Managing Operations - Tqm Case Study

CASE 1

The main factor of the decline in sales of Toys Inc. is inadequate Total Quality Management (TQM). TQM is a philosophy that should be held by people at all levels of an organisation and is a commitment to continuous quality improvement, of both processes and products, in order to satisfy customers(Russell & Taylor, 2011). Quality is subjective and can be seen from both a producers and consumers perspectives, which in this case is causing disparity between expectations and business results and the proposal of different recommendations (Russell & Taylor, 2011). Lack of an integrated TQM philosophy, coupled with cost-cutting measures are key constraints to Toys Inc. achieving high quality and a successful and profitable business.

The actions of Ed Murphy and the recommendations from Joe Martin and Steve Bukowski all show a limited understanding of total quality management within the business.

Ed Murphy’s decision to cut production costs and layoff people from the design and product development, when being requested to cut costs, put the company in a bad position and at risk of not meeting several dimensions of quality and increased costs. Toys Inc. prides itself on its reputation of quality and innovation, which the design and product development teams are crucial to achieving. Cuts in these areas put the products at risk of not meeting the performance dimensions of quality, as evidenced with increased customer complaints around parts not working, and also not meeting the reliability, conformance and durability quality dimensions (Russell & Taylor, 2011). These tactile dimensions then feed into the consumer perception of Toys Inc. as a reputable company, damaging the brand and further eroding profits and market share.

These cost-cutting measures increase the likelihood of defects, again evidenced through the increase of consumer complaints, which in turn increases the external failure costs. As shown on the graph below, the external...