MANAGEMENT OF QUALITY

WHY QUALITY

 Meet Customer Expectations

 Entry ticket for doing business
 Establish Reputation
 Order qualifying criteria
 Meet or Exceed Industry Standards
 Manage Costs Effectively
WHAT IS QUALITY?
 Quality is fitness for use. (Juran, 1974)
 Quality means conformance to requirements. (Crosby, 1979)
 Quality is conformance to specifications (Deming, 1968)
 Quality is the totality of features and characteristics of a
product or service that bear on its ability to satisfy given needs.
(ASQ)
DIMENSIONS OF QUALITY

 Performance - main characteristics of the product/service

 Aesthetics - appearance, feel, smell, taste

 Special Features - extra characteristics

 Conformance - how well product/service conforms to customer’s expectations

 Reliability - consistency of performance

 Durability - useful life of the product/service

 Perceived Quality - indirect evaluation of quality (e.g. reputation)

 Serviceability - service after sale

DETERMINANTS OF QUALITY

 Quality of design
 Intention of designers to include or exclude features in a
product or service
 Quality of conformance
 The degree to which goods or services conform to the intent
of the designers
COST OF QUALITY

 Cost of quality refers to the sum of costs incurred to

prevent non-conformance from happening and the costs
incurred when nonconformance in products and system
occurs which is commonly known as cost of poor
quality
 Cost of poor quality refers to the costs associated with
providing poor quality product or service
 Cost of poor quality is actually the cost of doing things
wrong
WHY DO WE NEED TO KNOW COST OF QUALITY?

 Most experts estimate that the costs of quality range from 20

to 30 percent of gross sales.
 It can prioritize quality improvement actions
 Cost of quality data shows how profit is affected by quality
 It helps identify the redundant activities
QUALITY COSTS CAN BE BROKEN DOWN INTO FOUR MAJOR
CATEGORIES

(1) prevention,
(2) appraisal,
(3) Internal failure, and
(4) external failure.
In addition, there is a fifth category of costs associated with
unethical behavior in making quality decisions, and which can be
significantly higher than all the other four costs combined.
 PREVENTION COSTS
 Prevention costs are associated with preventing defects before they
happen.
 They include the costs of
 redesigning the process to remove the causes of poor performance,
 redesigning the service or product to make it simpler to produce,
 training employees in the methods of continuous improvement, and
working
 with suppliers to increase the quality of purchased items or contracted
services.
APPRAISAL COSTS

 These are the costs associated with measuring,

evaluating or auditing product or service to assure
conformance to standard or performance requirement.
 As the costs of prevention increase and performance improves,
appraisal costs decrease because fewer resources are needed
for quality inspections and the subsequent search for causes of
any problems that are detected.
EXAMPLES OF APPRAISAL COSTS:
 Internal audits
 Incoming material inspection
 Laboratory testing
 Calibration costs
 In process material inspection
 Equipment calibration
 Procedure evaluation
 Final product inspection
 Automated testing tools
INTERNAL FAILURE COSTS

 Internal failure costs result from defects that are discovered

during the production of a service or product.
 Defects fall into two main categories: (1) rework, and (2) scrap,
EXTERNAL FAILURE COSTS

 External failure costs arise when a defect is discovered after the

customer receives the service or product.
 The potential impact on future profits is difficult to assess, but without
doubt external failure costs erode market
 share and profits.
 Encountering defects and correcting them after the product is in the
customer’s hands is costly.
 External failure costs also include warranty service and litigation costs.
ETHICAL FAILURE COSTS

 Ethical failure costs are the societal and monetary costs associated with
deceptively passing defective services or products to customers
 As a practical matter, ethical costs arise from internal or external
failures.
 The main difference is that somebody tries to “cover them up” and
knowingly passes the defects along to the customer knowing that they
can do harm.
 https://www.aop.org.uk/ot/industry/contact-lenses/2019/09/27/contact-lens-recall-
following-quality-standards-concern-from-the-mhra

 https://www.business-standard.com/article/economy-policy/india-s-rice-exports-hit-
as-saudi-arabia-makes-quality-rules-stringent-119092401288_1.html
APPROACHES OF TQM

 Find out what customers want.

 Design a product or service that will meet (or exceed) what customers
want.
 Design processes that facilitate doing the job right the first time.
 Keep track of results and use them to guide improvement in the system.
 Extend these concepts throughout the supply chain.
 Top management must be involved and committed.
ELEMENTS OF TQM
 Continuous improvement
 Competitive benchmarking
 Employee empowerment
 Team approach
 Decisions based on facts
 Knowledge of tools
 Supplier quality
 Champion
 Quality at the source
 Suppliers
Total quality management (TQM) is a philosophy that stresses three
principles for achieving high levels of process performance and quality.
(1) customer satisfaction,
(2) employee involvement, and
(3) continuous improvement
CUSTOMER SATISFACTION

 Conformance to Specifications
 Value
 Fitness for Use
 Support
 Psychological Impressions
EMPLOYEE INVOLVEMENT

 Cultural Change
 Teams (Empowerment)
CONTINUOUS IMPROVEMENT

 Plan-Do-Check-Act
INSPECTION

 Inspection is an appraisal activity that compares goods or

services to a standard.
 Inspection can occur at three points:
 before production,
 during production,
 and after production.
ISSUES IN INSPECTION

1. How much to inspect and how often

2. At what points in the process inspection should occur
3. Whether to inspect in a centralized or on-site location
4. Whether to inspect attributes (i.e., count the number of times
something occurs) or variables (i.e., measure the value of a
characteristic)
HOW MUCH TO INSPECT AND HOW OFTEN

 Low-cost, high-volume items

 high-cost, low-volume
 high-volume systems (automated inspection)
WHERE TO INSPECT

 Raw materials and purchased parts.

 Finished products.
 Before a costly operation.
 Before an irreversible process.
 Before a covering process.
QUALITY TOOLS

 Flowchart A diagram of the steps in a process.

 Check sheet A tool for recording and organizing data to identify a problem.
 Histogram A chart of an empirical frequency distribution
 Pareto analysis Technique for classifying problem areas according to degree of
importance, and focusing on the most important. The idea is to classify the cases
according to degree of importance and focus on resolving the most important,
leaving the less important.
 Scatter Diagrams. A scatter diagram can be useful in deciding if there is a correlation
between the values of two variables. A correlation may point to a cause of a
problem.
QUALITY TOOLS

 Control Charts. A control chart can be used to monitor a process to see

if the process output is random. It can help detect the presence of
correctable causes of variation.
 Cause-and-Effect Diagrams. A cause-and-effect diagram offers a
structured approach to the search for the possible cause(s) of a problem.
It is also known as a fishbone diagram because of its shape, or an
Ishikawa diagram,
 Run Charts. A run chart can be used to track the values of a variable
over time. This can aid in identifying trends or other patterns that may
be occurring.
 https://economictimes.indiatimes.com/markets/stocks/news/policy-to-
ensure-uniform-quality-says-paswan/articleshow/71105387.cms
 https://economictimes.indiatimes.com/news/politics-and-
nation/ayushman-hospitals-need-to-improve-quality-of-service-harsh-
vardhan/articleshow/71268749.cms
CONTROL CHART IS A

 Process monitoring tool

 Process control tool
 Both (a) and (b)
 None of the above
TOTAL QUALITY MANAGEMENT (TQM) FOCUSES ON

 Employee
 Customer
 Both (a) and (b)
 None of the above
ACCORDING TO DEMING, QUALITY PROBLEMS ARE

 Due to management
 Due to method
 Due to machine
 Due to material
What is the weakest form of control?
 Pre-control
 Simultaneous control
 Post-control
 Duel control
Improving quality through small, incremental improvements is a characteristic of what type of quality management
system?
 Just-in-time
 Six Sigma
 Total Quality Management
 Kaizen
Where was Total Quality Management first developed?
 USA
 UK
 Japan
 Korea
Which of the following are key components of a Total Quality Management system?
 Individual responsibility, incremental improvement, use of raw data
 Collective responsibility, continual improvement, use of raw data
 Group responsibility, staged improvement, knowledge
 Involves everyone, continual improvement, use of data and knowledge
What are the main characteristics of an effective control system?
 Flexibility, accuracy, timeliness and objectivity
 Flexibility, measurability, timeliness and objectivity
 Flexibility, accuracy, relevance and objectivity
 Flexibility, accuracy, timeliness and relevance
P-D-C-A stands for
 Plan-Do-check-Act
 Plan-Do-correct-Act
 Proceed-Do-check-Act
 Proceed-Do-correct-Act
Service Assurance is
 Confidence with customer
 Customer has trust
 Employee has knowledge
 All of the above
Cost of product failure, error prevention and appraisals can be classified under
 stocking costs
 stock-out costs
 costs of quality
 shrinkage costs
Quality aspect, that refers how well product fulfills customer demands, is classified as
 learning quality
 design quality
 conformance quality
 business process quality
The most common form of quality control includes:
 Planning
 Organizing
 Inspection
 Directing
IMPROVING QUALITY THROUGH SMALL, INCREMENTAL IMPROVEMENTS IS A
CHARACTERISTIC OF WHAT TYPE OF QUALITY MANAGEMENT SYSTEM?

 a) Just-in-time

 b) Six Sigma

 c) Total Quality Management

 d) Kaizen
WHICH OF THE FOLLOWING ARE KEY COMPONENTS OF A TOTAL
QUALITY MANAGEMENT SYSTEM?

 a) Individual responsibility, incremental improvement, use of raw data

 b) Collective responsibility, continual improvement, use of raw data

 c) Group responsibility, staged improvement, knowledge

 d) Involves everyone, continual improvement, use of data and knowledge

WHICH OF THE FOLLOWING IS NOT AN EXAMPLE OF AN
EXTERNAL FAILURE COST?

 Loss of customer goodwill affecting future business.

 Cost of providing excessive capability.
 The setting up of statistical acceptance sampling plans.
 Guarantee and warranty costs.
TECHNICALLY SPEAKING, SIX SIGMA INVOLVES DRIVING TOWARDS
HOW MANY DEFECTIVE PARTS PER MILLION?

 230
 1
 6200
 3.4
SIX SIGMA
 Six Sigma, which relies heavily on the principles of TQM,
is a comprehensive and flexible system for achieving,
sustaining, and maximizing business success by
minimizing defects and variability in processes.
 https://economictimes.indiatimes.com/news/economy/agriculture/punjab-
hurries-registration-of-basmati-growers-for-quality-
traceability/articleshow/71111332.cms
QUALITY IN MANUFACTURING MEANS THAT AT A ______________, ALL
PRODUCTION MUST BE WITHIN SPECIFICATION LIMITS AND THE _______
VARIATION FROM THE NOMINAL, THE BETTER THE QUALITY.

 minimum, less
 minimum, more
 maximum, less
 maximum, more
_____________ MEANS LISTENING TO THE CUSTOMER SO GOODS AND
SERVICES MEET CUSTOMER NEEDS AT A LOW COST. IT MEANS IMPROVING
DESIGN AND PROCESSES TO REDUCE DEFECTS AND COSTS.

 A committed and involved management

 Focus on the customer
 Involvement of the total workforce
 Continuous process improvement
CUSTOMERS WANT SUPPLIERS TO HAVE ALL OF THE FOLLOWING
EXCEPT:

 High quality level

 High flexibility to change
 High service level
 High variability in meeting targets
____________ ANSWERS THE QUESTION—DOES THE PRODUCT OR
SERVICE APPEAL TO CUSTOMERS? (FOR EXAMPLE, THE PERCENTAGES OF
PEOPLE WHO LIKE CERTAIN FEATURES OF A PRODUCT.)

 Function
 Aesthetics
 Accuracy
 Quantity