Total Quality Management and ERP

March 8, 2022

One of the most sought-after technologies of the new millennium to improve productivity and profit has been an Enterprise Resource Planning (ERP) system. Implementing an ERP system can be a challenge on both the technical and the procedural side. When implemented correctly, an ERP helps you redesign your critical business processes and applications while improving productivity and quality.

Quality has become a competitive advantage. Quality retains customers, so the costs of poor quality are not just wasted production but also lost of future sales. An added reason to bet on better quality is more informed customers. With reviews being available from anywhere and given by anyone for any product, management can see itself under increasing pressure to improve competitiveness, lower costs, and improve logistics. This demand for quality means that shops of all sizes and locations have had to adopt total quality management (TQM) methodologies.

Understanding TQM

Total Quality Management means:

• Continuously improving a process until it is predictable, repeatable, and dependable
• Every person in the organization is part of the effort to make products that are fit for use
• Conforming to requirements with (near) zero defects
• Doing it right the first time
• Constant attention to quality, not just on manufacturing, but also service, management, and the quality-of-life of all involved.

In other words, TQM means continuous attention to detail that starts with the customer requirements and ends with the customer’s satisfaction. How this is done has changed with time but it starts with good quality being a core part of the corporate culture with a proactive approach to problem solving while conforming to standards.

Originally TQM started being implemented on the shop floor in the hopes that being more mindful of quality on the floor would flow up and solve productivity problems elsewhere. It quickly became apparent to many implementers of the methodology that TQM is a firm-wide initiative that impacts all business units where one unit not adhering to the philosophy will negatively affect the productivity of all others. The corporate change that is required for TQM requires factors like top-level management commitment, active leadership, teamwork, better training and development, staff rewards and recognition, and the involvement and empowerment of employees.

TQM is guided by four principles: Plan, Do, Check, Act.

• Plans are made to improve the process with input from employees where they work
• Product design and production processes are updated based on the plan with any variance controlled to ensure high quality
• Data is collected, checked, and analyzed to look for issues that need solving
• Take action on any issues found. Use what you learned to plan new improvements.

Understanding ERP

An ERP system is a technological tool that has evolved to touch all of a company’s business units with the goal of building strong organizational capabilities, improving performance, and improving decision-making.  This has made an ERP one of the first and most cost-effective tools for a competitive advantage available to shops.

An ERP system can greatly improve your productivity and competitive edge, but implementing any system that affects so much of your operations can be difficult. While there are methods that can be used to decrease the implementation time and improve adoption, taking a TQM approach can help you avoid costly overruns. By using PDCA and a problem-solving mindset during your ERP implementation, you can engage in a continuous improvement cycle that lasts long after the go-live date.

TQM plus ERP

TQM and ERP are two methodologies that complement each other both in goals and implementation requirements. Both require senior management involvement, a large organizational investment, and impact the entire firm. And both have the goal of providing improved productivity while decreasing wastes.