UNIT – IV

TQM TOOLS & TECHNIQUES FOR QUALITY MANAGEMENT

Quality circles – Cost of Quality- Quality Function Deployment (QFD) – Taguchi

quality loss function – TPM – Concepts, improvement needs –– Performance
measures.
Quality Circle

Meaning of Quality Circles:

Conceptually Quality Circles can be described as a small group of employees of the same work area, doing
similar work that meets voluntarily and regularly to identify, analyse and resolve work related problems.
This small group with every member of the circle participating to the full carries on the activities,
utilizing problem solving techniques to achieve control or improvement in the work area and also help self
and mutual development in the process.
The concept of the Quality Circle is based on “respect for the human individual” as against the
traditional assumption based on suspicion and mistrust between management and its employees.
Quality circles built mutual trust and create greater understanding between the management
and the workers. Cooperation and not confrontation is the key element in its operation. Quality Circles
aims at building people, developing them, arousing genuine interest and dedication to their work to
improve quality, productivity, cost reduction etc.
Thus we can say that a quality circle is a group of 5 to 8 employees performing similar work,
who volunteer themselves to meet regularly, to identify the cause of their on-the-job problems, employ
advanced problem-solving techniques to
reach solutions and implement them.
The concept is based on the premise that the people who do a job everyday know more about
it than anyone else and hence their voluntary involvement is the best way to solve their work related
problems. Characteristics of Effective Quality Circles:
1. The atmosphere should be informal, comfortable and relaxed. The members should feel involved
and interested.
2. Everyone should participate.
3. The objectives should be clear to the members.
4. The members should listen to each other.
5. The group should feel comfortable even when there are disagreements.
6. The decisions should generally be taken by a kind of consensus and voting should be minimum.
7. When an action is required to be taken, clear assignments should be made and accepted by all the
members.
8. The leader should not dominate the group. The main idea should not be as to who controls but how
to get the job done.
9. Until a final solution is found and results are attained feedback is necessary.
Objectives of Quality Circles:
Some of the broad objectives of the Quality Circle are:
(i) To improve quality, productivity, safety and cost reduction.
(ii) To give chance to the employees to use their wisdom and creativity.
(iii) To encourage team spirit, cohesive culture among different levels and sections of the employees.
(iv) To promote self and mutual development including leadership quality,
(v) To fulfill the self-esteem and motivational needs of employees.
Implementation of Quality Circles in an Organization:
For the success of Quality Circle programme, following actions are necessary in the Organization:
(a) Few managers representing production, quality control, design, process planning form the Quality
Circle (Q.C.) steering committee. This acts as a policy making body and will monitor the Q.C. in the
Organization.
(b) Top management must attend the orientation courses designed for them.
(c) A committed top and middle management is necessary.
(d) A facilitator must be appointed, who serves as a link between top management, Q.C., steering
committee, middle management circle leaders and circle members. Facilitator will coordinate training
courses; get the support from all concerned including top management Q.C., steering committee, circle
leader and circle members to help the circle leader in conducting the meetings, and to provide necessary
resources.
Duties of Circle Leader:
For the success of Quality Circles, circle leader must have following duties:
(i) He must assume the responsibility of guiding the members.
(ii) He must make his members sure about what is going on.
(iii) He must channelise the discussions.
(iv) Every member is allowed equal opportunity.
v) Specific task be assigned to each member.
(vi) He must work in coordination with facilitator.
Steps for Setting up Quality Circles:
For starting Quality Circles in an organization, following steps should be taken:
(i) First of all Managers, Supervisors and Foremen must be made to understand the concepts and
activities of Q.C.
(ii) Management’s total support and commitment should be made known to everyone in the
organization.
(iii) Steering committee is formed with the top management personnel to give direction to Quality
Circle activities.
(iv) A facilitator (or sometimes known as promoter) is selected from the senior management level, who
will serve as coordinator and advisor to the circle.
(v) Supervisor and foreman are then trained to act as Q.C. leaders.
(vi) Members of each circle must be selected from the persons who are doing similar type of work or
belong to the same department or section.
(vii) Membership to the circle is voluntary.
(viii) First few meetings of the circle are held with a view to train them.
(ix) To start with, only one to two circles should be formed in an organization, and then increase the
number gradually as more and more experience is gained.
(x) Meetings must be held regularly, may be once in a week initially and once in a month on completion
of basic training of members.
(xi) Everyone’s suggestion or problem matching with the circle’s objectives is discussed.
(xii) Total participation of team members must be encouraged.
(xiii) Recommendations of the circle must be considered and decisions should be taken without delay.
Cost of Quality

CONCEPT AND DEFINITION OF QUALITY COSTS

 Concept: Quality-related costs are costs incurred by an organization to ensure that the products /
services it provides conform to customer requirements. In other words, quality costs are the sum of
money spent on ensuring that customer requires are met and also the costs wasted through failing
to achieve the desired level of quality. Thus quality cost is the cost of not meeting the customer’s
requirement. i.e., the cost of doing things wrong.
 The cost of quality is the difference between the actual cost of making and selling products /
services and the cost of no failure.
 Definition : Quality costs are defined as those costs associated with the non-achievement of
product / service quality as defined by the requirements established by the organization and its
contracts with customer and society.
 In simple word, quality cost is the cost of poor products or services.

ELEMENTS OF QUALITY COSTS

The cost of quality (COQ) can be classified into the following four categories.
 Cost of prevention
 Cost of appraisal
  Cost of internal failures, and
 Cost of external failures.

Cost of Prevention

 Prevention costs are the costs that are incurred on preventing a quality problem from arising.
 Prevention costs relate to efforts to prevent failures.
 Cost of prevention includes:
 Cost of quality planning : It includes the costs associated with creating an overall quality plan, the
cost of market research and product development, inspection plan, reliability plan, etc.

 Cost of documenting: It includes cost of preparation of required documents such as manuals,

procedures, policies, etc.

 Process control cost: It is the cost associated with implementing the quality plans and procedures
to achieve the stated purpose.

 Cost of training: It includes the costs of conducting training programmes.

 Costs associated with preventing recurring defects: It is the engineering, technical and supervisory
costs for preventing the reoccurring defects.

 Costs of investigation, analysis and correction of causes of defects by quality control and
engineering departments.

 Cost of quality awareness programme.

Cost of Approval

a) Appraisal costs are the costs that are incurred in assessing that the products / services conform to
the requirements.

b) Appraisal costs relate to testing, execution, and examination to assess whether specified quality is
being maintained.

c) Cost of appraisal includes :

a. Cost of receiving test and inspection.

b. Cost of laboratory acceptance testing.
c. Cost of installation testing.
d. Cost of installation and commissioning.
e. Cost of maintenance and calibration of testing and inspecting equipments.
f. Cost of test equipment depreciation.
g. Cost of analysis of reporting of tests and inspection results.
h. Cost of line quality engineering.
i. Cost of vendor rejects,

Cost of Internal Failures

 Internal failure costs arise due to internal failures.

 These costs are linked to correcting mistakes before delivery of the product, such as : scrap,
rejects, adjustments, downtime of equipment, labour sitting idle while waiting for repairs, and
sales discounts for inferior products.

 Cost of internal failure includes:

1. Cost associated with scrap and rejects.

 2. Cost of repair and rework.
3. Cost of design changes.
4. Cost of trouble-shooting or defect failure analysis.
5. Cost of reinspection and retesting.
6. Cost of sales discounts for inferior products.
7. Cost of downgrading.
8. Cost of downtime.

Cost of External Failures

1. External failure costs arise from the rejection of the products / services by the customers due to
poor quality.
2. These costs are associated with the adjustments of malfunctions after delivery of the product, such
as : repair costs, travel and lodging expenses, replacement costs, stock spare parts, lost goodwill of
customer, guarantee and warranty costs, and dispatchment costs.
3. Cost of external failures include :

1. Cost of processing complaints from customers.

2. Cost of commissioning failure.
3. Cost of servicing or replacing the defective items.
4. Cost of guarantee and warranty claims.
5. Cost of lost goodwill of customer.
6. Cost of product reliability compensation (voluntary or legal).
7. Cost of loss of sales.
8. Cost of concessions offered to customers (due to substandard products being accepted by
customers).

OPTIMUM COST OF PERFORMANCE

The relationship between various cost categories is depicted in Figure. It is understood that the sum
of the prevention and appraisal costs rises from zero to infinity as perfection is approached. Thus the
optimum total cost point lie between two infinities, as shown in figure

From the figure, it is clear that to achieve a reduction in failure costs, it is necessary to increase
prevention and appraisal costs.

ANALYSIS OF COQ FOR IMPROVEMENT

 Management should use the COQ data to identify and prioritize improvement opportunities. The
first priority is to eliminate external failures and then internal failures. Thereafter inspection can be reduced
gradually. By spending more money on prevention all these can be achieved. A typical case study is given
in Table.

Cost of Quality as a Percentage of Total Manufacturing Cost

Year External Internal Appraisal Prevention Total COQ

1995 3 1.5 1 0.5 6
1997 1.5 2.5 1.5 0.5 6
1999 0.5 1 1.5 1 4
2001 0.1 0.2 0.5 1.2 2

During 1997, increasing appraisal without increasing prevention increased internal failures but
reduced external failures. However, the total COQ did not change. This is certainly an improvement because
external failures affect business very badly. During 1997, the organization decided to get into ISO 9000
and focus on prevention. During 1999 when prevention was stepped up, keeping the same level of
inspection, the failures and overall COQ came down. In 1999, the CEO decided to adopt TQM. Vigorous
efforts were made to improve quality further and do things right, the first time and every time. Hence in the
year 2001, appraisal could be brought down drastically. However, the result is much better as the table
indicates. Now both the internal failures and external failures are quite low. Efforts should be made in the
same direction so that overall COQ reduces further. Thus, TWM is aimed at enabling the lowest cost of
quality.

ANALYSIS OF EXTERNAL, FAILURE COST

Similarly an analysis of external failures was made by the organization. The pie chart below indicates the
distribution of causes of external failure.

The above pie chart gives the priorities for action to be taken as given below:

1. Improve quality of soldering

2. Eliminate the cause of failure of diode D 1.
3. Estimate the correct rating of fuse and analyze the causes of failure of fuse.

If all the above failures can be eliminated then the failure cost will reduce to about 10 per cent.

ANALYSIS OF INTERNAL FAILURE COSTS

From the data available, the causes for the internal failure costs were analyzed and plotted as a Pareto
Diagram.
 1. Wrong component placed
2. Soldering failure
3. Other causes.

A major cause of internal failure was insertion of wrong components in the PCB. The process was
studied and found that the lighting in assembly line needed improvement and the operators needed training.
This analysis and the external failure analysis pointed to problems in the soldering process. A thorough
study was required to reduce the defects caused by poor soldering.

Thus, it is very important to analyze the data more closely to derive benefits to the organization.

The COQ analysis gives the following benefits to the organization.

1. Brings out the magnitude of the quality problem in the organization. It further leads to establishing
goals for the organization to improve quality.
2. Enables cost reduction owing to steps taken for improvement based on analysis.
3. Enables taking steps to improve customer satisfaction.
4. Displaying the results motivates employees to improve further.

Quality Function Deployment

MEANING:
Quality function development is a systematic and organized approach of taking customer needs and
demands into consideration while designing new products and services or while improving the existing
products and services.
Definition:
Quality function development may be defined as a system for translating consumer requirements
into appropriate requirements at every stage, from research through product design and development, to
manufacture, distribution, installation and marketing, sales and service.
OBJECTIVES OF QFD
1. To identify the true voice of the customer and to use this knowledge to develop products which satisfy
customers.
2. To help in the organization and analysis of all the pertinent information associated with the project.
3. Quality function development aims at translating the customers voice into product specifications.
BENEFITS OF QFD:
1. Improves customer satisfaction
2. Reduces implementation time.
3. Promotes teamwork
4. Provides documentation
The voice of the customer:
QFD begins with marketing to determine what exactly the customer desires from a product. The
various sources for determining customer expectations are focus groups, surveys, complaints. Consultants,
standards, and federal regulations. During the collection of information the QFD team must continually
ask and answer numerous questions, such as:
What does the customer really want?
What are the customer’s expectations?
Are the customer’s expectations used to drive the design process?
What can the design team do to achieve customer satisfaction?
INFORMATION ORGANIZATION:
Now that the customer expectations and needs have been identified and researched, the QFD team
needs to process the information. Numerous methods include affinity diagrams, tree diagrams, and cause
and effect diagrams. These methods are ideal for sorting large amounts of information. The affinity
diagram which is ideally suited for most QFD applications
HOUSE OF QUALITY:
The primary planning tool used in QFD is the house of quality. The house of quality converts the
voice of the customer into product design characteristics. QFD uses a series of matrix diagrams, also called
‘quality tables’, resembles connected houses.
Basic structure of house of quality:
1. Customer requirements
2. Prioritized customer requirements
3. Technical descriptors
4. Relationship matrix
5. prioritized technical descriptors
6. Competitive assessments
7. Develop a relationship matrix between WHATS AND HOWS
Constructing the house of quality:
Step1: List customer requirements
Step2: List technical descriptors
Step3: Develop a relationship matrix between HOWS
Step4: competitive assessments
Step5: Develop prioritized customer requirements
Step6: Develop prioritized technical descriptors

QUALITY FUNCTION DEVELOPMENT PROCESS:

Phase 1: product planning

Step1: list customer requirements
Step2: List technical descriptors
Step3: Develop a relationship between WHATS AND HOWS
Step4: Develop a interrelationship matrix between HOWS
Step5: Do competitive assessments
Step6: Develop prioritized customer requirements
Step7: Develop prioritized technical descriptors.

Phase 2: part development

Step8: Deploy QFD process down to sub-components level both in terms of requirements and
characteristics.
Step9: Deploy the component deployment chart. Relate the critical sub-component control characteristics.

Phase 3: process planning

Step10: Develop the relationship between the critical characteristics and process used to create the
characteristics
Step11: Develop the control plan relating critical control to critical processes.

Phase 4: production planning

Step 12: Tabulate operating instructions from process requirements
Step13: develop prototype and do testing
Step14: Launch the final product to the market.
 TAGUCHI’S QUALITY LOSS FUNCTION.

Taguchi’s methods are statistical methods developed largely by Genichi Taguchi to improve the
quality of manufactured goods

Taguchi methods are controversial among many convention western statisticians.

Taguchi’s principle contributions to statistics are:

1. Taguchi loss function;

2. the philosophy of off-line quality control; and
3. Innovations in the design of experiments.
Taguchi loss function:
Taguchi defines quality as “the loss imparted by the product to society from the time the product is
shipped”.

This loss includes costs to operate, failure to function, maintenance and repair costs, customer
dissatisfaction injuries caused by poor design and similar costs.
 Defective products/ parts that are detected repaired reworked or scrapped before shipment are not
considered part of this loss.

The essence of the loss function concept is that whenever a product deviates from its target
performance it generates a loss to society.

This loss is minimum when performance is right on target, but it grows gradually as one deviates
from the target.

Therefore the loss function philosophy says that for a manufacturer, the best strategy is to produce
products as close to the target as possible, rather than aiming at “being”

LOSS FUNCTION:

Taguchi has defined quality as the loss imparted to society from the time a product is shipped.
Societal losses include failure to meet customer requirements, failure to meet idea performance, and
harmful side effects. Many practitioners have included the losses due to production such as raw material
energy and labor consumed on unusable products or toxic by-products.
 TOTAL PRODUCTIVE MAINTENANCE

TPM PHILOSOPHY – CONCEPT OF TPM : Total Productive Maintenance (TPM) is an extension of

the Total Quality Management (TQM) philosophy to the maintenance function.

OBJECTIVES OF TPM : 1. To maintain and improve equipment capacity. 2. To maintain equipment

for life. 3. To use support from all areas of the operation. 4. To encourage input from all employees. 5. To
use teams for continuous improvement.

TPM has the following steps:

1. Management should learn the new philosophy of TPM.
2. Management should promote the new philosophy of TPM.
3. Training should be funded and developed for everyone in the organization.
4. Areas of needed improvement should be identified. Loss measurements to identify improvement needs
are  Down time losses  Reduced speed losses  Poor quality losses
5. Performance goals should be formulated.
6. An implementation plan should be developed.
7. Autonomous worth groups should be established

What is Total Productive Maintenance?

Total Productive Maintenance (TPM) is a maintenance program concept. Philosophically, TPM resembles
Total Quality Management (TQM) in several aspects, such as (1)total commitment to the program by upper
level management is required, (2) employees must be empowered to initiate corrective action, and (3) a
long range outlook must be accepted as TPM may take a year or more to implement and is an on-going
process. Changes in employee mind-set toward their job responsibilities must take place as well.
TPM brings maintenance into focus as a necessary and vitally important part of the business. It is no longer
regarded as a non-profit activity. Down time for maintenance is scheduled as a part of the manufacturing
day and, in some cases, as an integral part of the manufacturing process. It is no longer simply squeezed in
whenever there is a break in material flow. The goal is to hold emergency and
unscheduled maintenance to a minimum.
II. When and where did TPM originate?
TPM evolved from TQM, which evolved as a direct result of Dr. W. Edwards Deming's influence on
Japanese industry. Dr. Deming began his work in Japan shortly after World War II. As a statistician, Dr.
Deming initially began to show the Japanese how to use statistical analysis in manufacturing and how to
use the resulting data to control quality during manufacturing. The initial statistical procedures and the
resulting quality control concepts fueled by the Japanese work ethic soon became a way of life for Japanese
industry. This new manufacturing concept eventually became knows as Total Quality Management or
TQM.
When the problems of plant maintenance were examined as a part of the TQM program, some of the general
concepts did not seem to fit or work well in the maintenance environment. Preventative maintenance (PM)
procedures had been in place for some time and PM was practiced in most plants. Using PM techniques,
maintenance schedules designed to keep machines operational were developed. However, this technique
often resulted in machines being over-serviced in an attempt to improve production. The thought was often
"if a little oil is good, a lot should be better." Manufacturer's maintenance schedules had to be followed to
the letter with little thought as to the realistic requirements of the machine. There was little or no
involvement of the machine operator in the maintenance program and maintenance personnel had little
training beyond what was contained in often inadequate maintenance manuals.
The need to go further than just scheduling maintenance in accordance with manufacturer's
recommendations as a method of improving productivity and product quality was quickly recognized by
those companies who were committed to the TQM programs. To solve this problem and still adhere to the
TQM concepts, modifications were made to the original TQM concepts. These modifications elevated
maintenance to the status of being an integral part of the overall quality program.
The origin of the term "Total Productive Maintenance" is disputed. Some say that it was first coined by
American manufacturers over forty years ago. Others contribute its origin to a maintenance program used
in the late 1960's by Nippondenso, a Japanese manufacturer of automotive electrical parts. Seiichi
Nakajima, an officer with the Institute of Plant Maintenance in Japan is credited with defining the concepts
of TPM and seeing it implemented in hundreds of plants in Japan.
Books and articles on TPM by Mr. Nakajima and other Japanese as well as American authors began
appearing in the late 1980's. The first widely attended TPM conference held in the United States occurred
in 1990. Today, several consulting companies routinely offer TPM conferences as well as provide
consulting and coordination services for companies wishing to start a TPM program in their plants.
III. Implementation of TPM
To begin applying TPM concepts to plant maintenance activities, the entire work force must first be
convinced that upper level management is committed to the program. The first step in this effort is to either
hire or appoint a TPM coordinator. It is the responsibility of the coordinator to sell the TPM concepts to the
work force through an educational program. To do a thorough job of educating and convincing the work
force that TPM is just not another "program of the month," will take time, perhaps a year or more.
Once the coordinator is convinced that the work force is sold on the TPM program and that they understand
it and its implications, the first study and action teams are formed. These teams are usually made up of
people who directly have an impact on the problem being addressed. Operators, maintenance personnel,
shift supervisors, schedulers, and upper management might all be included on a team. Each person becomes
a "stakeholder" in the process and is encouraged to do his or her best to contribute to the success of the
team effort. Usually, the TPM coordinator heads the teams until others become familiar with the process
and natural team leaders emerge.
TPM Responsibilities Training-Coaching-Consulting
Total Productive Maintenance action teams are charged with the responsibility of pinpointing problem
areas, detailing a course of corrective action, and initiating the corrective process. Recognizing problems
and initiating solutions may not come easily for some team members. They will not have had experiences
in other plants where they had opportunities to see how things could be done differently. In well run TPM
programs, team members often visit cooperating plants to observe and compare TPM methods, techniques,
and to observe work in progress. This comparative process is part of an overall measurement technique
called "benchmarking" and is one of the greatest assets of the TPM program.
TPM teams are encouraged to start on small problems and keep meticulous records of their progress.
Successful completion of the team's initial work is always recognized by management. Publicity of the
program and its results are one of the secrets of making the program a success. Once the teams are familiar
with the TPM process and have experienced success with a small problem, problems of ever increasing
importance and complexity are addressed.
As an example, in one manufacturing plant, one punch press was selected as a problem area. The machine
was studied and evaluated in extreme detail by the team. Production over an extended period of time was
used to establish a record of productive time versus nonproductive time. Some team members visited a
plant several states away which had a similar press but which was operating much more efficiently. This
 visit gave them ideas on how their situation could be improved. A course of action to bring the machine
into a "world class" manufacturing condition was soon designed and work was initiated. The work involved
taking the machine out of service for cleaning, painting, adjustment, and replacement of worn parts, belts,
hoses, etc. As a part of this process, training in operation and maintenance of the machine was reviewed. A
daily check list of maintenance duties to be performed by the operator was developed. A factory
representative was called in to assist in some phases of the process. Total Productive Maintenance was just
the right fit for the situation
After success has been demonstrated on one machine and records began to show how much the process had
improved production, another machine was selected, then another, until the entire production area had been
brought into a "world class" condition and is producing at a significantly higher rate.
Note that in the example above, the operator was required to take an active part in the maintenance of the
machine. This is one of the basic innovations of TPM. The attitude of "I just operate it!" is no longer
acceptable. Routine daily maintenance checks, minor adjustments, lubrication, and minor part change out
become the responsibility of the operator. Extensive overhauls and major breakdowns are handled by plant
maintenance personnel with the operator assisting. Even if outside maintenance or factory experts have to
be called in, the equipment operator must play a significant part in the repair process. Training for TPM
coordinators is available from several sources. Most of the major professional organizations associated with
manufacturing as well as private consulting and educational groups have information available on TPM
implementation. The Society of Manufacturing Engineers (SME) and Productivity Press are two examples.
Both offer tapes, books, and other educational material that tell the story of TPM. Productivity Press
conducts frequent seminars in most major cities around the United States. They also sponsor plant tours for
benchmarking and training purposes.
IV. The Results of Total Productive Maintenance
Ford, Eastman Kodak, Dana Corp., Allen Bradley, Harley Davidson; these are just a few of the companies that have
implemented TPM successfully. All report an increase in productivity using TPM.
Kodak reported that a $5 million investment resulted in a $16 million increase in profits which could be traced and
directly contributed to implementing a TPM program. One appliance manufacturer reported the time required for die
changes on a forming press went from several hours down to twenty minutes!
This is the same as having two or three additional million dollar machines available for use on a daily basis without
having to buy or lease them. Texas Instruments reported increased production figures of up to 80% in some areas.
Almost all the above named companies reported 50% or greater reduction in down time, reduced spare parts inventory,
and increased on-time deliveries. The need for out-sourcing part or all of a product line was greatly reduced in many
cases.
V. Conclusion
Today, with competition in industry at an all time high, Total Productive Maintenance may be the only
thing that stands between success and total failure for some companies. It has been proven to be a program
that works. It can be adapted to work not only in industrial plants, but in construction, building maintenance,
transportation, and in a variety of other situations. Employees must be educated and convinced that TPM
is not just another "program of the month" and that management is totally committed to the program and
the extended time frame necessary for full implementation. If everyone involved in a TPM program does
his or her part, an unusually high rate of return compared to resources invested may be expected.

Performance measure

Introduction Performance measurement is a fundamental building block of TQM and a total

quality organisation. Historically, organisations have always measured performance in some way through
the financial performance, be this success by profit or failure through liquidation. However, traditional
performance measures, based on cost accounting information, provide little to support organisations on
their quality journey, because they do not map process performance and improvements seen by the
customer. In a successful total quality organisation, performance will be measured by the improvements
seen by the customer as well as by the results delivered to other stakeholders, such as the shareholders.

A simple performance measurement framework is outlined, which includes more than just
measuring, but also defining and understanding metrics, collecting and analysing data, then prioritising and
taking improvement actions. A description of the balanced scorecard approach is also covered.

Why measure performance? ‘When you can measure what you are speaking about and express it
in numbers, you know something about it’. Kelvin ‘You cannot manage what you cannot measure’. Anon
These are two often-quoted statements that demonstrate why measurement is important. Yet it is surprising
that organisations find the area of measurement so difficult to manage. In the cycle of never-ending
improvement, performance measurement plays an important role in: • Identifying and tracking progress
against organisational goals • Identifying opportunities for improvement • Comparing performance against
both internal and external standards Reviewing the performance of an organisation is also an important step
when formulating the direction of the strategic activities. It is important to know where the strengths and
weaknesses of the organisation lie, and as part of the ‘Plan –Do – Check – Act’ cycle, measurement plays
a key role in quality and productivity improvement activities. The main reasons it is needed are:
To ensure customer requirements have been met
• To be able to set sensible objectives and comply with them
• To provide standards for establishing comparisons
• To provide visibility and a “scoreboard” for people to monitor their own performance level
• To highlight quality problems and determine areas for priority attention
• To provide feedback for driving the improvement effort

It is also important to understand the impact of TQM on improvements in business performance,

on sustaining current performance and reducing any possible decline in performance.

A simple performance measurement framework A good performance measurement framework will

focus on the customer and measure the right things.
Performance measures must be:
Meaningful, unambiguous and widely understood
Owned and managed by the teams within the organisation
Based on a high level of data integrity
Such that data collection is embedded within the normal procedures
Able to drive improvement
Linked to critical goals and key drivers of the organisation

There are four key steps in a performance measurement framework - the strategic objectives of the
organisation are converted into desired standards of performance, metrics are developed to compare the
desired performance with the actual achieved standards, gaps are identified, and improvement actions
initiated.
These steps are continuously implemented and reviewed: