What is the significance of a 'control limit' in control charts?

The significance of a 'control limit' in control charts is that it defines acceptable process variation. Control limits are statistical boundaries set on control charts that establish the threshold for common cause variation, which is inherent in the process. These limits are typically set at three standard deviations from the process mean, indicating where the natural variation of the process lies.

When a process operates within these control limits, it indicates that the variation is consistent and the process is stable. Conversely, if the data points fall outside of these limits, it may signal the presence of special cause variation that needs to be investigated and addressed. Essentially, control limits help in monitoring process performance and determining whether corrective actions are necessary to maintain quality standards.

This understanding is crucial in Total Quality Management (TQM) as it aids in identifying performance issues early on, ensuring continuous improvement in processes.