CHAPTER 1

Total Quality Management with Six Sigma

The greatest difficulty in the world is not for people to accept new ideas, but to make them forget about old ideas

– John Maynard Keynes

Total quality management—meaning

In the expression total quality management (TQM), the word ‘quality’ is the adjective to the word ‘management’ to symbolise that there has to be quality in anything and everything that management does. The word ‘total’ represents that management is an inclusive and integral force to acquire, assimilate and update its knowledge from diverse disciplines and use it to hone and brace itself in order to meet the challenges of the times and remain ever relevant to society, besides being competitive.

Thus, TQM is

1. A philosophy of thought and action to ensure ‘quality’ in anything and everything management does.
2. The mindset to understand what quality is and how to achieve quality in one’s work, no matter what that work is, in which enterprise it operates and to which hierarchy it belongs to.
3. An approach to involve people in the vital task of achieving continual improvement in the performance.
4. A collection of tools and techniques which helps one to be logical, objective and analytical in understanding the problems and finding a solution to the problems.
5. A way of organising an enterprise to be ever relevant on the one hand to meet the needs of customers as well as stakeholders and on the other to become one among the best in its class, nationally/internationally.

TQM—eight fundamental principles

TQM has its rationale and well-reasoned foundation in the eight principles of quality management listed in Table 1.1. TQM as a managerial practice operates through these well-known principles of universal applicability in different institutions/organisations.

TABLE 1.1 Quality Management Principles

An outline of each principle is explained in the following sections.

Customer focus

Every institution/organisation must reflect the concern and focus it has on its customer through the following actions.

1. Link business objectives directly to customer needs and expectations.
2. Research and understand customer needs and expectations on a continual basis and accordingly update operational objectives.
3. Ensure that every output, which becomes input for the next process, meets the requirement of the customer.
4. Ensure that the built-in harmonisation characterises each type of process in an institution/organisation: indirect services such as security, canteen and transport; supportive services such as maintenance, stores, purchase and finance; and direct activities such as marketing, customer service, design and manufacturing.
5. Communicate customer needs and expectations throughout the institution/organisation.
6. Measure customer satisfaction and act on the results.
7. Ensure a balanced approach between satisfying customers and other interested parties (such as owners, suppliers, financiers, local communities) and society as a whole.
8. Focus on ‘customer’ as applicable/relevant to the continual improvement project.
9. Manage customer relationship systematically.

Leadership

Leadership establishes unity of purpose and direction to the institution/organisation. They create and maintain an internal environment whereby people become competent and fully involved in achieving the organisational objectives. To develop leadership qualities the environment is built assiduously and maintained consistently through the following measures.

1. Transparency, consistency and credibility in organisational practices to promote good relations, trust and confidence.
2. Eliminating fear of failures of well-considered and honest attempts. This helps achieve new and better levels of performance.
3. Freedom to act with responsibility and accountability without being constrained by precedents and procedures; and thus having the liberty to discard the procedures found irrelevant, obsolete and unproductive.
4. Free flow of resources to enhance performance.
5. Sharing with employees the organisation’s ever evolving mission and vision.

Involvement of people

People at all levels are a vital force of an organisation; and their full involvement and commitment enhance the organisation’s performance and progress on a continual basis. To achieve such an involvement and commitment of the people, actions that are taken by the institution/organisation are as follows.

1. Respects its employees and recognises that every employee, no matter where one operates, has the inherent ability and interest to think about the job one does to enhance its performance and thus enhance his own self-worth.
2. Creates an operational environment such that employees also understand that management recognises the importance of their role and contribution to enhance the performance of the institution/organisation.
3. Delegates authority and responsibility in such a way that employees right up to the cutting edge own their process and feel responsible for its performance.
4. Empowers employees at all levels to identify and solve problems according to the specified path. In this task, employees feel free to identify the limitations and constraints that one encounters and seek avenues for their redressal.
5. Adopts measures to enhance the competency of employees. There is also ample evidence of people actively seeking opportunities to enhance their competence, knowledge and experience.
6. Accounts and monitors the contribution of its employees to enhance performance in diverse areas.

Process approach

Process is a set of clearly laid-out interrelated activities/operations/jobs, all of which together achieve a well-defined output. Thus, several processes are involved in churning an output that can be a product, service or information. For example, the food kept ready to serve is the final product of several processes involved in preparing the food. Likewise, the task of serving food at the table kept neat and clean is the result of several processes involved in serving the food. This is a natural feature governing the production of any product, service or information in any institution/organisation.

Thus, it stands to reason that managing a process well is the very basis of achieving the desired level of quality, quantity and efficiency. Therefore, every process has to have its unique pathway to manage it and such a path is specified. This is known as the process approach.

Systems approach

The output of several processes has to be well integrated and coordinated to provide the ultimate finished product/service/information. This task of integration and coordination is known as the systems approach. This ensures that the required level of quality, output and efficiency is provided; and thus one process does not affect the other processes. One process affecting another is termed as failure at the interfaces. ‘Operation was successful, but patient died’ is the thought that illustrates the occurrence of failures at interfaces due to poor systems. Thus, there must be a proper linkage of the processes to prevent/avert failures at interfaces, in spite of each process being right. This is the objective of the systems approach and this is met through proper linkage of the processes.

Continual improvement

Continual improvement can be defined as learning to achieve a better result continuously, whereas learning for the sake of learning is futile and pointless. Continual improvement has a cycle of activities which comprises

• reaching a new target of performance not attained earlier;
• planning effort in terms of study, investigation, and learning new, different and relevant approach to help in investigation;
• involving people and teams in the study, decision and action;
• documenting the objectives/lessons of each process;
• implementing the lessons and their evaluation;
• institutionalising the effective lessons in the institution/organisation at all appropriate places/times;
• repeating the entire cycle continuously.

Continual improvement is a distinct routine but compulsory managerial function. Continual improvement as a managerial responsibility and function is carried out in a planned, structured and organised manner. The primary purpose of continual improvement is to make an enterprise face competition ably. Continual improvement is a movement in the institution/organisation, wherein every employee, no matter to which functional area he/she belongs to, is an annual member of at least one or two teams on continual improvement throughout his/her tenure in the company. Thus, as a rule, everyone is in the ‘ring’ of continual improvement with the quest of reaching higher and more challenging levels of performance.

Factual approach to decision-making

Decision-making is also a process of identifying problems; finding alternative solutions to the problem, choosing the best one from among the alternatives, implementing the chosen alternative, evaluating the effectiveness of action and routinising the new features of the actions found effective. Problem selected has to be the one with a high priority and to assess the priority there must be appropriate data. A priority index is assigned to each of the problems identified in order to select the ones with high priority. Likewise, the best among the alternative solutions has to be selected on relevant data/information and not just opinion. Similarly, each stage has to have its factual basis for action relevant to a stage and not be decided on opinions and/or authority. This concept of allowing the figures to speak for themselves to decide the issue of action is factual approach to decision-making.

Decision-making needs to be not a misleading one but impacting in the desired manner. Hence, decision-making has to be based on appropriate facts, data and information, all of which together constitute the factual approach. The following actions need to be taken to adopt the practice of factual approach to decision-making.

• Identifying the types and sources of data needed for decision-making appropriate to the problem on hand.
• Ensuring that data and information are adequate besides being sufficiently accurate and reliable.
• Making data accessible to those who need it.
• Analysing data and information using valid methods.
• Making decisions and taking actions based on factual analysis, balanced with experience, intuition and future awareness.

Decision-making at micro-level is confined to a limited area like an operation, activity (process in short). It is simple as the data to be examined are few, they can be easily obtained, and in the majority of the cases they may even be readily available. Methods of analysis are also simple and can be learnt easily.

But the process of factual approach to decision-making becomes complicated once the problem gets transformed into external issues like acquisition and investment in different states or far beyond national boundaries involving consideration of political stability, economic scenario, social aspects, etc., in addition to market and technological considerations. The central point to be noted is that decision-making has to be on a factual basis and not based on individual’s idea and cannot definitely be an authority-dominated mandatory action.

Mutually beneficial supplier relationships

This principle recognises the fact that no institution/organisation is a powerful independent entity by itself but a link in the chain of stakeholders, suppliers and customers. This chain is known as supply chain. An institution/organisation does well when it focuses on enhancing value of the supply chain and enables everyone to win and avoid win/lose situation.

Mutually beneficial supplier relationships can be built through the following steps.

• Establishing relationships that balance short-term gains with long-term considerations.
• Pooling of expertise and resources with partners.
• Providing clean and open communication.
• Sharing information and future plans.
• Establishing joint development and improvement activities.
• Inspiring and encouraging every member of the chain to enhance the value of the supply chain.
• Recognising the contribution of the members in enhancing the value of the supply chain.

All the principles stated above provide the directions, set priorities, formulate objectives and have clear focus for quality management functions in an institution/organisation. This facilitates consistency in action. There is another expression called ‘variation’ for consistency and this is what one is concerned with at the operating level. A highly consistent situation at the operating level is the one that is subjected to least variation. Hence, one must have a clear appreciation of variation and this is dealt with in the following subsections of this chapter.

Variation

At the operating level, practise of quality is essentially a task of controlling variation. Study of variation is the science of statistics. How to measure variation in a set of data is explained in Chapters 12 and 20. It is to be noted that:

1. The minimum value that variation can take is zero.
2. Variation is a measure of quality in terms of consistency or uniformity.
3. Hence, quality level in any quality characteristic reaches its best when the variation is minimised. For example, in Figure 1.1, among the three controlled processes A, B and C, the worst is A and the best is C.

Figure 1.1 Comparison of variability: compare the base of A, B and C

Figure 1.2 Illustration: reduction in variation is improvement

Thus, reduction in the magnitude of variation—span of variation represented by the base of process shown in Figure 1.1 is ‘measurement of improvement’. This is illustrated in Figure 1.2.

Variation implies disparity and differences. Therefore, reducing variation means reducing disparity and differences and thus improving consistency and homogeneity.

Six Sigma

Six Sigma means a process that has attained a status of near-zero defect level of 3.4 ppm (parts per million). In such a situation, the word ‘Six’ represents that ‘Sigma’, the magnitude of variation in the process, is so small (process of a superior order) that defect level (output beyond the required limits) is 3.4 ppm.

In recent years, Six Sigma has entered the field of continual improvement and its focus is to achieve near-zero defect level expressed as having failure rate of 3.4 ppm opportunities. Each of the two words ‘Six’ and ‘Sigma’ are special words having their own meaning in statistical terminology explained as under:

1. Variation referred to above can be quantified and the quantified value of variation is called ‘standard deviation’ and this is referred to as ‘Sigma’ represented by the symbol ‘s’ or ‘σ’.
2. As explained earlier, reduction in variability leads to higher and higher levels of homogeneity, uniformity or consistency in output.
3. How good the degree of uniformity, consistency or homogeneity of the output is quantified by a value called ‘Sigma value of the process’ which is based on the ratio of requirement bandwidth to process capability bandwidth. Process capability is six times the standard deviation which is a measure of process variation.
4. Sigma value of the process is also linked to defect rate per opportunity in a process and this route is followed to assess the Sigma value of the process.
5. When Sigma value of the process is 4.5 the defect rate (also a measure of uniformity, consistency or homogeneity) is 3.4 ppm opportunities. This near-perfect status is called ‘Six Sigma’ and the corresponding Sigma value of the process is 4.5.
6. Processes with their ‘Sigma value less than 4.5’ are away from the ideal state.

Thus, the quality status of any process can also be measured by the Sigma value of that process. Hence the focus of continual improvement from Six Sigma point of view lies in improving the Sigma value of a process to reach the ideal value of 4.5. All these points are discussed with several examples and illustrations in Chapter 12.

Thus, it can be seen that Six Sigma is an integral part of continual improvement principle of quality management and not quality management itself.

TQM vs. Six Sigma

Some of the champions of Six Sigma rightly project that Six Sigma is superior to TQM by raising issues like ‘Why is Six Sigma succeeding where TQM has failed’? and discuss at length ‘Six Sigma and the pitfalls of TQM’.

Six Sigma and TQM are not comparable. Six Sigma is a tool/technique. TQM is a philosophy of management. It is a way of thinking, planning, managing and not a tool. In fact, Six Sigma is a subset of TQM featuring under the category of tools and techniques. Therefore, to compare the two is wrong besides being misleading.

Thus, raising issues like Six Sigma vs. TQM is chauvinistic. TQM is a philosophy of thought and tasks of action by management and not a tool. Therefore, raising an issue like Six Sigma vs. TQM is a display of narrow focus to state the least.

World trend in quality

The promotion of TQM on the basis of the eight fundamental principles discussed earlier coupled with the emphasis on improving consistency in performance has led to phenomenal progress in the march of quality in the world. This growth is reflected briefly here under.

1. Expansion of quality management concepts, task, methods and tools in every function of an enterprise, no matter what that enterprise is—trade, commerce, industry, education, hospital and health care, insurance, construction, transport, hotel and hospitality services, administration, telecommunications, software development, etc.
2. Quality improvement at a revolutionary pace—simple problems are fixed within 24 hr, and typical rates of improvement are as high as one improvement per employee per week.
3. Partnering or forming a relationship with suppliers and others in the same class of industry including competitors.
4. Recognition of the new factors of success.
   1. Selling more of ‘intellect’ than ‘material’.
   2. Decline in the value and significance of wealth in the form of possessing physical resources.
   3. Realising that leading nations and corporations are masters not of land and material resources but of ideas and technologies. Hence, wealth goes to emancipators of the mind.
5. Sustainable competitive edge comes from the ability to learn faster than competitors. Hence diverse types of learning programmes are a must for every employee of an institution/organisation as well as those of the supply chain.
6. Empowering/liberating workforce to organise themselves as self-managing groups to organise, plan and control the tasks that belong to them and meet the requirements of customer in an efficient manner. Facilities and support are extended to them to be knowledgeable on (i) improving process efficiency and (ii) customer needs, wants and expectations.
7. Information system catering to the needs of every functional group and also relating to the needs of the different levels of a group.
8. Recognising business operation as a conglomerate of several hundred business processes and focusing on the design of each process so that non-value adding, bureaucratic, inefficient, ineffective and defect-laden elements are removed. Proper linking of concerned processes to prevent failures at interfaces.
9. Going beyond the realm of just delighting the customer to that of achieving customers’ trust and confidence.
10. Benchmarking and self-assessment as a continual exercise in order to be one among the world class group.
11. Leveraging ‘quality’ as a tool of strategic thinking and action to improve ‘the way things are done here’ to achieve customer impact as well as maximum revenue possible to serve well the stakeholders of the company, its employees and society at large.

Conclusion

Thus, TQM with Six Sigma means a journey towards perfection which is at the zero defect level. The path towards perfection is through reduction in variation through continual process improvement. Thus, Six Sigma provides focus and goal for improvement. It is an integral part of ‘continual improvement’, one of the eight principles of TQM.

The subject of continual improvement is of paramount importance to the country as a whole. For example, the global trend for manufacturing and service industry in low cost countries like ours is likely to rise in an exponential manner in the coming decades. Similarly, health care centres of world-class category in our country have also shown their potential to attract its clientele from abroad. Its impact on raising the expectations of the masses within the country cannot be underestimated. To exploit these developments, it is essential to be internally focused to bring about continual improvement in order to be competitive. This is the subject matter of the next three chapters.