Assignment 2

TOTAL QUALITY MANAGEMENT
(5575) MBA Executive TOPIC:

“How Quality Control gets in the way of Quality”

ZAHID NAZIR
Roll # AB523655 Semester: Autumn 2009

ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD.

TOTAL QUALITY MANAGEMENT

INTRODUCTION
Quality is the most important aspect in every day’s life. The figure below is self explanatory emphasizing the importance of quality.

Everyone has had experiences of poor quality when dealing with business organizations. These experiences might involve an airline that has lost a passenger’s luggage, a dry cleaner that has left clothes wrinkled or stained, poor course offerings and scheduling at your college, a purchased product that is damaged or broken, or a pizza delivery service that is often late or delivers the wrong order. The experience of poor quality is exacerbated when employees of the company either are not empowered to correct quality inadequacies or do not seem willing to do so. We have all encountered

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service employees who do not seem to care. The consequences of such an attitude are lost customers and opportunities for competitors to take advantage of the market need. Successful companies understand the powerful impact customer-defined quality can have on business. For this reason many competitive firms continually increase their quality standards. For example, both the Ford Motor Company and the Honda Motor Company have recently announced that they are making customer satisfaction their number one priority. The slow economy of 2003 impacted sales in the auto industry. Both firms believe that the way to rebound is through improvements in quality, and each has outlined specific changes to their operations. Ford is focusing on tightening already strict standards in their production process and implementing a quality program called Six-Sigma. Honda, on the other hand, is focused on improving customer-driven product design. Although both firms have been leaders in implementing high quality standards, they believe that customer satisfaction is still what matters most. To understand the role of quality control in maintaining the quality, it is necessary to understand the quality concepts.

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DEFINING QUALITY

Quality Concepts

The definition of quality depends on the role of the people defining it. Most consumers have a difficult time defining quality, but they know it when they see it. For example, although you probably have an opinion as to which manufacturer of athletic shoes provides the highest quality; it would probably be difficult for you to define your quality standard in precise terms. Also, your friends may have different opinions regarding which athletic shoes are of highest quality. The difficulty in defining quality exists regardless of product, and this is true for both manufacturing and service organizations. Think about how difficult it may be to define quality for
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products such as airline services, child day-care facilities, college classes, or even textbooks. Further complicating the issue is that the meaning of quality has changed over time. People define quality in many ways. Some think of quality as superiority or excellence, others view it as a lack of manufacturing and service defects, still others think of quality as related to product features or price. A study that asked managers of 86 firms in the eastern United States to define quality produced several dozen different responses including Perfection Consistency Eliminating wastes Speed of delivery Compliance with policies and procedures Providing a good, usable product Doing it right the first time Delighting or pleasing customers Total customer service and satisfaction Today, there is no single universal definition of quality. Some people view quality as “performance to standards.”Others view it as “meeting the customer’s needs” or “satisfying the customer.” Let’s look at some of the more common definitions of quality.

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 Conformance to
specifications How well a product or service meets the targets and tolerances determined by its designers.

Conformance to specifications measures how well the product or service meets the targets and tolerances determined by its designers. For example, the dimensions of a machine part may be specified by its design engineers as 3 + .05 inches. This would mean that the target dimension is 3 inches but the dimensions can vary between 2.95 and 3.05 inches. Similarly, the wait for hotel room service may be specified as 20 minutes, but there may be an acceptable delay of an additional 10 minutes. Also, consider the amount of light delivered by a 60 watt light bulb. If the bulb delivers 50 watts it does not conform to specifications. As these examples illustrate, conformance to specification is directly measurable, though it may not be directly related to the consumer’s idea of quality. Fitness for use focuses on how well the product performs its intended function or use. For example, a Mercedes Benz and a Jeep Cherokee both meet a fitness for use definition if one considers transportation as the intended function. However, if the definition becomes more specific and assumes that the intended use is for transportation on mountain roads and carrying fishing gear, the Jeep Cherokee has a greater fitness for use. You can also see that fitness for use is a user-based definition in that it is intended to meet the needs of a specific user group. Value for price paid is a definition of quality that consumers often use for product or service usefulness. This is the only definition that combines economics with consumer criteria; it assumes that the definition of quality is price sensitive. For example, suppose that you wish to sign up for a personal finance seminar and discover that the same class is being taught at two different colleges at significantly different tuition rates. If you take the less expensive seminar, you will feel that you have received greater value for the price. Support services provided are often how the quality of a product or service is judged. Quality does not apply only to the product or service itself; it also applies to the people, processes, and organizational environment associated with it. For example, the quality of a university is judged not only by the quality of staff and course offerings, but also by the

 Fitness for use A
definition of quality that evaluates how well the product performs for its intended use.

 Value for price paid
Quality defined in terms of product or service usefulness for the price paid.

 Support services
Quality defined in terms of the support provided after the product or service is purchased.

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efficiency and accuracy of processing paperwork. Psychological criteria is a subjective definition that focuses on the judgmental evaluation of what constitutes product or service quality. Different factors contribute to the evaluation, such as the atmosphere of the environment or the perceived prestige of the product. For example, a hospital patient may receive average health care, but a very friendly staff may leave the impression of high quality. Similarly, we commonly associate certain products with excellence because of their reputation; Rolex watches and Mercedes-Benz automobiles are examples.

 Psychological
criteria A way of defining quality that focuses on judgmental evaluations of what constitutes product or service excellence.

IMPORTANCE OF QUALITY

Quality is important because it has the certain benefits. The benefits can be external and the internal benefits. Internal Benefits
Improved cost effectiveness Better control in the process Reduction of wastages Improved productivity Better relations, employees job satisfaction and participation Increased customer retention Standardization of work routine Increase sales and market share Improved competitiveness Better profitability

External Benefits
Customers get the correct product and services Correct specification Appropriate intangibles Customer satisfaction Customer retention

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COST OF QUALITY
The reason quality has gained such prominence is that organizations have gained an understanding of the high cost of poor quality. Quality affects all aspects of the organization and has dramatic cost implications. The most obvious consequence occurs when poor quality creates dissatisfied customers and eventually leads to loss of business. However, quality has many other costs, which can be divided into two categories. The first category consists of costs necessary for achieving high quality, which are called quality control costs. These are of two types: prevention costs and appraisal costs. The second category consists of the cost consequences of poor quality, which are called quality failure costs. These include external failure costs and internal failure costs. These costs of quality are shown in Figure below. The first two costs are incurred in the hope of preventing the second two.

Cost of Quality

Prevention Costs Prevention costs are all costs incurred in the process of preventing poor quality from occurring. They include quality planning costs, such as the costs
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of developing and implementing a quality plan. Also included are the costs of product and process design, from collecting customer information to designing processes that achieve conformance to specifications. Employee training in quality measurement is included as part of this cost, as well as the costs of maintaining records of information and data related to quality. Appraisal Costs Appraisal costs are incurred in the process of uncovering defects. They include the cost of quality inspections, product testing, and performing audits to make sure that quality standards are being met. Also included in this category are the costs of worker time spent measuring quality and the cost of equipment used for quality appraisal. Internal Failure Costs Internal failure costs are associated with discovering poor product quality before the product reaches the customer site. One type of internal failure cost is rework, which is the cost of correcting the defective item. Sometimes the item is so defective that it cannot be corrected and must be thrown away. This is called scrap, and its costs include all the material, labor, and machine cost spent in producing the defective product. Other types of internal failure costs include the cost of machine downtime due to failures in the process and the costs of discounting defective items for salvage value. External Failure Costs External failure costs are associated with quality problems that occur at the customer site. These costs can be particularly damaging because customer faith and loyalty can be difficult to regain. They include everything from customer complaints, product returns, and repairs, to warranty claims, recalls, and even litigation costs resulting from product liability issues. A
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final component of this cost is lost sales and lost customers. For example, manufacturers of lunch meats and hot dogs whose products have been recalled due to bacterial contamination have had to struggle to regain consumer confidence. Other examples include auto manufacturers whose products have been recalled due to major malfunctions such as problematic braking systems and airlines that have experienced a crash with many fatalities. External failure can sometimes put a company out of business almost overnight. Companies that consider quality important invest heavily in prevention and appraisal costs in order to prevent internal and external failure costs. The earlier defects are found, the less costly they are to correct. For example, detecting and correcting defects during product design and product production is considerably less expensive than when the defects are found at the customer site. This is shown in Figure below.

Cost of Defects

External failure costs tend to be particularly high for service organizations. The reason is that with a service the customer spends much time in the service delivery system, and there are fewer opportunities to correct defects than there are in manufacturing. Examples of external failure in services

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include an airline that has overbooked flights, long delays in airline service, and lost luggage.

THE EVOLUTION OF TOTAL QUALITY MANAGEMENT (TQM)

The concept of quality has existed for many years, though its meaning has changed and evolved over time. In the early twentieth century, quality management meant inspecting products to ensure that they met specifications. In the 1940s, during World War II, quality became more statistical in nature. Statistical sampling techniques were used to evaluate quality, and quality control charts were used to monitor the production process. In the 1960s, with the help of so-called “quality gurus,” the concept took on a broader meaning. Quality began to be viewed as something that encompassed the entire organization, not only the production process. Since all functions were responsible for product quality and all shared the costs of poor quality, quality was seen as a concept that affected the entire organization. The meaning of quality for businesses changed dramatically in the late 1970s. Before then quality was still viewed as something that needed to be inspected and corrected. However, in the 1970s and 1980s many U.S. industries lost market share to foreign competition. In the auto industry, manufacturers such as Toyota and Honda became major players. In the consumer goods market, companies such as Toshiba and Sony led the way. These foreign competitors were producing lower-priced products with considerably higher quality. To survive, companies had to make major changes in their quality programs. Many hired consultants and instituted quality training programs for their employees. A new concept of quality was emerging. One result is that quality
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began to have a strategic meaning. Today, successful companies understand that quality provides a competitive advantage. They put the customer first and define quality as meeting or exceeding customer expectations. Since the 1970s, competition based on quality has grown in importance and has generated tremendous interest, concern, and enthusiasm. Companies in every line of business are focusing on improving quality in order to be more competitive. In many industries quality excellence has become a standard for doing business. Companies that do not meet this standard simply will not survive. The term used for today’s new concept of quality is total quality management or TQM. Figure BELOW presents a timeline of the old and new concepts of quality. You can see that the old concept is reactive, designed to correct quality problems after they occur. The new concept is proactive, designed to build quality into the product and process design. Next, we look at the individuals who have shaped our understanding of quality.

Timeline showing the differences between old and new concepts of quality

Quality Gurus To fully understand the TQM movement, look at the philosophies of notable individuals who have shaped the evolution of TQM. Their philosophies and

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teachings have contributed to our knowledge and understanding of quality today. Their individual contributions are summarized in Table below.

Quality Gurus and Their Contributions

HIERARCHY OF QUALITY
As principles of quality developed, is was understood to be part of a hierarchical process which saw inspection develop through to quality control, within the context of systems of quality assurance under the wider management approach of total quality management.

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INSPECTION

QUALITY CONTROL

QUALITY ASSURANCE

TOTAL QUALITY MANAGEMENT
Fig: Hierarchy of Quality

INSPECTION
Quality inspection involves using or deploying people to inspect in order to achieve a basic level of quality. However, this is an expensive way of monitoring quality and adds to the cost of products or services being provided. Inspection processes do however, ensure that standards are met. Through inspection it is possible to identify areas that do not conform to standards and take corrective action.

QUALITY CONTROL
Quality control is a stage above inspection. This is a process that uses quality planning and procedures as well as basic statistics and performance data. Quality control involves monitoring the performance of processes and then using statistical techniques such as sampling and control charts to make
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decisions. QC is therefore the use of the techniques to achieve. Maintain and try to improve on quality standards of products and services. It coordinates the links between the following activities: Specifications of what is required. Designing the products/services required. Production/installation/assembly of the parts, components, elements of the service, product package. Inspection of the product/service package to determine conformance to customer specification. Monitoring usage/consumption of product/service to feed back the information for improvements wherever possible.

QUALITY ASSURANCE
Quality Assurance involves developing quality systems and quality planning to ensure that a process or product will fulfill quality requirements. Quality assurance is aimed at developing procedures that avoid mistakes. Quality Assurance means that the process of checking, correcting and controlling is conducted in such a manner that the manufacture/service provider are aware that all stages of the process are being conducted correctly (with the set quality standards in operation) and that what is planned is what is expected to result in terms of the output. The notion of a ‘total’ approach to quality and, in particular, total quality control, was at the heart of Armand Feignenbaum’s book in 1951. TQC is a business philosophy which groups together manufacturing, engineering, marketing and sales amongst others linked together by a two way of flow of information. TQC should be considered as a mind set to approve only criteria which lead to better than
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acceptable quality (via the use of the continuous improvement). TQC provides reliability and consistency in the delivered product/services as a check and balance system.

TOTAL QUALITY MANAGEMENT
Total Quality Management is that aspect of the overall management function that determines and implements the quality policy. Since it has been established that the quality management is a managerial responsibility, one has therefore got it to the destiny of business. It is not therefore just a question of achieving standards but one of survival and being strong all the time. Furthermore managerial responsibilities are not just concerned with focusing on one particular aspect of the business but in being fully aware and in control of all the various activities no matter how small they are. This leads to the argument therefore that TQM is an organizational concern and not the domain of any specialists or specific functions. (Zairi, 1992). Total quality management (TQM) is defined in ISO 8402 as the: “Management approach of an organization, centered on quality, based on the participation of all its members and aiming at long term success through customer satisfaction, and benefits to all members of the organization and society.” In this sense TQM is holistic. It is because it assumes that quality is the responsibility of everybody within an organization and not just managers. TQM involves employee involvement and teamwork in order to develop a system that meets the needs of product quality, process quality and organizational quality. With TQM everybody within an organization works towards and strives for customer satisfaction.
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.

•PRACTICAL STUDY

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GALXOSMITHKLINE PAKISTAN LIMITED
Overview:
GlaxoSmithKline Pakistan Limited was created on January 1st 2002 through the merger of SmithKline and French of Pakistan Limited, Beecham Pakistan (Private) Limited and Glaxo Wellcome (Pakistan) Limited- standing today as the largest pharmaceutical company in Pakistan. As a leading international pharmaceutical company we make a real difference to global healthcare and specifically to the developing world. We believe this is both an ethical imperative and key to business success. Companies that respond sensitively and with commitment by changing their business practices to address such challenges will be the leaders of the future. GSK Pakistan operates mainly in two industry segments: Pharmaceuticals (prescription drugs and vaccines) and consumer healthcare (over-the-counter- medicines, oral care and nutritional care). GSK leads the industry in value, volume and prescription market shares. We are proud of our consistency and stability in sales, profits and growth. Some of our key brands include Augmentin, Panadol, Seretide, Betnovate, Zantac and Calpol in medicine and renowned consumer healthcare brands include Horlicks, Aquafresh, Macleans and ENO.
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In addition, we are also deeply involved with our communities and undertake various Corporate Social Responsibility initiatives including working with the National Commission for Human Development (NCHD) for whom we were one of the largest corporate donors. We consider it our responsibility to nurture the environment we operate in and persevere to extend our support to our community in every possible way. GSK participates in year round charitable activities which include organizing medical camps, supporting welfare organizations and donating

to/sponsoring various developmental concerns and hospitals. Furthermore, GSK maintains strong partnerships with non-government organizations such as Concern for Children, which is also extremely involved in the design, implementation and replication of models for the sustainable development of children with specific emphasis on primary healthcare and education.

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MISSION STATEMENT
Excited by the constant search for innovation, we at GSK undertake our quest with the enthusiasm of entrepreneurs. We value performance achieved with integrity. We will attain success as a world class global leader with each and every one of our people contributing with passion and an unmatched sense of urgency. Our mission is to improve the quality of human life by enabling people to do more, feel better and live longer. Quality is at the heart of everything we dofrom the discovery of a molecule to the development of a medicine.
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THE ROLE OF QUALITY CONTROL
In the pharmaceutical industry in general, the quality department carries out three important functions: quality control and quality assurance. Quality control Quality control is of crucial importance to the pharmaceutical industry, and for this reason numerous checks are made at every stage of production to ensure that quality is not compromised and that the Code of Good Manufacturing Process is adhered to. Quality control procedures include:

Sampling of raw materials. All incoming raw materials are initially quarantined, and samples are taken and tested to ensure that the material meets strict purity guidelines. This testing involves both microbiological and chemical testing, as is laid out in the relevant Pharmacopeia (a reference book on the preparation of pharmaceuticals. Three are published - the British, United States and European Pharmacopeia). In-process checks. The manufacturing staff carries out checks on such things as tablet weight and size at frequent intervals. At hourly intervals the quality control staff takes samples to check for contamination and to ensure that composition is as expected. Final product checking. Checking similar parameters to those measured during production. Monitoring cleaning. When a batch of a certain drug has been made, all equipment that has been used must be cleaned. When the next pharmaceutical to be made on that line is going to be different, this
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cleaning must be particularly thorough to prevent contamination. In this instance, after cleaning the quality control staff takes swabs off each piece of equipment, and tests them to see if they can detect the presence of the active previously used. Only when the equipment is so clean that the previous active is undetectable can the production of the next pharmaceutical commence. The results of all of these tests are recorded on the batch records for the pharmaceutical, as well as the name and batch number of the pharmaceutical made immediately prior on the same production line. In terms of laboratory testing, over the past 10 years there has been a major change in the equipment that is used. Ten years ago the laboratory was normally equipped with a visible- UV spectrophotometer, analytical balance, tablet disintegrator and analytical glassware. Nowadays pharmaceutical laboratories will also include high pressure liquid chromatography, gas liquid chromatography, infra-red spectrophotometers, and dissolution testing apparatus as standard items.

CONCLUSION: Quality is some prescribed or desired characteristics present in raw material, sent finished or finished items. In every manufacturing organization there are always some standard specifications (Quality) laid down either by the producer or the consumer & it is important that the finished product meets established specification. Quality characteristics can be divided in two main categories, namely Qualitative & Quantitative.

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In case of Qualitative characteristics direct quantitative measurement is not possible, e.g cracks, breakage, color etc. These can be determined by inspection only and be classified as defective or non defective. In a business activity, producers & consumers are two main components. Producer is responsible for the production and marketing of his product. His fundamental objective is to manufacture the product of desired quality in the most economical manner with minimum risk of being rejected by the consumer. Similarly, consumer always wants to purchase the goods of desired quality. When consumer knows that he is getting goods of desired specifications, he buys the product with confidence and the market for the product expands. But every manufacturing process is a repetitive process depending both on controllable & uncontrollable factors. Due to this, there is bound to be some deviation in the capacity in the quality of the product. Thus, there is always a necessity that the deviations in the quality of the product should be discovered and corrected. Thus, quality control is of great value both to the producer and consumer. It helps in solving many manufacturing problems which could not be solved otherwise.

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