The critical factors for successful TQM are described in Figure 16.2.

The Need for a New Accounting System As noted above, a critical factor in the success of TQM is having measurements that actually reflect the needs and expectations of customers, both internal and external. A good measurement system that helps TQM often includes developing a new accounting system because the current one splits and spreads important quality data across a variety of accounts. A good TQM measurement system should also allow all employees to know at all times the progress that is being made towards quality-related products and what additional improvements are needed. A traditional accounting system often fails to associate costs with activities. As a result, quality teams (for example, cross-functional teams that oversee the total quality management and continuous improvement process) do not have the information they need to focus on and identify quality issues. The accounting system needs to relate quality costs to activities so that quality teams can focus their efforts appropriately to ensure the success of the TQM effort. In short, management accountants need to ensure that the measurement and reporting process meets the following criteria: 11 • That it addresses the information needs of internal customers. • Include all relevant quality-related measurements, as well as financial and non-financial measurements. • Adapt measures as needs change. • Keep it simple and easy to use, run and monitor. • That encourages improvements, rather than just monitoring them. • Motivate and challenge team members to strive for the highest quality earnings.

Comprehensive structure for managing and controlling quality LEARNING OBJECTIVE 3 Develop a comprehensive structure for managing and controlling quality.

Figures 16.1 and 16.2 of the text provide comprehensive guidance for the development of a comprehensive framework (or system) for quality management and control. One possible structure is presented in Figure 16.3. The figure serves as the focal point around which the discussion in the chapter text is built. Therefore, by way of introduction, we now provide an overview of the main elements of the structure.

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