Business 101: Principles of Management

If the above player doesn't work, try this direct link.

W. Edwards Deming, Joseph Juran and Philip B. Crosby are three of the most influential people involved in the shift from production and consumption to total quality management (TQM). Their work significantly impacted how industries view customer satisfaction, employee needs and supplier relations.

TQM and the Men Who Made Us Think About It

Total quality management (TQM) is an approach to serving customers that involves totally reengineering processes and systems to improve products and services in the way customers expect while considering the needs of employees and relationships with suppliers. W. Edwards Deming, Joseph Juran and Philip B. Crosby each developed a different aspect of TQM. We will learn about how each contributed to how we think about TQM today.

The TQM approach began as a means of repairing the damage Japan suffered post-World War II. W. Edwards Deming worked with Japanese automobile manufacturers to improve the quality of their products in an effort to gain a competitive foot in the industry. His philosophy resulted in the 14 Points of TQM, which can be summed up by saying management must redesign their processes and systems to:

• Plan
• Do
• Check
• Act

Deming's Philosophy on TQM

Let's see how TQM is implemented at Beefy's Burgers.

To plan, Deming counsels that businesses should design quality products and services that customers want, develop processes and systems that reduce waste and increase quality and decrease the cost of production.

Deming wanted to revolutionize the way Beefy's Burgers produces burgers. To gain a better understanding of the customer preferences, he surveyed everyone involved in the operation, from the customers to the employees. He even called his suppliers in to get their opinions. From the information collected, Deming was able to determine a few important things. Beefy's was competitive on price. However, the burger was small and flavorless.

He called his employees in and showed them how to properly grill the burgers. He called his supplier in to discuss alternatives to the current beef he uses. A timing schedule for completion of burger orders was set. No burger would hit the grill until the customer placed an order. Tomorrow would be go time!

Next, the businesses must do the work by putting the plan into action. As processes and systems are running, they must continually seek ways to do things better. Deming's crew knew exactly what to do. Stations were set up for bun-slicing, burger-grilling and ketchup-squeezing. As customers placed their orders, the beef hit the grill, the bun was sliced 1.2 seconds after and delivered to the grill, ketchup was squeezed and the process ended with wrapping.

Customers were thrilled with the new and improved burgers. However, during busy times, it wasn't feasible to make each burger as ordered. Lines formed, creating more customer complaints. This time complaints were about the system.

As work moves through the processes and systems, check points will monitor changes that need to take place - changes like removing barriers to quality by providing employees with the tools needed to do the job right the first time.

Finally, managers take action. Management may make changes. Deming tweaked a few things to speed up the process by placing more people on the line. Customers received their burgers on time, and they were tasty, too!

Juran's Approach to Quality Planning, Control and Improvement

Joseph Juran shared a connection with Deming. Juran's approach to quality control also had Japanese roots. While Japan was price-competitive with the rest of the world, the quality of product did not measure up.

Like Deming, Juran stressed the importance of total quality management. However, he summed it up by saying total quality management begins at the top of an organization and works its way down. He developed 10 steps to quality improvement. The steps boil down to three main areas of management decision-making:

• Quality planning
• Quality control
• Quality improvement

Quality planning involves building an awareness of the need to improve, setting goals and planning for ways goals can be reached. This begins with management's commitment to planned change. It also requires a highly trained and qualified staff. Juran managed Beefy's during the night shift. He set the standard for quality during his shift by training each employee on how to properly make a burger.

Quality control means to develop ways to test products and services for quality. Any deviation from the standard will require changes and improvements. On Sunday nights when business was slow, Juran invited mystery diners to come to Beefy's to rate the quality of the burgers. If he found that a diner was displeased, he retrained employees.

Quality improvement is a continuous pursuit toward perfection. Management analyzes processes and systems and reports back with praise and recognition when things are done right. Juran allowed the staff to engage in a well-deserved burger-eating contest at the end of a profitable shift.

Crosby's Ideology of Conformance to Quality Standards

Philip B. Crosby was a contemporary leader in TQM. He didn't engineer principles or steps. He simply made TQM easier for the layman to implement by breaking it down to an understandable ideology that organizations should adopt.

Crosby re-defined quality to mean conformity to standards set by the industry or organization that must align with customer needs. There are Four Absolutes of Quality Management necessary for conformity:

• Quality is defined as conformance to standards
• The system for causing quality is prevention
• The performance standard is not arbitrary; it must be without defect
• The measurement of quality is price of non-conformance

Crosby worked the register at Beefy's. He was also a business student at the local college. He used Beefy's as a field study on TQM. When customers sent back burgers, he looked at the price of inferior products and its toll on the overall organization.

These four absolutes can be summed up to mean that quality is based on an industry or organizational standard, not flawlessness. That standard must be upheld. Inferior quality is preventable through processes that ensure quality, and the real measurement of quality is the price an organization pays for non-conformance to the quality standards set by the organization. Non-conformance to quality standards causes waste, and wasted product costs money! Crosby gets that Beefy's Burgers is a fast food joint. He did not demand a high-quality burger like those served at a steakhouse. He demanded that the burgers served at Beefy's meet the standard that Beefy's sets for their burgers.

Lesson Summary

In summary, W. Edwards Deming, Joseph Juran and Philip B. Crosby are three of the most influential people involved in total quality management. Total quality management is an approach to serving customers that involves the total reengineering of processes and systems to improve products and services in the way customers expect while considering the needs of employees and relationships with suppliers. Deming, Juran and Crosby believed that total quality management was the most important approach an organization can take to be competitive.

Deming developed 14 Principles of TQM. Condensed, they suggest that management, with total organizational involvement, must plan processes and systems to improve quality based on pre-set standards that align with customer needs. Management must put the plan into action by doing the right things to ensure quality while continuously checking outcomes for flaws in the processes. If a process is not working, management must take swift action to make it right.

Juran theorized that quality planning is done by building an awareness of quality improvements and ways to achieve it. Quality control meant measuring quality every step of the way. And quality improvement involved making changes to processes and systems that do not work.

Crosby looked at the cost of poor quality. He defined quality to be more about conforming to standards than to imperfection. For this, he developed four absolutes management must follow with a customer focus in mind. Standards of conformity must be developed, poor quality should be preventable by processes and systems within management's control, the standards set must not allow for any deviation from the standard and quality can be measured by the price of nonconformance.