Deming stressed that the efficient use

of statistical techniques ensure

positive competitiveness in the
market place and the obtainment of
the desired returns on investment
through:

1
Deming strongly believes that quality
improvement has to be management led.
He sees management responsibility in two
main areas:
a) To create a positive climate for quality
improvement.
b) Emphasis on knowledge of workers rather
than rigid systems.

2
 DEMING’S FOURTEEN POINTS
The Total Quality & Productivity Approach

1. Create consistency of purpose towards the

improvement of products and services in
order to become competitive, stay in
business, and provide jobs.
2. Adopt the new philosophy. Management
must learn that it is a new economic age and
must awaken to the challenges, learn their
responsibilities and take on leadership for
change.
3
 DEMING’S FOURTEEN POINTS
The Total Quality & Productivity Approach

3. Stop depending on inspection to achieve

quality. Build in quality from the start.
4. Stop awarding contract on the basis of low
bids.
5. Improve continuously and forever the system
of production and services, to improve
quality and productivity, and thus constantly
reduce costs.

4
 DEMING’S FOURTEEN POINTS
The Total Quality & Productivity Approach

6. Institute training on the job.

7. Institute leadership. The purpose of
leadership should be to help people and
processes must work better.
8. Drive out fear so that everyone may work
effectively.
9. Break down barriers between departments
so that people can work as a team.

5
 DEMING’S FOURTEEN POINTS
The Total Quality & Productivity Approach

10.Eliminate slogans, exhortations, and targets

for the workforce. They create adversarial
relationships.
11.Eliminate quotas and management by
objectives. Substitute leadership.
12.Remove barriers that rob employees of their
pride of workmanship.

6
 DEMING’S FOURTEEN POINTS
The Total Quality & Productivity Approach

13.Institute a vigorous program of education

and self improvement.
14.Make the transformation everyone’s job and
put everyone to work on it.

7
 JURAN’S TEN STEPS TO QUALITY
IMPROVEMENT ARE:
1. Build awareness of opportunities to improve.
2. Set goals for improvement.
3. Organize to reach goals.
4. Provide training.
5. Carry out projects to solve problems.
6. Report on the progress made.
7. Give recognition to achievements.

8
 JURAN’S TEN STEPS TO QUALITY
IMPROVEMENT ARE:
8. Communicate results.
9. Keep score of performance.
10.Maintain movement by making annual
improvement part of the regular system and
processes of the company.

9
Comments:
Juran is the founder of the Juran Institute in Wilton,
Connecticut. He promotes a concept known as
managing Business Process Quality, which is a
technique for executing cross functional quality
improvement. Juran’s contribution may, over the
longer term, be greater than Deming’s because Juran
has the broader concept. While Deming’s focus on
statistical process control is more technically oriented.

10
 THE JURAN QUALITY TRILOGY
1. Quality Planning
– Identify the customers;
– Determine the customer’s needs;
– Develop product features;
– Establish quality goals;
– Develop a process;
– Prove process capability.

11
 THE JURAN QUALITY TRILOGY
2. Quality Control
– Choose control subjects (what to control);
– Choose units of measurement;
– Establish measurement;
– Establish standards of performance;
– Measure actual performance;
– Interpret the difference (actual versus standard);
– Take action on the difference.

12
 THE JURAN QUALITY TRILOGY
3. Quality Improvement
– Prove the need for improvement;
– Identify specific projects for improvement;
– Organize to guide the projects;
– Organize for diagnosis for discovery of causes;
– Diagnosis to find the causes;
– Provide remedies;
– Prove that the remedies are effective under operating
conditions;
– Provide for control to hold gains.
13
He gives the example of the manager who is
surrounded by the alligators: “He (the manager)
undertakes to slay alligators, one by one – a
reptilian version of project by project
improvement. But there will never be an end to
it, because more and more alligators keep
emerging from the swamp. The ultimate answer
is to drain the swamp”.

14
 PHILIP CROSBY
Philip Crosby, author of the popular book
“Quality is Free”, may have achieved the greatest
commercial success by promoting his views and
founding the Quality College in Winter Park,
Florida (USA).
He argues that poor quality in the average firm
costs about 20% of revenues, most of which
could be avoided by adopting good quality
practices. His absolutes of quality are:
15
• Quality is defined as “conformance to
requirements, not “goodness”.
• The system for achieving quality is prevention,
not “appraisal”.
• The performance standard is zero defects, not
“that’s close enough”.
• The measurement of quality is the price of
non-conformance, not indexes.

16
 PHILIP CROSBY
Crosby stresses motivation and planning and
does not dwell on statistical process control and
the several problem solving techniques of
Deming and Juran. He states that quality is free
because the small cost of prevention will always
be lower than the costs of detection, correction,
and failure.

17
 LIKE DEMING, CROSBY HAS HIS OWN
FOURTEEN POINTS:
1. Management Commitment
Top management must be convinced of the
need for quality and must clearly
communicate this to the entire company by
written policy, stating that the person is
expected to perform according to the
requirement or cause the requirement to be
officially changed to what the company and
the customers really need.
18
 LIKE DEMING, CROSBY HAS HIS OWN
FOURTEEN POINTS:
2. Quality Improvement Team
Form a team composed of departmental
heads to oversee improvements in their
departments and in the company as a whole.
3. Quality Measurement
Establish measurements appropriate to every
activity in order to identify areas in need of
improvement.
19
 LIKE DEMING, CROSBY HAS HIS OWN
FOURTEEN POINTS:
4. Cost of Quality
Estimate the costs of quality in order to
identify areas where improvements would be
profitable.
5. Quality Awareness
Raise quality awareness among employees.
They must understand the importance of
product conformance and the costs of non-
conformance.
20
 LIKE DEMING, CROSBY HAS HIS OWN
FOURTEEN POINTS:
6. Corrective Action
Take corrective action as a result of step 3 and 4.
7. Zero Defects Planning
Form a committee to plan a program appropriate to
the company and its culture.
8. Supervisor’s Training
All levels of managements must be trained in how to
implement their part of the quality improvement
program.
21
 LIKE DEMING, CROSBY HAS HIS OWN
FOURTEEN POINTS:
9. Zero Defects Day
Schedule a day as a signal to employees that
the company has a new standard.
10.Goal Setting
Individuals must establish improvement goals
for themselves and their groups.

22
 LIKE DEMING, CROSBY HAS HIS OWN
FOURTEEN POINTS:
11.Error Cause Removal
Employees should be encouraged to inform
management of any problem that prevents
them from performing error free network.
12.Recognition
Give public recognition, non-financial
appreciation, to those who meet their quality
goals or perform outstandingly.
23
 LIKE DEMING, CROSBY HAS HIS OWN
FOURTEEN POINTS:
13.Quality Councils
Composed of quality professionals and team
chairpersons, quality council should meet regularly
to share experiences, problems and ideas.
14.Do It All Over Again
Repeat step 1 to 13 in order to emphasize the never
ending process of quality improvement.

24
 KAORU ISHIKAWA
Ishikawa is considered as Japan’s leading figure
in the area of Total Quality Management. His
inspiration came from the work of Deming and
Juran and, to a lesser extent, Feigenbaum. He is
well respected for the following contributions:

25
The solution to all these problems is

5S
Housekeeping & Maintenance System
helps create a better working
environment
26
5S (Good Housekeeping Practices)
5S is a disciplined step-by-step approach to
keeping the workplace clean and well organized.
The five S’s come from Japanese words starting
with S as follows:
WORD MEANING
1st S SEIRI Sort out unnecessary items in the
workplace and discard them.
2nd SEITON Arrange necessary items in good
order.

27
 WORD MEANING
3rd S SEISO Clean the workplace thoroughly to
eliminate waste and dust on the
floor, machinery and equipment.
4th S SEIKETSU Maintain high standards of
housekeeping of the workplace in
order all the time.
5th S SHITSUKE Train people to follow good
housekeeping disciplines
automatically.

28
 THE 5S PRINCIPLES
• SEIRI – Sort out
• SEITON – Orderliness/Systemize
• SEISO – The Cleaning/Shining
• SEIKETSU – Standardize
• SHITSUKE – Sustain/Discipline

29
 DISCOVERY OF 5S
• 30 years ago researchers started studying the
secret of success of Japanese manufacturing
companies.
• 5S turned out to be the most impressive
“Secret”.
• The factories were so well organized that
abnormal situations were readily apparent.

30
METHODOLOGY OF 5S

31
1. SEIRI (SORT OUT)
• Decide what you need;
• Remove unnecessary clutter;
• All tools, gauges, materials, classified and
then stored;
• Remove items which are broken,
unusable or only occasionally used.

32
 RED TAG TECHNIQUE
• Give staff red labels;
• Ask staff to go through every item in the
workplace;
• As if needed and those that are needed,
in what quantity;
• Not needed  red tag it;
• Store in the red tag area.
33
 FOR CONFUSING ITEMS
• Place the suspected items in the Red Tag
area for one week;
• Allow the staff to re-evaluate the needed
items;
• At the end of week those who need
items should be returned.

34
SEIRI
Priority Frequency of use How to use
Low Less than once per year Throw away
Once per year Store away from the
workplace
Average Once per month Store together but
Once per week offline
High Once per day Locate at the
workplace

35
2. ORDERLINESS (SEITON)
• Once you have eliminated all the
unneeded items;
• Now turn to the left over items.

36
ORDERLINESS (SEITON)
• Workplace checkpoints:
– Positions of aisles and storage places clearly
marked?
– Tools classified and stored by frequency of
use?
– Pallets stacked correctly?
– Safety equipment easily accessible?
– Floors in good condition?
37
3. SEISO (CLEAN/SHINE)
• Create a spotless workplace;
• Identify and eliminate causes of dirt and
grime – remove the need to clean;
• Sweep, dust, polish and paint.

38
SEISO (CLEAN/SHINE)
• Divide areas into zones;
• Define responsibilities for cleaning;
• Tools and equipment must be owned by
an individual;
• Focus on removing the need to clean.

39
4. SEIKETSU (STANDARDIZE)
• Generate a maintenance system for the first
three;
• Develop procedures, schedules, practices;
• Continue to assess the use and disposal of
items;
• Regularly audit using checklists and
measures of housekeeping;
• Real challenge is to keep it clean.
40
5. SHITSUKE (SUSTAIN/DISCIPLINE)
• Inoculate courtesy and good habits;
• Driving force behind 5S;
• Make it a way of life;
• Part of health and safety;
• Involve the whole workforce.

41
 LITMUS TEST FOR 5S
• 30 second rule;
• One must locate the item within 30 seconds if
5s is properly implemented;
• Also applies to the electronic records retrieval.

42
 RESISTANCE AT THIS STAGE
• Human nature is to resist change.
• The tendency is to return to the status quo
and the comfort zone of the “old way” of
doing things.
• Defining a new status quo and standard of
workplace.

43
 5S IS A STARTING POINT FOR PRODUCTIVITY AND QUALITY
IMPROVEMENT AND PRODUCE THE FOLLOWING RESULTS:

• The workplace will be clean and better organized.

• Shop floor/office operations will be easier and
safer to carry out.
• The results will be visible to everyone, both
insiders and outsiders.
• More new ideas for new improvements are likely
to be generated because of visible results.
• The company image will improve generating more
business opportunities etc.
44
 TANGIBLE BENEFITS OBSERVED IN
COMPANIES PRACTICING THE 5S
• Happier employees with high morale.
• Greater people involvement.
• Increased number of suggestions.
• Better utilization of floor space.
• Better flow of production.
• Higher yield of materials.
• Lower defective and rework ratio.

45
KAIZEN

46
 KAIZEN
• Kaizen is a concept, or state of mind, oriented
towards continuous improvement.
• Kaizen is also a body of practical techniques
utilized to improve the status quo in daily
operations.

47
CONTINUOUS IMPROVEMENT OR KAIZEN

1. Kaizen in Japan means on-going improvement

which involves everyone in the organization.
2. Kaizen affects all layers of management and
workers.
3. Infact, the concept of Kaizen in Japan is deep
rooted and applies to everyday life.
4. Improvement in Japan concerns social life,
personal life and working life.

48
CONTINUOUS IMPROVEMENT OR KAIZEN

5. Kaizen is very much a customer-driven

strategy and therefore efforts have to be
sustained to maintain the customer
satisfaction.
6. The concept is made easily applicable
because there is wide recognition that
problems exist everywhere in the
organizations and that those need to be
tackled if the companies are to progress.
49
CONTINUOUS IMPROVEMENT OR KAIZEN

7. The driving force is wanting to improve is not a

Management Push but a general concern on the
welfare of the employer organization and the belief
that continuous improvement will benefit in turn
the workforce.
8. This is facilitated by the assistance of a positive
climate and a culture which supports improvement.
9. The distinction to Kaizen is not one of a cultural
bias but is one of Mentality.

50
 ELEMENTS FOR CONTINUOUS
IMPROVEMENT INITIATIVES
1. Continuous improvement is customer driven
effort. Targets can be set and determined by
customer requirements.
2. The use of work knowledge is required. Any
continuous improvement initiative will
depend on people’s skill, knowledge,
expertise and creative output.

51
 ELEMENTS FOR CONTINUOUS
IMPROVEMENT INITIATIVES
3. Continuous improvement is about inter
functional problem solving activity and
teamwork. Shared goals and objectives are
the key to successful continuous
improvement programs.
4. Continuous improvement is about driving out
fear and making problems an opportunity for
improvement.

52
 ELEMENTS FOR CONTINUOUS
IMPROVEMENT INITIATIVES
5. Continuous improvement focuses on the
whole process (means and the ends) rather
than the result only.
6. Improvement is about slow and gradual steps
rather than single shots or big leaps. It is
about the long term health of the business
rather than short term profitability.

53
 ELEMENTS FOR CONTINUOUS
IMPROVEMENT INITIATIVES
7. Continuous improvement requires positive
management system which creates a positive
climate for improvement and supportive
management teams.
8. Management systems include the use of tools and
techniques to understand processes, measure
existing performance, identify problems and
implement the solutions.
9. Continuous improvement has to be based on
Deming’s PDCA cycle.
54
 KAIZEN
• Kaizen is a concept, or state of mind, oriented
towards continuous improvement.
• Kaizen is also a body of practical techniques
utilized to improve the status quo in daily
operations.
• Kaizen techniques consists of the following
steps:
– Identifying problem(s);

55
 KAIZEN
– Examining the problem(s);
– Finding ideas to solve the problem(s);
– Developing selected proposal(s);
– Implementing the proposal(s).

56
 KAIZEN FRAMEWORK OR CYCLE OF
CONTINUAL IMPROVEMENT
Define problem(s) and
target/deliverables to
be achieved for Q.A. or
TQM
(i) Deploy and educate team
(ii) Develop implementation plan and
execute the improvement plan
Measure the
improvement plan

Rollout continual Quick strike Characterize i.e.

improvement breakthrough (i) Control process variations
cycle again improvements (ii) Stabilize process

Collect results and

analyze

Workout
Workout new
optimized new
improvement measures
plan for CPI & CQI
57
 KAIZEN, CONCEPT AND TECHNIQUES

The characteristics of Kaizen are:

• Continuous improvement.
• Accumulation of small steps.
• Total employee involvement.
Innovation Kaizen
Technology oriented People oriented
Result oriented Process oriented
Land marking steps for Accumulation of small
breakthrough steps
58
 KAIZEN AND INNOVATION
• Kaizen is different from innovation.
• Innovation generally represents the focus of
western management, which results in large,
short-term, radical changes in product or
process.
• Often innovation is the result of substantial
investment in equipment or technology to the
major re-building of entire plant.

59
 KAIZEN VERSUS INNOVATION: JAPANESE
VERSUS WESTERN APPROACH TO CONTINUOUS
IMPROVEMENT
Sr. # Points to Kaizen Innovation
Consider
1) Effect Long term and long Short term
lasting but undramatic but dramatic
2) Pace Small steps Big steps
3) Timeframe Continuous and Intermittent
incremental and non-
incremental
4) Change Gradual and constant Abrupt and
volatile

60
 KAIZEN VERSUS INNOVATION: JAPANESE
VERSUS WESTERN APPROACH TO CONTINUOUS
IMPROVEMENT
Sr. # Points to Kaizen Innovation
Consider
5) Involvement Everybody Selected few
champions
6) Approach Collectivism, Rugged
group efforts, individualism,
systems approach individual ideas
and efforts
7) Mode Maintenance and Scrap and
improvement rebuilt

61
 KAIZEN VERSUS INNOVATION: JAPANESE
VERSUS WESTERN APPROACH TO CONTINUOUS
IMPROVEMENT
Sr. # Points to Kaizen Innovation
Consider
8) Spark Conventional Technological
know how and breakthrough,
state of the art
new inventions,
new theories
9) Practical Requires little Requires large
requirements investment but investment but
great effort to little efforts to
maintain it maintain it

62
 KAIZEN VERSUS INNOVATION: JAPANESE
VERSUS WESTERN APPROACH TO CONTINUOUS
IMPROVEMENT
Sr. # Points to Kaizen Innovation
Consider
10) Efforts People Technology
orientation
11) Evaluation Process and Results for
efforts for profits
better results
12) Advantage Works well in Better suited to
slow growth fast growing
economy company

63
 MORE COMMENTS ON KAIZEN
• Kaizen is a system of accumulated
improvement.
• The main purpose of Kaizen is to evolve total
employee participation and it also helps in
building capable workforce for an organization.
• The results of Kaizen are not very drastic but
incremental that’s why continuous
improvement leads to accumulated
improvement.
64
 MORE COMMENTS ON KAIZEN
Process oriented Result oriented
• Self discipline
• Time management
• Skill management I don’t care, you get it
• Participation and done just give me one
involvement result
• Communication
• Morale

65
10 BASIC RULES FOR PRACTICING KAIZEN

1. Prepare people to accept change for the

betterment.
2. Think of how to do it and not why it cannot
be done.
3. Do not make excuses? Start by questioning
current practices.
4. Do not seek perfection? Do it even if for only
50% of target.

66
10 BASIC RULES FOR PRACTICING KAIZEN

5. Correct mistakes at once.

6. Do not spend money for Kaizen.
7. Wisdom is brought out when faced with
hardship.
8. Ask “why”? Five times and seek root causes.
9. Seek the wisdom of ten people rather than
the knowledge of one.
10.Kaizen ideas are infinite.
67
 TO CONCLUDE KAIZEN WHY?

1. Because it promotes change.

2. Because it promotes creativity and
participation.
3. Because it improves personal development.
4. Because it promotes teamwork.
5. Because it improves the work environment.
6. For the organization and industry survival.

68
 FORCE FIELD ANALYSIS
• A useful technique for helping managers to
understand the change process is Force Field
Analysis. “This is a process of analyzing the
forces for and against a change in behavior by
an individual or a group. The forces are
illustrated in figure.

69
 A MODEL OF FORCE FIELD ANALYSIS
DIVISION MANAGER’S VIEW
Forces for Forces against
Productivity improvement necessary
for survival.
Improved management control Cost
Early diagnosis of potential Employees’ lack of
problems understanding
Able to communicate achievements Difficulty of establishing
to the management valid measures
Improved ability to plan
Ability to validate staffing levels
Ability to recognize good units

70
 A MODEL OF FORCE FIELD ANALYSIS
DEPARTMENT MANAGER/EMPLOYEES’ VIEW
Forces for Forces against
Top management wants it More reports to complete
Closer management control
Might be embarrassing
Boss does not understand our work
Nothing in it for me
Excuse to cut our resources
Can’t measure what I do

71
 QUALITY CONTROL CIRCLE
• History of Quality Circle
– Quality Circle or Quality Control concept originated
from Japan.
– In April 1962, Dr. K. Ishikawa, presented this idea in
the inaugural issue of journal on QC.
– In the last 50 years, Quality Circle concept was
introduced in as many as 130 countries.
– Quality Circle concept is well established only in
ASEAN countries like Japan, South Korea, Peoples
Republic of China, Taiwan etc.
72
 QUALITY CONTROL CIRCLE
• Introduction of Quality Circle Concept
– Quality circles are small groups of volunteer
workers who come from the same work unit
or who do similar work.
– Meet regularly to identify problems and
improvements within their area of
responsibility.

73
 DEFINITION OF QUALITY CIRCLE
Original
• Quality circles is a small group that performs
voluntarily for improvement activities within the
same workshop.
• This small group carries on continuously as a part of
company wide improvement activities with the focus
on self and mutual developments and improvements
within the workshop, utilizing quality control
techniques with the participation of all members.

74
 DEFINITION OF QUALITY CIRCLE
Revised
• Based on the experience and knowledge
gained over 30 years and more, Japanese
body for the movement in Japan has
modified the definition of the concept in
1995.

75
 DEFINITION OF QUALITY CIRCLE
Revised version is given below:
• Q.C. Circle is a small group in which
people who work in the first line
workplace, continually improve and
maintain the quality of products,
services, job and so on.

76
 DEFINITION OF QUALITY CIRCLE
Comments on revised definition of quality
circles:
• As we can see, revised version clarifies
many important points. This version can
be broadly divided into two aspects i.e.
a) Connected to workman.
b) About managerial responsibilities and activities
needed to be carried out by them.

77
 STORY OF MANAGER OF A LEADING
AUTOMOBILE ASSEMBLY PLANT
• In 1974, when I was Manufacturing Manager
for passenger car assembly plant, in my
department there were 50 QC Circles out of
850 production workers which completed 198
projects being reported to me in three months.
• I showed these projects to my 6
superintendents, 36 foremen, asking how many
projects (problems) they were aware of in
advance.
78
 STORY OF MANAGER OF A LEADING
AUTOMOBILE ASSEMBLY PLANT

<Sample Size>
Manager
N=198 QCC Projects 4
% General Foremen
7% (Superintendents)

Foremen
79%

First Line
100% Workers

79
 WHY THIS STRUCTURE?

• A structure is a pre-requisite for performance.

For any structure to be meaningful, it should
first start with the top management’s policies
which should be laid down and linked to the
organization’s objectives and goals.
• The next step is to work out strategies to
achieve these through structure and systems
by spelling out roles for a concerted effort to
accomplish results.
80
 WHY THIS STRUCTURE?
Steering Committee Quality Circle

M.D./C.E.

Advisor
(Dept. Manager)
Advisors
Facilitator
(AM/Engineer)
Members
Departmental Heads) Circle Leader
(Team Leader)

Coordinator
Members

81
 WORKMAN ASPECTS

a) It is a small group activity for the first line

workplace i.e. for grass root level employees.
b) Purposes are:
i. To continually improve and maintain the quality
of products, services jobs and so on.
ii. It is volunteer activity.
iii. To utilize the Quality Control concept and
technique i.e. utilizing elementary statistical
system, planning tool, etc.
82
 WORKMAN ASPECTS

iv. To bring self-development and mutual

development of the grass root level employees
by developing their capability to reach self
actualization.
v. To make workplace better.
vi. Customer satisfaction comes by high quality
product at lower cost, free from defects, timely
delivery and prompt services.
vii. Social contribution.

83
 THE FUNCTION OF CIRCLE
LEADER/ASSISTANT CIRCLE LEADER
• A leader is a person chosen by the
member of the circle through consensus.
• For leader to play an effective role, he
should be given the requisite education
and training to lead and to develop
leadership qualities and skills.

84
 THE FUNCTION OF CIRCLE
LEADER/ASSISTANT CIRCLE LEADER
• Since Quality circle conceptually is also
“applied management” at grass root
level, they are to be given training on
management aspects.
• Aside from the facilitator, the success of
the Quality Circle will depend upon how
well the leader leads the group.

85
 THE OTHER IMPORTANT FUNCTIONS OF A
LEADER ARE
1) Conduct meeting regularly.
2) Moderate in meetings.
3) Involve all the members.
4) Keep the cohesiveness of the group.
5) Coordinate.
6) Take the team towards achieving the goals.

86
 THE OTHER IMPORTANT FUNCTIONS OF A
LEADER ARE
7) Takes care of:
i. Task behaviour of the group.
ii. Team maintenance.
iii. Disruptive or negative behaviour in the group.

87
 THE FUNCTION OF MEMBER

• Members join the group with full

understanding of the concept and
philosophy of Quality Circle.
• It is recommended for their growth and
natural aspiration.
• They should get involved whole-heartedly
for their development and growth.

88
WHAT SHOULD BE THE SIZE OF THE QUALITY
CIRCLE?
• An ideal size is five to eight members but
they can be upto a maximum of ten.
• The size must never be so large that a
member cannot have sufficient time to
participate and contribute at each
meeting.
• Too few members would also tend to
make circle dormant.
89
THE FUNCTION OF ADVISORY/FACILITATOR

• Advisor/Facilitator should be a role model and

a value shaper.
• Advisor/Facilitator could be rotated once in
two years, or as may be deemed fit by the
organization.

90
 MANAGERIAL RESPONSIBILITY

In order make QC Circle successfully contribute to

the enterprises:
i. Managers should implement TQM or such
similar philosophy by themselves so that they
can fulfill the primary responsibility to the
enterprises.
ii. Such knowledge gained help to give the
required environment for Quality Circle
activities.
91
 MANAGERIAL RESPONSIBILITY

iii. Continually give the appropriate guidance and

support.
iv. Quality Circle activities help to create a respect
for support.
v. Also enables to bring participation from every
person.
vi. Quality Circle activities are important for
human resource development and workplace
utilization.
92
KAIZEN/QUALITY CIRCLE-A STEP BY STEP
APPROACH
1) Circle formation
2) Reason for theme selection
3) Current and problem analysis
4) Workout solution & make a plan
5) Establish goals
6) Trial run and countermeasures
7) Result confirmation
8) Standardization
9) Achievements
10) Review and workout future plan
11) Summarizing and reporting

93
 DEFINITION – COST OF QUALITY

• Quality is measured by the cost of quality which

is the expense of non conformance – the cost of
doing things wrong.
(Philip Crosby “Quality is Free”)
• Quality costs usually are defined as costs incurred
because poor quality may or does exist.
• Quality and cost are sum, not a difference –
complementary, not conflicting objectives.
(Armand Feigenbaum)
94
 QUALITY COSTS

The costs of quality are generally classified into

four categories:
1. Prevention
2. Appraisal
3. Internal failure
4. External failure

95
 QUALITY COSTS

• Prevention Costs:
Prevention costs include those activities which
remove and prevent defects from occurring in
the production process. Included are such
activities as quality planning, production
reviews, training, and engineering analysis,
which are incurred to ensure that poor quality is
not produced.

96
 QUALITY COSTS

• Appraisal Costs:
Appraisal costs are those costs incurred to
identify poor quality products after they occur
but before shipment to the customers.
Inspection activity is an example.

97
 QUALITY COSTS

• Failure Costs:
Failure costs are those incurred either during the
production process (internal) or after the
product is shipped (external).
Internal Failure Costs:
Internal failure costs include such items as
machine downtime, poor quality materials,
scrap, and rework.

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 QUALITY COSTS

External Failure Costs:

External failure costs include returns and
allowances, warranty costs, and the hidden
costs of customer dissatisfaction and lost
market share. Recognition of the relative
importance of external failure costs has
caused many companies to broaden their
perspective from product quality to total
customer satisfaction as the key quality
measure. 99
 QUALITY COSTS

• The figure-1 is an attempt to convey the idea

of a iceball, where only 10% is visible and 90%
is hidden from view. The analogy is a good
one because visible 10% comprises of such
items as scrap, rework, inspection, returns
under warranty, and quality assurance costs;
for many companies these comprise what
they believe to be the total costs.

100
 QUALITY COSTS

• When the hidden costs of quality are

computed, controlled, and reduced, a firm can
achieve the benefits shown at the bottom of
figure-1.
• Of these types of costs, prevention costs
should probably take priority because it is
much less costly to prevent defect a defect
than to correct one.

101
 QUALITY COSTS

• The principle is like the traditional medical

axiom: “An ounce of prevention is worth a
pound of cure”.
• The relationship between these costs is
reflected in the 1-10-100 rule depicted in
figure-2.
• One dollar spent on prevention will save $10
on appraisal and $100 on failure costs.

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 QUALITY COSTS

• As one moves along the stream of events from design

to delivery or “dock-to-stock”, the cost of errors
escalates as failure costs become higher and the payoff
from an investment in prevention becomes greater.
• Computer systems analysts are aware of this and
understand that an hour spent on better programming
or design can save upto ten hours of systems retrofit
and redesign.
• One general manager of Hewlett-Packard’s computer
systems division observed.

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 QUALITY COSTS

• “The earlier you detect and prevent a defect the

more you can save. If you catch a two cent resistor
before you use it and throw it away, you lose two
cents. If you don’t find it until it has been soldered
into a computer component, it may cost $10 to
repair the part. If you don’t catch the component
until it is in the computer user’s hands, the repair
will cost hundreds of dollars. Indeed, if a $5000
computer has to be repaired in the field, the
expense may exceed the manufacturing cost”.
104
 Defects Scrap Rework Inspection Returns
Warranty Quality Assurance
Prevention Appraisal
Design review Vendor surveillance
Zero defects program Receiving inspection
Supplier training Product acceptance
Supplier evaluation Process control
Specification review Inspection labor
Quality audits Quality control labor
Preventive maintenance Testing
Engineering changes Equipment costs
Product liability
Increased Overhead

105
 Defects Scrap Rework Inspection Returns
Warranty Quality Assurance
Internal Failure External Failure
Downtime Customer affairs
Engineering changes Purchase changes
Excess inventory Service after sales
Disposal costs Product liability
Reinspection Lost market share
Delivery delay

Figure - 1
106
 Prevention 1

10
$
Correction $
$ 100
$

Failure
$ $

$ $

$ $

Figure – 2 1-10-100 Rule

107
 BENEFITS OF COSTS OF QUALITY CONTROL
Reduced Items Improved Items
Inventory Finished goods Return on Scale
levels assets economies
Lead-time Warehouse Return on Scheduling
space investment
Time-to- Order process Vendor Productivity
market time relations
Turnaround Dock-to-stock Transportation
Work in process Learning curve

108
THE USE OF QUALITY COST INFORMATION

Quality cost information can be used in a number of

ways:
• To identify profit opportunities (every dollar saved
goes to the bottom-line).
• To make capital budgeting and other investment
decisions (quality, as opposed to payback, is the
driver of decision to purchase new equipment or
dispose off unneeded ones; equipment for network
is not needed if the rework is eliminated or reduced).

109
THE USE OF QUALITY COST INFORMATION

• To improve purchasing and supplier-related

costs.
• To identify waste in overhead caused by activities
not required by the customer.
• To identify redundant systems.
• To determine whether quality costs are properly
distributed.
• To establish goals for budget and profit planning.

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THE USE OF QUALITY COST INFORMATION

• To identify quality problems.

• As a management tool for comparative
measure of input-output relationships (e.g.,
the cost of a reliability effort versus warranty
costs).
• As a tool of Pareto Analysis to distinguish
between the “vital few” and the “trivial
many”.

111
THE USE OF QUALITY COST INFORMATION

• As a strategic management tool to allocate

resources for strategy formulation and
implementation.
• As an objective performance appraisal
measure.

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 BENCHMARKING
1) General:
• How do we know whether our group is good,
average or at the top of the industrial sector of
our concern.
• The question is well answered through the
Benchmarking Practices.
• Benchmarking is a technique used by the
ambitious companies around the world in the
most important aspects of their operations.
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 BENCHMARKING
• All companies have one thing in common: a
recognition that profitability and growth come
from a clear understanding of how the
business is doing, not just last year, but against
the best they can measure.

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 BENCHMARKING
2) Leading Note:
• Nobody is good at everything. One doesn’t
need to be the best at everything.
• One may be actually the second best in many
performance factors and still be the best overall.
• So, an organization is supposed to set about
learning how people do things and get to the
top in key elements.

115
 BENCHMARKING
3) Points to Watch:
• Too much information is as bad as too little.
• Gather only the information you need to make
a direct comparison of performance.
• If you have properly defined your benchmark
in the first place, you will be dealing with
manageable and useful data.

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 BENCHMARKING
• Once you have a higher level of performance
in a particular activity, one should:
Quantify it, as closely as possible.
Make sure you are comparing like with like.
Get other managers’ opinion on the lessons you
can learn from the other companies’ experiences.

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 BENCHMARKING
4) Key Questions:
These are:
• Remember that the most important issues
may change with time.
• Don’t try to benchmark too many things to
begin with.
• Don’t waste time benchmark things that are
“just nice to know”.
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 BENCHMARKING
• The more precisely you define what you want
to measure.
• Before you start comparing with other
companies, test the benchmark within your
own organization, to make sure they really
work.

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 BENCHMARKING
5) Outline Plan for Benchmark:
• You can benchmark almost any activity that can be
measured. In practice’ however, we shall normally
want to start with those things, we are really good
at to be successful in our benchmarking processes
or activities, which do not support any of these
statements, should be disregarded, as the benefits
will be limited compared to those that could be
achieved by deploying sources to other areas.

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 BENCHMARKING FEATURES

Change
Measurement Review

BENCHMARKING FEATURES
121
FOCUSING BENCHMARKING

Mission

BENCHMARKING
Critical
Processes

Critical Success
Factors

122
 THE MAIN CHARACTERISTICS OF
BENCHMARKING
The main characteristics of benchmarking are:
• It is a corporate wide applicable tool.
• It is process-driven and not individually
focused.
• It comes in various forms and can focus on
“what, where, how” (practices) and “how
much, how big, how small” (metrics).

123
 THE MAIN CHARACTERISTICS OF
BENCHMARKING
• It is based on continuous improvement and
therefore is an integral component of total
quality management.
• It is a powerful culture change agent and helps
prevent complacency through developing the
discipline of focusing externally.
• It is knowledge based and brings in state of
the art thinking all the time.

124
SELECTING BENCHMARKING PARTNERS

Benchmarking
Benchmarking
Potential benchmarking partners
Type
Type

Comparable sites, branches, sections, departments

Internal
within the business

Competitor Within the same industry sector

Functional Same function across all industry fields

Generic All industry fields

125
 FOUR MAIN TYPES OF BENCHMARKING

There are four types of benchmarking:

1) Internal Benchmarking:
a) It is the continuous effort of establishing
good practice uniformly and company wide
by continuously comparing what takes
place in various operations of business
organizations.

126
FOUR MAIN TYPES OF BENCHMARKING

b) The main advantage of this type of

benchmarking is the ease of
implementation with a low requirement in
terms of resources and time.
c) The disadvantage is that it is directed only
to an internal standard of performance.

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 FOUR MAIN TYPES OF BENCHMARKING

2) Competitive Benchmarking:
a) It aims at comparing specific models or
junctions with main competitors.
b) It is also described as reverse engineering
since the starting point in most cases has
been the product and looking at its
characteristics and functionality.

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FOUR MAIN TYPES OF BENCHMARKING

c) The advantage of this type of

benchmarking is the direct comparison
with main competitors.
d) But the disadvantage is – the competitors’
data may not point to best practices.

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 FOUR MAIN TYPES OF BENCHMARKING

3) Functional Benchmarking:
a) This type of benchmarking compares specific
functions with best in industry and best in
class.
b) It is a positive approach in benchmarking
because it is only related to specific functions.
c) It may not be of benefit to other operations
in the business organizations concerned.

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 FOUR MAIN TYPES OF BENCHMARKING

3) Generic Benchmarking:
a) This is the ultimate in terms of
benchmarking applications.
b) This approach applies to all functions of
business operations and encourages the
continued effort of comparing functions
and processes with those of best in class.

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 DEFINITIONS OF BENCHMARKING

Definitions of benchmarking are many but an

analysis of each reveals similar characteristics:
1) An enabler for achieving and maintaining
high levels of competitiveness.
2) The measurement of business performance
against the best of the best through a
continuous effort of constantly reviewing
processes, practices and methods.

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 DEFINITIONS OF BENCHMARKING

3) Benchmarking is a process which can be

characterized by a standard (an excellence
point obtained) and variables (expectations,
performance and measurements).
4) The continuous process of measuring our
products, services and business practices
against the toughest competitors and those
companies recognized as industry leaders.

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 DEFINITIONS OF BENCHMARKING

5) Emulating the best by continuously

implementing change and measuring
performance.
Comments:
Differences are due largely to a change in focus
rather than any fundamental disagreement.

134