Q.

1 Write up on Quality: includes dimensions, TQM fundamentals & cost

of quality.
The most fundamental definition of a quality product is one that meets the expectations of the
customer. However, even this definition is too high level to be considered adequate.
In order to develop a more complete definition of quality, we must consider some of the key
dimensions of a quality product or service.
1. Performance:
Performance refers to a product’s primary operating characteristics. For an automobile,
performance would include traits like acceleration, handling, cruising speed, and
comfort; for a television set, performance means sound and picture clarity, colour, and
the ability to receive distant stations.
Performance is often a source of contention between customers and suppliers,
particularly when deliverables are not adequately defined within specifications.
The performance of a product often influences profitability or reputation of the end-
user.

2. Features:
Similar thinking can be applied to features, a second dimension of quality that is often
a secondary aspect of performance. Features are the “bells and whistles” of products
and services, those characteristics that supplement their basic functioning. Examples
include free drinks on a plane, automatic tuners on a colour television set.
The line separating primary performance characteristics from secondary features is
often difficult to draw. What is crucial, again, is that features involve objective and
measurable attributes; objective individual needs, not prejudices, affect their translation
into quality differences.

3. Reliability:
This dimension reflects the probability of a product malfunctioning or failing within a
specified time period. Among the most common measures of reliability are the mean
time to first failure, the mean time between failures, and the failure rate per unit time.
Because these measures require a product to be in use for a specified period, they are
more relevant to durable goods than to products and services that are consumed
instantly.
Reliability normally becomes more important to consumers as downtime and
maintenance become more expensive. Farmers, for example, are especially sensitive to
downtime during the short harvest season. Reliable equipment can mean the difference
between a good year and spoiled crops. But consumers in other markets are more
attuned than ever to product reliability too.

4. Conformance:
All products and services involve specifications of some sort. When new designs or
models are developed, dimensions are set for parts and purity standards for materials.
These specifications are normally expressed as a target or “center”; deviance from the
center is permitted within a specified range. Because this approach to conformance
 equates good quality with operating inside a tolerance band, there is little interest in
whether specifications have been met exactly.

5. Durability:
A measure of product life, durability has both economic and technical dimensions.
Technically, durability can be defined as the amount of use one gets from a product
before it deteriorates. After so many hours of use, the filament of a light bulb burns up
and the bulb must be replaced. For instance, fighter aircraft procured to operate from
aircraft carriers include design criteria intended to improve their durability in the
demanding naval environment. Durability, then, may be defined as the amount of use
one gets from a product before it breaks down and replacement is preferable to
continued repair.
This approach to durability has two important implications. First, it suggests that
durability and reliability are closely linked. Second, this approach implies that
durability figures should be interpreted with care. An increase in product life may not
be the result of technical improvements or the use of longer-lived materials.

6. Serviceability:
A sixth dimension of quality is serviceability, or the speed, courtesy, competence, and
ease of repair. Consumers are concerned not only about a product breaking down but
also about the time before service is restored, the timeliness with which service
appointments are kept, the nature of dealings with service personnel, and the frequency
with which service calls or repairs fail to correct outstanding problems. In those cases
where problems are not immediately resolved and complaints are filed, a company’s
complaint-handling procedures are also likely to affect customers’ ultimate evaluation
of product and service quality.
Some of these variables reflect differing personal standards of acceptable service.
Others can be measured quite objectively. Responsiveness is typically measured by the
mean time to repair, while technical competence is reflected in the incidence of multiple
service calls required to correct a particular problem.

7. Aesthetics:
The final two dimensions of quality are the most subjective. Aesthetics—how a product
looks, feels, sounds, tastes, or smells—is clearly a matter of personal judgment and a
reflection of individual preference. A recent study of quality in 33 food categories, for
example, found that high quality was most often associated with “rich and full flavour,
tastes natural, tastes fresh, good aroma, and looks appetizing.”
The aesthetics dimension differs from subjective criteria pertaining to “performance”—
the quiet car engine, say—in that aesthetic choices are not nearly universal. Not all
people prefer “rich and full” flavour or even agree on what it means. Companies
therefore have to search for a niche. On this dimension of quality, it is impossible to
please everyone.

8. Perceived Quality:
Consumers do not always have complete information about a product’s or service’s
attributes; indirect measures may be their only basis for comparing brands. A product’s
 durability, for example, can seldom be observed directly; it usually must be inferred
from various tangible and intangible aspects of the product. In such circumstances,
images, advertising, and brand names—inferences about quality rather than the reality
itself—can be critical.
Perception is reality. The product or service may possess adequate or even superior
dimensions of quality, but still fall victim to negative customer or public perceptions.
As an example, a high quality product may get the reputation for being low quality
based on poor service by installation or field technicians. If the product is not installed
or maintained properly, and fails as a result, the failure is often associated with the
product’s quality rather than the quality of the service it receives.

TQM Fundamentals:
A core definition of total quality management (TQM) describes a management approach to
long-term success through customer satisfaction. In a TQM effort, all members of an
organization participate in improving processes, products, services, and the culture in which
they work.

TQM can be summarized as a management system for a customer-focused organization that

involves all employees in continual improvement. It uses strategy, data, and effective
communications to integrate the quality discipline into the culture and activities of the
organization. Many of these concepts are present in modern quality management systems, the
successor to TQM. Here are the 8 principles of total quality management:

1. Customer-focused: The customer ultimately determines the level of quality. No matter what
an organization does to foster quality improvement—training employees, integrating quality
into the design process, or upgrading computers or software—the customer determines
whether the efforts were worthwhile.
2. Total employee involvement: All employees participate in working toward common goals.
Total employee commitment can only be obtained after fear has been driven from the
workplace, when empowerment has occurred, and when management has provided the
proper environment. High-performance work systems integrate continuous
improvement efforts with normal business operations. Self-managed work teams are one
form of empowerment.
3. Process-cantered: A fundamental part of TQM is a focus on process thinking. A process is
a series of steps that take inputs from suppliers (internal or external) and transforms them
into outputs that are delivered to customers (internal or external). The steps required to carry
out the process are defined, and performance measures are continuously monitored in order
to detect unexpected variation.
4. Integrated system: Although an organization may consist of many different functional
specialties often organized into vertically structured departments, it is the horizontal
processes interconnecting these functions that are the focus of TQM.
 Micro-processes add up to larger processes, and all processes aggregate into the business
processes required for defining and implementing strategy. Everyone must understand the
vision, mission, and guiding principles as well as the quality policies, objectives, and critical
processes of the organization. Business performance must be monitored and communicated
continuously.
 An integrated business system may be modeled after the Baldrige Award criteria and/or
incorporate the ISO 9000 standards. Every organization has a unique work culture, and it is
 virtually impossible to achieve excellence in its products and services unless a good quality
culture has been fostered. Thus, an integrated system connects business improvement
elements in an attempt to continually improve and exceed the expectations of customers,
employees, and other stakeholders.
5. Strategic and systematic approach: A critical part of the management of quality is the
strategic and systematic approach to achieving an organization’s vision, mission, and goals.
This process, called strategic planning or strategic management, includes the formulation of
a strategic plan that integrates quality as a core component.
6. Continual improvement: A large aspect of TQM is continual process improvement.
Continual improvement drives an organization to be both analytical and creative in finding
ways to become more competitive and more effective at meeting stakeholder expectations.
7. Fact-based decision making: In order to know how well an organization is performing, data
on performance measures are necessary. TQM requires that an organization continually
collect and analyse data in order to improve decision making accuracy, achieve consensus,
and allow prediction based on past history.
8. Communications: During times of organizational change, as well as part of day-to-day
operation, effective communications plays a large part in maintaining morale and in
motivating employees at all levels. Communications involve strategies, method, and
timeliness.

Cost of Quality:

Cost of quality is a method for calculating the costs companies incur ensuring that products meet
quality standards, as well as the costs of producing goods that fail to meet quality standards.

The goal of calculating cost of quality is to create an understanding of how quality impacts the
bottom line. Whether it’s the cost of scrap and rework associated with poor quality, or the
expense of audits and maintenance associated with good quality, both count. Cost of quality
gives manufacturers an opportunity to analyze, and thus improve their quality operations.

This two-pronged approach to quality can be categorized as “control” (good quality) vs. “failure
of control” (bad quality).

Cost of Good Quality vs. Poor Quality

Cost of quality has four main components between the two buckets of “good” and “bad” quality.
Four Types of Cost of Quality:

Appraisal Costs:
Measurement and inspection activities during operations to determine conformance to quality
requirements. These costs are associated with the suppliers’ and customers’ evaluation of
purchased materials, processes, products, and services to ensure that they conform to
specifications.

Examples include inspection, testing, process or service audits, calibration of measuring and test
equipment.

Prevention Costs:
Activities planned and designed before operations to guarantee good quality and prevent bad
quality products or services.
Examples include new product review, quality planning, supplier surveys, process reviews,
quality improvement teams, education and training.

Internal Failure Costs:

Expenses incurred to remedy defects discovered before the delivery of a product or service.

Examples include scrap, rework, re-inspection, re-testing, material review, material downgrades.

External Failure Costs:

Expenses incurred to remedy defects discovered by customers after the customer receives the
product or service.

Examples include processing customer complaints, customer returns, warranty claims, product
recalls.

Q.2 Write up on Work Study + Time & Motion Study + Value Analysis. You
may refer to books and all other sources include examples.

“Work study is a generic term for those techniques, particularly method study and work
measurement, which are used in all its context and which lead systematically to the investigation
of all the factors, which effect the efficiency and economy of the situation being reviewed in
order to effect improvement.”

The main objective of work study is to improve productivity of men, machines and materials.
The aim of work study is to determine the best method of performing each operation and to
eliminate wastage so that production increases with less fatigue. The work study is also used in
determining the standard time that a qualified worker should take to perform the operation when
working at a normal place.

Work study is a technique which deals with the following problems:

(a) As to how should a job be done, and

(b) How much time a job should take for completion.

Answer for the first question is found by Motion Study or Method Study or Work Simplification.
Answer for the second question is found by the Time Study or Work Measurement.

Role of Work Study:

1. To standardise the method of doing a work,

2. To minimise the unit cost of production,

3. To determine the standard time for doing a task,

4. To minimise the material movement, and operators movement,

5. To eliminate unnecessary human movements,

 6. To utilise facilities such as man, machine and materials most effectively, and

7. To a systematic investigation of all factors.

Objectives of Work Study:

The following are the objectives of work study:
1. Increased efficiency,

2. Better product quality,

3. To choose the fastest method to do a job,

4. To improve the working process,

5. Less fatigue to operators and workers,

6. Effective labour control,

7. Effective utilisation of resources,

8. To decide equipment requirements,

9. To pay fair wages,

10. To aid in calculating exact delivery,

11. To formulate realistic labour budgeting, and

12. To decide the required manpower to do a job.

Time & Motion Study: Making the most of your time

Crossing an item off from your to-do list washes a sense of accomplishment over you. But on
the sight of the unfinished items and a quick glance at the clock, panic crawls its way in.
Another day of mad rush impends, to get the piling work done on time and to no satisfaction.
You admonish yourself for the inefficiency, thinking that you should have planned and thought
this through. And what you thought isn’t far from the truth of what you ideally should have
done. How? That’s where Scientific Management and Time & Motion Study come in.

As the name suggests, time & motion study a portmanteau of time-study and motion-study,
both of which are scientific studies in search of optimisation of performance by understanding
the time and labour required. The great Athenian thinker Socrates once said, “The unexamined
life is not worth living”. Primarily employed for repetitive tasks in industries, time-study was
developed in the period between the two World Wars by Frederick W. Taylor. It dwells into
procedural measurement of time taken for completion of tasks, while also accommodating
human activities. Motion study developed by Frank B. Gilbreth and Lillian M. Gilbreth
describes, systematically analyses and provides means for improvement of methods.
Accompanied by work-simplification — cutting down on redundant and wasteful motions —
the combination of the two studies helps in setting time standards along with a wage-incentive
system to motivate the workers.

Time-motion study can be simmered down to a systematic investigation and analysis of the
number of movements needed to get work done, and the bracket of time that each correct
movement consumes. These movements can range from the motions of a secretary through the
day such as taking calls, sending emails and scheduling meetings to the motions of an assembly
unit of a car company such as reaching, grasping and placing parts of a car. In this way, time-
motion study can be used in cafeterias, libraries, banks, department stores and even household
work to increase operational efficiency.

The knowledge of time-motion study is used as a tool for better comprehension of scientific
management. What is scientific management then? Taylor, the man behind the concept,
believed that optimising the way a work is done rather than extracting the best out of the
workers could prove to be more efficient. The philosophy of scientific management can be
phrased as follows — scientific analysis of the methodology of work and appropriate allocation
of labour or tasks. It is to be noted that this ideology was developed in a time when there was
no standardisation and motivation, no incentive for more efficient labour. Taylor, who was then
a mechanical engineer (understandably interested in efficiency), conducted various
experiments in his workplace (the most famous being a shovel design) and studied the most
optimal ways in which a work could be done. This led to the framing of the fundamentals of
scientific management — Taylorism.

However, Taylorism in the coming days turned out to be a flop. Experts argued that this
methodology dehumanised the workforce and converted man to machine by following a
reductionist approach to attain optimisation. The implementation seemed to leave no scope for
the worker to think or innovate. The counter-argument was that the modern application of this
technique was not the same as what Taylor visualised. Here’s what he felt:

Though both Taylor and the Gilbreths jointly pioneered the concept of scientific management,
there were some abstract differences in their approaches. While Taylor’s theory was more
focused on achieving maximum efficiency by decreasing the total process time with not much
concern for the practical limitations, the Gilbreths gave more importance to the welfare of
workers. In Taylor’s theory, which is often quoted to be the “classical perspective” of scientific
management, workers have lesser relevance compared to profit.

Regardless of the reception and deficiencies, implementation of scientific management was

one of the first instances when process improvement and management were treated as a
scientific problem. Ideas from Taylorism were invoked in what resulted in the fourth Industrial
Revolution, Industry 4.0, to gain perspectives for Industrial Automation. Although scientific
management has evolved by leaps and bounds, one would not be wrong to assume that
Taylorism laid the foundation for the large and influential practices of today’s industries.
Value Analysis:

Value analysis is one of the newer scientific aids to managerial decision-making. It comprises
a group of techniques aimed at the systematic identification of unnecessary costs in a product
or service and efficiently eliminating them without impairing its quality and efficiency. It can
also be defined as a systematic analysis and evaluation of techniques and functions in the
various areas of a concern with a view to exploring channels of performance improvement so
that the value attached to a particular product or service may be improved.

Although initially the group of techniques, aimed at the systematic identification of

unnecessary costs and exploring channels of performance improvement, was used mostly in
the engineering field which gave it the name of value engineering, it is now used in the various
areas of a concern such as marketing, purchasing, financing etc. Keeping in view the wide
applicability of this technique, value analysis is now used instead of value engineering.

Value analysis involves a creative approach for finding out unnecessary costs. Such costs are
those costs which though incurred on a product or service, are unnecessary and do not improve
its quality or efficiency, give it a better appearance, prolong its life, nor provide any additional
satisfaction to the customer. By eliminating these costs; the cost of the product or service can
be reduced, and the sales and the resulting profit proportionately increased.

Value analysis is an effective tool for cost reduction. Cost reduction may be achieved by
economizing expenditure and increasing productivity whereas value analysis probes into the
economic attributes of value. In value analysis it is possible to improve performance, increase
the value of a product and thus reduce costs by a continuous process of planned action.

Value analysis lays emphasis on searching out new ideas while cost reduction is usually
confined to already known facts. Hence, value analysis is not a substitution for cost reduction
methods but it is a completely different procedure for accomplishment of greater results leading
to the elimination of unnecessary costs and value improvement of a product or service.

Value analysis is sometimes taken as value engineering. There is no doubt that value
engineering is an important aspect of value analysis and is concerned with production
technology, product designing, fabrication and quality control.

Broadly speaking value engineering is mainly concerned with production while value analysis
goes up to the marketing stage for the systematic identification of unnecessary costs and
efficiently eliminating them. The scope of value analysis thus is broad and extends to all
operations of an organisation where cost is incurred.

Types of Value Analysis:

The term, value is used in a broader sense and it has different meanings for different persons.
For example, for a designer, value means quality of the product designed and efficiency of the
product produced; for a salesman, it would be the price of the product at which it can be sold
in the market; and for the management, value would be the return on capital employed.
An industrial product may have the following types of value:
a. Use Value:
There are certain characteristics of a product which make it useful for certain purposes. For
example, a book of Cost Accountancy if written for ICWA- Inter students, has a use value
provided it serves the purpose of such category of students. It measures the quality of
performance of a product. Use value may be primary use value, secondary use value and
auxiliary use value.

Primary use value indicates the attributes of a product which are essential for its performance
as engine, steering wheel and axle in a motor car without which car cannot run. Secondary use
value refers to such devices as bonnet or the mudguard or the windscreen without which motor
car can be driven but these are necessary for the protection of engine and other parts.

Auxiliary use value is essential for better control and operation as speed meter, electric horn
etc in motor car.

b. Esteem Value:
Certain properties of a product do not increase its utility or performance but they make it
esteemable which would induce customers to purchase the product. For example, a watch with
gold cover has esteem value. A rich customer may prefer a watch with gold cover although a
watch with a steel cover may serve the same purpose of keeping time.

Some products may have both use as well as esteem value and yet both may be important. For
example, a fountain pen with a gold plated body will have both use and esteem value as it will
not only look better but will also last longer.

c. Cost Value:
This value is measured in terms of cost involved. In case of a manufacturing concern it refers
to the cost of production of the product produced and if some part of the product is purchased
from outside, it means cost of purchase of that part.

d. Exchange Value:
Certain characteristics of a product facilitate its exchange for something else and what we get
is the exchange value of that product. It is equivalent to its sale value. All these values play an
important part in our personal lives, but in value analysis, we are mainly concerned with use
value and to some extent to the esteem value.

All other valued should be subordinated to use value in varying degrees. Value of a product
manufactured for sale is the least amount spent in manufacturing it to create appropriate use
and esteem values. Thus, value analysis seeks to provide the different values required in a
product or service at the least cost without impairing its quality, efficiency and attractiveness.

Procedure of Value Analysis:

Following points should be considered for putting a scheme of value analysis in operation:
 Identification and definition of the problem, i.e. ascertaining whether the customer is
being given the full use value and esteem value for the product he purchases and if not,
what is required to be done. In case of raw materials and components performance,
satisfaction in subsequent production or processes is to be seen.
 The feasibility of the alternatives and exploring the best method of performing the work
at the minimum cost. For this purpose all relevant facts like drawing and design,
material specifications, material, labour, overhead and other costs, market competition
etc. are considered before proceeding farther with the job of value analysis.
 Percentage of the return on new investment. This return should be equal to or more than
the expected return on investment.
 Costs resulting indirectly out of a decision to change to alternative like costs of items
becoming obsolete cost of training, etc.
 The benefits from the alternative like reduction in costs and increased revenue.
 Recommendation of the final proposal for implementation after considering the above
points which will increase use value and or esteem value.

Value analysis requires a broad organisational framework, active involvement of various

departments and a combination of initiative, creative approach, knowledge and mature
personality in the person heading the value analysis team which generally includes a design
engineer, a production engineer, cost accountant, system expert, market analyst and experts
from other functional areas.

For its success, the value analysis team should base its judgement upon complete information
from all areas of the organisation when cost is incurred, cost benefit analysis, work study,
standard costing, market research etc.

To get willing cooperation from everyone within the organisation, the value analyst should
invite suggestions for performance improvement and elimination of unnecessary costs which
should be duly considered.