Total quality management

– Total quality management is exactly what you think it is. Everyone in the organization is committed to managing quality and improving its processes, products, and services. By doing this, you continuously improve customer satisfaction. The American Society for Quality defines eight principles of total quality management that empower companies to do just that. Check the exercise files for a handout with a brief description of these eight principles. I’ll only talk about one of them, principle four, which emphasizes that a business organization is a system. If you make a change in one part of the system, it can impact other parts. Sometimes that impact isn’t a good thing. So, when improving key processes in your organization, you must consider this system effect. Let’s use a typical manufacturing company as an example here. They would have a purchasing department, a factory, and a distribution center. The purchasing department buys materials, the factory makes products, and the distribution center delivers those products to customers. Each department manages their own specific processes to achieve their department goals. But the key processes of the company They usually run horizontally across the departments. Order fulfillment is a good example. I think you’ll agree that’s a pretty important process. Filling a customer’s order requires several departments to do their job. The warehouse delivers the order to the customer on time. They then place an order with the factory to replace that inventory. The factory notifies the purchasing department, who orders materials from the supplier and makes sure it’s delivered on time to the factory. No doubt, all these people and processes and activities must work together as an integrated system to ensure the customer is satisfied. But what if a change is made? Suppose the purchasing department introduces a new policy that requires buyers to contract with suppliers who offer the lowest price. The low cost supplier meets the factory’s quality specifications so when your contract is placed the company saves money and everyone is happy. Maybe the purchasing manager even gets a bonus. But suppose this low cost supplier has trouble meeting delivery schedules. Maybe their inexperienced workers are not very efficient, and maybe their trucking company is not very reliable. It won’t take long before the factory has trouble meeting new orders, the warehouse runs out of inventory, and unhappy customers switch to your competitors. In this example, a process improvement in the purchasing department led to decreased customer satisfaction and lost sales. So, it’s really important to maintain a systems mindset when managing your key processes. a systems mindset when managing your key processes.