What are the benefits of budgeting
What are the benefits of total quality management (TQM)?
Total quality management is a general philosophy of gradually improving the operations of a business. This is done through the application of rigorous process analysis by every involved employee and business partner. TQM is usually applied at the tactical, front-line level, where production, clerical, and low-level managers are deeply involved. There are a number of tools available to assist in a TQM effort, such as:
- Failure analysis
- Plan-do-check-act (PCDA) cycle
- Process management
- Product design control
- Statistical process control
There is some debate regarding which tools fall within the umbrella of TQM, so there are a number of other tools not mentioned here that could be of assistance.
TQM can be implemented successfully in any part of a business, such as:
- Field servicing
- Legal and administration
- Materials management
- Research and development
- Sales and marketing
The advantages of total quality management (TQM) include:
- Cost reduction. When applied consistently over time, TQM can reduce costs throughout an organization, especially in the areas of scrap, rework, field service, and warranty cost reduction. Since these cost reductions flow straight through to bottom-line profits without any additional costs being incurred, there can be a startling increase in profitability.
- Customer satisfaction. Since the company has better products and services, and its interactions with customers are
relatively error-free, there should be fewer customer complaints. Fewer complaints may also mean that the resources devoted to customer service can be reduced. A higher level of customer satisfaction may also lead to increased market share, as existing customers act on the company's behalf to bring in more customers.
- Defect reduction. TQM has a strong emphasis on improving quality within a process, rather than inspecting quality into a process. This not only reduces the time needed to fix errors, but makes it less necessary to employ a team of quality assurance personnel.
- Morale. The ongoing and proven success of TQM, and in particular the participation of employees in that success can lead to a noticeable improvement in employee morale, which in turn reduces employee turnover, and therefore reduces the cost of hiring and training new employees.
However, TQM also requires a significant training period for those employees involved in it. Since the training can take people away from their regular work, this can actually have a negative short-term effect on costs. Also, since TQM tends to result in a continuing series of incremental changes, it can generate an adverse reaction from those employees who prefer the current system, or who feel that they may lose their jobs because of it.
TQM works best in an environment where it is strongly supported by management, it is implemented by employee teams, and there is a continual focus on process improvement that prevents errors from occurring.
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