63 ERP and Total Quality Management ERP Demystified

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63. ERP and Total Quality Management ERP Demystified (Second Edition). Copyright 2008, Alexis Leon.

63. ERP and Total Quality Management ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved. ERP Demystified (Second Edition) By Alexis Leon (2008)

Total Quality Management (TQM) • Total Quality Management (TQM) is a comprehensive and structured

Total Quality Management (TQM) • Total Quality Management (TQM) is a comprehensive and structured approach to organizational management that seeks to improve the quality of products and services through ongoing refinements in response to continuous feedback. • TQM requirements may be defined separately for a particular organization or may be in adherence to established standards, such as the International Organization for Standardization's ISO 9000 series. • TQM can be applied to any type of organization; it originated in the manufacturing sector and has since been adapted for use in almost every type of organization imaginable, including schools, highway maintenance, hotel management, and churches. • As a current focus of e-business, TQM is based on quality management from the customer's point of view. • TQM processes are divided into four sequential categories: plan, do, check, and act (the PDCA cycle). 1. In the planning phase, people define the problem to be addressed, collect relevant data, and ascertain the problem's root cause 2. In the doing phase, people develop and implement a solution, and decide upon a measurement to gauge its effectiveness 3. In the checking phase, people confirm the results through before-and-after data comparison 4. In the acting phase, people document their results, inform others about process changes, and make recommendations for the problem to be addressed in the next PDCA cycle. ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.

Characteristic of TQM • The important characteristics of TQM are: 1. Customer-driven quality -

Characteristic of TQM • The important characteristics of TQM are: 1. Customer-driven quality - TQM has a customer-first orientation. The customer, not internal activities and constraints, comes first. Customer satisfaction is seen as the company's highest priority. 2. Top management leadership and commitment - TQM is a way of life for a company. It has to be introduced and led by top management. 3. Continuous improvement - Continuous improvement of all operations and activities is at the heart of TQM. Continuous improvement of the quality of the product is seen as the only way to maintain a high level of customer satisfaction. 4. Fast response – The customer-driven and process-oriented product development results in simplicity and efficiency of the processes and will help in improving the response times. 5. Actions based on facts - The statistical analysis of engineering and manufacturing facts is an important part of TQM. Facts and analysis provide the basis for planning, review and performance tracking, improvement of operations, and comparison of performance with competitors. 6. Employee participation and TQM culture - A successful TQM environment requires a committed and well-trained work force that participates fully in quality improvement activities. ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.

ERP and TQM • Both ERP and TQM share similar goals—customer satisfaction, productivity improvement,

ERP and TQM • Both ERP and TQM share similar goals—customer satisfaction, productivity improvement, increased competitiveness, waste reduction, effort duplication and so on. • ERP systems will help in achieving these goals when used in conjunction with TQM. • Effective use of TQM creates better performing ERP systems. • TQM brings problem solving techniques and continuous improvement opportunities for all ERP systems. • The effective use of TQM helps companies obtain the maximum return on investment from expensive investments. • Organizations applying or targeting total quality management (TQM) in their businesses should implement enterprise resource planning (ERP) systems for better results. • TQM is a management strategy aimed at embedding awareness of quality in all organizational processes. • TQM provides an umbrella under which everyone in the organization can strive and create customer satisfaction. • For those businesses that have not yet started TQM and ERP implementations, starting both simultaneously and treating these as integrated projects will allow organizations to attain the best returns. ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.

Review Questions 1. What is TQM? Explain. 2. What are the characteristics of TQM?

Review Questions 1. What is TQM? Explain. 2. What are the characteristics of TQM? 3. Explain how TQM and ERP complement each other. 4. What are the common goals of ERP and TQM? ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.