ask SCORE: Total quality management
Total quality management
A powerful small business tool
By Richard N Walton, Assistant District Director
SCORE, Western Maryland
How would you like to use a free management tool that will enable you to reduce operating costs, improve customer relations, motivate your employees to improve their on the job performance, build a sustainable competitive advantage in your market?
The tool is Total Quality Management, a technique that is built upon the idea of continuous improvement in every aspect of the firm's operations. Continuous improvement can enable you to develop and maintain a steadily increasing competitive advantage thereby earning customer loyalty and higher profits. What's more, it can be done by any business at any time. Here's how to get started.
The first step in a TQM program is to perform a situational analysis, using a tool such as SWOT Analysis (SWOT stands for a company wide review of internal strengths and weaknesses, and external threats and opportunities facing your company). The result of a SWOT analysis is to pinpoint areas for improvement in the firm's operations. This analysis should involve everyone carefully reviewing systems and procedures in their respective work areas aimed at identifying what the company is doing well (the strengths) and what the firm is doing poorly (the weaknesses). Placing the mantra of continuous improvement on everyone and in every operational area will create a strong motivation on the part of each employee to focus on improvement, thereby lowering costs and improving operations. The threats and opportunities can result from either the firm's strengths and weaknesses or outside forces, such as economic recession (or expansion). The key is to be ready for whatever happens by monitoring all four aspects of a firm's strategic position in the marketplace.
The second step is to quantify the short term operational impact that would occur by overcoming the weaknesses and further building on the strengths as well as avoiding the threats and capitalizing on the opportunities identified in Step 1. For example, a key weakness might be found in billing errors that create annoyance in the mind of the customer and lead him to seek another supplier. That weakness should be corrected immediately. On the other hand, a business building strength might be found in quick response time to customer or prospect inquiries. This fact can be a major selling point by adding a call feature to the response through having a sales representative personally contact the customer to make sure that the response was received, that it was understood, and that our firm is ready to supply to item requested on a defined delivery schedule. Overcoming weaknesses can help avoid threats (such as the cancellation of a customer order) while improving strengths can lead to business expansion by capitalizing on a recognized opportunity.
The third step is to work with your customers in a continuous dialogue designed to improve the quality of your work through understanding what the customer wants, and providing it, always under promising and over delivering. There is no end to a TQM program. Continuous improvement goes on forever, and a key result will be earning continuous customer loyalty, higher profits, and the development and maintenance of a sustainable competitive advantage.
Total Quality is a tool that any business can use to its great advantage, even when competing with other firms that are leaders in quality operations. A TQM technique called 'benchmarking' is used to compare a firm's operations with the best of its competitors, with the idea that if we know how the best in the business handle a certain type of task, we can study their method and work to improve on it, and thereby build our own capabilities.
There is much more to Total Quality Management than can be conveyed in a short article, but the mentors at SCORE can provide further information and work with you to utilize this powerful tool to reduce costs, improve customer relations, and build a sustainable competitive advantage for your business.
Mr. Walton teaches Financial Management, Operations Management, Corporation Finance, and Entrepreneurial Finance at Frostburg State University. He is also Assistant District Director for SCORE, Western Maryland, and the President of ERMACORP, a Hagerstown based Management Consulting Firm. He may be reached at 301-462-9850, or by email to Richard@ermacorp.com.