Total quality management definition

/

What is Total Quality Management?

Total quality management (TQM) refers to the ongoing reduction of process errors and the streamlining of operations. The result is a system that contains few non value-added elements, and which produces results with minimal error rates. These results are gauged from the viewpoint of the customer. A common outcome of a TQM system is increased profits, because a business spends less time and money correcting errors.

Who Participates in a Total Quality Management Program?

There may be either ad hoc or permanent committees that engage in PDCA cycles (as described below), depending on the situation and management's commitment to overall company improvement. A TQM system draws upon the skills of many employees, making improvement a group effort. This also means that everyone in an organization is held accountable for the results of the system.

Related AccountingTools Course

Quality Management Fundamentals

Steps in the Total Quality Management Process

There are four steps in the TQM process, which are continually repeated to achieve ongoing improvements. The steps are:

  1. Plan. Determine the problem that shall be addressed, collect information about it, and figure out the root cause of the problem.

  2. Do. Decide how to fix the root cause, implement the fix, and initiate a measurement system to track the resulting improvement.

  3. Check. Examine the measurement using before-and-after testing, to see if the root cause of the problem has actually been eliminated or at least reduced.

  4. Act. Document and publicize the results of this cycle, and also issue a recommendation regarding the problem to be addressed in the next cycle.

The acronym for these steps is the PDCA cycle.

Advantages of Total Quality Management

There are multiple advantages to having a total quality management program, which are as follows:

  • Improve product quality. The quality of the goods and services delivered to customers is enhanced, which tends to reduce customer turnover and increase customer loyalty.

  • Fewer product defects. A total quality management program results in fewer product defects, which reduces the cost of quality throughout the organization.

  • Reduces overall costs. By increasing product quality, a business can strip out substantial costs relating to product defects. This increases the overall profits of the business, creating more cash flow that can be reinvested in the business or returned to investors.

  • Enhances the brand. When products are sold with very high quality, this enhances the seller’s brand image with consumers, which can lead to more word-of-mouth marketing from satisfied customers.