TOTAL QUALITY MANAGEMENT

TOTAL QUALITY MANAGEMENT
Continuous improvement is fundamental for establishing a state of manufacturing excellence is the key to survival in today’s world-class competitive environment. Producing products with little waste that actually perform according to specifications are the twin objectives of world-class firms. A philosophy of total quality management, in which manufactures strive to create an environment that will enable workers to manufacture perfect (zero-defect) product, is replacing the “acceptable quality“ Attitudes of the past. This increased emphasis on quality has also created a demand for a management accounting system that provides financial and non financial information about quality.
Service industries are also dedicated to improving quality. Service firms present special problems because quality may differ from employee to employee. As a result, service firms are emphasizing consistency thorough the development of systems to support employee efforts, for example, USSA, a financial services company specializing in insurance for current former military officers, invested heavily in information technology in the mid-1980s. Incoming document (for example, policy applications, checks, and appraisals) are scanned electronically and stored on optical disks. When a customer calls USSA to see if a policy application for a new house has been received, a service representative can check the customer’s file on the computer and answer the question immediately. This is in contrast to the old system which required USSA reps to search a warehouse or other rep’s disks for the relevant files-a process that could take up to two weeks.
Quality cost measurement and reporting are key features of the contemporary management accounting system for both cases, the management accounting system should be able to provide both operational and financial information about quality, including information such as the number of defects, quality cost reports, quality cost trend reports, and quality cost performance reports.