J Grill (2009) gives a few definitions of TQM of quality as "conformance to requirements" and only performance standard is "zero" defects, Quality is the improvement through reduced variation and Quality for use of fitness. Therefore, customer loyalty plays a crucial survival factor for companies; hence, the customer support and helpline system is quite active. For a slightest mistake, full compensation can be claimed. And companies are happily willing to do whatever they can do to make customers come back in near future. The overall important aspect is to "make customer feel good and happy about the whole process".
TQM has been one of the major developments in management practice. The reorganization of TQM as a competitive advantage is widespread around the world. (D.I. Prajogo 2000). If all organization were able to successfully implement TQM, product and service quality would soon cease to be a competitive weapon which 'provide products or services of high quality and low costs' in business strategy. (Z.Hoque, M.Alam 1999). However a review of the literature emphatically informs us that this is not the case because TQM initiatives often fail. (T. Redman & J. Grieves 1999)
D.I. Prajogo, A.S. Sohal (2001) mentioned that defining "what is TQM" is quite problematic because the most serious problem with TQM is the absence of a uniform definition and "the confusion in defining quality." Therefore many of the firms were not successful in implementing an effective TQM. (V.B. Wayhan & E.Balderson 2007) and not all dimensions of TQM have direct effects. (V.B. Wayhan & E.Balderson 2007). TQM has been considered an effective management practice and even a necessity for corporate survival but the elements of TQM and its difference from good management practice is unclear. This has led, throughout academic and industry to a range of perceptions of what TQM is, and as a result a large number of different methods of implementation.
The road to Total Quality is littered with failures. Hundreds of organizations have tried to implement TQM, but few have reaped it full benefit. (R.Mann 2008). An example would be Indian organizations fails due to poor understanding and implementation of TQM and its related quality tools. (V.K. Khanna 2009).
The lack of a single model that will serve as a basis for the TQM theory was also mentioned in another TQM research noted the lack of scientifically derived industry standards for making diagnostic assessments of TQM programs. (Ma.Gloria V.Talavera 2004) S.-UR Rahman (2004) also mentioned that although TQM is the only known effort of synthesizing a theory of quality management, however it lacks a systematic scale development thru statistical tests such as reliability and validity. As a result, TQM is in danger of being over oversold, inappropriately implemented and ineffective and continue that this may explain some of the failures of TQM. Business today is increasingly characterized by uncertainty and instability. (S.-UR Rahman 2004)
The implementation of TQM is not and has not been an easy task for many organizations. Literatures shows that many authors would argue that if it is easier for small businesses then there should be many small companies, which have already been successful in their TQM effort. However, it is not the case. The facts show that many small companies are actually failing in their efforts. This is because small businesses are constrained by human & financial resources. (S.M.Yusof & E.Aspinwall 2000, Andy.C.L. Yeung, T.C. Edwin. Cheung, Kee.H.L 2006, Victor B.Wayhan & E. Balderson 2007)
T. Redman & J. Grieves (1999) mentioned that customer focus could lead organization to be reactive and short term in focus in terms of serving the current and stated needs of customers. Because quality means both producing products to specifications and meeting customer's expectations, the needs of customers become a key input to TQM. (D.I. Prajogo, A.S. Sohal 2001) Z.Hoque & M. Alam mentioned that everybody in the organization should have an idea of why the formal TQM was needed even though they could not defined quality, they can still have a better understanding idea of what constituted a lack of quality. Although there have been been detailed studies showing that TQM tend to leads to better superior organizational performance, but the fact that most of them were conducted used selective highly quality sample of ward winners or the worlds' leading organization which did not reflect the does not help in the general out come of of TQM in the industry. (A.C.L. Yeung, T.C. E. Cheung, Kee.H.L 2006, V.B. Wayhan & E.Balderson 2007)
One contributing factors in the success of the Japanese in their competitive strategy is adoption of Total Quality Management which the role of TQM in leading Japan to global economic power as well as in restoring the industrial competiveness of United States. (Ma. G.V. Talavera 2004). Although TQM may not provide an organization with substantial operations benefits, it is a still fundamentally better way to conduct businesses, and is necessary for the economic well being of a country. TQM result in higher quality, lower cost product and services that response faster to the needs of the customers, decrease perceived uncertainty and reduce the difficulty of measuring intangible capabilities, enhancing organizational status and corporate reputation. (Shams-UR. Rahman 2004, Andy C.l Yeung, T.C Edwin Cheung, Kee Hung Lai 2006). TQM is often a key ingredient in workplace transformation. In part, this strong association between TQM and transformational strategic change derives from many companies adopting TQM in a period of crisis. "today very few manufacturing companies can afford to ignore the term TQM" (D.I. Prajogo, A.S. Sohal 2000). This could thus be characterized as 'lifeboat' management, where an increasingly desperate management looks to TQM to deliver a major cultural re-orientation and thus to ensure survival (T. Redman & J. Grieves 1999). TQM concerns about providing better quality products that satisfy customer' needs while at the same time, also leads them to the adoption of a cost leadership strategy. (D.I. Prajogo, A.S. Sohal 2001)
Competitions no longer just focus on cost, but on other key success factors such as quality, flexibility, delivery, service and innovation. (Ma. Gloria V. Talavera 2004). The days are gone when customers considered price as the main reason for purchasing a product or service. In the end, we cannot fail to appreciate the importance of TQM in that place in the markets of the future world (J.Gill 2009).
Shams-UR Rahman (2004) mentioned that TQM is a management approach for improving organizational performance that encompasses a variety of topics both technical and behavioral. TQM leads to a unique level of organizational effectiveness and is a potent strategy for firms to gain long-term competitive. A comparisons of quality management practices and organizational performance between TQM firms and non TQM firms indicates that TQM firms achieved significantly better performance in time-based efficiency and cost effectiveness, customer satisfaction, marketing and financial performance. Large organization typically have more resources and enlightened employees than smaller ones, their TQM implementation should be more effective. advantages ( Andy C.L. Yeung, T.C Edwin Cheung, Kee hung lai 2006). TQM has no impact on subsequent financial performance in the short-run, but does not have a long-term impact on subsequent financial performance. (Victor B.Wayhan & Erica Balderson 2007)
COQ is a double-edged sword, which ensures quality improvement along with cost reduction. (D.A. Desai 2008). J Gill (2009) mentioned that 11 defective units represent the wastage of all kinds of resources like raw material, machine work, labor, and a total loss of energy. This kind of management will at the most result in maximum acceleration in that particular gear (giving rise to increased number of units and hence equal ratio of defective units). However, to go to the next bigger gear, we have to take the foot off the gas pedal and use clutch and change the gear to next upper level (i.e. the main aim in quality implementation should be zero defects theory, so that the fully efficient utilization of resources is feasible).
The cost of quality (COQ) is generally classified into four categories; preventation appraisal, internal failure and external failure. COQ is aimed at placing a measure upon current business processes and highlights waste. It's a win-win situation for both producers and consumers along with earning the loyalty of customers. The use of quality cost can be grouped into four categories. First, for promoting quality as a business parameter, second, they give rise to performance measures and facilitating improvement activities; third, they provide a means for planning and controlling future quality costs; and fourth, they act as motivation. (J. Gill 2009)
Cost of Quality = Prevention Cost (PRC) + Appraisal Cost (AC) + Internal Failure Cost
(IFC) + External Failure Cost (EFC). E. D. Fassoula (2005)
C.C.Yang (2008) mentioned that the cost items entailed in the new categories are difficult to identify and quantify. In effect, they are 'invisible' or 'hidden' cost. The term-hidden cost is used to indicate failure costs that are inadequately recorded in company accounts and/or failure costs that are never actually discovered. In the past, companies made little effort to trace such 'invisible' quality costs or to find a way of measuring the components of such hidden quality cost. The main reason for this failure to pursue such costs has been that conventional cost accounting fails to provide manufacturers with reliable information on intangible cost of this type. However such hidden quality cost and be significant which might amounts to 10-15% of turnover and the cost could also contribute to 10% of actual production costs. CC.Yang (2008) also mentioned that the hidden quality costs are estimated to be three times of the visible costs and present study proposes that hidden cost items should be divided into two categories; the first referred to as 'extra resultant costs' which consisit of items caused by failures or errors; these cost can be traced and counted and are usually internal failure cost. The second proposed category is referred to as 'estimated hidden costs' which includes many cost items that are difficult to analyze and quantify for example lost sales as a result of poor quality in the past.
Victor B. Wayhan & Erica Balderson (2007) mentioned that an effective TQM programs had a strong impact on operating based measures, a modest impact on sales-based measures and a weak impact on cost based measures.
D.A. Desai (2008) mentioned that Quality costs represent the difference between the actual cost of a product or service and what the reduced cost would be if there were no possibility of substandard service, failure of products, or defects in their manufacture. D.I. Pragogo, A.S. Shoal (2001) mentioned that a fundamental premise of TQM is that the costs of poor quality (such as inspection, rework, lost customers, and so on) are far greater than the costs of developing processes that product high-quality products and services.
D.A. Desai (2008) states that for most companies, the cost of quality, such as scrap and rework, runs in the range of 5 - 35% of the sales revenue for manufacturing organizations or 25 to 40% of operating expenses for service organizations. They indicated cost of poor quality as a massive red ink blot o economic growth. Another report by C.C Yang (2008) state that in general, the literature reports quality costs to be between 5 and 30% of sales and studies have shown that quality-related cost are to substantial for manufacturers to ignore, especially in today's competitive markets. Unfortunately, most companies do now know the true cost of their own quality.
Major process innovation, combined with incremental product innovation, allows firms to enhance the product and open the market to a more diverse customer base until it reaches the mature stage. At this point, the pattern of incremental product and major process innovation continues until the product and its associated production processes are so intertwined that only incremental product and process innovations are possible. During this period, even small changes in the product or process can lead to significantly decreased costs or higher quality. (D.I. Prajogo, A.S Sohal 2001) D.I. Prajogo, A.S. Sohal (2001) findings found out that the adoption of TQM as a management strategy contributes significantly in differentiating the more-innovative organizations from the less-innovative ones.
However, D.I. Prajogo, A.S. Sohal (2001) also mentioned that customer focus could lead organizations to be reactive and short term in focus in terms of serving the current and stated needs of customers. Because quality means both producing products to specification and meeting customer's expectations, the needs of customers become a key input to TQM. The implementation of quality cost can produce significant benefits. The most important is that organizations are able to focus on areas that require improvement. C.C Yang (2008)
TQM is more market pull (customer driven) while innovation is more product push. (D.I. Prajogo, A.S Sohal 2001)
T. Redman & J. Grieves (1999) mentioned that team members became more remote from decision-making and increasing confused by the changes to production when there is a change in management where team leaders make their own decisions. This lead to an increase in defects and large scale of wastage returns to become an increasingly regular occurrence. While suppliers may be able to offer lowest price but this may be potentially damaging if the goods are of poor quality with defective units & unreliable delivery schedules. (Z.Hoque & M.Alam 1999)
Managers failed to recognize the processual nature of organizational change, since they focused on it as largely as a journey taking them from survival to arrival. The failure to deal with the continual processual difficulties of communication, teamwork and customer relationships led directly to employee frustration and resentment, declining commitment and increasing quality and operations problems. (T. Redman & J. Grieves 1999)