International Journal of Analytical, Experimental and Finite Element Analysis (IJAEFEA), Issue. 3, Vol. 1, July 2014 © 2014 RAME IJAEFEA 23 Research Association of Masters of Engineering www.rame.org.in Saipad B.B.P.J.Sahu 1 enggsaipad@gmail.com Swarup Kumar Nayak 2 Sibakanta Sahu 3 Gandhi Institute For Technological Advancement/Mechanical Engineering Department, Bhubaneswar, India “Improving Quality with reducing cost” an approach by applying TQM and Outsourcing with their combined impact on automobile OEMs Abstract — The OEMs have to react quickly on trends to fulfill the customer demands and be technically innovative as the customer taste changes frequently, also the gap between demand and supply require minimum. The Original equipment manufacturers (OEMs) are facing fundamental changes as it is utmost important and primary objective of the manufacturing industries to provide high quality and less cost products to the customers for creating the market leadership. The importance of the quality of products in the automotive industry has changed to being exclusively dependent on the demand and sense of the customer. These innovations and intensity of their implication lead to a high cost pressure for the OEMs again. Therefore, the OEMs need to work together with their suppliers. Production strategies like TQM and outsourcing are known as the key to success. Although cost and quality management themselves are quite well-investigated in literature, and the use of both TQM and outsourcing are widely implemented in the OEMs’ strategies to improve quality and reduce costs, studies about the combination of TQM, outsourcing and subcontracting and their impact on quality and costs cannot be limited. The wide spread opinion of managers is that quality and costs cannot support each other but the use of TQM and Outsourcing are widely implemented in the OEMs’ strategies to improve quality and reduce costs. We wanted to find out how they are related to each other to fulfill the given goals. Index Terms— Quality, and Quality Management; Costs, and Cost Management; Outsourcing, Total Quality Management (TQM), and TQM in Automotive/ Automobile Industry. I. INTRODUCTION Automobile OEMs outsource many parts of their manufacturing to gain cost and quality improvements. Moreover, the automotive industry, which we wanted to analyze, faces an outstanding tough competition. Nowadays, consumers expect lowest possible costs and highest possible quality at the same time. Today, this is the main challenge for automobile manufacturers. (Fawcett et al., 2000) We chose the concepts of outsourcing and total quality management for three main reasons:  First of all both are especially important in the automotive industry. TQM was first used a large dimension in the automotive industry and the outsourced value creation amount to 70% (Kleinhans & Dannenberg, 2002).  The relation and interaction between these concepts is not well researched in literature, which gives us the possibility to find new approaches.  The basics of these two concepts are very different. Outsourcing or Subcontracting is not only part of a company strategy; it is also the well defined action of outsourcing or Subcontracting processes to suppliers, while TQM is more or less a management philosophy concerning several issues inside the company. The implementation of these two concepts should cut costs and improve quality. We wanted to find out if and how there is an interaction between outsourcing or subcontracting and TQM concerning the OEM’s cost and quality. Do they support each other or are they not compatible? Is there a connection at all? We wanted to analyze these problems with help of articles and data concerning the automotive industry and try to find the connection between TQM and outsourcing and their impact on costs and quality. II. THEORY Your goal is to simulate the usual appearance of papers in a Conference Proceedings or Journal Publications of the AMAE Press. We are requesting that you follow these guidelines as closely as possible.