UNIT II.

THE PRINCIPLES OF TOTAL QUALITY MANAGEMENT SYSTEM

• Strategic quality planning
• Quality statements
• Customer focus (Customer orientation; Customer satisfaction; Customer complaints; and
Customer retention)
• Employee involvement (Motivation; Empowerment; Team and Teamwork; Recognition and
Reward Performance appraisal)
• Continuous process improvement (Plan-Do-Study-Act Cycle (PDSA) cycle; 5S System; and
Kaizen)
• Supplier partnership (Partnering; Supplier selection; and Supplier Rating)

STRATEGIC QUALITY PLANNING

SEVEN STEPS TO STRATEGIC QUALITY PLANNING

In order to integrate quality with the strategic planning process, a systematic and
sequential procedure has to be adopted. There are seven basic steps to strategic
process planning. They are

Step 1. Customer Needs

The basic step is the identification of customers and their wants and needs.
An organization must seek its customers’ requirements, expectations and assess
future trends before developing a
strategic plan.

Step 2. Customer Position

The second step requires the planners to determine its positioning with regards to its
customers. Various alternatives such as whether the organization should give up,
maintain or expand market position should be considered. In order to become
successful, the organization should concentrate and consolidate its position in its
areas of excellence.
Step 3. Predict the Future

Next, the planners must predict future conditions that will affect their product
or service: To help predicting the future, the tools such as demographics, economic
forecasts, and technical assessments or projections may be used.

Step 4. Gap Analysis

In this step, the planners must identify the gaps between the current state and the
future state of the organization. This concept is also known as value stream
mapping. For identifying the gaps, an analysis of the core values and concepts and
other techniques may be used.
Step 5. Closing the Gaps

Now the planners should develop a specific plan to close the gaps. This
process is also termed as Process improvement. By assessing the relative importance
and relative difficulty of each gap, planners can close the gaps.

Step 6. Alignment

Now the revised plan should be aligned with the mission, vision, and core
values and concepts of the organization. Organization should embrace quality as an
essential ingredient in their vision, mission, and objectives.
Step 7. Implementation

In order to implement the action plan, resources must be allocated to

collecting data, designing changes, and overcoming resistance to change. Also the
planners should monitor and assess the result of the strategic plan.

Since quality is a continuous improvement process, one has to reassess

and renew the strategic plans periodically. So it is a cyclic process. Figure
summarizes the strategic planning cycle.
QUALITY STATEMENTS

Quality statements are part of strategic planning process and once developed, are occasionally
reviewed and updated.

There are three types of quality statements:

1. Vision statement
2. Mission statement
3. Quality policy statement

The utilization of these statements varies from organization to organization. Small organization
may use only the quality policy statement.

1. Vision Statement: The vision statement is a short declaration what an organization aspires to
be tomorrow. A vision statement, on the other hand, describes how the future will look if the
organization achieves its mission.

Successful visions are timeless, inspirational, and become deeply shared within the organization,
such as:

IBM’s Service
Apple’s Computing for the masses
Disney theme park’s the happiest place on the earth, and
Polaroid’s instant photography

2. Mission Statement: A mission statement concerns what an organization is all about. The
statement answers the questions such as: who we are, who are our customers, what do we do and
how do we do it. This statement is usually one paragraph or less in length, easy to understand,
and describes the function of the organization. It provides clear statement of purpose for
employees, customers, and suppliers.

An example of mission statement is:

Ford Motor Company is a worldwide leader in automatic and automotive related products and
services as well as the newer industries such as aerospace, communications, and financial
services. Our mission is to improve continually our products and services to meet our customers’
needs, allowing us to prosper as a business and to provide a reasonable return on to our
shareholders, the owners of our business.

3. Quality Policy Statement: The quality policy is a guide for everyone in the organization as
to how they should provide products and services to the customers.It should be written by the
CEO with feedback from the workforce and be approved by the quality council. A quality policy
is a requirement of ISO 9000.

A simple quality policy is:

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

Reference:
https://totalqualitymanagement.wordpress.com/2008/10/04/strategic-quality-planning/

CUSTOMER FOCUS (Customer orientation, Customer satisfaction, Customer complaints,

Customer retention)

Quality for customer satisfaction means:

a) Using customer’s perspective;
b) Meeting or exceeding customer expectations;
c) Anticipating future needs of the customer

Definition of Customer

There are two distinct types of customers i.e. external and internal. Internal customers are within
the company-the colleagues working together for delivering a service or product for the external
customer. We will, however, remain restricted to the external customers here.

An external customer may be an individual or an enterprise that hires or purchases the product(s)
or service(s) from another person or business in exchange of money.

One of the most important factors for the success of an enterprise is its customers. Without them,
a business cannot exist. But to capture customers, a business must try to find out what people
want, how much and how often they will buy and how their post-purchase satisfaction will be
ensured.

Who is the Customer?

1) External Customer – one who purchases/uses the product or service, or one who influences the
sale of the product or service. The external customer falls into 3 categories the current,
prospective and lost customer.

2) Internal customer – every person in a production process is considered a customer of the

preceding operation. Each worker’s goal is to make sure that the quality meets the expectations
of the next person.

Dealing with the Internal Customer

The formula for successful internal customer/ supplier relationships varies. But it always begins
with asking three basic questions.

i. What do you need from me?

 ii. What do you do with my output?
iii. Are there any gaps between what you need and what you get?

Customer Perception of Quality

Quality is judged by customers. Thus, quality must take into account all product and service
features and characteristics that contribute value to customers and lead to customer satisfaction,
preference and retention.

Process vs. Customer

Customer complaints are often as a result of process variation.
From the company’s viewpoint, customer satisfaction is the result of a three-part system:
(1) company processes (operations);
(2) company employees who deliver consistent product or service and
(3) customer expectations.
The overlap represents the extent to which customer satisfaction is achieved. The objective is to
make this area as large as possible and ultimately make all three circles converge into an integrated
system

What key indicators are used to measure customer satisfaction?

There are two basic steps in measurement system:

1. Develop key indicators that drive customer satisfaction.

2. Collect data regarding perception of quality received by customers

Key Indicators for Physical Products

1. Reliability
2. Aesthetics
3. Adaptability
4. Usability
5. Functionality
6. Appropriateness

Key Indicators for Services

1. Friendliness/courteousness of employees
2. Safety/risk of service
3. Billing/invoicing procedure
4. Responsiveness to requests
5. Appearance of physical facilities
6. Approachability of the service provider
7. Willingness to listen to customer
8. Honesty and an ability to communicate in clear language
The American Society for Quality (ASQ) surveys perceptions of important factors:

1) Performance – fitness for use. Other considerations include

(a) availability, which is the probability that a product will be there when needed;
(b) reliability, which is freedom from failure over time; and
(c) serviceability, which is the ease of keeping the product operable.
2) Features (add-ons) – these may be physical, time-oriented, contractual, ethical or technological.
3) Service – this is an intangible requirement by customers and may differentiate between
purchasing a service/product in one place relative to another – a way of serving the customer better.
4) Warranty – it represents an organization's public promise of a quality product backed up by a
guarantee of customer satisfaction. It also represents a public commitment to guarantee a level of
service sufficient to satisfy the customer.
5) Price – Today’s customer is willing to pay a higher price to obtain value. On-going efforts must
be made by everyone having contact with customers to identify, verify and update each customer’s
perception of value in relation each product and service.
6) Reputation – Total customer satisfaction is based on the entire experience with the organisation.

Getting Customer Feedback/ Collecting Customer Information Feedback enables the

organization to:
• Discover customer dissatisfaction
• Discover relative priorities of quality
• Compare performance with competition
• Identify customer needs
• Determine opportunities for improvement

Ways of getting customer feedback/ information

• Comment card – to give feedback on a specific service/product

• Report card – A quarterly report card could be sent to repeat customers.
• Customer questionnaire – by mail, in person or via phone
• Focus Groups – A group of customers is assembled in a meeting room to answer a series
of questions/discuss issues.
• Customer visits – An organization can proactively monitor a product’s performance
while in use thereby identifying any specific or recurring problems.
• Employee feedback – They can offer information and insights about conditions that
inhibit service quality, and can also brainstorm on ideas to address those problems.
• Online feedback – Internet users can use given feedback online possibly on a company’s
website
• Imprint analysis – Imprint refers to the collection of associations and emotions
unconsciously linked to a word, concept or experience.
• Managers acting as customers – Managers can act as customers of their own
establishments in order to understand customer needs better.

10 Key Excellence Indicators for Customer Satisfaction

1) Service standards derived from customer requirements

2) Understanding customer requirements
• Thoroughness/objectivity
• Customer types
• Product/service features
3) Frontline empowerment
4) Strategic infrastructure support for frontline employees
5) Attention to hiring, training, attitude, morale for frontline employees
6) High levels of satisfaction – customer awards
7) Proactive customer service systems
8) Proactive management of relationships with customer
9) Use of various listening posts
Surveys, product/service follow-ups, complaints, turnover customers, employees
10) Quality requirements of market segments
Surveys that go beyond current customers
Commitment to customer (trust/confidence/ making good on word)

EMPLOYEE INVOLVEMENT (Motivation; Empowerment, Team and Teamwork, and

Recognition and Reward Performance appraisal) – PLEASE SEE SEPARATE NOTES

CONTINUOUS PROCESS IMPROVEMENT (Plan-Do-Study-Act Cycle (PDSA), 5S

System, Kaizen)

Please view the following videos for the topic:

Video 1

https://www.youtube.com/watch?v=Kx7_L-DK_ww

Video 2

https://www.youtube.com/watch?v=n9sxq34D9HQ

Video 3

https://www.youtube.com/watch?v=osRArZmxG4Q

SUPPLIER PARTNERSHIP

Please view the following videos by clicking the link provided

Video 1

https://www.youtube.com/watch?v=p3Y7WUucnoA

Video 2
https://www.youtube.com/watch?v=PVFGBcLLJY8

Video 3

https://www.youtube.com/watch?v=NptM4OUERpM