Why Total Quality Management?

Excerpted from Bank, John, "The essence of Total Quality Management"

The relaunch of America's space shuttle programme in October 1988 required over 400 design changes and replacement of critical components in the shuttle fleet costing $2.4 billion. In the nearly three years it took to recover from the spectacular explosion of Challenger, NASA was completely reorganized.

Events leading up to 'the major malfunction' of Challenger provide the raw material of a case study on how not to manage a complex technological project. The prodigious cost of poor quality engineering and poor processes in the space shuttle programme - including the loss of seven lives - argue for the need of total quality management in NASA.

Poor quality processes in its Bhopal pesticide plant cost the Union Carbide Corporation 420 million in compensation claims in March 1989. More than 3,400 people have died since a cloud of deadly methyl isocyanate gas leaked out of a storage tank at the Bhopal plant and floated over a city of 672,000 population in the early hours of 3 December 1984. It was the worst industrial accident in history with over 200,000 people hurt and 15,000-20,000 suffering lasting injuries. The pesticide factory simply did not have the quality safety processes that exist in a similar pesticide plant in Germany (owned by Bayer) and one in America (Union Carbide's own) which include towers that rain down foam to neutralize escaping gases. The three men with garden hoses at Bhopal - two of whom wisely ran away - were a ludicrous substitute for a fail-safe system.

The space shuttle explosion, the tragedy at Bhopal, are not accidents that result from human error. They are part of seriously flawed business processes where quality is ignored. They are part of the unacceptable high cost of poor quality which companies and their customers are increasingly refusing to pay.

Who is accountable for disregarding quality procedures? There was public outrage in Britain over the sinking of the British ferry Herald of Free Enterprise after sailing from Zeebrugge on 6 March 1987 with open bow doors. Anger over the loss of 193 lives was reflected by a court case in which former employees of P&O European Ferries were charged with manslaughter at the Old Bailey in October 1990. As a result of the case, although those charged were acquitted, corporate manslaughter is legally. admissible in an English court. The fire on Occidental's Piper Alpha oil platform in the North Sea which claimed 169 lives on 29 June 1989 showed a similar disregard for life when submitted to the white-hot scrutiny of public inquiry and legal action. Earlier there was the tragedy of the drug thalidomide. These events again reveal an alarming lack of proper quality procedures. But it should not take a national disaster to alert - managers to bad practices and procedures. Engineers or shopfloor workers who discover flawed design should be encouraged to 'blow the whistle' by their company's own commitment to continuous improvement and to quality processes, rather than wait to play dramatic parts as witnesses in an inquiry.

An insistence on total quality as the fundamental business principle in organizations everywhere has the force of an unstoppable idea whose time has come. Managers are grappling with total quality now to ensure a future for themselves and their companies. Anyone who ignores quality today does so at great jeopardy to his or her business.

In the run up to the new millennium a manager has to focus on the right priorities. The manager should lead the company with clear vision to fulfil its mission, unleashing the creative powers of all employees in teams to meet competitive challenges from a global market-place. Coping with change and uncertainty the manager needs an overall framework within which to work which will provide practical norms while capturing the imagination of managers and workers alike. The manager needs to create a corporate culture where quality products and services, business processes and people are central. In short, the manager needs a working understanding of total quality management (TQM).

Rooted in the research and teachings of American quality pioneers W. Edwards Deming and Joseph M. Juran, and the home grown management synthesis of Karou Ishikawa, and many others, the TQM message empowered Japanese managers and gave them the quality vehicle with which they established global trade supremacy. The quality gurus told Japanese managers and politicians what they were gradually discovering for themselves, that the only way they could survive as an island nation with virtually no natural resources, was to make quality products and service the national imperative. And this they did, producing steel, ships, motorbikes, cars, medical equipment, transistor radios, stereo components, television sets, video recorders, cameras, camcorders, calculators, computers, office machinery, musical instruments, hand tools, machine tools, radial tyres, electric motors, food processors, microwave ovens, sports equipment, heavy machinery, computer games, industrial robots, electron microscopes and microcircuits - where the Japanese measure defects in 'parts per million' rather than the traditional Western percentages. In all these sectors the Japanese sell their products on quality as well as price. They perfected the idea of continuous improvement. And the West is still reeling from the results. In 1985 the US foreign trade deficit reached a record $148.5 billion of which $49.7 billion - a third - applied to trade with Japan.

During the last decade, however, the quality thrust has come back to America and Europe bringing great benefits in its wake. The benefits of TQM programmes include greater competitive advantage and massive financial savings to do with the 'cost of quality' (the total business cost in achieving quality) which is exhibited in the costs of prevention, appraisal, internal failure, external failure, exceeding customer requirements and lost opportunities.

Although first taken advantage of in the industrial sector, total quality management has been found to be just as effective in the service industry - in banking, insurance, hotels and restaurants, travel and holidays, health and the administration of public affairs. In fact, whenever an organization has a sequence of activities directed towards a defined end result it has business processes which can be analysed and improved by TQM techniques.

In addition to marketing advantages and financial savings, TQM programmes increase customer satisfaction producing a tidal wave of goodwill and additional business. They encourage the production of new products and services. They help develop a more effective management focused on the right priorities. By empowering people, these TQM programmes improve company morale and encourage genuine involvement in decision making. They ultimately enhance a company's image and, in so far as is possible in an uncertain world, attempt to assure a company's viability.

UK companies are following the lead of Japanese and American firms taking on TQM programmes to capture these benefits. Getting it right first time, zero defeds, prevention, the internal customer, competitive benchmarking, 'cost of quality', synergy in team work, self-management, self-inspection, are key words and phrases in the move towards total quality. Behind the words and concepts are techniques and actions. Instead of focusing on products and services in isolation, they are looked at in their integral connection with business processes and the people who do the work. New systems are created.

The focal point of it all is the customer. In fact, quality is defined as fully satisfying agreed customer requirements at the lowest internal price. The rewards are great for those companies who meet customer requirements because they win repeat business. Rob Walker, director of quality and management systems for Rank Xerox UK, laments that in 1990 customers discontinued using 5,500 Xerox machines out of approximately 140,000 installed. These lost customers cost Rank Xerox $8.5 million in 1990 and will cost about $30 million over three years. By 1993, Rank Xerox plans to reduce dissatisfaction among its customers from its current level of 7 per cent to zero.