purchase was worth the price. Your expectations for the product were met or exceeded.
However, if the pen lasted only 3 days,
you might be disappointed and feel that the value wasn't there.
(c) Fitness for use In assessing fitness
for use, or how well the product or service perform its intended purpose, the customer may consider
the mechanical features of a product or
the convenience of a service. Other aspects of fitness for use include appearance, style, durability, reliability,
craftsmanship and serviceability. For
example, a retailer of frozen fish may find a deep freezer fit for
product storage while a wholesaler will
need a cold room.
(d) Support Often the product or
service support provided by the company is as important to customers as the quality of the product or
service itself. Customers get upset with
a company if financial statements are incorrect, responses to warranty claims are delayed, or advertising is
misleading. Good product support can
reduce the consequences of quality failures in other areas. You may
decide to buy your upholstery from a
furniture worker who agrees to transport it to your apartment.
(e) Psychological Impression
People often evaluate the quality of a product or service on the
basis of psychological impressions:
atmosphere, image, or aesthetics. The appearance and actions of the service provider are very
important. Nicely dressed, courteous,
friendly, and sympathetic employees can affect the customer's perception of service quality. For example,
rumpled, discourteous, or grumpy waiters
can undermine a restaurant's best efforts to provide high-quality service.
3.1.2 Quality as a
Competitive Weapon Attaining quality
in all areas of a business is a difficult task because perceptions of quality by customers change
over time. For instance, changes in life-styles
and economic conditions have drastically altered customer perceptions of automobile quality. During
austerity, most Nigerians go for
second-hand (Tokunbo) cars especially models with economic fuel consumption. But as the economy improves, more
people buy better cars. A business's
success depends on the accuracy of its prediction of consumer’s expectation and the ability to bridge the gap
between those expectations and operating
capabilities. Consumers are now quality-minded than in the past. Research findings indicate that a
high quality product has a better chance
of gaining market share than does a low-quality product. Most modern firms believe that their total quality
management (TQM) programmes are highly
successful in retaining customers and building satisfaction. More over, perception of a product as being of high
quality by customers gives it better
chance over those considered to be of low-quality even if the level of
their quality is the same. Good quality can pay off in higher profit.
High-quality products and services can
be priced higher than comparable lower quality ones and yield a greater return for the same sales naira. Poor quality
erodes the firm's ability to compete in
the market place and increase the costs of producing its products or
service.
3.2 Employee involvement One important
component of TQM is employee involvement. A complete programme in employee involvement includes
changing organizational culture,
fostering individual development through training, establishing awards
and incentives, and encouraging team
work.
3.2.1 Cultural
Change The challenge of quality
management is to instill an awareness of the
importance of quality in all employees and to motivate them to
improve product quality. With TQM,
everyone is expected to contribute to the overall improvement of quality - from the
administrator who finds cost- saving
measures to the salesperson that learns of a new customer need, to the
engineer who designs a product. Customers can either be internal or external.
External customers are the people
or firms who buy the product or service. Thus the entire firm must do
its best to satisfy them. It is often
difficult for employees who are not dealing directly with customers to see their contribution to
TQM, but this is not to say that they
are less important. Each employee has one or more internal customers
- employees in the firm who rely on the
output of other employees. For example,
a printer who prints a book and passes it on to a binder has the binder
as his customer.
The binder will have similar perception of quality as final
consumer. All employees have to do a
good job of serving their internal customers for ultimate satisfaction of the external
customers. The concept of internal customers
works, if each internal customer demands only value-added activities of their internal suppliers: that
is, activities that the external customer
will recognize and pay for. The concept of internal customers applies to
all parts of a firm and enhances cross
functional coordination.
TQM makes quality control everyone's business where errors are
promptly detected and corrected
internally before they get to the final consumers. This philosophy is called quality at the source.
Firms should try to avoid "inspecting
quality into the product" by using inspectors to detect defective
product after all operations have been
performed. Some firms authorize workers to stop a production line if they spot quality
problem.
3.2.2 Individual Development
On the job training can help improve quality. Teaching new work
methods to experienced workers or
training new employees in current practices can
increase productivity and reduce the number of product defects.
Some companies train workers to perform
related jobs to help them understand how
quality problems in their own work can cause problems for other
workers. Managers too need to develop
new skills in order to teach their subordinates. They may have to embark on "train - the
- trainer" programme to acquire skills
to train others in quality improvement practices.
3.2.3 Awards and Incentives
The prospect of merit pay and bonuses can give employees some
incentive for improving quality.
Companies may tie monetary incentives directly to quality improvements.
Non-monetary awards, such as recognition in front of co-workers, also
can motivate quality improvements. Some
companies periodically select an
employee who has demonstrated quality workmanship and give them
special recognition e.g. a special dinner,
such performance may even be reported in the
company newsletter.
3.3 Continuous Improvement Continuous
improvement, based on a Japanese concept called "Kaizen", is the philosophy of continually seeking way to
improve operations. It is also applicable
to process improvement. Continuous improvement involves identifying benchmarks of excellent practice
and instilling a sense of employee
ownership in the process. The focus can be on reducing the length of
time required to process request for
loans at a bank. Continuous improvement can
also focus on problems with customers or suppliers. The bases of
continuous improvement is that if people
involved in a process can identify the needed
changes to be made, the process can be improved upon. An organization
should not wait until massive problem
occurs before acting.
3.3.1 Getting Started
with Continuous Improvement. Instilling
the philosophy of continuous improvement involves the following processes:
(a) Train employees in the methods of statistical process control
(SPC) and other tools for improving
quality and performance.
(b) Make SPC methods a normal aspect of daily operations.
(c) Build work teams and employee involvement
(d) Utilize problem-solving tools within the work teams.
(e) Develop a sense of operator ownership in the process. Note that employee involvement is central to
the philosophy of continuous
improvement. The last two steps are crucial if the philosophy is to
become part of everyday operations.
Problem solving addresses the aspects of operations that need improvement. A sense of operator
ownership emerges when employees feel as
though they own the processes and methods they use and take pride in the quality of the product or
service they produce.
3.3.2 Problem-solving process
Firms that are actively involved in continuous improvement train
their work teams to use the
plan-do-check-act cycle of problem solving. The approach is called Deming wheel and it lies in the heart
of the continuous improvement
philosophy. The steps involved are.
(i) Plan. The team selects a process (activity, method, machine,
policy e.t.c.) that needs improvement.
The team then documents the selected
process, by analyzing data; sets qualitative goals for improvement;
and discusses various ways to achieve
the goal. After assessing the benefits
and costs of the alternatives, the team develops a plan with
quantifiable measures for improvement.
(ii) Do. The team implements the plan and monitors progress. Data
are collected continuously to measure
the improvements in the process. Any
further revisions are made as needed.
(iii) Check. The team analyzes the data collected during the do
step to find out how closely the results
correspond to the goals set in the plan step. If major short comings exist, the team may have
to reevaluate the plan or stop the plan
or stop the project.
(iv) Act. If the results are successful, the team documents the
revised process so that it becomes the
standard procedure for all who may use it. The
team may then instruct other employees in the use of the revised process.
3.4 The Cost of Poor Quality
Defective and unsatisfactory product may cost a company up to 20
to 30 percent of its gross sales. For
instance, a high electric power surge may damage all electrical appliances of a company as low
current supply may delay operations.
Four major categories of cost are associated with quality management: prevention, appraisal, internal
failure, and external failure.
3.4.1 Prevention Costs These are incurred when
preventing defects from happening. These include the cost of redesigning the process and product,
training of employees and working with
suppliers to increase the quality of purchased items. In order to improve quality, firms invest in aghdditional time,
efforts, and money.
3.4.2 Appraisal costs - are incurred in assessing the level of
quality attained by the operating
system This helps to
identify quality problems and proffer measures to improve quality, appraisal costs decrease due to
quality inspections.
3.4.3 Internal failure costs
These result from defects that are discovered during the
production of product or service. They
fall into two categories: yield losses and rework costs. Yield losses are incurred if a defective item must
be scrapped. Rework Costs are incurred
if item is rerouted to some previous operation (s) to correct the defect or if the service must be performed again.
Additional time spent to correct mistakes
lowers productivity of a unit.
3.4.4 External failure costs: Arise when a defect is discovered after the customer has received
the product or service. For instance,
suppose you discover that your dry cleaner has burnt one of your clothes given to him, you may
demand that he amends it for you.
External failure cost erodes market share of profits. The costs include
warranty service and litigation costs. A
warranty is a written guarantee that the product will be replaced or repair the defective
parts or perform the service to the
customer's satisfaction. Defective
products can injure and even kill consumer who purchase them. Thus it is important to prevent them from getting
to the final consumer. External failure
costs also include litigation cost. These include legal fees, time and effort of employees who appear for the
company in court. The cost of litigation
is enormous and the negative publicity can be devastating.
3.5 Improving Quality through TQM
Employee involvement and continuous improvement generally
improve quality. But, TQM often focuses
on benchmarking, product and service design,
process design and purchasing.
3.5.1 Benchmarking Benchmarking is a
continuous systematic procedure that measures a firm's products, services and processes against
those of industry leaders. Companies use
the outstanding company in the industry as standard they would like to attain to. Typical measures used in,
benchmarking include cost per note, service
per customer, processing time per note, customer retention rates,
revenue per note, return on investment,
and customer satisfaction levels. Benchmarking
consists of four basic steps"
(i) Planning - Identifying the product, service or process to
be benchmarked and the firms (s) to be used
for comparison, determine the measures
of performance for analysis, and collect data
(ii) Analysis - Determine the difference between the firm's
current performance and that
of the benchmark firm (s) and identify the causes of significant gaps.
(iii) Integration - Establishing goals and obtaining the support
of managers who must provide the
resources for achieving the goals.
(iv) Action - This involves determining the team affected by the
changes, developing action
plans and assignments, implementing the plan,
monitoring progress and watching the level attained on the benchmark. Benchmarking focuses on setting of
quantitative goals for continuous
improvement. Comparative benchmarking is based on comparisons with a direct industry competitor. Functional
benchmarking compares areas such as
administration, customer service and sales operations with those of
outstanding firms in an industry.
Internal benchmarking involves using an organisational note with superior performance as the
benchmark for other notes. All forms of
benchmarking are applied when there is a need for continuous
improvement.
3.5.2 Product and Service Design
Because design changes often require changes in methods,
materials, or specifications, they can
increase defect rates. Change increases the risk of making mistakes, so stable product and service
designs can help reduce internal quality
problems. Stable designs may not be possible when a product or service is sold in markets globally. Although changed
designs have the potential to increase
market share, management must be aware of possible quality problems resulting from changes. A firm may need to
change design to remain competitive; it
should carefully test new designs and redesign the product with a focus on the market. Higher quality and
increased competitiveness are exchanged
for added time and cost. Another
dimension of quality related to product design is reliability. Reliability is the probability that the product will be
functional when used. Products often
consist of a number of components that must be operative for them to perform as expected. Some products can be designed
with extra components/subsystems so that
if one system component fails another can be activated. Suppose that a product has subsystems, each
with its own reliability measure. The
reliability of the product is equal to the product of the reliabilities of all
the subsystems, i.e. rs = (rl) (r2) ... (rn)
............................... (i)
Where
rs = reliability of the complete product.
n = number of subsystems
rn = reliability of the subsystem n This measure is based on the assumption that
the reliability of each component
depends on those of others.
Suppose you have a table fan, and you discover that the reliability of its
plug is 0.95, that of the cord 0.90 that
of the switch is 0.88 and the coil has 0.70
reliability. The reliabilities are the probabilities that each subsystem
will still be operating three years from
now. The reliability of the table fan is
Rs=(0.95) (0.90) (0.88) (0.70) = 0.53
The table fan thus has a reliability of 0.53. This is the probability
that it will not fail to work when you
put it on.
3.5.3 Process Design Process designs
greatly affect product quality. Wema Bank PLC may observe that the average waiting time to pay NEPA
bill in all its branches is one hour. It
may want to reduce the waiting time to 30 minutes by assigning only
one cashier to customer waiting to pay
such bills. The purchase of new and
efficient machinery can help to prevent or overcome quality problem. The cost of the machinery is
the trade-off for reducing the
percentage of defects and their cost.
One of the keys to obtaining high quality is concurrent engineering in
which operation's manager work hand in
hand with designers in the initial phases of
product or service design to ensure that production requirements and
process capabilities are synchronized.
This results in better quality and shorter
development time.
3.5.4 Quality Function Deployment
A key to improving quality is to link the design of products or
services to the processes that produce
them. Quality Function Deployment (QFD) is a means of translating customer requirements into the
appropriate technical requirements for
each stage of product or service development and production. This approach seeks answers to the following
questions.
(a) Voice of the customer - what do our customers need and
want?
(b) Competitive analysis - How well are we doing relative to
our competitors, in terms of our
customers? (c) Voice of the engineer
- what technical measures relate to our customers' needs?
(d) Correlation - what is the relationship between the Voice of
customer and the voice of the
engineer?
(e) Technical comparison - How does our product/service
perform compared to that of
our competitors?
(f) Trade-offs - what are the potential technical trade -
offs? The QFD approach provides a way to set
targets and debate their effects on
product quality. QFD encourages inter functional communication for
the purpose of improving product quality.
3.5.5 Purchasing Considerations
Most firms depend on outside suppliers for some of the materials,
services, or equipment used in producing
their products and services. Large companies
have many of such suppliers, some of which supply them the same
material. The quality of these inputs
can affect the quality of the firm's work
Both the buyer's approach and specification management are keys to controlling supplier quality. The firm's
buyer must emphasize the cost, and speed
of delivery of the supplier as well as the quality of the product.
The buyer identifies
suppliers with high - quality products and arranges to buy from them.
The specifications for the purchased items must be clear and realistic.
The buyers initiate process capability
studies for important products. This involves
trial runs of small product samples to ensure that the quality is as
specified and will perform as desired at
the given cost. Management needs to allow sufficient time for the purchasing note and may work
closely with other notes e.g.
engineering to ensure quality control.
3.5.6 Tools for Improving Quality and Performance The first step in improving quality of an operation is data
collection. There are seven tools for
organizing and presenting data to identify areas for quality and performance improvement. These are: Checklists, histograms and bar charts,
Pareto charts, scatter diagrams, causeand-
effect diagrams, graphs, and control charts. We discuss six of them here.
(a) Checklists A checklist is a form
used to record the frequency of occurrence of
certain product or service characteristics related to quality. The characteristics may be measurable on
continuous scale (e.g. weight or time)
or on yes-or-no basis
(b) Histograms and Bar chats
A histogram summarizes data measured on a continuous scale,
showing the frequency distribution of
some quality characteristic. A bar chart is a
series of bars representing the frequency of occurrence of data characteristics measured on a yes-or-no
basis.
(c) Pareto Charts When managers
discover several quality problems that need to be addressed, they have to decide on which to
tackle first. Vilfredo Pareto proposed
that most of an "activity" is caused by relatively few of its factors. In a restaurant quality problem, the
activity could be customer complaints
and the factor could be "discourteous waiter". Pareto's concept, called the 80-20 rule, is
that 80 per cent of the activity is
caused by 20 percent of the factors. Thus, by concentrating on the 20 per cent of the factors, managers can attack
80 percent of the quality problem.
A Pareto chart is a bar chart on which the factors are plotted
in decreasing order of frequency along
the horizontal axis. The chart has two
vertical axis, the one on the left showing frequency and the one on the right showing the cumulative percentage
of frequency curve, identifies the few
vital factors that warrants immediate managerial attention.
(d) Scatter diagram A scatter diagram is
a plot of two variables showing whether they are related or not and can be used to clear doubt
about a factor causing one quality
problem. Each point on the scatter diagram represents a data observation.
(e) Cause-and-Effect Diagrams
One way to identify a design problem that needs to be corrected is
to develop a cause-and -effect diagram
that relates a key quality problem to
its potential causes. The diagram helps management to trace
customer complaints directly to the
operations involved. The
cause-and-effect diagram is also known as a fishbone diagram. The main quality problem is labeled as the fish's
"head", the major categories
of potential causes as structural "bones" and the likely
specific causes as "ribs". The
diagram below is used to illustrate this.
Figure 19.1 
From Figure 19.1, the head or problem is bad printing job. The
main causes forming the structural bones
are people, material, process and other
causes. These all have specific causes.
(f) Graphs Graphs represent data
in a variety of pictorial formats, such as line
graphs and pie charts. Line graphs represent data sequentially with
data points corrected by line segments
to highlight trends in the data. Pie
charts represent quality factors as slices of a pie, the size of each
slice is in proportion to the number of
occurrence of the factor.
3.5.7 Data Snooping Each of the tools for
improving quality may be used independently, but their power is greatest when they are used
together. Managers may need to shift data
to clarify the issues involved in deducing the causes. This process is
called data snooping.
3.6 National and International Quality Standards
3.6.1 National Quality Standards
Products and services quality are standardized by various public
and private agents in Nigeria. These
could be trade unions, professional bodies or
government agencies e.g. licencing office. Accountants, Engineers e.t.c.
have their professional bodies that
maintain standard in their profession. The
Nigerian University Commission for instance, maintains standard and
quality of university education in
Nigeria. The National Agency for Food
and Drug Administration and Control
(NAFDAC) is saddled with responsibility of maintaining standard in food
and pharmaceutical industry.
3.6.2 International Quality Standard Companies selling in international markets may have difficulty
complying with varying quality
documentation standards in countries where they do business. To cope with this problem, the international
organization for standardization devised
a set of standards called ISO 9000 for companies doing business in the European Union. Also, a new set of standards,
ISO14000, were devised for environmental
management systems.
(a) The ISO 9000 standards is a set of standards governing
documentation of a quality programme.
Companies become certified buy proving to a
qualified external examiner that they have complied with all the requirements. Companies thus certified are
listed in the directory for potential
customer to know that such companies can own-up their claims on their products. This tells nothing on the
actual quality of the product. The ISO
9000 consists of 5 documents: ISO 9000 - 9004
(b) ISO 14000 - An Environmental management system. The ISO 14000 standards require participating
companies to keep track of their raw
materials use and their generation, treatment, and disposal of hazardous wastes. The standard is to
ensure improvement in environmental
performance. ISO 14000 is a series of 5 standards covering the following areas.
• Environmental management system
• Environmental performance evaluation
• Environmental
labeling
• Life-cycle assessments
4.0 CONCLUSION
Total quality management is a big challenge for all modern
businesses. Products and services will
meet customers’ expectations for satisfaction if they have good quality for their money value. Good
quality is not a thing to be inspected
for in a product after final production but a thing that is built into the product from the beginning of the production
process. Everyone in the firmmanagement,
employees and all the notes need to be carried along in quality management. Contacts have to be maintained
with customers too as their perception
of quality changes over time.
5.0 SUMMARY Total quality
management is built on three principles: customer-driven focus, employee involvement, and continuous quality
improvement. Quality means a variety of
things to customers. A customer may make a qualitative judgment about whether a product or service meets
specified design characteristic. Another
may make qualitative judgment about value, fitness for the customer's intended use, product or service support, and
aesthetic reasons. One TQM
responsibility of marketing is to listen to customers and report their
changing perceptions of quality. Quality can be used as a competitive weapon.
World-class competition requires
businesses to produce quality products or services efficiently
Responsibility for quality is shared by
all employees in the organizations. Managers too need to develop skills for teaching their
subordinates. Continuous improvement
involves identifying benchmarks of excellent
practices and instilling a sense of ownership in employees so that they
will continually identify product,
services or process that need improvement.
Quality management is important because of its impact on market
share, price, and profits and because of
the costs of poor quality.
The four categories of
costs associated with quality management are prevention, appraisal,
internal failure, and external failure.
Benchmarking is a comparative measure used to
establish goals for continuous improvement. Forms of benchmarking
are competitive, functional and internal
concurrent engineering improves the match
between product design and production process capabilities. Quality improvement requires close cooperation among
functions (design, operations,
marketing, purchasing etc.) Keys
to controlling supplier quality are buyer's approach and specification management.
The buyer must consider
quality, delivery, and cost. Approaches
to organizing and presenting quality improvement data include check lists, scatter diagrams,
cause-and-effect diagrams, Pareto charts, bar
charts, graph and control charts.
Quality management in Nigeria is done by various public and
private agencies. NAFDAC monitors
quality in the food and drugs industry.
Tow sets of standard, governing the documentation of quality programmes
at the global level are ISO 9000 and ISO
14000
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