Management of Quality

Graeme Warren
Copyright Graeme Warren 1
What is Quality?
Quality is “the ability of a product or service to consistently
meet or exceed customer expectations.” These “expectations”
can be categorized conceptually in various dimensions:

• For products: performance, aesthetics, special features,
conformance to specifications, reliability, durability,
perceived quality (e.g., reputation), serviceability
(maintainability). See Table 9.1 for an example.
• For services: convenience, reliability, responsiveness
(willingness to deal with unusual situations), time,
assurance (e.g., knowledge, ability to instill confidence and
a sense of security, professionalism, etc.), courtesy,
tangibles, consistency. See Table 9.2 for an example.
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Determinants of Quality
• Design,
• Conformance of the product/service to the
design,
• Ease of use, and
• Service after delivery.

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Responsibility for Quality Management
“EVERYONE!” Roles in quality management will vary:
• Top management must assume overall responsibility for quality
management by instituting and sustaining quality management programs
like TQM (Total Quality Management)
• Designers must build quality into product/service offerings and business
process designers like industrial engineers have to ensure the quality of
the firm’s processes.
• Procurement officers have to select quality suppliers, and ensure that the
products/services delivered meet quality expectations.
• Production, packaging, and shipping employees have to ensure that all
operations are carried out in accordance with quality specifications.
• Marketing and sales have to determine the quality needs of customers
and to create an effective feedback loop to the rest of the business if
customers’ quality needs are not being met.
• Customer service employees have to communicate customer complaints
about quality for resolution.

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Benefits of Good Quality,
Consequences of Poor Quality
Benefits of good quality: enhanced reputations, the
ability to charge a premium for products/services
offered, higher profits, significant brand equity,
repeat business, and lower/fewer warranty
claims/liability claims/product recalls.

Consequences of poor quality: loss sales, lost
customers, high liability and warranty costs,
product recalls, and loss of productivity (if products
have to be reworked in the factory).
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Costs of Quality
• Appraisal costs: this includes the cost of inspection and
testing equipment and inspectors.
• Prevention costs: these include training and the cost of
defect-prevention activities in design, supply-chain
interactions, business-process design, and production.
• Failure costs. There are two types:
– Internal failure costs: costs associated with scrap, rework,
production disruptions, injuries, etc. before the
product/service reaches the customer.
– External failure costs: costs associated with repair or
replacement of products, costs of reputational damage
after the product has reached the customer.
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Questions
• Return on quality (ROQ)
• Ethical issues
– Due diligence
– Reasonable response
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History
• Early efforts on quality management included focus on product
design, and inspection and gauging strategies.
• Statistical sampling procedures (and associated control charts) were
introduced and developed in the period from the mid-1920s through
the Second World War.
• 1950s: focus expanded to the quality of raw materials and parts
from suppliers, design considerations; involvement of upper
management.
• 1960s the focus shifted again, to worker motivation issues, “zero
defect” drives, and the expectation of perfection from employees.
• The 1973 oil crisis resulted in significant gains in market share for the
Japanese automakers, and a renewed emphasis on quality of US
automakers in the 80s as their struggled to keep up.
• Globalization in the 90s and beyond has opened up markets to
increased competition. In addition, the Internet has allowed
consumers to become much more aware of product/service quality,
and to shop comparatively.
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This work is in the public
domain in the United
States because it is a work
prepared by an officer or
employee of the United
States Government as part
of that person’s official
duties under the terms of
Title 17, Chapter 1, Section
105 of the US Code
Quality Gurus
• Walter Shewhart: the father of statistical quality control; introduced control chart
theory.
• W. Edwards Deming: philosophical contributions including his “System of Profound
Knowledge” (his “14 points”); his focus on variance reduction; and his targeting of
assignable-cause versus common-cause variation worked extensively with the
Japanese.
• Joseph M. Juran: contributions include continuous improvement programs,
capability analysis, and his view of quality as fitness-for use; worked closely with the
Japanese.
• Armand Feigenbaum: developed Total Quality Control, the forerunner of Total
Quality Management (TQM), which we will discuss in this chapter.
• Philip B. Crosby: responsible for the idea of Zero Defects and for promoting “do it
right first time.”
• Kaoru Ishikawa: responsible for fishbone diagrams (cause-and-effect diagrams).
• Genichi Taguchi: known for the loss function, which is used to measure the cost of
poor quality.
• Taiichi Ohno and Shigeo Shingo: responsible for developing the Toyota Production
System (TPS) and the concept of kaizen (continuous improvement; “kai”=change;
“zen”=good).

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Deming’s 14 Points
1. Create constancy of purpose toward improvement
2. Adopt the new philosophy. Take on leadership for change.
3. Cease dependence on inspection to achieve quality. Eliminate the need for massive inspection by
building quality into the product in the first place.
4. End the practice of awarding business on the basis of a price tag. Instead, minimize total cost. Move
towards a single supplier for any one item, on a long-term relationship of loyalty and trust.
5. Improve constantly and forever the system of production and service, to improve quality and
productivity, and thus constantly decrease costs.
6. Institute training on the job. Institute leadership (see Point 12 and Ch. 8 of "Out of the Crisis"). The
aim of supervision should be to help people and machines and gadgets do a better job.
8. Drive out fear, so that everyone may work effectively for the company. (See Ch. 3 of "Out of the
Crisis")
9. Break down barriers between departments.
10. Eliminate slogans.
11. Eliminate work standards, management by numbers and numerical goals. Instead substitute with
leadership.
12. Remove barriers .
13. Institute a vigorous program of education and self-improvement.
14. Put everybody in the company to work to accomplish the transformation. The transformation is
everybody's job. Copyright Graeme Warren 10
Awards
• Baldrige (NIST)
• Deming Prize
• European Quality Award
• Japan Prize
• Juran Quality Medal
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ISO Certifications
• ISO 9000 is widely recognized in Europe. It
focuses on the quality of a firm’s business
processes. ISO 9000-certified companies can
be generally regarded as “world class.”
• ISO 14000 addresses the environmental
impact of a firm’s business processes.
• ISO 24700 addresses the quality and
performance of office equipment that
contains reused/ refurbished components.

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Supply Chain Risk
• Supply chains are global. Differentials in
quality awareness and practices world-wide
can result in significant problems and supply
chain risk.
• Collaborative relationships with vendors,
suppliers, and distribution network partners,
adequate training, the use of assurance
techniques, and a thorough understanding by
all parties of quality expectations are crucial.

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Total Quality Management (TQM)
Hallmark of a world-class firm.

Three pillars:
• Continuous improvement,
• Involvement of everyone, and
• Achievement of customer satisfaction.

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Elements of TQM
• Continuous improvement programs strive to continually find ways of
improving products, services and especially the business processes. This
includes finding ways to incorporate technology innovations, refining
procedures, improving team-member training, finding higher-quality
suppliers and supplies, etc.
• Competitive benchmarking involves identifying best-practice methods,
and how the best-of-breed does it.
• Employee empowerment puts decision-making authority in the hands of
team members. The idea behind this is to assign decisions responsibilities
to those who are functionally involved with the decision and can best
assess what the course of action should be. This gives team members
better control of their jobs and serves to motivate them.
• Using a team approach to exploit group synergies and creates a sense of
collaboration, cooperation, and hopefully a sense of shared success.
• Decisions are based upon facts rather than opinions. Decisions should be
based upon data and observation, by the people directly involved (who
are also responsible for the decision).

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Elements of TQM continued
• Team members should be trained in the use of statistical and other
quality control tools.
• Supplier quality programs must be integrated with the firm’s
quality program. Timely delivery of quality parts and materials is
the goal.
• TQM champions promote TQM and initiate new quality projects.
• Quality at the source is the idea that each employee will do their
work right the first time. Each person is responsible for the quality
of their work and for not allowing defects to pass through their
hands. Quality at the source is often focused upon the quality of
the production/service process rather than upon individual product
or service quality.
• Collaborative and cooperative relationships with suppliers are
encouraged.
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Six Sigma
• A business process for eliminating waste, improving quality, and
increasing customer satisfaction. Six sigma programs employ
concrete philosophical and statistical control best-practice methods
to improve quality, reduced costs, and better align a firm’s
processes with its strategy.
• Six sigma programs are implemented by team members trained in
six-sigma methods. Black-belt and master-black-belt training (and
credentialing) is available from various training providers.
• Master black belts are capable of serving as TQM champions,
leading corporate-wide quality management programs, and training
black belts.
• Black belts have 4 to 6 weeks of training (depending upon the
training provider) and facilitate TQM programs by providing project
leadership, applying tools and techniques, and conveying quality
management knowledge to team members.

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Lean Manufacturing and Six Sigma
• Six sigma has links to lean manufacturing .
• A six-sigma program functions best within a
lean environment.
• Tradeoffs between quality and waste
reduction (working too fast compromises
quality – an idea conveyed in the video
“’Modern Chairs’ – A Total Quality
Management Training Video”).

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Why is TQM Difficult to
Implement/Sustain
• Failure of top management to introduce TQM firm-wide, maintain a
strategic long-term focus on continuous improvement, encourage
appropriate corporate communication, commit sufficient time or
resources to TQM, and general lack of leadership with respect to
quality management.
• Failure to plan the TQM implementation process appropriately.
• Lack of customer focus and failure to tie TQM program activities to
customer needs or business results.
• Failure to empower, motivate, or incentivize team members
appropriately.
• Focusing on short-term results and quick fixes.
• Overzealous focus on quality to the detriment of other aspects of
the business.

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Process Improvement
• Document, Analyze, Brainstorm, Improve…
• Process improvement is a systematic and holistic approach to improvement. T
• Typical objectives of process improvement include higher profit, improved
customer satisfaction, reduced process waste, improved productivity, etc. Process
improvement requires that processes be documented.
• Typical process documentation graphing and analysis tools: flowcharts and service
blueprints, process charts, check sheets, histograms, Pareto charts, scatter
diagrams, control charts, cause-and-effect diagrams (also known as fishbone
diagrams), run charts, and mind maps.
• Seek improvements. Ideas for improvement may come from various sources:
– Customers: via surveys, pilot studies, product trials, etc.
– Competitors: close analysis and benchmarking of competitors’ products and processes is
common.
– Suppliers: collaborative design and technology-sharing relationships that allow the R&D,
marketing, engineering, and other team members to interact can spawn many new ideas.
– Research and engineering teams, quality circles (voluntary “groups of workers who meet to
discuss ways of improving products or processes”), and continuous improvement teams will
strive to continuously develop product, service, and process improvements.
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Image by –Grondemar (Self-made in en:Microsoft Excel 2007) [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC-BY-SA-3.0-2.5-2.0-1.0
(http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons
Process Chart
Example
Copyright Graeme Warren 21
Image by faa.gov [Public domain], via Wikimedia Commons
Mind Map Example
Copyright Graeme Warren 22
Image courtesy of Wikimedia commons under the GNU Free Documentation LIcense
Implications for Operations
• The competitive priority categories of consistent
quality and top quality and are a fundamental driver of
every aspect of operations for those companies who
compete on these bases.
• Continuous improvement initiatives are essential to
productivity improvement as product/service quality
refinements and process waste reductions are pursued
by competitors.
• Appropriate training in quality measures for team
members (including top management) is essential.
• Finally, supply chains create significant quality risks.
These need to be carefully managed.

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FIN
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