Magazine article CMA - the Management Accounting Magazine

Total Quality Management: Customer Satisfaction Guaranteed?

Magazine article CMA - the Management Accounting Magazine

Total Quality Management: Customer Satisfaction Guaranteed?

Article excerpt

Research with some of the most successful companies worldwide shows that competitive success belongs only to organizations with a management system that focuses all their resources on delighting customers. Total Quality Management (TQM) is that management strategy. Widely adopted by many organizations in Japan since the 1950s, TQM is proving a necessity for surviving more intense global competition.

Quality is hardly a new concept. But TQM goes beyond quality initiatives that have been isolated (practised only in parts of the organization) or piecemeal (restricted to inspection or quality control methods). The strategy requires a company to align its structures and processes-- product or service design, marketing and sales, customer relations, after-sales service toward customer satisfaction. Every contributor throughout the process leading up to the final customer-- suppliers, dealers, distributors--also needs to focus on that goal.

In 1990, the Conference Board of Canada and Industry, Science and Technology Canada sponsored a seven-month-long study of how some of the world's most successful companies are implementing total quality. The participants included senior Canadian executives from small entrepreneurial companies, including Montreal's IAF Biochem International Inc. and Nexus Engineering Corp. of Burnaby, B.C.--to multinationals-- Northern Telecom Canada Ltd. of Mississauga, Ont., and Toronto's Xerox Canada Inc. The group visited 14 companies in the United States, Germany, England, and Japan that had been selected for outstanding achievements in Total Quality Management. Their goal: to bring back lessons that would help other Canadian organizations meet the competitive challenge. (For examples of specific benefits derived by companies from TQM initiatives, see the exhibit on the page 18.)

One thing became immediately clear: No one answer or set of instructions exists for implementing this management system makeover. Rather, TQM is a corporate state of mind that succeeds only when the organization is willing to change, to discard outdated management and work methods if necessary, and to make decisions based on the primary goal of satisfying customers' needs. At the same time, organizations agree several basic management principles must co-exist: maximizing employee potential, improving continuously, integrating effort, and managing by fact.

Setting the goal

By providing goods or services, organizations exist to address human concerns. Their continued existence--and success-- depends upon how well they meet customer expectations. Quality must be defined not by the supplier, but by the customer. This is a deceptively simple concept. Many companies chase targets and measures determined internally, only to have to do an about-face after consulting their customers.

Even "satisfying customers' requirements" may not be good enough to keep them coming back. "Customer delight," or going beyond the stated requirements in order to build and maintain client loyalty, has become a new target for many leaders.

So how to pinpoint what customers want? Organizations have developed sophisticated systems, ranging from extensive written and telephone surveys to innovative personal contacts to more enterprising ideas. Matsushita Electric Industrial Co. Ltd., for example, built replicas of a typical Japanese home in one of its plants. Homemakers hired on a one-year contract test the company's products and those of its competitors to see them through customers' eyes. Engineers, ergonomists and other company experts observe how appliances are used and study the homemakers' assessments.

After identifying needs, organizations must place their resources where they will deliver the most customer satisfaction. Federal Express Corp., based in Memphis, Tennessee, took a step-by-step approach, investing scarce resources in turn into projects that would have the greatest customer impact. …

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