As a part of their business philosophy, most of the businesses give prime importance to quality. But if your manufacturing business is not one of them, you perhaps need to learn its importance. Understand it this way. If any of your business processes is operating at 99 percent efficiency, it will produce 10,000 defects per million parts. This is over 2,941 times more than what the excellent organizations allow. The best businesses in the world allow for no more than 3.4 defects per million parts in manufactured goods, or 3.4 mistakes per million activities in a service operation, which means their processes ought to be 99.99966 percent perfect to achieve those results. This is called the six sigma approach to Total Quality Management.
Let’s keep the discussion over six sigma for some other day, and talk about Total Quality Management, or simply TQM, and also how it complements an Enterprise Resource Planning software, or simply ERP software, in improving overall quality within an organization.
Total Quality Management is a manufacturing philosophy which focuses on improving quality across the operations, and producing higher quality products with few defects. At the core of this approach are concepts such as customer satisfaction, and continuous improvement, whereas it is often associated with concepts like just-in-time inventory, and just-in-time manufacturing. Basically, a TQM approach makes all members of an organization participate in continual improvement of the processes, products, services, as well as the organizational culture, with the emphasis on delivering defect free products/services to the customers.
The TQM approach uses different tools such as strategy, data, and effective communication to integrate the quality discipline into the culture and activities of the organization. TQM’s objective is doing things right the very first time, every time, so as to reduce cost, and save time required to correct poor work, and failed product and service implementations.
Total Quality Management is broadly based on eight principles:
1. Customer focus: The organizations depend on their customers, who determine the level of quality. They must hence strive to understand their customers’ current and future needs, and work towards exceeding their expectations by continually improving the quality, processes, etc. It results in increased customer loyalty, revenue, and reduced waste.
2. Leadership: A business without strong and clear leadership is often directionless and failure prone. TQM’s second principle suggests an organization must have strong leadership and clearly defined objectives, and its employees must actively work towards achieving those targets. This results in better employee engagement, as the employees feel empowered and participate in working towards common goals.
3. Employee involvement: The third principle is in a way an extension of the second principle, as it states that Involvement of all the employees of an organization is essential in the development of quality products or services. This ensures increased motivation and accountability amongst the employees, and paves way for innovation in products as well as services.
4. Process-centered approach: Organizations must develop processes in accordance with their vision, mission, and strategies to drive efficiency and effectiveness, and eventually productivity. Such processes, when executed consistently, speed-up the overall organizational work, reduce cost, promote continuous improvement, and help deliver quality to the customers.
5. Strategic and systematic approach: Organizations must focus on managing the key processes and the aligning processes together as a system to drive greater efficiency. Strategic planning or strategic management, is thus essential to ensure that quality becomes the core aspect of all business processes.
6. Continual improvement: Continual improvement is a mantra that ensures organizations find new ways and techniques to produce better quality products, improve processes, be more competitive, and exceed the customer expectations. Continual improvement should hence an active business objective, especially to develop the ability to embrace new opportunities and adapt to new market conditions.
7. Factual approach to decision making: Often organizations take impulsive decisions in the lack of meaningful data. But with the efficiency and clarity of thought it brings to the organization, TQM ensures organizations collect and analyze data on a continual basis so as to improve quality, introduce fact-based & accurate decision making, forecasts based on past history, and achieve consensus.
8. Mutually beneficial supplier relations: This principle recognizes that an organization and its suppliers are independent, and a strong mutually beneficial relationship between the two enhances productivity and the ability to create value. The result is optimization of costs and resources, seamless work practices, and fulfillment of the organization’s commitment towards meeting customer satisfaction.
Benefits of TQM
Benefits of Total Quality Management for an organization are many, such as:
- Enhanced competitive position
- Adaptability to changing market conditions
- Greater productivity
- Improved market image
- Reduced waste & costs
- Higher profitability
- Improved customer focus and satisfaction
- Increased customer loyalty and retention
- Improved employee morale
- Improved and innovative processes
TQM & ERP
TQM and ERP software actually complement each other well. TQM, which is a predecessor of ERP implementation, shares common goals with the latter. In fact, the effective use of TQM provides a much higher quality ERP implementation. The objectives of both the systems are improving customer satisfaction, productivity and efficiency, increasing competitiveness, and reducing waste, among others. TQM ensures satisfaction of all the stakeholders, including ERP vendors, service providers, system integrators, team members who implement the software, and the company that purchased the software. Characteristics of TQM are fundamentally common to all different types of business process flows and ERP functional modules.
ERP software, on the other hand, play the role of an enabler of the TQM principles and philosophies. In context of a manufacturing business, ERP software help achieve the aforementioned goals and obtain the maximum return on investment from expensive investments, when used in collaboration with TQM. The benefits of this union are far-reaching, as the organization develops problem solving techniques and continuous improvement opportunities. With both of them working in tandem, you can eliminate waste, drive production and satisfy your customers more efficiently than ever before. And their benefits can be leveraged in every area of your business, not just the shop floor.