**2. Systems thinking, TQM, quality planning, assurance and control**

#### **2.1 The firm as a system**

Firstly, we recognize that a firm is connected, and there are many interaction points as we live in a networked society [2]. This interaction is necessary due to exchanging goods and services [2] within and between firms. Goods and service exchanges occur within firms as different sections (departments) of the firm interact with each other, and exchanges occur between firms as firms interact with other firms, like suppliers, customers, and other stakeholders. This interaction with other firms leads to connectivity [21]. Defines connectivity as "the property that enables effects to be transmitted through the system". In Ref. [2] positioned that firms do not exist in isolation; they are connected with other firms by buying and selling goods and services [2]. Therefore, taking a systemic view of the firm is well warranted. In addition, firms require inputs; these inputs are resources and aids. Resources include materials, customers, information, etc. and aids, which include human resources, equipment, facilities, technology, etc. These inputs are transformed through a process, and the raw materials are converted to finished products. This is referred to in operations management as the input-transformation-output model. **Figure 1** gives a graphical representation of the input-transformation-output model.

The operations management input-transformation-output model is a conceptual generic model and can be applied to different industry settings; as in the case of this chapter, it applies to the manufacturing, projects and services industries. In the manufacturing industry, let us consider an automobile manufacturing plant. Inputs include materials procured from suppliers in either unprocessed form or finished components from some suppliers; customers who have requirements and need an automobile to provide inputs regarding specifications, quantity, color, etc. Then, there is information on the general market, demand for other vehicles, and customers who may require a similar automobile. Aids will include the human resources required

#### **Figure 1.**

*Input-transformation-output model.*

#### *Quality Planning, Assurance and Control in Manufacturing, Industrial Projects and Services… DOI: http://dx.doi.org/10.5772/intechopen.113995*

to manufacture, i.e. the engineers, the workforce, and other support staff like procurement, finance, maintenance, etc. Aids also includes the manufacturing facilities, equipment and technology required to produce the automobile. These inputs then go through a transformation process, which in this case is manufacturing, where all the inputs are transformed into the finished product, that is, the automobile, which is then delivered to the end customer.

In a project environment, there are also inputs: materials processed as in the manufacturing industry; there are customers who need and provide specifications, budgets and timelines, which the project firm has to adhere to. There is also other information about the external factors that influence the build of the project. In terms of the projects, industry aids also include human resources, as is in the case of the manufacturing industry. There are also more stakeholders and many different external factors like environmental concerns, weather, etc., which are also aids, but they have a high degree of uncertainty. Equipment and facilities, but these equipment and facilities may have to be transported to different or remote sites. This brings different complexities as opposed to manufacturing. Then, there is also the technology that is used to facilitate the project management process. In this case, the transformation process is project management. A project must be well managed to successfully deliver to the end customer. The delivery is the complete project's product to be built, be it a residential building, a bridge, a dam, etc.

Let us consider the banking example discussed in *Section 1* in the services sector. The inputs consist of information about the customer and the customer's needs; the materials include the documents provided by the customer, for example, proof of employment, proof of residence, etc. Information includes historical information about the customer's past performance regarding loan repayments, etc. In this case, aids also include human resources personnel from the bank and the customer, as without customer interaction, the service cannot be delivered. Aids also include the banks' platform for the interaction, the customer's technology that is being used to access the bank's platform and the banking technology that is used to process the loan application. In this case, the transformation process is accessing and either approving or rejecting the loan application. The final deliverable is when the customer receives a loan. In this case, the input-transformation-output model is also applicable.

In summary, we may conclude that in each case, manufacturing, projects and service the firms can be viewed from a systems perspective. There are differences in inputs, transformation process and output deliverables, but the conceptual generic operations input-transformation-output model applies to all three industry sectors. Now that we have established that we can look at these different industry sectors as a system, it will be prudent to take a TQM perspective on the transformation process for each sector.

#### **2.2 Total quality management (TQM)**

From a TQM perspective, it is important to first understand the concept of efficiency and effectiveness. These terms are well known in manufacturing they are often not given the right level of attention in the projects and services industries. Effectiveness is about doing the right thing; it is focusing on delivering value; it is about how well one is doing to achieve the target objectives. For example, the target revenue measure for a firm is \$100 million per annum at the end of the year; the actual revenue achieved is \$80 million, so then you are 80% effective. Considering efficiency, you can make many high-quality products; you do this well, but there is


#### **Table 1.**

*Efficiency and effectiveness.*


#### **Table 2.**

*Seven TQM principles (adapted from [10]).*

not much market need for this product, so you have been very efficient. You have been efficient because you followed all the right processes and met all the quality requirements. However, you made a product that the market does not need, so while you were efficient, you were not very effective. Manufacturing industries have a good grasp of this concept; however, there is far too much focus on efficiency and insufficient focus on effectiveness in the projects and services industry. **Table 1** indicates some of the differences between efficiency and effectiveness.

Now that we have a better handle on efficiency and effectiveness, we refer to [10], who lists seven TQM principles for efficiently and effectively managing a system; these principles are depicted in **Table 2**. These TQM principles apply equally well to manufacturing, projects and service industries. Principle 1 refers to focusing on customer value. This is an effective principle to deliver what the customer wants. Principle 2 speaks of continuous improvement, that is, to continually improve the systems and processes is efficient. Principle 3, managing processes and not people, allows one to focus on team spirit and culture, steering away from being too hard on people. Principle 4 looks for root causes that are separate causes from systems, focusing on the factors causing the problem and not the symptoms of the problem. Principle 5 collects data and uses scientific principles, both quantitative and qualitative methods and techniques in problem analysis, staying away from the blame game, which can have a negative effect on the team and firm culture. Principle 6 recognizes that people are a core resource essential in delivering goods and services. Principle 7 focuses on teamwork to deliver efficiently, that is, doing things right and reducing scrap and waste, among other things and effectiveness by doing the right things by doing what the customer wants.

*Quality Planning, Assurance and Control in Manufacturing, Industrial Projects and Services… DOI: http://dx.doi.org/10.5772/intechopen.113995*

Now that we have established the groundwork in terms of viewing a firm as a system, adopting the input-transformation-output model, understanding the differences between efficiency and effectiveness and discussing the appropriateness of the TQM model for all three industry settings, our next focus is directed to quality planning, assurance and control in the manufacturing, projects and services industries.

#### **2.3 Definition of the terms quality planning, assurance and control**

These definitions are generic and apply to all three industry sectors. The differences and similarities stem from how these concepts are implemented. Quality planning is a proactive process where the role of planning is to establish the criteria so that the product or service that is being delivered will meet the customer's requirements. A quality plan consists of several documents that together form the specific quality standards, practices, resources, specifications and the sequence of activities to be performed in delivering a product or service [22]. In Ref. [22] emphasizes that a quality plan should include at least the following:


The highest-level quality goals and plans must be linked to the strategic objectives of the firm [22]. The essential elements of a quality plan must include quality assurance, quality control and quality management.

Quality assurance provides the overall guidelines and is a systematic process to ensure that the products or services meet the required specifications. Quality assurance is closely linked to international standards like ISO 9000, where many firms use ISO standards to ensure that their quality assurance system is in place and effective. There are many methods for quality assurance in the manufacturing and services industries. ISO Standards are quite widely accepted and used. In the project industries, firms are more likely to adhere to the guidelines in the Project Management Body of Knowledge (PMBOK) guide for effective project management.

Quality control is synonymous with inspection and testing, where inspection is more usually confined to indicators for fitness of use before actual use testing [23]. Testing and inspection are decision functions; they provide decisions concerning the fitness of use for a product or a manufacturing or production process [23].
