Self-Instruction Material:

Chapter 2 - Quality and Quality Management

Welcome to Chapter 2 of your MBA 7073 Operation Management course! In this chapter, we
will explore the concept of quality and its management. We'll cover the definition of quality,
quality management systems, quality tools, total quality management (TQM) and quality
management systems (QMS), the cost of quality, the effect of quality management on
productivity, and quality awards. Let's get started!

2.1) What is Quality?

Quality is a measure of excellence or superiority of a product, service, or process. It reflects

how well a product or service meets or exceeds customer expectations and requirements.
Quality can be defined based on various dimensions, including performance, features,
reliability, durability, serviceability, and aesthetics. Achieving and maintaining high-quality
standards is crucial for customer satisfaction, market competitiveness, and long-term success.

Study Notes:

 Quality is a multifaceted concept that goes beyond meeting basic specifications.

 It encompasses meeting customer needs, conforming to standards, and continuous
improvement.
 Quality can be measured objectively through metrics and subjectively through
customer perceptions.

2.2) Quality Management System:

A quality management system (QMS) is a set of policies, processes, and procedures

implemented by an organization to ensure quality objectives are met consistently. A QMS
provides a structured framework for managing quality, from planning to control and
improvement. It includes activities such as quality planning, quality assurance, quality control,
and continuous improvement. Implementing a QMS helps organizations establish a
systematic approach to quality management and enhance overall performance.

Study Notes:

 A QMS establishes the structure and responsibilities for quality management within an
organization.
 It includes documentation of procedures, training programs, performance monitoring,
and customer feedback mechanisms.
 Commonly used QMS frameworks include ISO 9001, Six Sigma, and Lean
Management.

2.3) Quality Tools:

Quality tools are techniques and methods used to analyze, monitor, and improve quality-
related processes. These tools help identify problems, analyze data, make informed decisions,
and drive continuous improvement.
Some commonly used quality tools include:

 Pareto Chart: A bar chart that ranks problems or causes in descending order of
frequency or impact.
 Cause-and-Effect Diagram (Fishbone Diagram): A graphical tool used to identify
and analyze potential causes of a problem.
 Control Chart: A statistical tool used to monitor process performance over time and
identify any variations.
 Histogram: A visual representation of data distribution that helps identify patterns or
abnormalities.
 Scatter Diagram: A graphical tool used to study the relationship between two
variables.

Study Notes:

 Quality tools provide a structured approach to problem-solving and decision-making.

 They enable data-driven analysis, root cause identification, and process optimization.

2.4) TQM and QMS:

Total Quality Management (TQM) is a management approach that focuses on continuous

improvement, customer satisfaction, and employee involvement. TQM emphasizes a
proactive, systematic, and holistic view of quality management across all organizational
functions. A Quality Management System (QMS) provides the framework and processes to
implement TQM principles effectively.

Study Notes:

 TQM involves a cultural shift towards a quality-oriented mindset and continuous

improvement.
 It requires leadership commitment, employee involvement, and a customer-centric
approach.
 QMS provides the tools and processes to implement TQM effectively

2.5) The Cost of Quality:

The cost of quality refers to the expenses incurred to achieve and maintain quality standards.
It includes both the costs of conformance (prevention and appraisal costs) and the costs of
non-conformance (internal and external failure costs). Prevention costs are incurred to prevent
defects from occurring, while appraisal costs are associated with inspecting and testing
products or services. Internal failure costs are incurred when defects are identified before
reaching the customer, and external failure costs occur when defects reach the customer.

Study Notes:

 Managing the cost of quality is essential for achieving a balance between prevention
and detection.
 Investing in prevention activities can help reduce the occurrence of defects and
subsequent costs.
  Identifying and addressing quality issues early can prevent more significant costs
associated with customer dissatisfaction or product recalls.

2.6) The Effect of Quality Management on Productivity:

Quality management practices can have a significant impact on productivity. By reducing

defects, rework, and waste, organizations can improve process efficiency, save resources,
and enhance overall productivity. Quality management also promotes a culture of continuous
improvement and employee involvement, which further drives productivity gains.

Study Notes:

 Quality management improves productivity by eliminating waste, reducing errors, and

optimizing processes.
 Employee involvement and empowerment contribute to a motivated workforce and
increased productivity.
 Quality management practices such as standardization, process improvement, and
error prevention can yield significant productivity improvements.

2.7) Quality Award:

Quality awards are recognition programs that acknowledge organizations that have
demonstrated excellence in quality management. These awards provide a benchmark for
performance and encourage organizations to strive for continuous improvement. Examples of
quality awards include the Deming Prize, the Malcolm Baldrige National Quality Award, and
the European Quality Award.

Study Notes:

 Quality awards promote best practices, innovation, and customer focus.

 They serve as external validation of an organization's commitment to quality
management.
 Participating in quality award programs can drive organizational learning and
improvement.

Assessment - Short Answer Questions (SAQ):

Define quality and explain why it is important for organizations.

[Short Answer]

Describe the components of a quality management system (QMS) and its benefits for
organizations.
[Short Answer]

Discuss two commonly used quality tools and explain how they can aid in quality management.
[Short Answer]
Differentiate between TQM and QMS. How do they work together to improve quality in
organizations?
[Short Answer]

Explain the concept of the cost of quality and its significance for organizations.
[Short Answer]

Discuss the impact of quality management on productivity and provide examples to support
your answer.
[Short Answer]

What is the purpose of quality awards, and how can they contribute to organizational
excellence?
[Short Answer]

That concludes our comprehensive self-instruction material and study notes for Chapter 2 -
Quality and Quality Management. Take your time to answer the assessment questions, and
refer back to the material as needed. Self-assess your understanding of the chapter and
identify areas for further study. If you have any questions, feel free to ask. Best of luck with
your studies!