Unit Four

Quality Management
 What Is Quality?
Oxford American Dictionary
 a degree or level of excellence
American Society for Quality
 totality of features and characteristics that satisfy needs
without deficiencies
Consumer’s and producer’s perspective
 Fitness for use_ how well product or service does what it is
supposed to
 Quality of design_ designing quality characteristics into a
product or service

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Dimensions of Quality:_ Manufactured Products
 Performance_ basic operating characteristics of a product
 Features_ “extra” items added to basic features,
 Reliability_ probability that a product will operate properly
 Conformance_ degree to which a product meets pre–
established standards
 Durability_ how long product lasts before replacement;
 Serviceability_ ease of getting repairs, speed of repairs,
courtesy and competence of repair person
 Aesthetics_ how a product looks, feels, sounds, smells, or
tastes
 Safety_ assurance that customer will not suffer injury or harm
from a product
 Perceptions_ subjective perceptions based on brand name,
advertising, and like
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Dimensions of Quality:_ Services
 Time and timeliness_ how long must a customer wait for
service, and is it completed on time?
 Completeness_ is everything customer asked for provided?
 Courtesy_ how are customers treated by employees?
 Consistency_ is same level of service provided to each
customer each time?
 Accessibility and convenience_ how easy is it to obtain
service? does service representative answer you calls quickly?
 Accuracy_ is service performed right every time?
 Responsiveness_ how well does company react to unusual
situations?

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What Is Quality:_ Producer’s Perspective

 Quality of conformance_ making sure product or service is

produced according to design.

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What Is Quality:_ A Final Perspective

 Customer’s and producer’s perspectives depend on

each other
 Producer’s perspective:_ production process and
COST
 Customer’s perspective:_ fitness for use and PRICE
 Customer’s view must dominate

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Evolution of Quality Management:_ Quality
Gurus
Walter Shewart
 In 1920s, developed control charts
 Introduced term “quality assurance”
W. Edwards Deming
 Developed courses during World War II to teach statistical quality-control
techniques to engineers and executives of companies that were military
suppliers
 After war, began teaching statistical quality control to Japanese companies
Joseph M. Juran
 Followed Deming to Japan in 1954
 Focused on strategic quality planning
 Quality improvement achieved by focusing on projects to solve problems
and securing breakthrough solutions

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 Cont…

Armand V. Feigenbaum
 In 1951, introduced concepts of total quality control and
continuous quality improvement
Philip Crosby
 In 1979, emphasized that costs of poor quality far outweigh
cost of preventing poor quality
 In 1984, defined absolutes of quality management
conformance to requirements, prevention, and “zero defects”
Kaoru Ishikawa
 Promoted use of quality circles
 Developed “fishbone” diagram
 Emphasized importance of internal customer

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 Total Quality Management

A philosophy that involves everyone in an organization in a

continual effort to improve quality and achieve customer
satisfaction.
The TQM Approach
• Find out what the customer wants
• Design a product or service that meets or exceeds customer
wants
• Design processes that facilitates doing the job right the first
time
• Keep track of results
• Extend these concepts to suppliers

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 Elements of TQM

• Continual improvement
• Competitive benchmarking
• Employee empowerment
• Team approach
• Decisions based on facts
• Knowledge of tools
• Supplier quality
• Champion
• Quality at the source
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 Obstacles to Implementing TQM

• Lack of:
– Company-wide definition of quality
– Strategic plan for change
– Customer focus
– Real employee empowerment
– Strong motivation
– Time to devote to quality initiatives
– Leadership

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 Cont…
• Poor inter-organizational communication
• View of quality as a “quick fix”
• Emphasis on short-term financial results
• Internal politics and “turf” wars
Criticisms of TQM
• Blind pursuit of TQM programs
• Programs may not be linked to strategies
• Quality-related decisions may not be tied to market
performance
• Failure to carefully plan a program
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 TQM and QMS
 Total Quality Management (TQM)_ customer-
oriented, leadership, strategic planning, employee
responsibility, continuous improvement, cooperation,
statistical methods, and training and education
 Quality Management System (QMS)_ system to
achieve customer satisfaction that complements other
company systems

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Focus of Quality Management— Customers

 TQM and QMSs_ serve to achieve customer

satisfaction
 Partnering_ a relationship between a company and
its supplier based on mutual quality standards
 Measuring customer satisfaction_ important
component of any QMS, customer surveys, telephone
interviews

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Role of Employees in Quality Improvement

 Participative problem solving_ employees involved

in quality-management, every employee has
undergone extensive training
 Kaizen_ involves everyone in process of continuous
improvement

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 Six Sigma
 A process for developing and delivering
virtually perfect products and services
 Measure of how much a process deviates from
perfection
 3.4 defects per million opportunities

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Six Sigma: Breakthrough Strategy—DMAIC

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 Cost of Quality

Cost of Achieving Good Quality:

 Prevention costs _ incurred during product design
 Appraisal costs_ costs of measuring, testing, and
analysing
Cost of Poor Quality:
 Internal failure costs_ include scrap, rework, process
failure, downtime, and price reductions
 External failure costs_ include complaints, returns,
warranty claims, liability, and lost sales

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 Prevention Costs
 Quality planning costs_ costs of developing and
implementing quality management program
 Training costs_ costs of developing and putting on
quality training programs for employees
 Product-design costs_ costs of designing products
with quality characteristics
 Process costs_ costs expended to make sure
productive process conforms to quality specifications
and management
 Information costs_ costs of acquiring and
maintaining data related to quality, and development
and analysis of reports on quality performance
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 Appraisal Costs

 Inspection and testing_ costs of testing and

inspecting materials, parts, and product at various
stages and at end of process
 Test equipment costs_ costs of maintaining
equipment used in testing quality characteristics of
products
 Operator costs_ costs of time spent by operators to
gather data for testing product quality, to make
equipment adjustments to maintain quality, and to
stop work to assess quality
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 Internal Failure Costs
 Scrap costs_ costs of poor-quality products that
must be discarded, including labor, material, and
indirect costs
 Rework costs_ costs of fixing defective products to
conform to quality specifications
 Process failure costs_ costs of determining why
production process is producing poor-quality
products
 Process downtime costs_ costs of shutting down
productive process to fix problem
 Price-downgrading costs_ costs of discounting poor
quality products—that is, selling products as
“seconds”
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 External Failure Costs
 Customer complaint costs_ costs of investigating
and satisfactorily responding to a customer complaint
resulting from a poor-quality product
 Product liability costs_ litigation costs resulting
from product liability and customer injury
 Product return costs_ costs of handling and
replacing poor-quality products returned by customer
 Warranty claims costs_ costs of complying with
product warranties
 Lost sales costs_ costs incurred because customers
are dissatisfied with poor-quality products and do not
make additional purchases
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Measuring and Reporting Quality Costs

Index numbers_ ratios that measure quality costs

against a base value
 labour index_ ratio of quality cost to labor hours
 cost index_ ratio of quality cost to manufacturing
cost
 sales index_ ratio of quality cost to sales
 production index_ ratio of quality cost to units of
final product

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 The Consequences of Poor Quality

• Loss of business
• Liability
• Productivity
• Costs

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 Responsibility for Quality

• Top management
• Design
• Procurement
• Production/operations
• Quality assurance
• Packaging and shipping
• Marketing and sales
• Customer service

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 Quality Control

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 Phases of Quality Assurance

Inspection and
Inspection corrective Quality built
before/after action during into the
production production process

Acceptance Process Continuous

sampling control improvement

The least The most

progressive progressive

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 Inspection

• How Much/How Often

• Where/When
• Centralized vs. On-site

Inputs Transformation Outputs

Acceptance Process Acceptance

sampling control sampling

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Cost
Inspection Costs

Total Cost
Cost of
inspection

Cost of
passing
defectives

Optimal
Amount of Inspection

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 Where to Inspect in the Process

• Raw materials and purchased parts

• Finished products
• Before a costly operation
• Before an irreversible process
• Before a covering process
Statistical Process Control:
Statistical evaluation of the output of a process during production
Quality of Conformance:
A product or service conforms to specifications

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 Control Chart
• Control Chart
– Purpose: to monitor process output to see if it
is random
– A time ordered plot representative sample
statistics obtained from an on going process
(e.g. sample means)
– Upper and lower control limits define the
range of acceptable variation

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 Control Chart

Abnormal variation Out of

due to assignable sources control
UCL

Mean
Normal variation
due to chance
LCL
Abnormal variation
due to assignable sources

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Sample number

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 Statistical Process Control
• The essence of statistical process control is to assure
that the output of a process is random so that future
output will be random.
Statistical Process Control
• The Control Process
– Define
– Measure
– Compare
– Evaluate
– Correct
– Monitor results
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 Statistical Process Control

• Variations and Control

– Random variation: Natural variations in the
output of a process, created by countless minor
factors
– Assignable variation: A variation whose source
can be identified

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