Topic 8 Benchmarking and Quality Management (QM )

Quality Management in operations management

o Definition of terms used in Quality Management
o The evolution of quality management
o Importance and benefits of high quality
o Quality circles
o Cost of quality
o Concepts of total quality management and continuous improvement (Kaizen
Model)
o Quality control tools/statistical process control
o ISO 9000 and ISO 14000 series
o Six Sigma
o Quality Assurance
o Challenges in Quality Management
Benchmarking in Operations Management
o Meaning of benchmarking
o Purpose for benchmarking in operations management
o Types of benchmarking in operations management
o Limitation of bench marking in operations management

Quality Management in operations management

Introduction
 Modern economies are so competitive that, unless an organization brands itself to
giving its clients quality products; whether goods or services it will be kinked out
the industry regardless of the volume of investments.
 Quality entails, setting standard and maintaining those standards in everyday
activities so as to achieve long term objectives for your business or organization and
every time aiming at becoming better. The importance of quality, be it in product or
service, cannot be over emphasized and as markets have become much more
competitive - quality has become widely regarded as a key ingredient for success in
business.
That is, from giving customers what they want, when and how they want it, at the right time and
regarding value for their money.
Definitions of quality
 The concept and vocabulary of quality is elusive.

 Different people interpret quality differently. Few can define quality in measurable terms
that can be operationalized.
 When asked what differentiate their product or service, the banker will answer “service,”
health care worker will answer “quality health care,” the hotel restaurant employee will
answer “customer satisfaction,” and the manufacturer will simply answer “quality
product.” When pressed to provide a specific definition and measurement, few can do so.
Various authors define quality differently, we sample a few definitions as below;
 1. Edward deming (1986) defines quality as meeting customers’ needs both present and
future.

 2. Philip Crosby (1979) defines quality as conformance to requirements.

 3. Joseph Juran(1988) defines quality as fitness for use or purpose

 4. Ahuja (1990) defines quality as the degree to which specific product satisfies the needs
of a specific customer.
 5. feigenbaum (1991) quality is customer satisfaction at lowest cost

 6. Guespan (1998) quality = S+E+e

S – Specification requirements
E- Macro expectations of the customer for the product under consideration
e- Micro expectations which arise from the organizations communication with
potential customers
 7. Taguchi, (1986)Quality of a product is the minimum loss imparted by a product to the
society from the time the product is shipped.
 8. ISO 9000, (1988) Quality is the totality of features and characteristics of a product or
service that bear on its ability to satisfy stated or implied needs

outstanding features which characterize quality

 1. Customer satisfaction- Until a product meets/ Satisfies customer needs, wants and
expectations of the customer, then its not a quality product or service
 2. Actual experience- until a customer Uses the product/service, they can not tell whether
it’s a quality one, the customer has to experience the product either during purchase or
after using it.
 3. Technical operation of quality – the product has to function and perform whatit si
supposed to do.
 4. Quality is subjective- customers will describe quality subjectively based on their
opinions and in their own words.
 5. Conformance to requirements – A quality product has to conform set standards either
in the industry or as per requirements of the customer.
 Therefore quality can be defined as the degree of a product or service to meet or exceed
customer needs and wants.
 We can also define quality as the level to which a product or service meet set industry
standards or established customer requirements.
 Another view can also define quality as getting value for your money.

 There is an old maxim in management that says, “If you can’t measure it, you can’t
manage it,” and so it is with quality. If strategic management systems and the competitive
advantage are to be based on quality, every member of the organization should be clear
about this concept, definition, and measurement.
CONCEPTUAL FRAMEWORK FOR APPROACHES USED IN DEFINING
QUALITY (as developed by Garvin (1988)
 1. Transcendental View of Quality: Those who hold transcendental view would define
quality based on some religious belief, traditons and connotations based on what the
society cold view as moral or right.
2. Product-Based View: Product based definitions are different. Quality is viewed as
quantifiable and measurable characteristics or attributes. For example durability or
reliability can be measured (e.g. mean time between failure, fit and finish)
3. User-Based View: User based definitions are based on the idea that quality is an
individual matter, and products that best satisfy their preference
4. Manufacturing-Based View: Manufacturing-based definitions are concerned primarily
with engineering and manufacturing practices and use the universal definition of
“conformance to requirements.” Requirements, or specifications, are established design,
and any deviation implies a reduction in quality.
5. Value-Based View: Value-based quality is defined in terms of costs and prices as well as
a number of other attributes. Thus, the consumer’s purchase decision is based on quality
 (however it is defined) at the acceptable price. So what is costing lower and giving high
satisfaction will be termed as value and hence of high quality.
6. Perceived quality based approach- under this approach; customers will attach quality
based on their personal experiences and those of their families. So if a friend suggests that
a certain product is quality, it’s very likely that a customer will make a decision about that
particular product based on the information provided by the friend hence a perceived
quality.
7. Slogan based approach. This approach defines quality as per the impact of the slogans
(claims) put across by advertisement creating an imaginary meaning of quality about a
certain product. Advertisers are fond of promoting products in these terms. “Where
shopping is a pleasure” (supermarket), “We love to fly and it shows” (airline), and “It
means beautiful eyes” (cosmetics) are examples of slogans use

Dimensions of Quality

Quality in Manufacturing (products) as developed by Garvin (1988)

 1. Performance: a product’s primary operating characteristics measured in specific

quantitative terms which allows comparison and ranking e. g speed, power, acceleration
etc
 2. Extra Feature: the “bells and whistles” of a product. The non-operating characteristics
of a product that accompany a product offering. They are nonetheless very important to
the customer. Eg. A television and a remote control, a Car and the radio system, automatic
locking systems etc.
 3. Reliability: the probability of a product’s surviving over a specified period of time
under stated Conditions of use i.e being consistent, dependable over a time.
 4. Conformance: the degree to which physical and performance characteristics of a
product match pre-established standards.
 5. Durability: the amount of use one gets from a product before it physically
deteriorates or until replacement is preferable.
 6. Serviceability and maintainability: the ability to repair a product quickly and easily.
 7. Aesthetics: how a product looks, feels, sounds, tastes, or smells.
 8. Perceived quality: subjective assessment resulting from image, advertising, or brand
names. Most of these dimensions revolve around the design of the product.
Dimension of Quality in Services as developed by Parrasuramn, Zeithaml and Mr Berry.

 1. Reliability: How much reliable is the service provider? i.e dependable in delivering
what was promised
 2. Accessibility and convenience: Is the service easy to obtain?

 3. Timeliness: Will a service be performed when promised?

 4. Completeness: Are all items in the order included?

 5. Consistency: Are services delivered in the same fashion for every customer, and every
time for the same customer?
 6. Tangibility: after the service is over, is there anything to take home as a reminder of
the service experience? Also in terms of what customer can hold memory of the service
provider eg. Buildings, facilities, workers etc.
 7. Empathy or Courtesy: Do frontline employees greet each customer cheerfully when
necessary?
 8. Responsiveness: Can service personnel react quickly and resolve unexpected
problems?
Other quality dimensions cutting across for both goods and services
Time- speed with which the service is provided/delivered
Convenience – the availability and accessibility of the service.
Price – the cost of production /selling price of a product or service.

Total Quality Management

Total Quality Management (TQM) is a philosophy and approach which aims to ensure that high
quality, as defined by the customer, is a primary concern throughout an organisation and all parts
of an organisation work towards this goal. TQM does not prescribe a number of steps that must
be followed in order to achieve high quality but rather should be considered a framework within
which organisations can work. The TQM process will be dependent on factors such as customer
needs, employee skills and the current state of quality management within an organisation.
The six basic concepts of TQM
1. A committed and involved management to provide long-term top-to-bottom organisation
support.
2. An unwavering focus on the customer, both internally and externally.
3. Effective involvement and utilisation of the entire workforce.
4. Continuous improvement of the business and production process.
5. Treating suppliers as partners.
6. Establish performance measures for the process.
Total quality management stresses on three principles:
i. Customer satisfaction.
ii. Employee involvement.
iii. Continuous improvements in quality.

• Customer satisfaction is a relative concept that varies from one customer to

another. Also, a customer may be satisfied with today's products but not satisfied in
the future. For example, while one customer may consider a Ford automobile
perfectly satisfactory, another may not. Each person defines quality in relation to his
or her own needs and means at a particular point of time.
• Employee involvement in quality management is crucial in achieving and
sustaining high levels of quality. Employees may have to be empowered to take
preventive and if necessary corrective actions without management approval.
Employees must be involved in quality management by encouraging them to use
quality control tools and techniques to track performance and identify areas needing
improvement. Employee training and motivation are essential for achieving and
sustaining high levels of service quality.
• Continuous improvement is a never-ending process and is driven by knowledge
and problem solving from the producer's viewpoint; variation from specifications
cannot be tolerated. The producer must specify quality attributes of the product or
service as carefully as possible and then strive to meet those specifications. While
improving the process overtime, producers should continuously strive to improve
quality, that is doing a better job of meeting customer needs by reducing variability
in all processes and by introducing new and as better technology becomes available,
quality can be continuously improved.

Additional principles of TQM include:

Primary responsibility for product quality rests with top management.
i. Quality should be customer-focused and evaluated using customer-based
standards.
ii. The production process and work methods must be designed consciously to
achieve quality of conformance.
iii. Quality cannot be inspected into a product. So make it right the first time.
iv. Quality must be monitored to identify problems quickly and correct quality
problems immediately.
 v. Companies must work with and extend TQM programs to their suppliers to
ensure quality inputs.

Elements of TQM

 Management commitment to quality: If an organisation is serious about TQM, the

commitment to do so has to start at the top management level. Top management commitment
and involvement in implementing TQM is very crucial for the success. Top management gets
involved in setting business strategies based on using product quality as a competitive weapon to
capture the global market share and rewarding employees for achieving\excellence in product
quality.

 Focusing on the customer: Customer's needs and expectations drive the TQM system. The
characteristics that customers value more are built into products from design to after sales
service.

 Preventing rather than detecting defects: TQM prevents poor quality products or services
rather than simply to detect and sort out defects. "Prevention rather than detection" is a very
strong single characteristic of TQM. Some of the techniques of TQM which aim at defect
prevention rather than defect detection are: statistical process control, continuous process
improvement, Taguchi design of experiments, problem solving and system failure analysis.

 Universal responsibility for quality: Another basic TQM precept is that the responsibility for
quality is not restricted to only the quality assurance department, but is the guiding philosophy
started by everyone in the organisation. The traditional thinking was that inspection (or detection
rather than prevention) is necessary to ensure quality of products, thereby installing a deep belief
in people who actually manufacture the products that they are no longer responsible for the
quality of their output. In TQM approach, everyone takes responsibility for quality. As quality
improves, the inspection activity reduces and the quality assurance department gets smaller and
ultimately may disappear.

 Quality measurement: The quality measurement aspect of TQM asks the questions: Where are
we and where are we going? Quality is a measurable entity and we need to know what the
current quality levels are (Where are we?) and what quality levels we aspire to (Where we are
going?)

 Continuous improvement: TQM involves a never-ending process of continuous improvement

that covers people, equipment, suppliers, materials and procedures. The basis of the philosophy
is that every aspect of an operation can be improved. The Japanese use the word "Kaizen" to
describe the ongoing process of unending improvement-the setting and achieving of ever-higher
goals. In US, TQM, zero defects and six-sigma are used to describe such efforts. Root cause
corrective action: TQM seeks to prevent repetition of problems which were thought to have been
corrected by identifying the root causes of problems and by implementing corrective actions that
address problems at the root cause level. Problem-solving skills and failure analysis approach are
useful in this regard.

 Employee involvement and empowerment: Employee involvement means every employee is

involved in every step of the production process and every employee plays an active role in
helping the organisation meet its goals. Employee empowerment means enlarging the employee
jobs so that the added responsibility and authority is moved to the lowest level possible in the
organisation. Techniques for building employee empowerment include  building
communication networks that include employees,  developing open, supportive supervisors, 
moving responsibility from both managers and staff to production employees,  building high-
morale organisations and  Creating such formal organisational structures as teams and quality
circles.

 The synergy of teams: Taking advantage of the synergy of teams is an effective way to
address the problems and challenges of continuous improvement. Dr. Kaoru Ishikawa first
developed the concept of teams by developing quality circles in Japan. The concept of quality
circles developed into more sophisticated and focused teaming concept known as focus teams in
USA.

 Thinking statistically: Statistical methods or techniques are useful for reducing process or
product design variations for improving Quality. Statistical process control (SPC) using charts
for control of ongoing processes and Taguchi concepts for variability reduction are used for
achieving continuous improvement. These will be discussed in later chapters.

 Benchmarking: Benchmarking involves selecting a demonstrated standard of performance

that represents the very best performance for a process or activity. The steps for developing
benchmarks are:
i. Determine what to benchmark
ii. Form a benchmark team
iii. Identify benchmarking partners
iv. Collect and analyse benchmarking information and
v. Take action to match or exceed the benchmark

 Value improvement: The essence of value improvement is the ability to meet or exceed
customer expectations while removing unnecessary costs. TQM removes unnecessary costs
while simultaneously customer expectations and requirements are satisfied. However, simply
cutting cost without satisfying the customers will not result in value improvement.
 Supplier teaming: TQM aims at developing long-term relationships with a few high quality
suppliers rather than simply selecting those suppliers who supply at lowest cost.

 Training: People have to be trained to use the TQM concepts and technologies. Employees
are empowered by providing the tools necessary for continuous improvement Training is the
most basic tool for this.

THE EVOLUTION OF TOTAL QUALITY MANAGEMENT

TQM has evolved over a number of years from ideas presented by a number of quality gurus.
People like W. Shewhart developed many of the technical methods of statistical control, such as
control charts and sampling methods, which formed the basis of quality assurance. In the early
1970s however, this technical focus was subsumed by more of a managerial philosophy.
A.V. Feigenbaum introduced the concept of Total Quality Control to reflect a commitment of
effort on the part of management and employees throughout an organisation to improving
quality. There is a particular emphasis on strong leadership to ensure everyone takes
responsibility for control and there is also an emphasis on quality improvement as a continual
process – giving rise to the term continuous improvement. TQM encompasses both the
techniques of quality assurance and the approach of Total Quality Control.

A number of implementation models have been put forward by quality gurus such as Deming,
Juran and Crosby.
Input from Key Thinkers – The Quality Gurus
 W. Edwards Deming – introduced Japanese companies to the Plan-Do-Check-Act
(PDCA) cycle as a way of representing the concept of continuous improvement
 Philip Crosby – introduced the idea that companies should move towards the goal of
zero defects
 Armand V. Feigenbaum – developed the idea of Total Quality Control (TQC) and
quality at source
 Kaoru Ishikawa – credited with the concept of quality circles and suggested the use of
fishbone diagrams to identify quality problems
 Genichi Taguchi – maintains that products should be designed so that they are robust
enough to function satisfactorily despite variations in the production line or in use

THE IMPORTANCE AND BENEFITS OF HIGH QUALITY

i. Minimum scrap or rework due to reduced defectives.
ii. Reduced cost of labour and material as a result of reduced defectives.
iii. Uniform quality and reliability of product help in increasing sales turn over.
iv. Reduced variability resulting in-higher quality and reduced production
bottlenecks.
v. Reduced inspection and reduced inspection costs.
vi. Reduced customer complaints.
vii. Increased quality consciousness among employees.
viii. Higher operating efficiency.
ix. Better utilisation of resources.
x. Better customer satisfaction and employee satisfaction.
xi. Positive image for the organization

QUALITY CIRCLES

The most widespread form of an employee involvement team is the quality circle
which is defined as below. Quality circle is a small group of employees in the
same work area or doing similar type of work who voluntarily meet regularly for
about an hour every week to identify, analyse and resolve work-related problems,
leading to improvement in their total performance and enrichment of their work
life. Although the concept has had some success in white collar where concerns
are primarily with quality, cost, specifications, productivity and schedules.

By their very nature, quality circles were limited to concerns of the small group
of members and few cross-sectional problems were considered. The major
growth of quality circles occurred in the late 1970s and early 1980s, as thousands
of companies adopted the concept. However, the concept never met expectations
and widespread abandonment resulted by the late 1980s. The major reason for
failure was a general lack of commitment to the concept of participation and the
lack of interest and participation by the management. From a TQM perspective,
quality circles lack the prerequisites of integration with strategy, company goals
and management systems. Organisations can go beyond using quality circles by
creating task forces, work teams and cross-functional team

CHARACTERISTICS OF QUALITY CIRCLES

i. Small group of employees: It has been learnt by experience that the

optimum number of members in any quality circle is about 8 to 10. The
minimum and maximum number of members recommended is 5 and 15
respectively to avoid a circle becoming inactive (if members are less
 than 5) or resulting in deprivation of opportunity for active participation
by every member (if members are more than 15).
ii. Members are from the same work area or doing similar type of work: A
quality circle is a homogeneous group and not an inter-departmental or
interdisciplinary group (for example, in an assembly area, welding
section, stores department etc.).
iii. Membership of the quality circle is voluntary: Employees decide to join
the quality ' circles voluntarily. No coercion or pressure is to be exerted
on them to join or not to join, nor can anyone be barred from joining
quality circles by virtue of his being a union leader or for lack of
qualification.
iv. Members meet regularly for about an hour every week: The members of
quality circles "Should meet regularly once in a week for an hour after
their working hours or during working hours to discuss the problems
related to their work and find solutions to the problems.
v. Members meet to identify, analyse and resolve work-related problems:
Employees who work in a work place, know best what problems are
hindering achievement of good quality, productivity and optimum
performance and also how those problems could be solved. It should be
noted that only work-related problems come under the purview of the
quality circles and not other issues such as personal grievances or
demands.
vi. Members resolve work related problems leading to improvement in their
total performance: As a result of quality circles resolving work related
problems relating to quality, productivity, cost reduction, safety etc., the
total performance of the work-unit improves, resulting in both tangible
and intangible gains to the whole organisation.
vii. Quality circles enrich the work life of the employees: Quality circles
help in enriching the work life of the employees apart from attitudinal
changes, cohesive team culture etc. This is because of avoidance of
rework, greater job satisfaction, improved working environment and
better human relationships among employees. The quality of work life
(QWL) of any individual is said to be good only if he/she is enjoying the
work that he/she is doing and is happy in the work-environment and
finds his/her work meaningful.
HE CONCEPT AND PHILOSOPHY OF QUALITY CIRCLES
In organisations lacking the culture of participative management, it would be difficult for
employees to understand the role of quality circles. At the time when quality circles were first
organised in Japan, there were three basic aims which determined their activities. They are:
i. To contribute to the improvement and development of the enterprise.
ii. To respect humanity and build a happy work place. In the quality circle philosophy,
workers are not treated as a part of the machinery or equipment, but are afforded
opportunities to explore their full potential and display their true capability. The
quality circle concept enables employees to utilise their intrinsic wisdom and
creativity in the work that they are engaged in.
iii. To satisfy the higher human needs of recognition and self-development.
The Impact of Quality Circles
 Improvement of human relations and work-place morale

 Promotion of participative culture

 Enhancement of job interest

 More effective teamwork

 Reducing defects and improving quality

 Improving housekeeping, cost-effectiveness, safety etc.

 Improvement of productivity

 Enhancing problem-solving capability

 Encouraging an attitude of problem prevention.

 Improving communication and interaction

 Promotion of personal and leadership development and

 Catalysing attitudinal changes.

Quality circles pursue two types of problems:

a. those concerned with the personal well-being of the worker and
b. those concerned with the well-being of the company.
Worker's problems are concerned with the work itself, the manufacturing operations or
processes, machines, tools and equipment handled, working conditions, safety in the work
place, health hazards, working
i. Examined under three categories: Effect of quality circles on individual employee's
characteristics.
ii. Effect of quality circles on individual employee's relationship with other employees and
managerial personnel.
iii. . Effect of quality circles on the employee's and their attitudes towards the company.
 COST OF QUALITY

There are four categories:

i. Internal failure costs (costs associated with defects found before the customer
receives the product or service),
ii. External failure costs (costs associated with defects found after the customer
receives the product or service),
iii. Appraisal costs (costs incurred to determine the degree of conformance to
quality requirements) and
iv. Prevention costs (costs incurred to keep failure and appraisal costs to a
minimum).
Cost of quality is a methodology that allows an organization to determine the extent to which its
resources are used for activities that prevent poor quality, that appraise the quality of the
organization‘s products or services, and that result from internal and external failures. Having
such information allows an organization to determine the potential savings to be gained by
implementing process improvements. Quality-related activities that incur costs may be divided
into prevention costs, appraisal costs, and internal and external failure costs.

. Prevention costs
Prevention costs are incurred to prevent or avoid quality problems. These costs are associated
with the design, implementation, and maintenance of the quality management system. They are
planned and incurred before actual operation, and they could include:

 Product or service requirements - establishment of specifications for incoming materials,

processes, finished products, and services

 Quality planning - creation of plans for quality, reliability, operations, production, and
inspection  Quality assurance - creation and maintenance of the quality system

 Training - development, preparation, and maintenance of programs

2. Appraisal costs
Appraisal costs are associated with measuring and monitoring activities related to quality. These
costs are associated with the suppliers‘ and customers‘ evaluation of purchased materials,
processes, products, and services to ensure that they conform to specifications. They could
include: • Verification - checking of incoming material, process setup, and products against
agreed specifications
• Quality audits - confirmation that the quality system is functioning correctly
• Supplier rating - assessment and approval of suppliers of products and services

3. Internal failure costs

Internal failure costs are incurred to remedy defects discovered before the product or service is
delivered to the customer. These costs occur when the results of work fail to reach design quality
standards and are detected before they are transferred to the customer. They could include:

 Waste - performance of unnecessary work or holding of stock as a result of errors, poor

organization, or communication
 Scrap - defective product or material that cannot be repaired, used, or sold o
 Rework or rectification - correction of defective material or errors
 Failure analysis - activity required to establish the causes of internal product or service
failure
4. External failure costs
External failure costs are incurred to remedy defects discovered by customers. These costs occur
when products or services that fail to reach design quality standards are not detected until after
transfer to the customer. They could include:

 Repairs and servicing - of both returned products and those in the field
 Warranty claims - failed products that are replaced or services that are re-performed
under a guarantee
 Complaints - all work and costs associated with handling and servicing customers‘
complaints
 Returns - handling and investigation of rejected or recalled products, including transport
costs
Cost of quality and organizational objectives

The costs of doing a quality job, conducting quality improvements, and achieving goals
must be carefully managed so that the long-term effect of quality on the organization is a
desirable one. These costs must be a true measure of the quality effort, and they are best
determined from an analysis of the costs of quality.
 Such an analysis provides a method of assessing the effectiveness of the management of
quality and a means of determining problem areas, opportunities, savings, and action
priorities.
Cost of quality is also an important communication tool. Philip Crosby demonstrated
what a powerful tool it could be to raise awareness of the importance of quality. He
referred to the measure as the ―price of nonconformance‖ and argued that organizations
choose to pay for poor quality.
Many organizations will have true quality-related costs as high as 15 to 20 percent of
sales revenue, some going as high as 40 percent of total operations. A general rule of
thumb is that costs of poor quality in a thriving company will be about 10 to 15 percent
of operations.
Effective quality improvement programs can reduce this substantially, thus making a
direct contribution to profits. The quality cost system, once established, should become
dynamic and have a positive impact on the achievement of the organization‘s mission,
goals, and objectives.
CONCEPTS OF TQM AND CONTINUOUS IMPROVEMENT
Organisation for quality control

Quality control is a staff function concerned with the prevention of defects in

manufacturing so that items may be made right at the first time and not to be rejected
later. In order to achieve this end; several activities need to be performed.
 There must be inspection and control of incoming raw materials to ensure that they meet
specifications;
 there must be planning and control of manufacturing processes to ensure that suitable
methods are being used and that machines and equipment are performing satisfactorily;
 There must be in-process inspection to ensure that items being fabricated meet
specifications;
 there must be final inspection and testing for product performance.

In pursuance of these activities, several techniques must be employed . In order to

carryon these functions a separate department is' created which is called Quality Control
Department or simply, Department of Quality.

The person who heads this department carries the title of Manager of Quality Control,
Manager of Quality Assurance, or Chief Inspector. The level of quality control in an
organisation is influenced by several factors, namely, the quality level of significance
(e.g., 9f utmost importance in aircraft industry), the extent to which high quality
represents the company to customers, the seriousness of quality system failures (e.g.,
food and pharmaceutical industries), the complexity of manufacturing, and the policies
of customers.
 Thus, each company must establish a type of organisation which best fulfills its needs.
Frequently, the quality control department is composed of a quality engineering
function, an inspection function, and a laboratory function . It should be stated that
quality control is not the responsibility of only the personnel in the quality control
department. Everybody in the organisation must be equally responsible to ensure quality
of the end product. Quality involves the members of management who set the quality
policies, the salesmen who contract to sell products of a certain quality, the design
engineers who set the product specifications, the buyers who purchase raw materials of
the right quality, and the manufacturing personnel who are responsible for making the
product according to the prescribed specification. It is only through the wholehearted
cooperation of all the people that a sustained quality control programme can be
maintained.

Objectives of quality control

The ultimate aim of quality control is to provide products which are dependable,
satisfactory and economical. A quality control system is designed to ensure economical
production of products of uniform quality which is acceptable to the customer. Quality
control aims at preventing the defects rather than detecting the defects.

Ensuring quality

Ensuring quality involves action on several fronts. To be specific, quality control

involves the following steps:
A. Control of Engineering Quality
i. Assist in the evaluation of customer requirements to arrive at a clear
understanding of the product quality objectives.
ii. Review design documentation for conformance to design standards and practice
and for identification of potential quality problems.
iii. Validate the accuracy and completeness of design proof tests and qualification
tests.
iv. Audit the release and distribution of design documents to assure that all drawings
and specifications in use are current and correct.
v. Provide information on previous quality problems encountered for consideration in
new product designs or current product improvements.
B. Control of Purchased Material Quality
i. Assist in the evaluation and selection of potential suppliers or sub-contractors.
 ii. Review purchase orders and sub-contracts for correctness and completeness of
quality requirements.
iii. Assure that purchased material conforms to the requirements of purchase orders
and specifications.
iv. Initiate corrective action with suppliers and subcontractors when purchased
material is not of an acceptable quality level.

C. Control of Manufacturing Quality

i. Evaluate and approve manufacturing equipment, processes, testing, and test
equipment.
ii. Assure that measuring and test equipment is properly calibrated and maintained.
iii. Establish points of inspection and tests at selected points in the production
processes.
iv. Perform inspection and tests at selected points in the production processes.
v. Collect and analyse inspection and test data and provide information on
process and product quality levels.
vi. vi. Initiate corrective action on out-of-control conditions and related quality
problems
vii. Conduct follow-up to assure that corrective action is accomplished in a timely
manner.
viii. Control the handling, preservation, and packaging of material and equipment
from receipt through shipment of the final product.
D. Actions Supporting the Product after Delivery

i. Assure that product & service specifications are clear and correct.
ii. Assure that spare parts conform to quality requirements.
iii. Assure that repair and modification are performed in accordance with company quality
requirements.
iv. . Gather and analyse complaint data from the field to measure the degree of customer
satisfaction and initiate appropriate corrective action.
Benefits of Quality Control
i. Minimum scrap or rework due to reduced defectives
ii. Reduced cost of labour and material as a result of reduced defectives.
iii. Uniform quality and reliability of product help in increasing sales turn over.
iv. Reduced variability resulting in-higher quality and reduced production bottle necks.
v. Reduced inspection and reduced inspection costs.
vi. Reduced customer complaints.
vii. Increased quality consciousness among employees.
viii. Higher operating efficiency.
ix. Better utilisation of resources.
x. Better customer satisfaction and employee satisfaction.

Continuous Improvement

Continuous improvement, or Kaizen, is a method for identifying opportunities for

streamlining work and reducing waste. The practice was formalized by the popularity of
Lean / Agile / Kaizen in manufacturing and business, and it is now being used by
thousands of companies all over the world to identify savings opportunities. Many of
these ideologies can be combined for excellent results. For example, Kaizen and Kanban
can go hand-in-hand to facilitate continuous improvement.
Principles of continuous improvement

• Improvements are based on small changes, not major paradigm shifts or new inventions
This concept is important, because large changes often feel frightening and destabilizing
to organizations. By approaching change in small, incremental steps, the continuous
improvement model reduces the fear factor and increases speed to improvement. When
following this principle, the organization does not need to wait for a strategic shift or a
new product release to begin to advance.

• Ideas come from employees The continuous improvement model relies on employees,
not top management, to identify opportunities for improvement. This bottom-up
improvement is effective because employees are closest to the problems, and thus better
equipped to solve them.

• Incremental improvements are typically inexpensive to implement Employees tend to

focus on small changes that can be accomplished without a lot of expense. In fact, many
ideas from employees involve eliminating processes, rather than adding them, which is
an excellent way to be sure that every activity adds some value to the customer and
reduces wasted effort.
• Employees take ownership and are accountable for improvement Getting people to
change the way they've always done things is hard. Do you know what makes it easier?
Rolling out changes that originated from the front lines. When people come up with the
ideas to improve their own work, they intrinsically see the value of the changes.
Knowing that improvements come from their peers inspires faith in the necessity of the
 changes much more so than does a decree from senior leadership who has never actually
done the process in question.
• Improvement is reflective Constant feedback is an important aspect of the continuous
improvement model. Open communication during every phase of executing an
improvement is critical to both the final results of the improvement and to the
maintenance of employee engagement.
• Improvement is measurable and potentially repeatable It is not enough to simply make
a change and call it improvement. To achieve real improvement, the impact of change
must be measured. This makes it possible to determine if the change can be applied
successfully to other problems. Proving positive ROI also helps keep the organization
aligned around improvement.

Benefits of Continuous Improvement

1. Streamline Workflows
Working to constantly improve is the number one way in which many businesses reduce
operating overhead. Continuous improvement (sometimes known as ‗Rapid
improvement‘) is a Lean improvement technique that helps to streamline workflows. The
Lean way of working enables efficient workflows that save time and money, allowing
you to reduce wasted time and effort. For example, projects that involve shifting
deadlines, changing priorities and other complexities are usually filled with opportunities
to improve. It‘s just that no one has taken action on that opportunity.
2. Reduce Project Costs and Prevent Overages
It‘s important for a project manager to know the cost of completing a body of work. For this
reason, most project management offices benefit from knowing the amount of time it takes to get
certain types of work done. Project managers can reduce project cost and prevent overages using
forecasting software. Forecasting (versus estimating) whether a project‘s constraints are likely to
be broken is one way in which project management offices are able to increase their overall
effectiveness for the company.
3. Gain Flexibility
While many companies practice a formal version of a Lean / Agile method, other companies
enjoy the flexibility of continuous improvement as a theory while reserving the right to deviate
from the practice whenever a less formal approach is needed. For example, teams that want to
provide the space and time necessary for creativity or innovation may enforce the concept more
loosely as they seek new ways to lead in the marketplace.

QUALITY CONTROL TOOLS/STATISTICAL PROCESS CONTROL

Quality control is a process that evaluates output relative to a standard and takes corrective
action when output doesn't meet these predetermined standards. Therefore, quality control in
relation to customers would be the continuous act of making sure products, designed and
manufactured, are produced to meet and exceed the needs of customers. The purpose of quality
control is to make sure that certain processes are performing up to a company's set standards.
The statistical process control tries to correct processes that are not in line with the
predetermined limits. Lastly, process capability studies the output standards to make sure they
are up to specifications

Quality control tools include:

Seven Tools of Quality Control, Characteristics & Uses

1. Check Sheets

In their simplest form, checklists are tools that make the data collection process easier by providing pre-
written descriptions of events likely to occur. A well-designed check sheet will answer the questions
posed by the investigator.

Some examples of questions are the following:

“Has everything been done?”, “Have all inspections been performed?”,“How often does a particular
problem occur?”

They also serve as reminders that direct the attention of the data collector to items of interest and
importance. Such simple check sheets are called confirmation check sheets. Although they are simple,
check sheets are extremely useful process-improvement and problem-solving tools. Their power is
greatly enhanced when they are used in conjunction with other simple tools, such as histograms and
Pareto analysis. Ishikawa estimated that 80% to 90% of all workplace problems could be solved using
only the simple quality improvement tools.

Check sheets are great tools for organizing and collecting facts and data. By collecting data, individuals
or teams can make better decisions, solve problems faster, and earn management support.

Example of a check sheet for tracking defects at final inspection.

Check Sheet Example

The reasons for defects are listed on the left-hand side.  Each time a defect occurs, a tick mark is placed
in the column for the reason for the defect.  When the product has finished being inspected, the defects
are totaled and the total placed in the last column.

2. Graphs/Stratification

Dr. Ishikawa wrote “we draw limits on the graphs to indicate the standards for evaluation. These lines
will indicate the dispersion of the data on a statistical basis and let us know when an abnormal situation
occurs in production.” Control limits do provide a method for people to look at the same data set and
make the same conclusion.

Graphs are usually focused on raw data and showing the trends and changes in that data over time.
They are meant to be focused on the data in question and how it trends. Graphs have exact numerical
figures shown on axes, usually organized on the left and bottom of the graph. Common graph types
include dot-and-line and bar graphs. Graphs are most commonly used in analyses and situations that call
for raw and exact data.

Graphs are also known as stratification. This is the graphing by group where you are looking for patterns
based on a variety of sources. You sometimes will see this one replaced by a flow chart or a simple run
chart.

Stratification Graph by Group

It plots the output from two groups: A and B.  It is clear that group A’s production is higher each day that
Group B’s.  If you plotted one group by itself, you would have a run chart.

3. Scatter Diagrams

Definition—a scatter diagram is a plot of one variable versus another. One variable is called the
independent variable and it is usually shown on the horizontal (bottom) axis. The other variable is called
the dependent variable and it is shown on the vertical (side) axis.A scatter diagram shows the
relationship between these two types of data.

According to Dr. Ishikawa, when you talk about the relationship of two types of data, you are talking
about one of the following usually:

 a cause and effect relationship

 a relationship between one cause and another
 relationship between one cause and two causes

Figure below shows a scatter diagram for the data on conveyor speed (cm/sec) and severed length
(mm).   The scatter diagram plots paired samples of data.  For example, when the conveyor speed was
8.1, the severed length was 1046.  

Scatter Diagram Example

The scatter diagram is trying to determine if there is a positive, a negative or no correlation between the
two data sets.  If there is a positive correlation, increasing one variable increases the other.  If there is a
negative correlation, increasing one variable decreases the other.  If there is no correlation, changing
one variable does not impact the other variable.

This scatter diagram shows a positive correlation between conveyor speed and severed length.  Severed
length increases as conveyor speed increase.

4. Histogram

Histograms or Frequency Distribution Diagrams are bar charts showing the distribution pattern of
observations grouped in convenient class intervals and arranged in order of magnitude.

Histograms are useful in studying patterns of distribution and in drawing conclusions about the process
based on the pattern. A histogram tells you four things about your process:

1. What value or range of values occur most frequently (called the mode)

2. The amount of variation in the process

3. The relationship of the process variation to the specifications

4. The shape of the variation (e.g., bell shaped, skewed)

The Procedure to prepare a Histogram consists of the following steps:

1. Collect data (preferably 50 or more observations of an item).

2. Arrange all values in an ascending order.

3. Divide the entire range of values into a convenient number of groups each representing an
equal class interval. It is customary to have number of groups equal to or less than the square root of
the number of observations. However one should not be too rigid about this. The reason for this
cautionary note will be obvious when we see some examples.

4. Note the number of observations or frequency in each group.

5. Draw X-axis and Y-axis and decide appropriate scales for the groups on X-axis and the number of
observations or the frequency on Y-axis.

6. Draw bars representing the frequency for each of the groups.

7. Provide a suitable title to the Histogram.

8. Study the pattern of distribution and draw conclusion.

Example: Metal Box Thickness Histogram

The x-axis is the measurements.  The y-axis is the frequency each value or range of values occurred.  The
histogram in the example appears to be bell-shaped.  There are some data above the upper specification
limit (USL).

5. Control charts
Control chart or Shewhart control chart was introduced and developed by Walter A. Shewhart in the
1920s at the Bell Telephone Laboratories, and is likely the most “technically sophisticated” for quality
management. Dr. Ishikawa wrote “the purpose of a control chart is to determine whether each of the
points on the graph is normal or abnormal, and thus know the changes in the process from which the
data has been collected.”

Control chart makes possible the diagnosis and correction of many production troubles and brings
substantial improvements in the quality of the products and reduction of spoilage and rework. It tells us
when to leave a process alone as well as when to take action to correct trouble.

These charts allow you to identify the following conditions related to the process that has been
monitored.

• Stability of the process

• Predictability of the process

• Identification of common cause of variation

• Special conditions where the monitoring party needs to react

6. Pareto Chart

It is a bar graph of data that is used to help separate “vital few” problems from the “trivial many”
problems. It is a data-based approach to help decide what problem to work on first. An example of the
Pareto diagram is given below.

Pareto Diagram for Defective Items

This Pareto summarizes the reasons for defective items.  The item with the most defects is “caulking.”  
It is listed first.  The other reasons for defectives items are listed in descending order.  The bar height
represents how often each reason occurred.  The line on the Pareto diagram is the cumulative percent
line.  The figure gives 72% for the “connecting” bar.  These means that 72% of the defectives items were
due to “connecting” and “caulking” defects.  It is clear from the Pareto diagram that “caulking” is the
reason that needs to be addressed first.

7. Cause and Effect Diagram (Fishbone Diagram)

A cause & effect diagram, also known as a fish bone diagram shows the many possible causes of a
problem. It summarizes reasons for variations in processes. The effect is placed on the right-hand side of
the chart.  The “effect” can be a problem or a goal.  The major categories are selected.  These are often
the 4M’s, a P and an E: methods, materials, measurements, machines, environment, and people.  The
assorted reasons for variation are then brainstormed under each of the major categories.
The cause and effect diagram (Fishbone Diagram)

ISO 9000 AND ISO 14000 SERIES ISO 9000

As quality became a major focus of business throughout the world, various organisations
developed standards and guidelines. Terms such as quality management, quality control, quality
system and quality assurance acquired different meanings in different countries, within a country
and even within an industry.
As the European community moved towards the European Free Trade Agreement which went
into effect at the end of 1992, quality management became a key strategic objective. To
standardise quality requirement of European countries within the common market and those
wishing to do business with those countries, a specialised agency for standardisation, the
International Organisation for Standardisation (IOS) was founded in 1946 and composed of
representatives from the national standards bodies of 91 nations. It adopted a revised in 1994.
The IOS adopted the ISO prefix in naming the standards. 'ISO' means equal (Isotherm lines of a
weather map show equal temperatures). Organisations certified under the ISO 9000 standard are
assured to have quality equal to their peer organisations. The standards have been adopted in the
US as the ANSI 1994 series but are commonly referred to as ISO 90'0'0'. The standards are
recognised by over 1 DO' countries including India and Japan. In some foreign markets,
companies will not buy from non-certified suppliers.
Thus, meeting ISO 9000 standards is becoming a necessity for international competitiveness.
The standards are applicable to all types of manufacturing and service industries. ISO 9000
certification assures customers that a firm has designed and managed its processes to assure
delivery of a quality product. The texts of these standards released by the ISO central secretariat
in Geneva are adapted as the IS0 14000 series of standards by the Bureau of Indian Standards
(BIS). These standards embody comprehensive quality management concepts and guidance. The
control (creation, modification and deletion) of all documents related to quality management is
an important requirement of ISO 9000 covering elements such as drawings, specifications,
blueprints, work instructions, test procedures, inspection reports, calibration data and quality cost
reports.
A record retention system should be in place to facilitate the use of these documents, which are
themselves organised in three tiers –
(i) the quality manual
(ii) the work procedures and
(iii) the instructions and data records.
The ISO 9000 standards require that third party audits be performed leading to the suppliers
becoming certified. This certification is accepted by all customers, eliminating 10 to 20 different
audits by many companies interested in doing business with a supplier.
Objectives of ISO 9000 The five objectives are:
a) Achieve, maintain and seek to continuously improve product quality (including services) in
relationship to requirements.
b) Improve the quality of operations to continually meet customers' and stakeholders' stated and
implied needs.
c) Provide confidence to internal management and other employees that quality requirements are
being fulfilled and that improvement is taking place.
d) Provide confidence to customers and other stakeholders that quality requirements are being
achieved in the delivered product and
e) Provide confidence that quality system requirements are fulfilled.

Structure of ISO 9000

• The current version of the ISO 9001 standard is 9001:2015.

• In order to be certified to the ISO 9001 standard, a company must follow the
requirements set forth in the ISO 9001 Standard. The standard is used by organizations to
demonstrate their ability to consistently provide products and services that meet customer
and regulatory requirements and to demonstrate continuous improvement.
• QMS Requirements
• 1. management responsibility which involves
• Management commitment
• Customer focus
 • Quality policy
• Planning
• Responsibility, authority and communication
• Management review
• 2. resource management. The standard emphasizes on following key aspects of
resource management
• Provision of various resources
• Human resource management
• Infrastructure
• Work environment
• 3. product realization which addresses;
• Planning product realization
• Customer related processes
• Purchasing
• Product and service operations
Control of measuring and monitoring devices
• 4.measurement, analysis and improvement the std emphasizes the following
• Planning
• Monitoring and measurement
• Control of non conforming products
• Analysis of data
• Improvement
• 5. documentation of the following
• Quality policy
• Quality objectives
• Quality manuals
• Quality procedures
• Control pf documents
Quality audit procedures
Benefits of ISO 9000 Certification

An organisation must consider submitting to the compliance audit if customers demand

certification as a condition of making any purchases. Many firms now demand this certification
of suppliers, making it an important order qualifier. More specifically, three forces are boosting
the impetus for ISO 9000 certification: o International competition and customer demands. 155

• Internal processes are streamlined, improving efficiency, cost containment and savings,
whilst improving accountability and traceability

• Market realities and perceptions.

• International Competition and Customer Demands

 • A recognised mark of quality opens your business up to larger clients, both at home and
abroad
• Staff motivation is improved through greater clarity and focus on business objectives –
time and resource is spent on what really matters to the business
• A customer focus inevitably improves your customer service and referrals
• Better internal processes and customer services, ultimately improves
competitiveness leading to a higher profit potential

ISO 14000
Similar to ISO 9000 standards, the ISO 14000 series of standards was established in 1996 to
provide all industries with a structure for an "environmental management system" that will
ensure all operational processes are consistent and effective and will achieve the environmental
objectives of the organisation. ISO 14000 includes 20 separate standards covering everything
from environmental labeling and assessing the life cycle of products. The standard is based on
five principles
i. A company should define an environmental policy and ensure commitment, to its
environmental management system.
ii. A company should formulate a plan to fulfill its environmental policy.
iii. A company should develop the capabilities and support mechanisms necessary to achieve its
environmental policy, objectives and targets.
Vi A company should measure, monitor and evaluate its environmental performance
v. A company should review and continually improve its environmental management
system, with the objective of improving its overall environmental performance.

Structure
The main purpose of ISO 14001 is to define the requirements for the EMS and provides
guidance for its implementation. The standard gives a structured activity for making
environmental improvements in the organization.
The ISO 14001 environmental management systems standard contains the following key
elements; which are the general requirements for establishing and maintaining an EMS
1. Environmental policy; Management commitment, leadership and direction for
environmental activities
2. Planning; environmental aspects, impact, legal requirements, objectives and EM programs.
3. Implementation and Operation: addresses, structure and responsibility, training awareness
and competence, communication, EMS documentation, document controls, operational controls
and emergency preparedness
4. Checking and Corrective Action; monitoring, measuring, non conformance, corrective and
preventive actions.
5. Management review; this is required for continuing sustainability, adequacy and
effectiveness of EMS.
6. Continuous improvement

benefits
• Streamlining environmental processes, reducing waste and the carbon footprint of your
business
• Reducing tax, energy and insurance bills, lowering operating costs
• Reducing the risk of prosecution due to environmental breaches or failure to comply with
the law and the associated bad PR
• Providing your business with the credentials to satisfy growing market demand and open
up global business opportunities with a recognised mark of environmental efficiency
• Giving clients and those in your supply chain absolute confidence that your business will
add value and support them in their own environmental policies.
• Creates access to global markets
Six Sigma

Six Sigma is a powerful breakthrough management tool used to manage the business activity in
a smart way. Six sigma means a measure of quality that strives for near perfection.
Six sigma is a disciplined data driven approach and methodology for eliminating defects
(driving towards six sigma standard deviations between the mean and the nearest specification
limit) in any process from manufacturing to transactional and from product to service. The
statistical representation of six sigma describes qualitatively how a process is performing. To
achieve six sigma, a process must not produce more than 3.4 defects per million opportunities.
A six sigma defects is defined anything outside of customer specifications. A six sigma
opportunity is as the total quality of chance for a defect. Two approaches for six sigma are

 The six sigma DMAIC process (Define, Measure, Analyze, Improve and Control) is an
improvement system for existing processes falling below specification and looking for
incremental improvement.
 The six sigma DMADV process (Define, Measure, Analyze, Design, and Verify) is an
improvement system used to develop new processes or product at six sigma quality
level.
Six sigma is a highly disciplined process that helps us to focus on developing and delivering
nearly perfect products and services. The work six sigma is a statistical term that measures how
far the given process deviates from perfection. The central idea behind six sigma is that if you
can measure how many defects are in a process, you can systematically figure out how to
eliminate them and get as close to zero defects as possible. Six sigma is a gauge of quality and
efficiency and a measure of excellence. It is a mean of delivering top quality services and
products while virtually eliminating all internal inefficiencies. Six sigma is a federally registered
trademark and service mark of Motorola Inc. implementing six sigma manufacturing means
delivering products without defects. It means eliminating almost all defects, rework and scrap. It
includes operating processes under statistical control, controlling input variables rather than
inspecting for defects at the end of a process and it means maximizing equipment uptime and
optimizing cycle time.
Sigma is a statistical measure of variability or standard deviation in a given process through
characterization. This characterization involves assessing the potential of the process as
compared to its capability. Process potential is a statistical spread over upper and lower limits.
The actual spread is calculated from the process data collected and is calculated by multiplying
six times the standard deviation. The higher the process potential the lower the variability with
respect to the specifications limits. A six sigma process allows six standard deviations within the
specifications limits. In other words sigma is a statistical unit of measure that reflects the process
capability
Steps in Six Sigma
1. Define the project: Use process map, application area, deserved improvement, likely benefits.
It is important that the project has a high chance of successfully delivering better quality and
saving costs.
2. Measure the process: Without a relevant and accurate metric, it is not possible to analyze the
process to determine its present state and to measure it in future.
3. Analyze the data: Use soft techniques and data analysis methods to identify those parts of the
process which affect the quality or contribute to the problem and find the root cause of the
problem.
4. Improve the process: Find a permanent solution to the problem. This could involve better
forecasting, better scheduling, better procedures or better equipment.
5. Control the process: Once the improvement has been achieved, close the problem by putting
in the right procedures and management statistics.

Benefits of Six Sigma

There are numerous benefits of six sigma as a way to address issues and problems. Among the
benefits of six sigma is the decrease in defects that are allowed to reach the customer.
Other benefits of six sigma include:

 Focus on customers.
 Improved customer loyalty.
 Reduced cycle time. o Less waste. o Data based decisions.
 Time management. o Sustained gains and improvements.
 Systematic problem solving.
 Employee motivation.
 Data analysis before decision making.
 Faster to market.
 Team building

Kaizen
Kaizen "Kai" means change, and "Zen" means good (for the better). Basically kaizen is for small
improvements, but carried out on a continual basis and involve all people in the organization.
Kaizen is opposite to big spectacular innovations. Kaizen requires little investment. The principle
behind is that "a very large number of small improvements are more effective in an
organizational environment than a few improvements of large value. This pillar is aimed at
reducing losses in the workplace that affect our efficiencies. By using a detailed and thorough
procedure we eliminate losses in a systematic method using various Kaizen tools. These
activities are not limited to production areas and can be implemented in administrative areas as
well.
Kaizen Policy includes:
1. Practice concepts of zero losses in every sphere of activity.
2. Relentless pursuit to achieve cost reduction targets in all resources
3. Relentless pursuit to improve over all plant equipment effectiveness.
4. Extensive use of PM analysis as a tool for eliminating losses.
5. Focus of easy handling of operators.

Kaizen Target includes: Achieve and sustain zero loses with respect to minor stops,
measurement and adjustments, defects and unavoidable downtimes. It also aims to achieve 30%
manufacturing cost reduction.

Quality Assurance
Quality assurance is the activity of providing the evidence needed to establish confidence that the
quality related activities are being performed effectively. It is defined as "all those planned or
systematic actions necessary to provide adequate confidence that a product or service will satisfy
given requirement for quality". Quality insurance encompasses quality planning, quality control,
quality improvement, quality audit and reliability. Quality assurance comprises administrative
and procedural activities implemented in a quality system so that requirements and goals for a
product, service or activity will be fulfilled.

It is the systematic measurement, comparison with a standard, monitoring of processes and an

associated feedback loop that confers error prevention. This can be contrasted with quality
control, which is focused on process output. Quality assurance includes two principles: "Fit for
purpose" (the product should be suitable for the intended purpose); and "right first time"
(mistakes should be eliminated). QA includes management of the quality of raw materials,
assemblies, products and components, services related to production, and management,
production and inspection processes.
Purposes of Quality
Assurance By ensuring a level of quality in its products or services, the business is able to build
a positive reputation for reliability and consistency. This bolsters consumer trust and confidence
in the business and helps it compete with other businesses in the same market.