The Top Risks of Not Having a Quality Management System

Thousands of businesses operate daily without a quality management system or program in place.  If a business is content with where it is financially, is not concerned about future prosperity, loss of market share and customers, and expects that its product, in its current form, will be as viable 50 years from now as it is today, a quality management system is an unnecessary burden.

However, businesses that want to grow in size and market share need a quality management system to remain economically relevant in the future.  There are key components to a good quality management system that exist only by happenstance in businesses without such a program, and usually on a piecemeal basis, not as a whole.

A quality management system works on eight key principles:

1. Customer focus
2. Strong leadership
3. Involvement of people
4. Process approach
5. System approach
6. Continuous improvement
7. Decision making based on facts
8. Creating value for the company, its clients and its suppliers

Most businesses without a formal total quality management program lack some or all of these vital elements.  Unless they are all in place and functioning properly and collectively, businesses that employ a few of these principles are not utilizing the full potential of a complete TQM system, and are not getting the benefits that a total quality management system offers.

Here are some of the signs of not being fully engaged in the TQM process and the risks businesses face:

Lack of a continuous improvement process will allow a product to stagnate, while the products with which it competes continue to improve in quality, function, and use.  TQM involves discovering the deficiencies that exist in the production of a product, and reducing the number of defective products that get delivered to the consumer.  A continuous improvement program can decrease manufacturing costs by decreasing defective product, can increase production through continuous analysis and refinement of the manufacturing process, and can find and eliminate inefficiencies throughout the organization.

The workforce will become disengaged, decreasing productivity and increasing attrition.  TQM requires that employees be engaged and involved in the development and manufacturing process from beginning to end on a continual basis.  Without such involvement, workers will come to believe that their ideas are not wanted or valued, relegating them to an “eight-and-the-gate” mentality.   Without incentive or involvement, morale will suffer, productivity will decrease, and seasoned employees will leave the business in favor of more satisfying work, increasing training costs and the likelihood of increased defective manufacturing as younger, inexperienced workers move in to take their place.

Lack of a customer satisfaction program will drive customers to look elsewhere for similar products from companies who respond to their needs.  Total quality management has continuously improving customer satisfaction at its heart.  A company that is not committed to satisfying customers will quickly lose them to competitors who do respond to consumers demands.  In a competitive environment, alternate products that continue to improve in quality and meet the needs of customers will win the hearts and minds of consumers, who will migrate to that product, reducing market share for the stagnant company.

Lack of a document control and management system will prevent a business from getting better at what it does, because it has no formal starting point.  Total quality management sets out requirements for the development, approval, and periodic review of procedures that govern a business’ activities.  Without such documents, the workforce is left to operate as it sees fit, with no accountability and no recognized method of manufacture or product control.  Long-term employees who leave the company take irreplaceable information with them, leaving others to figure it out and the business to suffer in terms of quality.   It is also virtually impossible to pinpoint the cause of a defect in the process develop corrective actions without formal procedures, leaving a company to founder with excessive costs for scrap.

Not having a formalized quality management system can prevent a company from obtaining contracts or doing business with top-tier organizations.  Quality management systems requires that suppliers to a business have a formal quality management system of their own.  Since most major businesses subscribe to TQM in some form or fashion, they require their suppliers to have similar programs.  Without a quality management system, a business will not be asked to bid on or be granted a contract, limiting the ability of the business to expand its outreach and position.

A formal, well-executed TQM program is customer focused, and requires that a company constantly get better at making its products.

Without such a program, progress will be hit-and-miss, and the entire potential of the organization will never be attained.