Total Quality Management (TQM): Improve Processes & Keep Customers Happy

TQM-total-quality-management

What caused the global financial crash in 2008?

Failures of AIG, Lehman, Merrill, and other major financial firms? Disproportionate risk-taking by banks and lenders? Deregulation within the financial industry? Development of new ways to finance mortgage products? Excessive lending and borrowing in the housing market?

Yes, yes, yes, yes, and yes.

However, these causes only tell half the story behind the financial meltdown that morphed into the biggest global recession since the Great Depression (Covid-19 aside).

What was the root cause? The real reason behind the enormous cost to the economies of many countries and the lost fortunes of millions of families?

A lack of total quality management (TQM).

Paul Moore, former head of group regulatory risk at HBOS (part of the Lloyds Banking Group since 2009), dubbed this crisis as ‘the biggest quality failure of all time.’

Total quality management stems from the belief that mistakes can be avoided if everyone is behind the continual process of detecting, reducing, and eliminating errors.

If organizations from within the financial sector believed in putting quality first, and positioned culture and people above profit margins and structure, the events leading up to the crisis could have been avoided.

Just imagine how different things might have been had the financial sector been managing their quality in a similar way to ISO 9001!

We’ll continue to explore this concept later but, before we do, let’s look at what else we’ll cover in this Process Street post:

Let’s get going!

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ISO 9001: The Ultimate QMS Guide (Basics, Implementation, ISO Templates)

Consumer Reports publishes an annual reliability survey, which includes data on over 470,000 cars.

In this report, owners of Tesla’s Model 3 experienced a number of problems, including chassis hardware, paint and trim related faults, indicative of a build quality that fell far shorter than expected standards set across the automotive industry. The Model 3 represents Tesla’s first real attempt at a mass-market electric vehicle, and the issues surrounding its launch created much frustration and controversy among electric vehicle enthusiasts.

This lack of quality assurance has lost at least one major $5 million order of Model 3 vehicles from a rental company, in relation to problems with the service and performance of previously purchased vehicles.

In an email, NextMove wrote:

“Tesla Model 3 vehicles, which NextMove was supposed to take over after payment and only a short examination, sometimes had serious defects: defective tires, paint and body damages, defective charge controllers, wrong wiring harnesses or missing emergency call buttons. Such quality defects would have endangered the safety of the customers and the profitability of NextMove.”

Stefan Moeller, Managing Director of NextMove, went on to say:

“We had to insist on compliance with general quality standards and processes in order to protect our renters and our business model.”

Why did Tesla have so many problems? Crucially, Tesla made the decision to deliver the product to market and sort out the issues later.

Basically, they didn’t have a strong enough system for managing quality.

We call these Quality Management Systems (QMS) – and they work.

The rest of the auto-industry follows a specific quality management system structure. It’s called ISO/TS 16949:2009 and it’s a variant of ISO 9001.

People follow quality management systems for various reasons; they improve quality first and foremost. But they also have a positive impact on the bottom line.

The return on investment (ROI) of a quality management system is typically impressive:

As a guide, a recent study undertaken through the American Society for Quality (ASQ) showed that for every $1 spent on your QMS, you could expect to see an additional $6 in revenue, a $16 reduction in costs, and a $3 increase in profits. On average, they saw that quality management reduced costs by 4.8% – ASQ

In this Process Street article, we’ll be looking at how ISO 9001 can be used to assure quality control across all types of organizations, with benefits like improved company performance, higher demand for products, and a competitive advantage towards increasing market share.

What we’ll cover:

For the uninitiated, what is ISO 9001, as simply as possible?
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