Quality Management

A business philosophy that upholds the idea that long-term business success

Elliot Meade

Reviewed by

Elliot Meade

Expertise: Private Equity | Investment Banking


September 15, 2022

At its core, Quality Management is a business philosophy that upholds the idea that long-term business success comes from customer satisfaction and loyalty. QM requires all company stakeholders to work and improve the company's processes, products, services, and culture. 

Quality Management

Although it may seem like an intuitive process, it is a revolutionary idea. The 1920s saw an increase in the use of statistics and statistical theory in business, and the first known control chart was created in the 1920s.

People began to rely on this theory. Statistical theory eventually gave rise to the Statistical Process Theory (SPC) method. However, it was not successfully deployed in a commercial environment until the 1950s. 

It was during this time that Japan faced a difficult industrial economic environment. Its citizens are said to be largely illiterate, and its products are known to be of poor quality. Key companies in Japan saw these shortcomings and sought to change. 

Drawing on the pioneers of statistical thinking, companies like Toyota have incorporated the ideas of quality assurance and quality control into their production processes. 

By the late 1960s, Japan had completely reversed history and became one of the most efficient exporters, with some of its most admired products. Effective quality assurance has resulted in better products that can be produced at lower prices.

Principles of Quality Management

There are several principles applied by the International Standard for Quality Management. These principles are employed by top management to guide the organization's processes in the direction of performance improvement. 

1. Customer Orientation

The first goal of any organization should be to meet and exceed customer expectations and needs. When a corporation can understand and meet the needs of current and future customers, it results in customer loyalty, which successively increases revenue.  

The corporation can also identify and satisfy new customer opportunities. When business processes are more efficient, quality is at its peak, and more customers are satisfied.

2. Directing

Good leadership results in the success of an organization. Excellent leadership establishes unity and purpose between employees and shareholders. 

Create a thriving corporate culture that gives an internal environment that allows employees to reach their full potential and actively participate in the achievement of company goals. 

Leaders must involve employees in setting clear organizational goals and objectives. This motivates employees, which may significantly improve their productivity and loyalty. 

3. Engagement of People

Employee engagement is another fundamental. Management engages people to make and deliver value, whether full-time, part-time, outsourced, or in-house. A corporation should encourage employees to continuously improve their skills and maintain consistency. 

This principle also involves empowering employees, helping them make decisions, and recognizing their achievements. 

When people are appreciated, they work to their best potential because that builds their confidence and motivation. When employees are fully engaged, they feel empowered and in charge of their actions.  


4. Process approach

The performance of a corporation is very important according to the principle of the process approach. The principle of the approach emphasizes the effectiveness and efficiency of organizational processes. 

The approach involves understanding that good processes cause improved consistency, faster operations, reduced costs, elimination of waste, and continuous improvement. 

A corporation is improved when leaders can manage and control an organization's inputs and outputs and the processes used to produce the outputs.   

5. Continuous improvement

Every organization should set itself a goal to actively participate in the continuous improvement process. Continuously improving businesses enjoy improved performance, organizational agility, and increased ability to capture new opportunities. 

Companies must be ready to continuously create new processes and adapt to new market situations. 

6. Make decisions supported by evidence.

Businesses should adopt a fact-based approach to decision-making. Companies that make decisions supported by verified and analyzed data have a better understanding of the market. 

They're able to perform tasks that yield desired results and justify their previous decisions. 

Fact-based decision-making is required to help understand the cause-and-effect relationships of different events and to explain potential unintended consequences and consequences.


7. Relationship management

Relationship management is about creating interdependent relationships with suppliers and retailers. Various interested parties can have an impression on a company's operations. 

The organization must manage the supply chain process well and leverage relationships between the organization and its suppliers to optimize their impact on business performance. 

When a corporation manages its relationships with its stakeholders well, it's more likely to achieve long-term cooperation and business success.

Why is it necessary?

Quality Assurance features several advantages that have impressed many organizations and analysts around the world. Some of them are listed below.

1. Customer satisfaction

One of the main goals of Quality Management is to provide the best possible experience for customers, who are always at the guts of the organization. 

When a business uses QM, it can anticipate customer complaints and desires, address them on a basis, and improve its products/services.

2. Employee contract

Attracting and retaining senior employees is one of the most important challenges facing a company. With QM, it can engage and motivate employees and help them reach their full potential. 


3. Increase market share

Market share is increased when a corporation has a good reputation in the industry.  

Because it improves its products and services, its revenue and market share also are expected to increase in the long term, thereby creating a sustainable competitive advantage.

4. Productivity and lesser wastage of resources 

It helps a corporation significantly reduce wasted resources. Moreover, employees' work productivity also increases plenty as they use their time more efficiently.

5. Process improvement

QM is all about improving the processes that a business follows. This will include anything from customer service to production. For instance, to avoid product defects, manufacturing processes must be reviewed and improved if necessary. 

Internal operations are often improved by establishing processes that have proven to be successful in other industries.

Goals and Objectives 

Quality control and management systems are all about one thing: quality. On the other hand, ensuring the quality of your products and services has a positive ripple effect by increasing customer satisfaction and keeping them coming back for more.

Your company can identify problems and help improve the production quality to better meet customer needs with a well-designed quality control and management system.

The goals and objectives that a company sets for a quality management system are the same as any other: they must be clear, achievable, and measurable. A clear objective meets the specific objective of the company's strategic plan. 

Storage Area

For example, if a company's goal is to achieve ISO 9001 (ASQ/ANSI/ISO 9001:2015) certification, the goal should define all the steps required to achieve the criteria for this certification. 

As part of the quality assurance process, employees must be given clear instructions on what they should do to meet or exceed quality standards consistently. 

Ideally, each task should have measurable performance metrics so the business can measure progress and quickly see when certain goals have been met. 

Improve the quality of products and services 

One of the main goals of any quality management system is to improve the quality of the products or services provided by your company. 

Products & Services

The quality of such a system has three components: high accuracy, compliance with applicable standards, and high customer satisfaction. The goal of the system is to measure each component and achieve improvements. 

Product testing can measure accuracy and conformance to standards, while functional testing can show whether a product is meeting customer expectations. Test results provide information on problems and indicate areas for improvement. 

The quality assurance system details the skills, training, and qualifications required to perform specific tasks. When problems arise regardless of employee competence, additional training may be required. 

When employees fall short of the company's quality goals, test results often point to the source of the problems and the type of training that will improve performance. 

If a company can measure the quality of its products and foster a quality-centric culture, employees will be motivated to complete the appropriate training so that they can achieve their goals and objectives, company quality objectives.

Quality management tools 

This tools help employees identify common recurring problems and their root causes. This tools play a vital role in improving the quality of products and services. 

With the help of quality management tools, employees can easily collect and organize data, which will further help in analyzing the data and ultimately provide solutions.  

Quality control tools make it easier to understand data and allow employees to identify processes for correcting defects and finding solutions to specific problems. 

Here are the quality management tools: 

  • Checklists 

Checklists are useful to easily collect data and information. Checklists also help employees identify issues that prevent an organization from delivering quality products that meet and exceed customer expectations. 

A checklist is nothing more than a long list of identified problems that need to be addressed. When you find a solution to a particular problem, check it out immediately. 

Employees consult checklists to understand whether changes introduced into the system lead to lasting improvement in the organization. 

  • Pareto Charts 

Credit for the Pareto chart goes to Italian economist Vilfredo Pareto. Pareto charts help employees identify problems, prioritize them, and also determine how often they occur in the system. 

Pareto charts, often represented by both bars and a line chart, identify the most common causes of problems and the most common failures. 

The Pareto chart captures the reasons that lead to the maximum customer complaints and ultimately allows employees to form tailored strategies to correct the most common errors. 

  • Cause and Effect Diagram 

Also called the "Fishbone Diagram" (due to its shape being similar to the side view of a fish skeleton) and Ishikawa diagram after its creator Kaoru Ishikawa, the causal diagram records the cause of a particular problem. 

Cause-and-effect diagrams play an important role in identifying the root cause of a particular problem as well as the potential factors that give rise to a general problem in the workplace. 

  • Graph 

A graph, introduced by Karl Pearson, is nothing more than a graphical representation showing the magnitude of a particular problem. Diagrams help identify the causes of problems in a system by the shape and width of the distribution. 

A scatterplot is a quality review tool that helps analyze the relationship between two variables. 

In a scatter plot, data are represented as points, where each point represents a value on the horizontal and vertical axes. The scatter plot shows multiple points showing the relationship between two variables. 

  • Charts 

Charts are the simplest and most commonly used quality assurance tool. The charts help determine whether processes and systems are in line with expectations and, if not, also record deviations from standard specifications.

Quality management techniques 

This techniques involve controlling activities and planning to ensure that a service or product is fit for its purpose. The quality of the product makes the company's reputation, and it is also the attraction of the company's customers. 

Now, if we are discussing quality, there are parameters designed by the respective organization. On these parameters or specifications, the product is made. Settings may vary between organizations. 

Quality Assurance

Quality is important to the customer and the company because the customer wants quality as he spends money on it and wants a good product that is worth his money. 

On the other hand, organizations want to get a good reputation and a solid customer base which would only be possible if their products are of the highest quality. 

We will now discuss quality techniques in more detail. 

1. Total quality management 

Total Quality Management (TQM) is an ancient quality assurance technique in which focus is placed on every stage of production to ensure quality is maintained from the beginning. 

This technique is widely used in organizations because it is economical and easy to implement. This technique is also customer-oriented because in doing this technique, the needs of the customer take precedence. 

The birth of this technique dates back to the Japanese period. It also saves company resources, and productivity is also high. This technique has prevailed mainly in the field of information technology, etc. 

2. Six Sigma 

Six sigma is a very old method and is widely used in industries such as mechanical and electrical engineering. 


It is a technique whose focus is on improving the quality of a product by eliminating or eliminating defects that constitute an obstacle to quality. Sigma is the Greek name for the standard deviation method in mathematics. 

To understand six sigma, one must understand the value of sigma as its basic concept is based on this. Every engineer working in the industrial unit must know the six sigma method as all work is done with this particular technique. 

3. Top-down and bottom-up approaches 

Top-down and bottom-up approaches are very effective approaches in which orders are passed from senior officials to subordinates, and information is also passed from subordinates to higher officials.

If we talk about the top-down approach in this technique, higher-level officials will get reports from lower-level officials on the work and quality measures. 

But on the other hand, the bottom-up approach essentially depends on sharing information from subordinates to superiors about the work done and the quality parameters that the workers follow. 

The main goal of this method is to maintain the quality of the product by cooperating with each level to get a good product. 

4. ISO 

It is the "International Organization for Standardization," an organization that certifies the quality of products for different types of companies. It is based in Geneva, Switzerland. 

Every facility in the world, whether it's a business, an industry, or other businesses, must obtain ISO quality assurance certification. This ISO certification also acts as an assurance to the customer that the product is authentic and safe to consume. 

The ISO label is on each product. There are very rigorous procedures that must be followed to obtain ISO-approved status. So this ISO label is also a sign of good quality, and every industry is running to get this mark to make their products authentic.


5. Quality cost 

Quality cost is the difference between the cost of production, including the cost of production, sales, and other costs, and the cost incurred without any defects in the manufacturing process. 

The main idea behind the cost of quality is to make the product cheaper and free from defects. The manager focuses on reducing costs and improving quality to benefit the customer and also the business. 

Quality costing is a new concept and is rarely used for quality control as a highly skilled person is needed to perform the tables and counting. But multinational companies use this method on a large scale. 

6. Kaizen 

Kaizen is an ancient Japanese technique for maintaining product quality; this particular technique focuses mainly on each level of the process and includes all types of workers. 

This program is impactful on every level, resulting in a massive improvement of the entire product. 

The lower ranks of employees are targeted because they are the ones who work from the ground up, and the management provides them with all kinds of facilities for them to work with enthusiasm and materials used in the product. Products are carefully selected so that there is no loss in quality.

Examples of quality management

The automaker Toyota is an example of TQM. The adoption of TQM and kaizen at Toyota has enhanced the standard of products and work at all levels of the organization. Toyota adopted a related practice referred to as Statistical Quality Control (SQC) in 1949. 

In 1951, Toyota introduced the Innovative Idea Suggestion System, which supported a user recommendation system at Ford.

In 1965, Toyota received the Deming Application Award for major advances in quality improvement. In 1994, "The Toyota Group CEO TQM Training Course" was established, providing TQM training for brand spanking new executives. Toyota's TQM initiatives still this day. 

In 2011, Toyota announced that over 40 million proposals (to date) had been generated by the Innovative Idea Suggestion System.


Another example of TQM is Tata Steel, a company based in India and a subsidiary of Tata Group. Tata Steel adopted TQM in the 1980s. The corporate was awarded the 2008 Deming Application Award. 

Tata Steel used the TQM methodology to realize insights into customers. They seek to make sure value creation in a system that includes customers and suppliers. In 2008, Tata Steel established the Performance Improvement Committee (PIC) to market continuous performance improvement. 

Performance Improvement (PI) groups are created for Ironing, Steelmaking, Flat Rolling, Long Rolling, Maintenance, and more. As a part of its 2008-2009 annual report, Tata Steel reported that its TQM initiatives resulted in a net impact of up to $150 million on its business.

Key takeaways

  • It includes the supervision of all activities and tasks necessary to maintain the desired level of excellence.

  • Quality control and management in companies are essential to ensure the consistency of a company's processes as well as its products and services. 

  • QM includes defining the quality policy, planning and implementing quality planning and assurance, and quality control and improvement.

  • TQM requires all company stakeholders to work together to improve the company's processes, products, services, and culture. 

  • Customer orientation, employee engagement, integrated systems, a process-centric approach, and fact-based decision-making are some of the eight principles of TQM. Quality assurance is a shared responsibility affecting all aspects of the business or organization.

  • Ensuring customer loyalty, increasing productivity, improving relationships with stakeholders, improving organizational culture, etc., are some benefits of adopting and implementing TQM's work. 

  • The techniques we have discussed in this article are part of the total number of techniques for quality improvement. The techniques can vary from company to company, and companies should focus on tailoring the right technique.

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Researched and authored by Kavya Sharma | Linkedin

Reviewed and Edited by Aditya Salunke I LinkedIn

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