Quality Management & TQM: Tools, Models & Applications

TAKEAWAYS:

• TQM is a customer-centric, continuous improvement philosophy that integrates quality into all business processes (not just inspection).
• Quality costs include prevention, appraisal, internal failure, and external failure—companies like NTC save millions by reducing defects early.
• Six Sigma uses DMAIC (Define-Measure-Analyze-Improve-Control) to achieve 3.4 defects per million (used by Pathao for ride reliability).
• 7 QC tools (e.g., Pareto charts, Fishbone diagrams) help identify root causes—Daraz uses them to reduce order errors.
• ISO 9001 is a global standard for quality management systems (adopted by Himalayan Java for consistent coffee quality).
• Benchmarking (comparing against best practices) helps companies like Nabil Bank improve loan processing speed.

1. Defining Quality & Quality Management

Quality is fitness for use—meeting or exceeding customer expectations. Quality Management (QM) ensures products/services consistently meet standards.

Dimensions of Quality (Garvin’s Model)

mindmap
  root((Quality Dimensions))
    Performance
    Features
    Reliability
    Conformance
    Durability
    Serviceability
    Aesthetics
    Perceived Quality

• Example: A Khalti payment app must have reliability (no crashes), conformance (correct transaction processing), and serviceability (quick customer support).

Costs of Quality (COQ)

Worked Example: If NTC spends Rs. 5M/month on call-center training (prevention) but saves Rs. 20M/month by reducing complaints, the ROI = (20M - 5M)/5M = 300%. Visual:

pie
  title Cost of Quality Breakdown (NTC Example)
  "Prevention (10%)" : 10
  "Appraisal (20%)" : 20
  "Internal Failure (30%)" : 30
  "External Failure (40%)" : 40

2. Total Quality Management (TQM)

TQM is a holistic approach where every employee contributes to quality improvement.

Key Principles of TQM

flowchart TD
  A["Customer Focus"] --> B["Employee Involvement"]
  B --> C["Process-Centered"]
  C --> D["Continuous Improvement"]
  D --> E["Fact-Based Decisions"]
  E --> F["Leadership Commitment"]
  F --> A

• Example: Himalayan Java trains baristas to consistently brew coffee (process-centered) and listens to customer feedback (customer focus).

TQM Tools & Techniques

Worked Example (PDCA Cycle for Daraz):

1. Plan: Daraz identifies high return rates (Problem).
2. Do: Tests better packaging for fragile items.
3. Check: Tracks returns—drop by 15%.
4. Act: Implements standardized packaging globally.

3. Six Sigma & DMAIC

Six Sigma aims for near-perfection (99.99966% accuracy) using DMAIC:

flowchart LR
  A["Define"] --> B["Measure"]
  B --> C["Analyze"]
  C --> D["Improve"]
  D --> E["Control"]

• Example: Google uses Six Sigma to reduce search engine errors (DMAIC applied to algorithm accuracy).

Worked Example (NTC Call Center):

• Define: High customer complaints about slow responses.
• Measure: Average wait time = 5 minutes (target: <2 min).
• Analyze: Root cause = understaffed shifts.
• Improve: Hires 100 more agents, trains them.
• Control: Monthly audits ensure wait time stays below 2 min.

4. 7 Quality Control (QC) Tools

These tools help identify and solve quality issues:

Visual: Fishbone Diagram for Daraz Order Errors

flowchart TD
  A["Main Problem: High Order Errors"] --> B["Materials"]
  A --> C["Machines"]
  A --> D["Methods"]
  A --> E["Manpower"]
  A --> F["Measurement"]
  A --> G["Environment"]
  B --> B1["Wrong Inventory"]
  C --> C1["Software Bugs"]
  D --> D1["Poor Packaging"]
  E --> E1["Untrained Staff"]
  F --> F1["Incorrect Scanning"]
  G --> G1["Power Outages"]

5. ISO 9001: Quality Management System (QMS)

ISO 9001 is a global standard for QMS, ensuring consistent quality.

Key Requirements of ISO 9001

mindmap
  root((ISO 9001 Requirements))
    Leadership Commitment
    Customer Focus
    Process Approach
    Improvement
    Evidence-Based Decision Making
    Relationship Management

• Example: Himalayan Java gets ISO 9001 to ensure consistent coffee quality across all outlets.

Worked Example (Nabil Bank):

1. Document processes (e.g., loan approval workflow).
2. Train staff on new procedures.
3. Audit monthly to check compliance.
4. Certify after 2 years of consistent performance.

6. Benchmarking & Best Practices

Benchmarking compares your processes against industry leaders.

Worked Example (Nepal Rastra Bank):

• Problem: Slow forex transaction processing.
• Benchmark: Singapore’s DBS Bank processes in <1 hour.
• Action: Automates 50% of workflow, reduces time to <30 min.

7. Quality in Service Industries (Nepal Examples)

Service quality is measured by SERVQUAL (5 dimensions):

mindmap
  root((SERVQUAL Dimensions))
    Tangibles
    Reliability
    Responsiveness
    Assurance
    Empathy

• Example (Pathao):
  • Reliability: Driver arrives on time (95% success rate).
  • Responsiveness: Customer support replies in <10 min.
  • Empathy: Drivers help with luggage.

Worked Example (Khalti):

• Problem: High fraud complaints.
• Solution:
  • Two-factor authentication (Reliability).
  • 24/7 customer support (Responsiveness).
  • Transparent fee structure (Assurance).

In the Real World

1. Nabil Bank – Loan Processing Quality

   • Uses Six Sigma to reduce loan approval delays from 15 days → 3 days.
   • Tool: Fishbone diagram to find root causes (e.g., missing documents, slow verification).
   • Impact: 30% more loans approved, higher customer satisfaction.

2. Daraz – Order Fulfillment Quality

   • Implements 5S methodology in warehouses to reduce picking errors by 40%.
   • Uses Pareto charts to focus on top 20% of order issues (e.g., wrong addresses, damaged goods).
   • Result: Faster deliveries, fewer returns.

3. NTC – Network Reliability

   • Applies PDCA cycle to improve call drop rates.
   • Benchmarking against Bhutan Telecom (lower drop rates).
   • Outcome: 20% fewer complaints in 6 months.

Exam Tip

1. Define Key Terms Clearly

   • Example:

     "TQM is a customer-focused, data-driven approach where all employees work to improve quality through continuous improvement and process optimization."

2. Compare Tools in Tables

   • Examiners love side-by-side comparisons (e.g., PDCA vs. DMAIC).

3. Use Real Examples

   • Always relate to Nepali companies (Nabil Bank, Daraz, NTC, Khalti).
   • Example answer for "How does Six Sigma help Pathao?":

     "Pathao uses DMAIC to reduce ride cancellations. By defining the problem (high no-shows), measuring driver availability, analyzing peak hours, improving incentives, and controlling with real-time tracking, they achieved 99.9% ride success rate."

4. Draw Diagrams in Exams

   • Fishbone, Pareto, or PDCA can earn extra marks if labeled correctly.

5. Link Theory to Nepal’s Context

   • Example:

     "Unlike Toyota’s lean manufacturing, Nepal’s SMEs struggle with TQM due to limited training and high employee turnover. However, Himalayan Java successfully implemented ISO 9001 by training baristas and standardizing coffee brewing."

Final Checklist for Full Marks: ✅ Define TQM, Six Sigma, ISO 9001. ✅ Compare at least two quality tools (e.g., PDCA vs. DMAIC). ✅ Apply to a Nepali company (Nabil Bank, Daraz, NTC). ✅ Draw one diagram (Fishbone, Pareto, or flowchart). ✅ Calculate cost of quality or ROI (if numerical question).