Total Quality Management - Essay Example

?Running Head: Total Quality Management Total Quality Management [Institute’s Total Quality Management Introduction Japanese remember him as their hero and the father of their post world war revolution. In fact, much of the industrial boom that Japanese manufacturers witnessed after the Second World War was due to the application of the concepts taught by Sir William Edwards Deming. The Japanese industrial leaders invited Deming to their country and in less than four years, the impact was visible. In the next couple of decades, Japanese products were everywhere in the American markets (Neave, pp. 219-222, 1990). These products were better in terms of quality and much cheaper as compared to their American substitutes. Despite the fact that he remained in the headlines in Japan but in his country of origin, the man was running a slow consultancy business. Managers and CEOs were skeptical of his ideas since they were staunch followers of Taylorism. However, in 1980, NBC made a documentary with the title of “If Japan can…why can’t we?” It became almost impossible for the business world to avoid him anymore. From 1981 to 1993, he gave more than 250 four-day seminars where he explained. When he died at the age of 93, his ideas were still far from gaining the publicity and respect that he deserves. Even today, his ideas are gaining prominence and they remain the basis of many researches, studies, and theories (Bauer, Duffy & Westcott, pp. 85-89, 2006). This paper is an attempt to explore the ideas of W. E. Deming regarding quality management. The paper would then apply those ideas to a company for their better understanding and application. In the last part, the paper would attempt to present a critical analysis of Deming’s theories in light of the recent developments in the field of quality management. Discussion Deming’s approach to Quality Management Much of Deming’s teachings can be summarized with his classical fourteen points from his book, Quality, Productivity, and Competitive Position, which was renamed Out of the Crisis in 1986. Deming never used the term “total quality management” within his fourteen points, however, observers and experts agree that with his fourteen points, a new era began in the field of management, which is now known as Total Quality Management. Interestingly, Deming did not put great emphasis on quality but his central focus was on management and management styles. Following are Deming’s fourteen points: 1. “Create constancy of purpose towards improvement of product and service, with the aim to become competitive, stay in business, and to provide jobs. 2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change. 3. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by creating quality into the product in the first place. 4. End the practice of awarding business based on price tag. Instead, minimize total cost. Move towards a single supplier for any one item, on a long-term relationship of loyalty and trust. 5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs. 6. Institute training on the job. 7. Institute leadership. The aim of leadership should be to help people, machines, and gadgets to do a better job. Leadership of management is in need of overhaul, as well as leadership of production workers. 8. Drive out fear so that everyone may work effectively for the company. 9. Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service. 10. Eliminate slogans, exhortations, and targets for the work force that ask for zero defects and new levels of productivity. 11. Eliminate work standards (quotas) on the factory floor. Substitute leadership. Eliminate management by objective. Eliminate management by numbers, numerical goals 12. Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality. 13. Institute a vigorous program of education and self-improvement 14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody's job” (Deming, pp. 31-34, 2000; Deming, pp. 74-78, 2000). Deming is not only known for his fourteen points but also for his idea of seven deadly diseases of management. As mentioned earlier, his focus was on management and not on quality but with the passage of time, they transformed into the cornerstone principles of quality management. The first and the second deadly disease of management would be the short-termism, which leads to inconsistency in the plans, strategies, products, and other management activities (Fellers, pp. 20-24, 1994). A company, which has a short-term focus, changes its plans every once in a while and which has no strategy is like a ship without a rudder that is going nowhere and moving in circles. Companies have to have a well-defined strategy in the absence of which they are bound to become extinct (Wren & Greenwood, pp. 168-170, 1998). When companies manage themselves with focus sole focus of quarterly profits, revenues, dividends and results are most likely to become history after a few quarters, however, the companies that plan for the coming decades are more likely to survive for generations. The third deadly disease of management is to rely heavily or appraisals, merit ratings, personal evaluations, management by objectives and others. Deming believed that even when employees produce the results on paper, it is not them, but the processes that have created most part of the result (Bauer, Duffy & Westcott, pp. 85-89, 2006). By providing them with rewards for the same, managers are just wasting money for creating a workforce, which would “kiss up”. Fourth, in many companies, CEOs, vice presidents, directors, and other people in the middle management keep changing their organizations after every three to four years (Bauer, Duffy & Westcott, pp. 85-89, 2006). This is what leads to problems and inconsistencies in the strategies and plans of the organizations, when new leaders join the organizations, they are unlikely to follow the previous visions. Fifth, as they say, “if you can’t measure it, you can’t manage it”. Deming believed that if there is any statistical or even qualitative data available at the disposal of the managers they should use it and base their decisions on it. Furthermore, there are costs and benefits, which are not quantifiable such as customer dissatisfaction, customer loyalty, opportunity costs, and others. Not considering them is also a deadly disease. Deming pointed the sixth and seventh deadly diseases as the excessive medical and legal costs respectively that the companies were facing (Wren & Greenwood, pp. 168-170, 1998). Lastly, Deming also deserves the credit for introducing the PDCA (plan, do, act, check) cycle to represent a continuous process to identify the defects on the system and improve them with the passage of time (Deming, pp. 31-34, 2000). Applications of Deming’s concepts on Dell Employing more than 0.1 million people all over the world, in less than 27 years, Dell has achieved what its competitors always envy. From a room full of IBM computers in the University of Texas where Michael Dell started his company to a company whose product sells in more than 180 countries in the world, Dell is a truly an incredible success story. Despite the fact that the outlook of the company is positive, the competition in the industry is increasing day by day. With slow growth and market rapidly reaching its saturation point, Dell has to do something differently in its practices in order to gain a competitive advantage over its competitors. This section of the paper will attempt to explore the applications of Deming’s principles on Dell and how can that help Dell to improve its quality and achieve a competitive advantage. In light of Deming’s fourteen points of management, Dell will have to ensure first that they sit down to devise a mission and vision for Dell for the at least the next decade or so. That mission must have everything for the stakeholders to know about the aspirations of Dell in the coming years and how it hopes to achieve the same. Furthermore, this long-term vision of the company should have to consider the fact that the company cannot survive if fails to do things differently everyday and that “difference” have to be valued by the customers as well (Fellers, pp. 20-24, 1994). The top management of the company, the CEO, President, COO, Vice presidents, division heads, and even the middle management as well will have to prepare them for an “ongoing change”. Today’s marketplace has become so competitive that the only thing, which is inevitable, is change. With good products, great plans, excellent strategies and right markets, companies are only the right track, which mean that they have only won half of the battle. Being on the right track alone is not going to get the company anywhere in this competitive marketplace. It is when you start running on that right track is when you start making a difference. In the same way, Dell is on the right track with great products, excellent network, praiseworthy electronic commerce, and supply chain management techniques but this would help the company to survive until and unless it is mentally prepared to cope with “change” (Wren & Greenwood, pp. 168-170, 1998). Currently, Dell is spending millions of dollars as a cost of quality. These include the costs incurred on inspections, testing, checking, warranties, repair, exchanges, scarp, sorting, reprocessing, buffer inventory, lost sales, customer returns, recalls, rejects, complaint handling, paperwork, overtime, unused capacity, opportunity costs, time value of money and others. Quite clearly, most of these costs do not get a place in our accounting books. Therefore, rather than spending millions of dollars every year on creating faulty products and then repairing it, it is better to create systems and processes which reduce the defects in the first place. Research has revealed that if any products show a defect at the production line, it is highly likely other products will give similar problems to the customer even the company believes that they have strong inspection and testing system. Therefore, it is for the best to stop any defects from arising in the first place (Sower, pp. 49-51, 2010; Deming, pp. 74-78, 2000). Dell has one of best supply chains in the business world, however, in light of Deming’s principles; Dell is committing a serious mistake by relying on many suppliers for each component. Having too many suppliers is a sign of weakness and inefficiency from the side of the company. Rather than Dell should try to reduce the number of suppliers with which it is dealing and try to build strong, reliable and long lasting partnerships with a few suppliers with creating win-win situations with them (Bauer, Duffy & Westcott, pp. 85-89, 2006). Quality improvement is not a onetime exercise of any step on the ladder but it is a continuous and rigorous process of examination, control evaluation, and checking the processes and operations of the company to improve them. Dell will to communicate that to its employees that with every rising sun, they have the opportunity to improve something or do something better at work as compared to how they did it previously (Neave, pp. 219-222, 1990; Deming, pp. 74-78, 2000). Rather than off-the job training with seminars, conferences, lectures and exercises, it is much better to provide employees with firsthand experience. Processes depend on experienced, trained, and skilled workers who could minimize variation in the processes and thus lead to higher quality. Managers at Dell would have to understand that there is a sharp different between managing and leading and they have to lead their people. Rather than sitting in their offices, trying to boss everyone around, it is their duty to work closely with the people on field to identify any potential threats, which could be detrimental to the quality of the operations. Deming believed that employees are least likely to perform well when they are fearful of the managers, results, and outcomes. In order to achieve the maximum productivity out of their workers, Dell will have to create a sense of job security and satisfaction in the hearts and minds of the people, which would lead to higher employee motivation and higher efficiency. Rather than segregating people from different departments, the company should try to bring employees closer from different departments so that they could work together using their expertise in different for better achievement for the organizational goals. If different departments stop being sensitive to the demands and the needs of other departments then there is no chance that the company would ever be successful. Therefore, better communication between departments and more cross-functional teams should be the focus of Dell (Sower, pp. 49-51, 2010). Again, rather than using slogans, appraisals, merit systems and catchy lines forcing employees to decrease the defects and improve quality, the management should work on improving the process. At least, for Dell that is mainly a manufacturing company, most of the quality problems or defects would lie in the system and not in the hands of the workers. Furthermore, with those slogans, threats and rewards, employees feel great deal of discomfort because they also know that they are trying to achieve something which is out of their hands and which could be achieved if luck plays its part (Walton, pp. 87-89, 1990). Rather than providing targets and hard production quotas to the workers, Dell must try to focus more on improving the morale and satisfaction levels of its workers. Quotas and work targets are similar to threatening the employees. If an employee can exceed a given quota, it is likely that he will do the same. However, if an employee does not have the training or if there is some problem with the system then despite of all the quotas, threats and rewards, he would fail to achieve the targets. Therefore, the target should always remain on improving the processes and working closely with the employees to boost their morale (Walton, pp. 87-89, 1990). In order to survive in the competitive marketplace, Dell just not only needs skilled, talent and experienced people but it needs talent people who are improving and becoming better and better with everyday and improving the entire organization with them as well. Research shows that industry leaders spend 100 more on training and development of their employees as compared to average performing companies in the industry (Sower, pp. 49-51, 2010). Lastly and most important transforming the company is not the job of the top management. In fact, it is the job of each employee of the company to manage and contribute to that transformation by playing his or her own part. Transformation requires change and change would never be possible at Dell until and unless all the employees are taken onboard. When employees are resistant of the change, it is less likely that the change would be productive for the organization (Walton, pp. 87-89, 1990). In order to avoid the seven deadly diseases of management, Dell will first have to ensure consistency in its plans, strategies, and visions. The same would be done through ensuring that the company retains Dell’s executive leadership. This would include Michael S. Dell, Brad R. Anderson, Paul D. Bell, Jeffrey W. Clarke, Brian T. Gladden, Nnamdi J. Orakwue, Karen H. Quintos, Stephen F. Schuckenbrock, Stephen J. Felice, David L. Johnson, Steve H. Price, Ronald V. Rose and Lawrence P. Tu who formulate the team of executive leaders at Dell. Second, managers at Dell will have to be extremely responsive to the statistical data that they acquire and that should be the basis of their decisions. However, at the same time, they should be smart enough to understand that there are some aspects of decision making which cannot be based on data or figures because for those variables are difficult to quantify. Then managers will have to use their intuition and six senses to calculate the cost benefit ratio (Delavigne & Robertson, pp. 52-58, 1994). Value and Limitations of Deming’s Approach Important here to note is that over the years, concepts given by Deming has remained the cornerstone of quality management and even other fields of management science. His concepts are integrated into many different theories. For example, Six Sigma, which believes in achieving at 3.4 per million opportunities defect rate and improving the systems in such a way that defects do not arise in the first place; it roots can be found be in Deming’s ideas. The same is true for many other quality management approaches (Pyzdek, pp. 341-345, 2011). However, one problem with Deming’s approach is the fact that unlike other theorists in the field of management, Deming did not take on side. Instead, he merged the soft and hard human resource management, however, other theorists such as, F. W. Taylor was a hard HRM proponent, and M. P. Follett was a soft HRM supporter. In case of Deming, it is difficult to make this distinction since he has taken points from both schools of thoughts and merged them together. Therefore, if an organization is trying to implement all of Deming’s points then they may find themselves confused. For example, Deming does not believe that people deserve the reward for their achievement in form of merit pays, appraisals and others, since it is system, which is creating the output and not the people. On the other hand, Deming also says that people should receive strong training and development because their knowledge is important to the organization (Aguayo, pp. 20-25, 1991). Criticism to Deming’s ideas also comes from the proponents of blue oceans theory. Most of the organizations are operating in red oceans. They spend majority of their resources, whether financial, physical, human, or intellectual in trying to outclass their competition. They spend every day trying to figure out how to beat competitors, how to gain competitive advantages, and how to improve their own systems but before they know, their competitors are doing the very same thing and it seems like a never-ending fight. Markets are saturating and if not saturating then the growth is slow which means that if any organizations wants to increase its market share then it will have to cut out from someone else’s share of the pie and the war goes on and on. Price cuts, promotions, discounts, offers, aggressive selling and others; companies try everything possible but still find themselves going nowhere. They are living in “red oceans” where brutality, mercilessness, ruthlessness, and bloodiness of the marketplace surround them from all directions. It is like a vicious cycle of death (Kim & Mauborgne, pp. 9-13, 2005). Deming’s ideas are an extension of how to survive in the red ocean effectively. These may help the company to survive for a little while but before you know, the competitors would be following the same route and be right behind you. The same has happened with the Japanese companies, which were in the forefront to embrace Deming’s ideas. Despite the fact that Japanese companies are still selling their products very good but with all the competition, imitation, fighting in the industry, price wars and others, they have made the industry structure extremely unfavorable. Over the past few decades, the average profit margins for these companies have shrank, if not remained stagnant and this is happening despite all the efforts to improve processes, decrease costs, and focus on the savings. This means that in the long term, a company cannot count only on total quality management but what it needs it to find new, undisputed, uncontested, undiscovered, and fresh markets, which can be represented as “blue oceans”. Consider the example of the earnings and profits that companies made by introducing notebooks, digital cameras, cell phones, and others such products. This is because while competitors were stuck deep in the red oceans fighting over the share of older products, smart companies did not only improve the processes but they remained focus to inventing new processes and new products. This helped them to newer and safer oceans where they could earn and maximum profits with minimum fear of competition (Hartman, pp. 102-109, 2002; Kim & Mauborgne, pp. 9-13, 2005). References Aguayo, Rafael. 1991. Dr. Deming: the American who taught the Japanese about quality. Simon & Schuster. Bauer, John E., Duffy, Grace L., & Westcott, Russ. 2006. The Quality Improvement Handbook. ASQ Quality Press. Delavigne, Kenneth T., & Robertson, J. Daniel. 1994. Deming's profound changes: when will the sleeping giant awaken? PTR Prentice Hall. Deming, W. E. 2000. Out of the crisis. MIT Press. Deming, W. E. 2000. The new economics: for industry, government, education. MIT Press. Fellers, Gary. 1994. Why things go wrong: Deming philosophy in a dozen ten-minute sessions. Pelican Publishing. Hartman, Melissa G. 2002. Fundamental Concepts of Quality Improvement. ASQ Quality Press. Kim, W. Chan., & Mauborgne, Renee .2005. Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant. Harvard Business Press. Neave, Henry R. 1990. The Deming dimension. SPC Press. Pyzdek, Thomas. 2011. The Six Sigma handbook: a complete guide for greenbelts, black belts, and managers at all levels. McGraw-Hill. Sower, V. E. 2010. Essentials of Quality with Cases and Experiential Exercises. John Wiley and Sons. Walton, Mary. 1990. Deming management at work. G. P. Putnam's. Wren, Daniel A., & Greenwood, Ronald G. 1998. Management innovators: the people and ideas that have shaped modern business. Oxford University Press. Read More