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TOTAL QUALITY MANAGEMENT

ABSTRACT

Total quality management is a process that improves overall organizational productivity and quality. TQM empowers employees to actively participate in the improvement of quality. Quality and productivity teams are created, training budgets are allocated and statistical techniques are used to assist in identifying defects and carrying out preventive actions. Moreover, TQM stresses coordination between different departments in an organization. The concept of TQM generally applies to manufacturing organizations.

This paper outlines the principles of TQM and emphasizes the leadership attributes that are essential in implementing TQM in the organization.

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1.0 INTRODUCTION

In today's competitive business environment, companies are being challenged to improve performance by continuously improving processes, cutting costs and increasing output. These changes mean going beyond the traditional management systems and creating a culture of continuous improvement with a strong focus towards customers. TQM is a process and a way of thinking and executing for the present and the future. Focus on TQM guides a company to understand customer requirements and do things right the first time. TQM engages all divisions, departments and levels of the organization. Top management organizes all of its strategy and operations around customer needs and develops a culture with high employee participation. The goal is to deliver the highest value for the customer at the lowest cost while achieving sustained profit and economic stability for the company. Top management must define the vision and then train its employees towards a common mission. To do this, cross-functional teams work on improvements that respond to customer requirements.

TQM alters the way a company thinks about work and all of its relationships as it impacts every function, system and person connected with the company. TQM is a continuous journey towards excellence.

1.1 QUALITY MANAGEMENT

1.1.1 Definition of Quality Management Principle

A comprehensive and fundamental rule or belief, for leading and operating an organization, aimed at continually improving performance over the long term by focusing on customers while addressing the needs of all stakeholders.

1.1. The Quality Management Principles

With growing global competition, Quality Management is becoming increasingly important to the leadership and management of all organizations. Quality Management principles provide understanding of and guidance on the application of Quality management. By applying following eight Quality Management Principles, organizations will produce benefits for customers, owners, people, suppliers and society at large. [APQC]

Principle 1 - Customer-Focused Organization

Organizations depend on their customers and therefore should understand current and future customer needs, meet customer requirements, and strive to exceed customer expectations.

Principle - Leadership

Leaders establish unity of purpose and direction of organization. They should create and maintain the internal environment in which people can become fully involved in achieving the organizations objectives.

Principle - Involvement of People

People at all levels are the essence of an organization and their full involvement enables their abilities to be used for the organizations benefit.

Principle 4 - Process Approach

A desired result is achieved more efficiently when related resources and activities are managed as a process.

Principle 5 - System Approach to Management

Identifying, understanding, and managing a system of interrelated processes for a given objective improves the organizations effectiveness and efficiency.

Principle 6 - Continual Improvement

Continual improvement should be a permanent objective of the organization.

Principle 7 - Factual Approach to Decision Making

Effective decisions and actions are based on the analysis of data and information.

Principle 8 - Mutually Beneficial Supplier Relationships

An organization and its suppliers are independent, and a mutually beneficial relationship enhances the ability to create value.

1. Condensation of the 14 Points for Management

The following is excerpted from Chapter of Out of the Crisis by W. Edwards Deming.

1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs.

. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.

. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place.

4. End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust.

5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.

6. Institute training on the job.

7. Institute leadership. The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul as well as supervision of production workers.

8. Drive out fear, so that everyone may work effectively for the company.

. Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service.

10. Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.

11. a. Eliminate work standards (quotas) on the factory floor. Substitute leadership.

b. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership.

1. a. Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality.

b. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means the abolishment of the annual merit rating and of management by objective.

1. Institute a vigorous program of education and self-improvement.

14. Put everybody in the company to work to accomplish the transformation. The transformation is everybodys job.

1. Total Quality Control

By definition, total quality control is a concept that empowers employees with the responsibility for achieving standards of quality. Total quality control concepts are generally applied in context to the organization as a whole.

.0 THE CONCEPT OF TQM

TQM is based on a number of ideas. It means thinking about quality in terms of all functions of the enterprise and is a start?to?finish process that integrates interrelated functions at all levels. It is a systems approach that considers every interaction between the various elements of the organization. The overall effectiveness of the system is higher than the sum of the individual outputs from the subsystems. The subsystems include all the organizational functions in the life cycle of a product, such as

(1) Design

() Planning

() Production

(4) Distribution and

(5) Field service

The management subsystems also require integration, including

(1) Strategy with a customer focus,

() The tools of quality, and

() Employee involvement (the linking process that integrates the whole).

Some principles and practices of total quality management (TQM) may differ among firms and industries, but there is unanimous agreement as to the importance of leadership by top management in implementing TQM. Such leadership is a prerequisite to all strategy and action plans and it cannot be delegated. Those firms that have succeeded in making total quality work for them have been able to do so because of strong leadership. A U.S. General Accounting Office study concluded, Ultimately strong visionary leaders are the most important element of a quality management approach.

.1 IMPLEMENTING TQM

Companies that implement TQM focus their operations, their strategy and their employees towards understanding the customer, market segments and consequently get clues about the potential market share, resources needed for growth and how to satisfy market needs. TQM is an interactive methodology that combines statistical and technical processes along with human-management technology to make it a unique process. Companies would tend to run better and winning customers is facilitated. Institutional learning is captured through the development of high-performance and cross-functional teams. TQM evolves a process of continuous improvement along all organizational functions.

The TQM implementation model defines a conceptual framework as the organization strives to develop continuous-improvement processes. The individual components for this model, which are defined below, are inter-related and have to be adopted by each department concurrently or in some cases sequentially. All these factors are critical to achieve TQM commitment and successful implementation.

.1.1 Awareness

This principle dictates that the key customers need to be identified and the customer requirements form the baseline upon which a company organizes its resources and production. Companies that implement TQM focus their operations, their strategy and their employees towards understanding the customer, market segments and consequently get clues about the potential market share, resources needed for growth and how to satisfy market needs. TQM is an interactive methodology that combines statistical and technical processes along with human-management technology to make it a unique process. Companies would tend to run better and winning customers is facilitated. Institutional learning is captured through the development of high-performance and cross-functional teams. TQM evolves a process of continuous improvement along all organizational functions.

Identification of both external as well as internal customers is vital to the success of TQM. Companies that practice quality methods will create processes that link all the players in the customer chain.

There are many ways to increase the number of opportunities for productive interface with customers. The following are some examples of successful ways through which companies strengthen client relationships

· Conferences

· Customer product-design teams

· Problem solving groups

· Customer satisfaction surveys

· Pilot programs and test markets for new products

· Cross-training

.1. Assessment

Achieving considerable gains in the competitive marketplace, where TQM standards are already very high, demands an aggressive and strategic determination and follow-through in order to better equip managers and employees with the necessary training and tools necessary in a TQM setting.

Some of the assessment criteria used in the evaluation of company readiness are as summarized as follows

.1..1 TQM Organizational Readiness assessment

· The extent of senior management involvement

· Extent of productivity and quality planning integrated into the strategic planning process

· Productivity and quality culture

· Effectiveness of the productivity and quality system

· Effective communication among functional areas

· Measure of supplier partnerships

.1.. Human Resource Excellence assessment

· Extent to which employees are regarded as a strategic resource for competitive advantage

· Human resource development

· Participation of individuals in continuous process improvements

· Diversity of talents

· Workforce readiness

.1.. Productivity/Quality results

· Productivity and quality improvement gains

· Innovation and the speed with which new products are introduced

· Improvements in process capability

· Evidence of use of benchmarking to compare quality and productivity results.

.1..4 Customer Orientation and results

· Effective systems for determining customer requirements

· Importance of customer satisfaction

· Analyzing customer satisfaction trends

· Comparing customer satisfaction ratings with those of the competition and industry averages.

.1..5 Impact on community

· The economic impact of the quality and productivity improvement achievements on the community. The assessment factors include the number of jobs created, impact on tax base, increased productivity and quality of partners and reduced prices to consumers.

· Minimizing adverse effects on the environment

· Productivity and quality awareness in the community

.1. Preparation

A few key building blocks that are essential to prepare for the implementation of TQM in an organization are as follows

· Evaluating the how and why of the processes that are currently implemented

· Proceeding with an open mind, conducting brain storming sessions and being flexible to new ideas

· Conducting to the point and specific analysis of current problems

· Persistence in efforts to resolve problems

· Looking at problems from all angles and making notes of general ideas

.1.4 Action Plan

It is necessary to not only identify the potential problems and factors affecting implementation but to formaulte an action plan as well for the successful implementation of TQM. An action plan also serves the purpose of measuring progress towards the final objective. Some vital action steps are summarized as follows

· Review standards thoroughly and ensure that the objectives are completely understood by the employees.

· Identify and take action to reduce the gap between each employee's current performance and the expectations set by the new standards.

· Identify possible causes of anticipated performance such as lack of skills, knowledge, procedures, tools or a general lack of motiviation.

· Identify whether formalized training would be required on a group and individual level.

· Design and implement the training program.

· Improve working environment and adjust incentives, recognize achievements to increase motivation and drive to achieve the objectives.

.1.5 Training and Development

TQM success is dependant upon the improvement in people skills and work processes, how well people respond to problems and challenges, as well as on the quality of their decisions.

This requires a new role for the managers in an environment that has a shared responsibility for goal-setting, problem-solving, feedback and continuing development. One of the most effective methods for a manager to help create such an environment is by improving coaching skills, thereby paving the way for employee empowerment to take on more responsibility.

As companies adopt a flat hierarchy with managers having a larger span of control, the quality improvement team is the most powerful unit in ensuring successful operations. The process of forming teams and making them work in a result-oriented fashion requires key elements such as a clear definition of roles, skill development and a participative environment.

.1.6 Problem Solving Tools

The basis of employee empowerment and decision making is their ability ot identify and solve problems related to their work function or to improve a work process. Some of the problem solving stages and the required tools are summarized as follows

Stage 1

· Problem definition

· Establishing an improvement goal

Tools

· Brainstorming

· Flow charting

Stage

· Understanding the problem by collecting and analyzing data

Tools

· Check Sheet

· Cause-and-effect diagram

· Pareto Chart

· Scatter diagram

· Histogram

Stage

· Identify solutions

· Implement action plan

Tools

· Force field analysis

.1.7 Measurement

Meeting or exceeding customer requirements is the best measure of quality. Measurements provide the data of how successful a company is in fulfilling customer requirements and priority concerns such as

· Customer Satisfaction

· Financial Targets

· Market Strategies

· Process improvements

· Product/service features

· Quality and costs of poor quality

· Human resource development

.1.8 TQM Programs

Some of the programs that are employed in the industry to improve work processes and focus on the technology aspects of TQM are briefly summarized as follows

.1.8.1 Socio-Technical Systems (STS)

This concept is based on the work of Eric Trist, who studied the implementation of technology in British coal mines. His noticed increased productivity with employee participation in the design of changes. Implementation of STS in the industry aims to determine the relationships of social and technical systems with one another and how these systems are designed to address the external environment demands. Five factors that are required for a successful implementation of the STS program are as follows

· Examining each systems as a part of the larger organization.

· Defining the program based upon principles and effectively communicating these principles to all the employees.

· The STS process should not dictate improvements, rather all directly affected employees participate in the work process improvement.

· Work should be designed to add value to the process.

· Program should be designed towards ideal solutions.

.1.8. Statistical Process Control (SPC)

SPC is a method of establishing and responding to control limits for a process. The overall objective is to ensure conformance to the specifications, eliminating variations and control the processes within established tolerances. This program may be used in both a service and production environment. Work outputs are recorded graphically and once the trends have been identified, the standards could be made more stringent or corrective action may be taken to improve work process.

.1.8. Just-in-Time (JIT) inventory Control

The basic premise of the JIT method is to produce to the exact demand, work towards continuous improvement and to eliminate and minimize waste. This principle identifies people as the source of quality and productivity. Some of the key components of the JIT program include improvement teams, vendor and business partner relations and quality of the product at the source approach.

For JIT to be successful, the process demands a strong leadership from the top management. The following enabling factors are an integral part of the JIT implementation

· Strong Leadership

· Steering committee/ Project leader for the liaison

· Briefings/ regular updates

· Planning

· Team participation and

· Employee training

.1.8.4 International Organization for Standardization (ISO) 000

The ISO 000 Quality Management and quality assurance system is based on the premise that a high quality production and management system will assure the desired level of quality and that an external assessment provided through third party auditors will provide the most effective and impartial method of certification. The ISO 000 standards are as follows

ISO 000 Gives guidelines on the selection of quality assurance and quality management systems.

ISO 001 Establishes the model for quality assurance in design, development, production, installation and servicing.

ISO 00 Defines a model for quality assurance in production and installation.

ISO 00 Establishes a model for final inspection and testing.

. THE CONCEPT OF TOTAL QUALITY LEADERSHIP

Total Quality Leadership is an approach to management that focuses on giving top value to customers by building excellence into every aspect of the organization. Creating an environment that allows and encourages everyone to contribute to the organization and by developing the skills that enable them to scientifically study and constantly improve every process by which work is accomplished does this. In all organizations there are processes by which things get done. There are processes of production, of sales and of distribution. There are also processes to find out about customer needs and problems. There are processes that couple market information with information on new technologies. These in turn generate ideas for new products and services. Other processes create and test these new products and services and move them into routine production. Still other processes study costs and value added throughout the organization. There are literally thousands and thousands of processes, the overall health of which determines the future of the enterprise.

The focus in Total Quality Leadership is on quality--the quality of every product and service and the quality of every process.

To achieve this higher quality, every process, beginning with the most important, is studied using the Scientific Approach. Processes are described with flow charts, problems are identified, the root causes of problems are determined through careful research and new fool-proofed systems are developed. Every process is brought under statistical control and variations are further reduced, well beyond specifications.

. TOTAL QUALITY LEADERSHIP

Total Quality Leadership is a management philosophy that starts with the customer, not with the bottom line profit and loss statement.

It is very data oriented and calls for monitoring thousands of variables inside and outside the organization. These numerical measures are used to guide the search for better performance, and are recognized as means rather than ends, as guides to deeper truths, rather than items to be controlled.

In Total Quality Leadership there is freedom, yet there is control. There is the freedom to discover new markets, to develop new systems, to gain greater mastery over the processes. And there is the control of a data based approach to improvement.

When quality is increased by improving processes (not by expanded inspection), the better quality will lead to improved productivity. This leads to lower costs, which lead to lower prices. Better quality and lower prices mean the company can expand its market, and can stay in business creating jobs and a greater return on investment.

Management by Results, on the other hand, tends to focus only on the end result--the return on investment; it is like wagging the tail to keep a dog healthy.

It is a tough concept to comprehend and it takes a leap of faith to make the fundamental shift from Management by Results to Total Quality Leadership. There is no easy way to make the change. It seems best to us to use a gradual process of letting go from the old style while embracing the new. Mary Ann Gould, former president of Janbridge Corp. and the leader of the Philadelphia Area Council for Excellence, thinks of it as a revolution in thought, and an evolution in implementation.

..1 KEY COMPONENTS OF TOTAL QUALITY LEADERSHIP

Here are some of the key components of Total Quality Leadership

· In Total Quality Leadership, the focus is on constantly and rigorously improving every system.

· It asserts that work is not haphazard. It can be and must be studied, analyzed and scientifically dissected.

· It insists that processes must be standardized and that standardized procedures must be followed. Variation must be reduced in output and in the way things are done, yet the opportunity must be provided for everyone to contribute to improving the processes and to eliminating problems.

· It has a customer focus, an obsession with quality.

· It recognizes that there are both external customers and internal customers--other employees who depend on your work to be able to perform their jobs properly.

· It demands improved relations with suppliers, a true working partnership, which in most cases will require a single supplier for each item.

· It emphasizes process improvement rather than individual accountability.

· It requires that communication systems be adapted to the needs of the work, not to the needs of the hierarchy.

· It demands constancy of purpose throughout the organization, persistence in accord with a clear and widely understood vision. It is an environment that nurtures total commitment from all employees. Rewards go beyond simple benefits and salary to the belief we are family and we do good work.

On the other hand, Dr. Curt Reimann, Director of the Malcolm Baldrige National Quality Award summarizes the characteristics of excellent leadership as follows ?

Visible, committed and knowledgeable. They promote the emphasis on quality and know the details and how well the company is doing. Personal involvement in education, training and recognition. Accessible to and routine contact with employees, customers and suppliers.

A missionary zeal. The leaders are trying to effect as much change as possible through their suppliers, through the government and through any other vehicle that promotes quality in the United States. Active in promotion or quality outside the company.

Aggressive targets. Doing beyond incremental improvements and looking at the possibility of making large gains. Getting the whole work force thinking about different processes?not just improving processes.

Strong drivers. Cycle time, zero defects, six, sigma or other targets to drive improvements. Clearly defined customer satisfaction and quality improvement objectives.

Communication of values. Effecting cultural change related to quality. Written policy, mission, guidelines and other documented statements of quality values, or other hales for clear and consistent communication.

Organization. Flat structures that allow more authority at lower levels. Empowering employees. Managers are coaches rather than bosses, Cross-functional management processes and focus on internal as well as external customers. Interdepartmental improvement team.

Customer contact. CEO and all senior managers are accessible to customers.

. ROLE OF LEADERSHIP IN IMPLEMENTATION OF TOTAL QUALITY SETTING

..1 Attitude And Involvement Of Top Management

It is axiomatic that organizations do not achieve quality objectives; people do If there is a big push for quality or a new program, each employee is justifiably skeptical. Thus, top managers need to be ambidextrous. They must balance the need for the structural dimension (e.g., hierarchy, budgets, plans, controls, procedures) on the one hand with the behavioral or, personnel dimension on the other. The two dimensions need not be in conflicts. The commitment and involvement of management need to he demonstrated and visible.

Many managers send mixed signals. They endorse quality but reward bottom line or production. They insist on cost reduction even if it means canceling quality training. Still worse, some executives perceive the workers to be the cause of their quality problems. This is hardly behavior that encourages individual involvement in decision-making and personal ownership of the improvement process. Employee buy?in is unlikely in such a climate, where worker empowerment is talked about but not put into practice.

.. Communication

Communication is inextricably linked in the quality process, yet some executives find it difficult to tell others about the plan in a way that will be understood. An additional difficulty is filtering. As top managements vision of quality gets filtered down through the ranks, the vision and the plan can lose both clarity and momentum. Thus, top management as well as managers and supervisors at all levels serve as translators and executors of top managements directive. The ability to communicate is a valuable skill at all levels, from front?line supervisor to CEO.

Quality conscious companies are interested in the cost of poor communication in terms of both employee productivity and customer perception of product and service quality. More important than what is written or said is the recipients perception of the message. Limited or inaccurate facts parceled out to employees may demoralize workers and lead to rumors.

· One can only communicate in terms of the recipients language and perception, and therefore the message must be in terms of individual experience and perception. If the employees perception of quality is do a better job.' or

· Keep the customer happy, it is unlikely that the message?of TQM will be understood. Measures of quality are needed to ensure agreement on the meaning of the message.

· Only the recipient can communicate?the communicator cannot. Thus, management systems (including training) should be designed from the point of view of the recipient and with a built?in mechanism for feedback. Feedback and thus the exchange of information should be based on some measure, target, benchmark, or standard.

· All information is encoded, and prior agreement must be reached on the moaning of the code. Quality must be carefully defined and measures agreed upon.

· Communication downward cannot work because it focuses on what we want to say. Communication should be upward.

· Employees, should be encouraged to set measurable goals.

These concepts of effective communication can provide a practical approach for communicating about quality in the organization. It only remains to encode the messages in terms of recipient understanding. The vehicles for communicating about quality are selected components of the TQM system

· Training and development for both managers and employees. Managers must understand the processes they manage as well as the basic concept of systems optimization Employee training should focus on the integration and appropriate use of statistical tools and problem solving methods.

· Participation at all levels in establishing benchmarks and measures of process quality. Involvement is both vertical in the hierarchy as well as horizontal by cross?functional teams.

· Empowerment .of employees by delegating authority to make decisions regarding process improvement within individual areas of its responsibility so that the individual owns the particular process step.

· Quality assurance in all organization processes, not only in manufacturing or operations but in business and supporting processes as well. The objective throughout is continuous improvement.

· Human resource management systems that facilitate contributions? at all levels (up and down. and across) the organizational chart.

.. Culture

Culture is the pattern of shared beliefs and values that provides the members of an organization with rules of behavior or accepted Norms for conducting operations. It is the philosophies, ideologies, values, assumptions, beliefs, expectations, attitudes, and norms that knit an organization together? and are shared by employees.

Successful organizations have a central core culture around which the rest of the company revolves. It is important for the organization to have a sound basis of core values into which management and other employees will be drawn. Without this central core, the energy of members of the organization will dissipate .as they develop plans, make decisions, communicate, and carry on operations without a fundamental criteria of relevance to guide them. This is particularly true in decisions related to quality. Research has shown that quality means different things to different people and levels in the organization. Employees tend to think like their peers and think differently from those at other levels. This suggests that organizations will have considerable difficulty in improving quality unless core values are embedded in the organization.

...1 Embedding a Culture of Quality

It is one thing for top management to state a commitment to quality but quite another for this commitment to be accepted or embedded in the company. The baste vehicle for embedding an organizational culture is a teaching process in which desired behaviors and activities are learned through experiences, symbols, and explicit behavior. Once again, the components of the total quality system provide the vehicles for change.

· Signaling. Making statements or taking actions that support the vision of quality, such as mission statements, creeds or charters directed toward customer satisfaction. Public supermarkets Where shopping is a pleasure and JC Penneys The customer is always right are examples of such statements.

· Focus. Every employee must know the mission, his or her part in it, and what has to be done to achieve it. What management pays attention t6 and how they react to crisis is indicative of this focus. When all functions and systems are aligned and when practice supports the culture, everyone is more likely, to support the vision. Johnson and Johnsons cool reaction to the Tylenol scare is such an example.

· Employee policies. These may be the clearest expression of culture, at least from the viewpoint of the employee. A culture of quality can be easily demonstrated in such policies as the reward anal promotion system, status symbols, and other human resource actions.

.4 CUSTOMER VALUE ANALYSIS

.4.1 CVA and Its Important Role

Quality conscious business units commission surveys to measure the level of satisfaction of their customers and the level of satisfaction of competitors customers. Survey results are used to manage the business at a fundamental level. They are a basis for decisions about

· Product selection

· Process improvement

· Employee compensation, particularly top management

.4. The Analysis of Survey Data

· General approaches

· Specific data analysis tools

· And software

To take survey results, mine the information in them, and produce valid estimates of customer perceptions of the company and its competitors, together with statements of uncertainty.

The principal vehicle for drawing conclusions from the surveys is a statistical model for the data that describes the variation in customers ratings as a function of 4 different measures of company performance, the companies (The company and its competitors),

the individual respondents in the survey and time. The model is quite complex because the variation in the ratings is complex. For example, different survey respondents use the rating scale differently; they position themselves at different places on the scale and they use up different amounts of the scale.

Visualization has also played an important role in analyses. First, display of the data has been vital to developing a statistical model that does a good job of describing the actual variation in the data. That is, by studying the structure of the data, we can be able to develop a realistic model. Second, visualization has played an important role in conveying the results. The results are complex, but the visualization tools allow ready comprehension of the important messages in the data.

.4. Search Tools Used in the Analysis

The complex process of sampling customers, surveying them, analyzing their responses, and then summarizing the results to convey the information to management is like a manufacturing line, requiring advanced information technologies and process improvement at all stages to provide valid characterizations of customer perceptions. A number of tools and systems invented in statistics and data mining research organizations play a major role in the analysis and summary

The company needs to adopt specific measures to be used in the project, both for analysis and presentation, that enables the company to understand its market position relative to its competitors for several customer satisfaction measures, and to see how its market position changes through time.

.4.4 Customer Value Analysis Defined

In customer value analysis (CVA), a company conducts sample surveys of its customers and of its competitors customers to determine the relative performance of the company on many attributes ranging from product quality and technology to pricing and sales support.

· Building the model and using it to form conclusions about CVA stimulated work on statistical theory, models, and methods

· Some specific theory of data exploration that provides an overall guide for methods used to explore data for the purpose of making decisions about model specifications;

· A reformulation of integrated moving-average processes into integrated sum-difference models, which enhances interpretation, model building, and computation of posterior distributions;

.4.5 Customer Value Analysis Is The Key to Competitive Advantage

Does customer satisfaction equate to customer loyalty? Not necessarily. Satisfying customers is no longer enough. To gain a strategic advantage in todays competitive environment, organizations must take customer satisfaction to the next level. The American Productivity & Quality Centers (APQC) recently completed consortium-benchmarking study, Customer Value Measurement Gaining Strategic Advantage. It reveals that the advantage goes to those organizations that track their performance compared with competitors on factors that drive purchase decisions instead of evaluating only product/service quality.

Companies succeed by providing superior customer value and value is simply quality, however the customer defines it, offered at the right price,

APQC worked with sponsoring organizations to scope the study, which focused on four areas

Developing and implementing a customer value analysis system, operationalizing customer value analysis, integrating customer value analysis into a strategic navigation system, and measuring the impact of customer value.

One finding of Customer Value Analysis is that the majority of best TQM practice organizations have shifted their focus from customer satisfaction to customer value. Customer value is strategically oriented, and customer satisfaction supplements this strategic view with a more immediate, tactical viewpoint of the marketplace.

.0 CONCLUSIONS AND RECOMMENDATIONS

1. MAKE GOALS AND PURPOSES CLEAR

. RATE PERFORMANCES OF MANAGERS, DO THEY

· Provide clear directions?

· Give employees work that uses their skills, challenges their ability and intelligence?

· Ensure that work groups are harmonious?

· Provide promotional opportunities, interesting work?

· Give workers a voice in decisions that affect them?

· Create an environment that workers feel part of?

. INVOLVE PEOPLE IN LOOKING FOR OPPORTUNITIES

· What barriers and obstacles need to be overcome?

· What tasks can be done more efficiently?

· What might be dropped? Shortened? Simplified?

· Are employees unhappy about too much/little work?

· Can performance appraisal system be of use?

4. ANALYZE, MEASURE, EVALUATE

· Analyze objectives, problems, opportunities

· Decide what ought to be measured

· Define output/input measures

· Establish data collection system

· Analyze validity and usefulness

4.0 REFRENCES

1. Dhillon, B.S., Engineering Management Concepts, Procedures and Models, Technomic Publishing Company, Lancaster, PA, USA, 187.

. Creech, Bill, The five pillars of TQM how to make total quality management work for you, Truman Talley Books/Dutton, Penguin books USA Inc., NY, NY, USA, 14.

. Capezio, Peter and Morehouse, Debra, Taking the mystery out of TQM a practical guide to total quality management, Career Press, Hawthorne, NJ, USA, 1.

4. Daft, Richard L., Management, Dryden Canada, Toronto, Canada, 1.

5. Deming, W. Edward, Out of Crisis, MIT-CAES, nd ed., 186.

6. The American Productivity and Quality Centre internet website, http//www.apqc.org/

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