Total Quality Management System – Explanation, Application, Advantages and Disadvantages | Accounting For Management

Definition and explanation:

The total quality management (TQM) is a management system which is based on the assumption that every employee of a company must promote quality of company’s products and/or services by maintaining maximum efficiency possible in the operations of that company.

TQM is a very well-mannered and precise approach towards the management of a company. The approach refers to a systematic ongoing procedure which is adopted to identify and eradicate any kind of deficiencies and errors in the supply chain and management of a company. Total Quality Management is an effort to nurture a permanent environment to add value to a business’s systems, products and/or services.

The ultimate focus of this strategy is to increase the quality of the output of a business by focusing on the internal processes and procedures and the capabilities of those employees that are involved in the production/manufacturing process or providing services. The quality standards can be defined in relation to competitors, industry or preceding results of the business itself. These standards can also be set based upon the feedback of existing and potential customers which is a more sophisticated technique for service based organizations. The emphasize of efficacious implementation of total quality management is put upon the collective output of the employees and the use of relevant management tools to track their improvement in relation to the goals set by the strategic management of the company. The management tools must be most relevant to the needs of the organization and the tasks delegated to employees. Additionally, the decision of managements must be established upon the facts and figures.

The basic principles that derive the core of total quality management (TQM) theory are:

• Customer satisfaction
• Commitment of employees
• Attitude of upper level management
• Effective communication and dissemination of data
• Effective strategy making and proficient decision making process
• Continuous Improvements and upgradation

Application of total quality management (TQM)

The idea of total quality management (TQM) was first postulated by an American engineer and statistician ‘Walter Andrew Shewhart’. It was later refined by ‘Joseph M. Juran’, who was also an American engineer and management consultant.

The Japanese companies were among the first companies that owned and implemented total quality management on a large scale because Japanese companies had to compete with their lack of economies of scale and high costs of doing business. Japanese industries implemented TQM alongside the just-in-time system. American and European industries started to adopt TQM in late 1970’s and 80’s.

A practical example of implementation of total quality management is in Exxon Mobil – an American multinational oil and gas company. The primary focus of Exxon Mobil was the improvement of quality of its products to directly capture more market share and resolve issues related to existing customers i.e. the customer dissatisfaction, customers trust deficit etc. Exxon Mobil rebranded its company brand and acquitted its reputation as a trusted dealer and provider of good quality fuel products amongst its customers. In this way, Exxon Mobil achieved it’s emphasize upon the improvement of quality of its products and services and also consumer confidence in its brand name.

Ford, a multinational American auto mobile company used the same approach as Exxon Mobil. The primary focus was the improvement of its products and meeting the costumer needs to enhance customer trust and perception towards the company and its products reliability. Ford introduced a new slogan under this application and held customer surveys. In this way Ford improved its assembly line and increased the quality levels of its products.

Advantages and disadvantages of total quality management (TQM)

Advantages:

The main advantages of implementing total quality management (TQM) approach are given below:

1. The concept behind the total quality management approach is easy to understand and implement and can be applied to almost every business and industry.
2. The implementation of TQM dispenses immediate results as it directly highlights the inefficiencies in a company’s procedures.This is because the direct emphasize of TQM is the reduction of unwanted cost incurred by the entity and enhancement of quality of products.
3. By the implementation of total quality management many other costs like warranty claims, sales returns etc. can be minimized and avoided.
4. Total quality management system, meets the long term needs of a business. As the application of this system requires companies to enhance their products and services, it results in an overall development and refinement of business procedures and clientele.
5. The human resource of a company becomes more competent and competitive.
6. The customers become more satisfied as the company would have better products and services to offer under this approach. TQM also develops customer reliance on the brand and future sales are secured. As more market is captured the company gets a chance to move towards customization and differentiation in relation to its products and services.

Disadvantages:

Some of the notable disadvantages of total quality management (TQM) system are listed below:

1. The implementation of the TQM approach is costly and time consuming. This is because its implementation requires trained, competent and capable employees. Additionally, the business would require latest machinery, infrastructural improvements and up-to-date database. All these requirements have costs attached to them.
2. A business needs to have a long term commitment of intellect and financial resources to apply TQM. It requires the management to promote a culture of quality improvement and tolerance for errors.
3. Total quality management is a continuous improvement system. If the company becomes lenient at any stage of the implementation procedure there is a risk that whole effort could be lost. This may lead the employees of the company to return to their traditional methods which could ultimately sabotage the whole process.
4. A business may have to face resistance from its work force, as there may exist such employees that could not cope with the ever changing environment of the business and face redundancy. If the human resource of the company is not being replaced for a long time and lacks succession planning, this could become a huge hurdle in the way of implementing the total quality management system.
5. The TQM approach may not be able to mitigate all the errors from the systems of a business. The rapid change in the technological advances along with automation requires a more continuous application of TQM.
6. Proper management tools are required to assess the performance of the goals set under TQM approach. The employees may expect more pays and perks which could increase costs.

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