Total Quality Management
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The Illinois Manufacturer – Summer 2003
By Ronald Dukes
After a half century, few business initiatives remain as controversial as total quality management (TQM). Some regard it as an incredibly productive, transformational business tool. Others believe it analogous to “Alice in Wonderland.” Like the heroine of the Victorian-era classic, they fell down a rabbit hole, found the marmalade jar to be empty, and woke with a bump to a world of unusual characters and concepts — not a pleasant or productive experience.
Many leaders in manufacturing seem to relate to Alice. A March 2002 Strategic Direction article reported that 82 percent of manufacturing executives responding to a survey “were skeptical about TQM’s benefits.” Respondents indicated that their TQM efforts did not improve productivity, cycle times or supply-chain efficiency.
To many in manufacturing, the jar is empty. The environment is tougher than any time since the Great Depression. Any initiative to improve productivity, cut costs and enhance quality feels like a freefall and ultimately has a rough landing.
However, the empty jar symbolizes that things can never be the same. Hanging on to processes, products and other things that have seen their time is counterproductive. The landing is a positive, necessary experience, a break with the past allowing those embarking on TQM programs to move forward and fully experience the benefits of the ensuing journey. In other words, let go and relax. Otherwise, it will be incredibly difficult to move forward, let alone succeed.
Without the right mindset and comprehensive understanding of total quality management, it will be next to impossible to lead others and successfully implement TQM or any other process requiring change. Consider that the survey of manufacturing executives also revealed that many companies have a hard time instituting TQM because the primary focus is on the ends rather than the means.
And leadership — the active, ongoing support and involvement of top management — is key to realizing the benefits of TQM. They direct the focus.
Some experts argue that TQM fails because the initiative comes from the top. It’s true — but not according to the logic these experts put forth as explanation. They believe that employees cynically view top management’s driving total quality management as an autocratic action, another veiled attempt to artificially create a team environment where not everyone has to play by the rules.
No doubt the lack of enthusiasm and tempered participation resulting from employee perception contribute to lackluster results or the failure of TQM. But the reason total quality management fails is the same as why it succeeds: the manner and level in which top management values the program. It speaks volumes that W. Edwards Deming, revered grandfather of the quality movement, had a non-negotiable condition prior to discussing quality with a company: commitment from the highest echelon of the organization.
A study published in 2000 by Henderson and Evans underscores the vital significance of leadership’s role in Six Sigma programs. The survey population comprised individuals who had implemented and used Six Sigma. Respondents said the most important factor in the program’s success is “continued management support and enthusiasm,” pointing out that those “at the top must drive Six Sigma.”
The top means the chief executive. The study’s analysis of six companies with successful Six Sigma programs, including General Electric, Allied Signal and Motorola, concluded that the chief executive officers made the program’s success possible.
These leaders were critical in communicating with and galvanizing employees’ support and participation. Henderson and Evans’ research found that former GE Chief Executive Officer Jack Welch changed employees’ attitudes about Six Sigma.
A study of a medium-size utility conducted by Kim Buch and Drew Rivers illustrates how leadership and employee perception of leadership can make or break a quality initiative. The study, which lasted seven years, showed that the TQM program seemed to work well — at first. The company’s culture evolved to one that empowered employees and involved them in processes.
However, employee satisfaction levels with the program waned during the study and at the end, were lower than prior to the program’s introduction. Research cites “lack of perceived support” as a factor in the decline. In the early stages, 40 percent of the employees believed their leaders were committed to quality efforts.More than half felt their managers were behind the initiative. These first-blush positive opinions eroded over the seven years. At the end of the study, employees viewed leadership support as neutral.
The employees were right — management support of the initiative did change. Leadership pointed to a merger and re-engineering project that took place during the study as external factors that influenced the success of the project. The merger inhibited all employees. Few were willing to test new styles and ideas, fearing for their jobs. They grabbed for Alice’s empty marmalade jar and had a hard landing when they hit ground.
CEOs, while integral to the success of quality initiatives, require a top team committed to TQM. Their management team must thoroughly understand the far-reaching implications required and be willing to work with all constituencies to ensure the continuing success of the program. In short, be like Alice: relax, let go, and move forward.
When it comes to the bottom line, few manufacturing executives dream of relaxing.Many find it impossible to let go of a short-term focus, driven by anxious shareholders, global competition, and mercurial customer relationships. Investing in total quality management for the long term is necessary to realize its full potential.
General Electric embarked on the Six Sigma initiative in 1996, achieving no financial gain from the program that year. In 1999, the annual report stated that the company had realized more than $2 billion in benefits that year.
Top leadership at other manufacturers has shown the same dedication to quality. They understand that the rewards from investing in quality may mean delayed gratification. A number of years ago I had the pleasure of working with a manufacturer whose business and top management commitment epitomized the type of focus necessary to achieve long-term TQM success. Dan Moody served as president of the Sealed Power Division of SPX Corporation and was in position to directly impact the success of his operation.
Moody states, “The Sealed Power Division of SPX Corporation had a growing profitability issue as a result of market-driven price reductions. Analysis showed that its costs were too high and productivity was not keeping pace with price reductions.”
“Further analysis showed that scrap and the cost of quality were too high and impeding productivity improvements. Sealed Power was a fully integrated business making its own castings and doing all the machining. The basic issue turned out to be porosity and casting defects that were undetectable until most of the machining was done.”
“Our analysis showed that the only way to significantly reduce the castings defects was to add stock to the castings and that required new molds. Sealed Power had thousands of molds that had to be replaced on a priority basis, at a significant expense for each one.”
“The proposed solutions to our cost and productivity problems were expensive new molds and added material costs. This significant up-front cost resulted in a 5 percent reduction in the cost of quality over four years. At the time, we calculated that it would take $7 in new sales to have the same effect on the bottom line as a $1 reduction in scrap,” explains Moody.
“The reduction in castings defects provided the basis for significant productivity improvements by dramatically improving the yield and capacity of the machining operations,” adds Moody.
He acknowledges that for the company to fully realize long-term gains, it had to weather some short-term challenges. Top management support was key.
“Sealed Power used every quality improvement tool available; however, it took the conviction and commitment of top management to lead this effort. Profitability suffered in the short term due to the expense of new patterns and added stock. The financial impact on the business in 2 to 3 years was more than dramatic. During this period customer complaints declined by 66 percent due in part to the product improvements from reduced casting defects and improved productivity.”
“Significant quality, productivity and process improvements take conviction and commitment over time to reap longterm, sustainable benefits for the business. Top management has to lead the process with conviction that quality improvements pay huge benefits, and commit the resources and time required to achieve the improvements,”Moody said.
When top management embraces TQM, the effects can be dramatic. Dave Hunter is CEO of Auburn Foundry, one of the leading suppliers of gray iron industrial castings. “In our business, making ‘good’ castings is not enough. They must stay in a tight band within print specifications so that our customers can count on both dimensional and metallurgical consistency as they optimize their processes and tooling,” Hunter said.
“TQM has been invaluable in achieving that objective.We use Design of Experiments tools to identify the most sensitive process variables, continuous process monitoring to assure real time interactive control, and detailed process sheets to assure that we have shift-to-shift consistency and effective training of new people,” he said.
Manufacturers who reap the rewards of quality initiatives must completely embrace quality and instill the dedication in all employees to continuously better processes and products. Top leadership continuously looks for opportunities to “fall down the rabbit hole.” They let go, relax and start a new journey to differentiate their company with quality.