A PRESENTATION ON FOR THE SUBJECT:- COST AND MANAGEMENT ACCOUNTING
GROUP MEMBERS MMS1 – SEM II PARASHAR NAME ROLL NO
WHAT IS TQM?
TQM is an integrated organizational approach in delighting customers (both external and internal) by meeting their expectations on a continuous basis through everyone involved with the organizational working on continuous improvement in all products/processes along with proper problem solving methodology. “ TO DELIVER HIGHEST VALUE AT LOWEST COST” is the main objective of TQM
Significance of the term TQM
Total - The responsibility for achieving Quality rests with everyone a business no matter what their function. It recognises the necessity to develop processes across the business, that together lead to the reliable delivery of exact, agreed customer requirements. This will achieve the most competitive cost position and a higher return on investment.
Quality - The prime task of any business is to understand the needs of the customer, then deliver the product or service at the agreed time, place and price, on every occasion. This will retain current customers, assist in acquiring new ones and lead to a subsequent increase in market share.
Management - Top management lead the drive to achieve quality for customers, by communicating the business vision and values to all employees; ensuring the right business processes are in place; introducing and maintaining a continuous improvement culture.
Scope of TQM
TQM is the foundation for activities, which includes:
Commitment by senior management and all employees
Meeting customer requirements
Reducing development cycle times
Just In Time/ Flow Manufacturing
Reducing product and service costs
Systems to facilitate improvement
Employee involvement and empowerment
Recognition and celebration
Challenging quantified goals and benchmarking
Focus on processes / improvement plans
This shows that TQM must be practiced in all activities, by all personnel, in Manufacturing, Marketing, Engineering, R&D, Sales, Purchasing, HR, etc.
5 Principles of TQM
Produce quality work the first time.
Focus on the customer.
Have a strategic approach to improvement.
Encourage mutual respect and teamwork.
THE COMPANY IMPLEMENTATION OF TQM AT:
Rashtriya Ispat Nigam Limited (Vizag Steel Plant)
One of the leading public sector enterprises under the Ministry of Steel, Government of India
Located in the state of Andhra Pradesh.
Why TQM at RINL?
TQM was implemented in the company to achieve the objectives of:
Preparing the company's products and internal processes to global standards
Enhancing quality, productivity, and total performance of the organization
Enriching the quality of work life of its employees
How TQM was Implemented?
The journey of TQM in the company began on September 15, 1995 with the setting up of the TQM Cell.
To meet the quality planning requirements as well as to facilitate continuous improvement, the company has established, documented, implemented and maintained the Quality Management System (QMS) in accordance with the requirements of the International Standards.
In order to verify and determine the effective implementation and maintenance of the QMS, quality audits were carried out at regular intervals by the Internal Quality Auditors.
The company also implemented a number of TQM tools such as
Formation of Quality Improvement Projects (QIPs ),
Signing of MOUs
Employee involvement schemes
The company embarked upon both external and internal benchmarking for improving its production, commercial, and financial performance.
It benchmarked with British Steel Co., South Korea Steel Plant (POSCO)1 SAIL, and Tata Steel for reduction in the rejection rate, affrorestation, and improving manpower productivity respectively.
Annual improvement action plans were implemented involving techniques like Kaizen cycle time reduction for further improvement in delivery and technological process upgradation, leading to improvement in quality of products and enhanced customer focus.
Tangible benefits of implementing TQM
Increase in sales per year from Rs. 3263.66 cr to Rs. 7867.6 cr
Reduced manufacturing expenses from.
Rs. 3,94,706.6 cr to Rs. 3,46,158.86 cr
Reduced net loss incurred by the company from Rs. 6,97,525.90 cr to Rs. 4,00, 94.58 cr
Reduced the defective products from 5.76% to 1.2%
Accident rates reduced from 113 to 107 (both fatal and non-fatal)
Customer complaint rates from 0.27 to 0.13 (of total sales)
Increased productivity rate (tonnes per man year) from 176 to 194 from the pre-TQM to post-TQM period.
Intangible Benefits of Implementing TQM
Image of the organization has improved.
Reduction in inventory.
Shorter lead time in design, manufacturing, procurement service etc.,
Reduction in rejections and complaints.
Quality cost % to turnover reduction.
Lower manufacturing cost.
Reduction in deviation.
Drastic reduction in defectives and number of defects.
“ The company has earned the distinction of the first fully certified ISO-9001 integrated Steel Plant in the country, rated as the 68th largest steel producing company globally, and 38th among India's top 500 companies by Dun and Bradstreet (D&B) for the year 2004 keeping in view its excellent performance, commitment and vision.”
The findings of the study indicate that the company adopts a multiple-stakeholder philosophy for successful execution of TQM that squarely values the customers, employees, and community.
TQM is based on the strategic plans of the company and expectations of its stakeholders.
The organization implements a number of TQM tools, and the entire production and service departments strive to implement these tools.
The mission, vision and policies of the organization are consistent with those of TQM.
All the employees have accessibility to TQM training and the company has initiated a number of reward schemes to press forward the TQM implementation.
TQM Implementation has conferred both tangible and intangible returns to the company.
Visionary leadership of the top management, unreserved involvement of the middle management and absolute support of employees have made TQM a successful endeavor in the company.
The above findings thus corroborate that TQM can thrive in a manufacturing organization but it is contingent upon the unconditional support and commitment of all concerned.