Chapter 5

Managing Quality
Dr Selvi @ Kausiliha Vijayan
Outline
• Global Company Profile: Arnold Palmer Hospital
• Quality and Strategy
• Defining Quality
• Total Quality Management
• Tools of TQM
• The Role of Inspection
• TQM in Services
Managing Quality Provides a
Competitive Advantage
Arnold Palmer Hospital
• Delivers over 14,000 babies annually
• Virtually every type of quality tool is employed
– Continuous improvement
– Employee empowerment
– Benchmarking
– Just-in-time (JIT)
– Quality tools
Learning Objectives
When you complete this chapter you should be
able to:
6.1 Define quality and T QM
6.2 Describe the ISO international quality standards
6.3 Explain Six Sigma
6.4 Explain how benchmarking is used in TQM
6.5 Explain quality robust products and
Taguchi concepts
6.6 Use the seven tools of TQM
Quality and Strategy
• Managing quality supports differentiation, low cost, and
response strategies
• Quality helps firms increase sales and reduce costs
• Building a quality organization is a demanding task
Two Ways Quality Improves
Profitability
Figure 6.1
The Flow of Activities
Figure 6.2
Defining Quality (1 of 2)
An operations manager’s objective is to build a total
quality management system that identifies and satisfies
customer needs
Defining Quality (2 of 2)
The totality of features and characteristics of a product or
service that bears on its ability to satisfy stated or implied
needs
American Society for Quality
Different Views
• User based: better performance, more features
• Manufacturing based: conformance to standards, making
it right the first time
• Product based: specific and measurable attributes of the
product
Implications of Quality
1. Company reputation
– Perception of new products
– Employment practices
– Supplier relations
2. Product liability
– Reduce risk
3. Global implications
– Improved ability to compete
Malcolm Baldrige National Quality
Award
• Established in 1988 by the U.S. government
• Designed to promote TQM practices
• Recent winners include
Bristol Tennessee Essential Services, Stellar Solutions,
Adventist Health Castle, MidwayUSA, Charter School of
San Diego, Mid-America Transplant Services, Hill Country
Memorial, Elevations Credit Union, MESA Products Inc.
Baldrige Criteria
Applicants are evaluated on:

CATEGORIES POINTS
Leadership 120
Strategic Planning 85
Customer Focus 85
Measurement, Analysis, and Knowledge
90
Management
Workforce Focus 85
Operations Focus 85
Results 450
ISO 9000 International Quality
Standards (1 of 2)
• International recognition
• Encourages quality management procedures, detailed
documentation, work instructions, and recordkeeping
• 2015 revision gives greater emphasis to risk-based
thinking
• Over 1.6 million certifications in 201 countries
• Critical for global business
ISO 9000 International Quality
Standards (2 of 2)
• Management principles
1. Top management leadership
2. Customer satisfaction
3. Continual improvement
4. Involvement of people
5. Process analysis
6. Use of data-driven decision making
7. A systems approach to management
8. Mutually beneficial supplier relationships
Costs of Quality (1 of 2)
• Prevention costs - reducing the potential for defects
• Appraisal costs - evaluating products, parts, and services
• Internal failure costs - producing defective parts or service
before delivery
• External failure costs - defects discovered after delivery
Costs of Quality (2 of 2)
Takumi
A Japanese character that
symbolizes a broader
dimension than quality, a
deeper process than
education, and a more perfect
method than persistence
Leaders in Quality (1 of 2)
Table 6.1 Leaders in the Field of Quality Management
LEADER PHILOSOPHY/CONTRIBUTION
W. Edwards Deming Deming insisted management accept responsibility for
building good systems. The employee cannot produce
products that on average exceed the quality of what
the process is capable of producing. His 14 points for
implementing quality improvement are presented in
this chapter.
Joseph M. Juran A pioneer in teaching the Japanese how to improve
quality, Juran believed strongly in top-management
commitment, support, and involvement in the quality
effort. He was also a believer in teams that continually
seek to raise quality standards. Juran varies from
Deming somewhat in focusing on the customer and
defining quality as fitness for use, not necessarily the
written specifications.
Leaders in Quality (2 of 2)
Table 6.1 Leaders in the Field of Quality Management
LEADER PHILOSOPHY/CONTRIBUTION
Armand Feigenbaum His 1961 book Total Quality Control laid out 40 steps
to quality improvement processes. He viewed quality
not as a set of tools but as a total field that integrated
the processes of a company. His work in how people
learn from each other’s successes led to the field of
cross-functional teamwork.
Philip B. Crosby Quality Is Free was Crosby’s attention-getting book
published in 1979. Crosby believed that in the
traditional trade-off between the cost of improving
quality and the cost of poor quality, the cost of poor
quality is understated. The cost of poor quality should
include all of the things that are involved in not doing
the job right the first time. Crosby coined the term zero
defects and stated, “There is absolutely no reason for
having errors or defects in any product or service.”
Ethics and Quality Management
• Operations managers must deliver healthy, safe, quality
products and services
• Poor quality risks injuries, lawsuits, recalls, and regulation
• Ethical conduct must dictate response to problems
• All stakeholders must be considered
Total Quality Management
• Encompasses entire organization from supplier to
customer
• Stresses a commitment by management to have a
continuing companywide drive toward excellence in all
aspects of products and services that are important to the
customer
Deming's Fourteen Points (1 of 2)
Table 6.2 Deming's 14 Points for Implementing Quality
Improvement
1. Create consistency of purpose

2. Lead to promote change

3. Build quality into the product; stop depending on inspections to catch

problems
4. Build long-term relationships based on performance instead of awarding
business on price
5. Continuously improve product, quality, and service

6. Start training

7. Emphasize leadership
Deming's Fourteen Points (2 of 2)
Table 6.2 Deming's 14 Points for Implementing Quality
Improvement
8. Drive out fear

9. Break down barriers between departments

10. Stop haranguing workers

11. Support, help, and improve

12. Remove barriers to pride in work

13. Institute a vigorous program of education and self-improvement

14. Put everyone in the company to work on the transformation

Seven Concepts of TQM
1) Continuous improvement
2) Six Sigma
3) Employee empowerment
4) Benchmarking
5) Just-in-time (JIT)
6) Taguchi concepts
7) Knowledge of TQM tools
Continuous Improvement (1 of 2)
• Never-ending process of continuous improvement
• Covers people, equipment, suppliers, materials,
procedures
• Every operation can be improved
Shewhart's PDCA Model
Figure 6.3
Continuous Improvement (2 of 2)
• Kaizen describes the ongoing process of unending
improvement
• TQM and zero defects also used to describe continuous
improvement
Six Sigma (1 of 3)
• Two meanings
– Statistical definition of a process that is 99.9997%
capable, 3.4 defects per million opportunities (DPMO)
– A program designed to reduce defects, lower costs,
save time, and improve customer satisfaction
• A comprehensive system for achieving and sustaining
business success
Six Sigma (2 of 3)
Figure 6.4
Six Sigma Program
• Originally developed by
Motorola, adopted and
enhanced by Honeywell
and GE
• Highly structured approach
to process improvement
• A strategy
• A discipline – DMAIC
• A set of 7 tools
Six Sigma (3 of 3)
• Defines the project’s purpose, scope, DMAIC Approach
and outputs, then identifies the
required process information keeping
in mind the customer’s definition of
quality
• Measures the process and collects
data
• Analyzes the data, ensuring
repeatability and reproducibility
• Improves by modifying or
redesigning existing processes and
procedures
• Controls the new process to make
sure performance levels are
maintained
Implementing Six Sigma (1 of 2)
• Emphasize defects per million opportunities as a standard
metric
• Provide extensive training
• Focus on top management leadership (Champion)
• Create qualified process improvement experts (Black
Belts, Green Belts, etc.)
• Set stretch objectives
Implementing Six Sigma (2 of 2)
• Emphasize defects per million opportunities as a standard
metric
• Provide extensive training
• Focus on top management leadership (Champion)
• Create qualified process improvement experts (Black
Belts, Green Belts, etc.)
• Set stretch objectives

This cannot be accomplished without a major

commitment from top level management
Employee Empowerment
• Getting employees involved in product and process
improvements
– 85% of quality problems are due to materials and process
• Techniques
1. Build communication networks
that include employees
2. Develop open, supportive
supervisors
3. Move responsibility to
employees
4. Build a high-morale
organization
5. Create formal team structures
Quality Circles
• Group of employees who meet regularly to solve problems
• Trained in planning, problem solving, and statistical
methods
• Often led by a facilitator
• Very effective when done properly
Benchmarking
Selecting best practices to use as a standard for
performance
1. Determine what to benchmark
2. Form a benchmark team
3. Identify benchmarking partners
4. Collect and analyze benchmarking information
5. Take action to match or exceed the benchmark
Best Practices for Resolving
Customer Complaints
Table 6.3

BEST PRACTICE JUSTIFICATION

Make it easy for clients to complain It is free market research

Respond quickly to complaints It adds customers and loyalty

Resolve complaints on first contact It reduces cost

Use computers to manage complaints Discover trends, share them, and align
your services
Recruit the best for customer service It should be part of formal training and
jobs career advancement
Internal Benchmarking
• When the organization is large enough
• Data more accessible
• Can and should be established in a variety of areas
Just-in-Time (JIT) (1 of 2)
• 'Pull' system of production scheduling including supply
management
– Production only when signaled
• Allows reduced inventory levels
– Inventory costs money and hides process and material
problems
• Encourages improved process and product quality
Just-in-Time (JIT) (2 of 2)
Relationship to quality:
• JIT cuts the cost of quality
• JIT improves quality
• Better quality means less inventory and better, easier-to-
employ JIT system
Taguchi Concepts
• Engineering and experimental design methods to improve
product and process design
– Identify key component and process variables affecting
product variation
• Taguchi Concepts
– Quality robustness
– Target-oriented quality
– Quality loss function
Quality Robustness
• Ability to produce products uniformly in adverse
manufacturing and environmental conditions
– Remove the effects of adverse conditions
– Small variations in materials and process do not
destroy product quality
Quality Loss Function (1 of 2)
• Shows that costs increase
as the product moves away
from what the customer
wants
• Costs include customer
dissatisfaction, warranty and
service, internal scrap and
repair, and costs to society
• Traditional conformance
specifications are too
simplistic
Quality Loss Function (2 of 2)
Figure 6.5
TQM Tools (1 of 2)
• Tools for Generating Ideas
– Check Sheet
– Scatter Diagram
– Cause-and-Effect Diagram
• Tools to Organize the Data
– Pareto Chart
– Flowchart (Process Diagram)
TQM Tools (2 of 2)
• Tools for Identifying Problems
– Histogram
– Statistical Process Control Chart
Seven Tools of TQM (1 of 7)
Figure 6.6
(a) Check Sheet: An organized method of recording data
Seven Tools of TQM (2 of 7)
Figure 6.6
(b) Scatter Diagram: A graph of the value of one variable vs.
another variable
Seven Tools of TQM (3 of 7)
Figure 6.6
(c) Cause-and-Effect Diagram: A tool that identifies process
elements (causes) that may effect an outcome
Seven Tools of TQM (4 of 7)
Figure 6.6
(d) Pareto Chart: A graph to identify and plot problems or
defects in descending order of frequency
Seven Tools of TQM (5 of 7)
Figure 6.6
(e) Flowchart (Process Diagram): A chart that describes the
steps in a process
Seven Tools of TQM (6 of 7)
Figure 6.6
(f) Histogram: A distribution showing the frequency of
occurrences of a variable
Seven Tools of TQM (7 of 7)
Figure 6.6
(g) Statistical Process Control Chart: A chart with time on the
horizontal axis to plot values of a statistic
Cause-and-Effect Diagrams
Figure 6.7
Pareto Charts
Flow Charts
MRI Flowchart
1. Physician schedules MRI 7. If unsatisfactory, repeat
2. Patient taken to MRI 8. Patient taken back to
room
3. Patient signs in
9. MRI read by radiologist
4. Patient is prepped
10. MRI report transferred to
5. Technician carries out physician
MRI
11. Patient and physician
6. Technician inspects film discuss
Statistical Process Control (SPC)
• Uses statistics and control charts to tell when to take
corrective action
• Drives process improvement
• Four key steps
– Measure the process
– When a change is indicated, find the assignable cause
– Eliminate or incorporate the cause
– Restart the revised process
Control Charts
Figure 6.8
Inspection (1 of 2)
• Involves examining items to see if an item is good or
defective
• Detect a defective product
– Does not correct deficiencies in process or product
– It is expensive
• Issues
– When to inspect
– Where in process to inspect
When and Where to Inspect (1 of 2)
1. At the supplier’s plant while the supplier is producing
2. At your facility upon receipt of goods from your supplier
3. Before costly or irreversible processes
4. During the step-by-step production process
5. When production or service is complete
6. Before delivery to your customer
7. At the point of customer contact
When and Where to Inspect (2 of 2)
Table 6.4 How Samsung Tests Its Smartphones
Stress testing with nail punctures, extreme
Durability
temperatures and overcharging
Visual inspection Comparing the battery with standardized models

X-ray Looking for internal abnormalities

Charge and discharge Power up and down the completed phone

Organic pollution (TVOC) Looking for battery leakage

Opening the battery cell to inspect tab welding
Disassembling
and insulation tape conditions
Accelerated usage Simulated 2 weeks of real-life use in 5 days
Checking for change in voltage throughout the
Volatility (OVC)
manufacturing process
Inspection (2 of 2)
• Many problems
– Worker fatigue
– Measurement error
– Process variability
• Cannot inspect quality into a product
• Robust design, empowered employees, and sound
processes are better solutions
Source Inspection (1 of 2)
• Also known as source control
• The next step in the process
is your customer
• Ensure perfect product to
your customer
Source Inspection (2 of 2)
• Poka-yoke is the concept of
foolproof devices or techniques
designed to pass only
acceptable products
• Checklists ensure consistency
and completeness
Service Industry Inspection (1 of 3)
Table 6.5 Examples of Inspection in Services
ORGANIZATION WHAT IS INSPECTED STANDARD
Alaska Airlines Last bag on carousel Less than 20 minutes after arrival
Airplane door opened at the gate
Less than 2 minutes after arrival at
the gate
Jones Law Office Receptionist performance Phone answered by the second
Billing ring
Attorney Accurate, timely, and correct
format
Promptness in returning calls
Hard Rock Hotel Reception desk Use customer’s name
Doorman Greet guest in less than 30
Room seconds
Minibar
All lights working, spotless
bathroom
Restocked and charges accurately
posted to bill
Service Industry Inspection (2 of 3)
Table 6.5 Examples of Inspection in Services

ORGANIZATION WHAT IS INSPECTED STANDARD

Arnold Palmer Billing Accurate, timely, and correct
Hospital Pharmacy format
Lab Nurses Prescription accuracy, inventory
Admissions accuracy
Audit for lab-test accuracy
Charts immediately updated
Data entered correctly and
completely
Olive Garden Busboy Serves water and bread within 1
Restaurant Busboy minute
Waiter Clears all entrée items and crumbs
prior to dessert
Knows and suggests specials,
desserts
Service Industry Inspection (3 of 3)
Table 6.5 Examples of Inspection in Services

ORGANIZATION WHAT IS INSPECTED STANDARD

Nordstrom Display areas Attractive, well-organized, stocked,
Department Store Stockrooms good lighting
Salesclerks Rotation of goods, organized,
clean
Neat, courteous, very
knowledgeable
Attributes Versus Variables
• Attributes
– Items are either good or bad, acceptable or
unacceptable
– Does not address degree of failure
• Variables
– Measures dimensions such as weight, speed, height,
or strength
– Falls within an acceptable range
• Use different statistical techniques
TQM In Services
• Service quality is more difficult to measure than the quality
of goods
• Service quality perceptions depend on
1) Intangible differences between products
2) Intangible expectations customers have of those
products
Service Quality
The operations manager must recognize:
• Selecting best practices to use as a standard for
performance
• The tangible component of services is important
• The service process is important
• The service is judged against the customer’s expectations
• Exceptions will occur
Service Specifications
Determinants of Service Quality
Table 6.6
Reliability involves consistency of performance and dependability
Responsiveness concerns the willingness or readiness of employees to provide
service
Competence means possession of the required skills and knowledge to perform
the service
Access involves approachability and ease of contact

Courtesy involves politeness, respect, consideration, and friendliness

Communication means keeping customers informed and listening to them

Credibility involves trustworthiness, believability, and honesty

Security is the freedom from danger, risk, or doubt

Understanding/knowing the customer involves making the effort to understand
the customer's needs
Tangibles include the physical evidence of the service
Service Recovery Strategy
• Managers should have a plan for when services fail
• Marriott's LEARN routine
– Listen
– Empathize
– Apologize
– React
– Notify
Evaluating Performance (1 of 2)
• The SERVQUAL technique
• Direct comparisons between customer service
expectations and actual service provided
• Focuses on gaps in the 10 service quality determinants
Evaluating Performance (2 of 2)
• Most common version collapses the determinants to
– Reliability
– Assurances
– Tangibles
– Empathy
– Responsiveness
What is ISO?
• ISO is the International Organization of Standardization

• ISO is an organization that develops standards for use worldwide

to help companies better manage themselves

• ISO 9001:2008 outlines criteria for a Quality Management

System (QMS)
What is ISO 9001?
• ISO 9001 is the structural framework of a quality management
system

• ISO 9001 standards are generic standards that can be applied to

any industry

• It is important to note ISO 9000 is not a product standard; it is

rather a system standard

• It promotes standardization in processes and then measures

performance
ISO 9000 Family of Standards
•ISO 9000:2008 (Quality Management Systems – Fundamentals and
Vocabulary)
•
-Defines the fundamental terms & definitions used in ISO 9000
•ISO 9001:2008 (Quality Management Systems – Requirements)
-Defines the requirements for assessing the ability to meet customer and
applicable regulatory requirements and thereby address customer
satisfaction
-Only standard in the ISO 9000 family against which third-party certification
can be carried out
•ISO 9004:2008 (Quality Management Systems – Guidance for Performance
Improvement)
-Provides guidance for continual improvement of the quality management
system to benefit all parties through sustained customer satisfaction
QMPs of ISO 9001:2008
Quality Management Principles of ISO
9001:2008
1. Customer Focus
– What, where, how and when do your customer require?
– If you ensure it, it will ascertain in return that they would buy (or
continue to buy) from you
2. Leadership
– Leadership establishes environment, culture and direction
– Good leadership creates an environment where people can become
fully involved in achieving the organization’s objectives for quality
3. Involvement of people
– People at all levels are the essence of an organization and their full
involvement enables maximum utilization of individual abilities for the
organization’s benefit
– To educate, train and motivate employees to ensure their competence
in performing tasks affecting quality, environment, health and safety
Quality Management Principles of ISO
9001:2008
4. Process approach
– A desired result is achieved more efficiently when activities and
related resources are managed as a process

5. System approach to management

– Identifying, understanding and managing interrelated processes
as a system contributes to the organization’s effectiveness and
efficiency in achieving its objectives

6. Continual improvement
– Continual improvement of the organization’s overall performance
should be the permanent objective of the organization
Quality Management Principles of ISO
9001:2008
7. Factual approach to decision making
– Effective decisions are based on the analysis of data and
information

8. Mutually beneficial supplier relationship

– An organization and its suppliers are interdependent and a
mutually beneficial relationship enhances the ability of both to
create value.
– Promote quality, environmental, health and safety principles.
– Requiring suppliers to improve their practices and encouraging
wider adoption of these principles by suppliers.
ISO 9001:2008 Structure
• Scope Section 1
• Normative References Section 2
• Terms & Definition Section 3
• Quality Management System Section 4
• Management Responsibility Section 5
• Resource Management Section 6
• Product Realisation Section 7
• Measurement, Analysis and
Improvement Section 8
QMS-Section 4
Clause-4, Quality Management System

4.1 General Requirements

4.2 Documentation Requirements
(Process Approach)

Determine what processes? General- Quality Policy, Objectives,

Quality Manual, Procedures, Documents &
Records
Sequence & Interaction of processes
Quality Manual

Control methods for processes

Control of Documents

Provided resources for processes

Control of Records

Measure and analyze processes

Improve Processes
QMS Documentation Requirements

Commitment & Policy &

Goals
Objectives

Overall summary
and system str. Quality Manual

Procedures
related to QMS Quality System Procedures
(Auditing, Document Control, Corrective Action etc.)

Technical Process Procedures, Plans

Procedures (Operation procedures, plans, test methods, specifications etc.)

Records, Reports/ Logs

(Test Reports, Defect Reports, Training records etc.)

Proofs, Evidences
Management Responsibility
• Management commitment - evidence of commitment to the
development and improvement of QMS

• Customer focus - ensure customer needs and expectations are

understood and satisfied

• Quality policy - appropriate for company, communicated and

reviewed

• Planning - quality objectives and planning

• Administration - responsibility and authority, management

representative and internal communication

• Review - QMS to be reviewed at planned intervals

Resource Management
• General – Required and competent resources

• Competence, Training & Awareness

• Infrastructure- Building, workspace, process equipment

& other services

• Facilities - workspace, equipment and supporting

services

• Work environment
Product Realization
• Product realisation is the sequence of processes and sub-processes required to
achieve the product - must be planned
• Customer-related processes - identification of requirements, product obligations and
communication
• Design and/or development - planning, inputs and outputs, review, verification and
changes control
• Purchasing - control and purchasing information
• Production and service operations - operations control, traceability, preservation and
verification
• Control of measuring and monitoring devices
Measurement, Analysis &
Improvement
• Measurement, analysis and improvement (Processes, Customer satisfaction,
Product & Equipment)
- Planning
- Customer satisfaction
- Internal audit
- Control of nonconformity
- Analysis of data
- Improvement (CA & PA)
Conclusion (Sequencing & Interaction)
 Continual Improvement
• Effectiveness of QMS must continually be improved by:
❑ Quality Policy
❑ Objectives (KPIs)
❑ Audit Results
❑ Analysis of data
❑ Corrective Actions
❑ Preventive Actions
❑ Management Reviews
ISO 9001 Implementation
Selection of External QA Consultants for ISO9001
training and advisory Implement corrective actions to meet
ISO9001:2008 requirements

ISO9001 High level Training / Awareness Sessions

Mock Audit

Gap Analysis between Existing systems & ISO9001

External 3rd Party Audit &
standards
ISO9001:2008 Certification

System Development and Document Processes, SOPs Surveillance Audits

and Work Instructions

System implementation according to the documented

Processes, SOPs and Work Instructions

Perform Internal Audits

Steps to Implement ISO 9001:2008 QMS
• Management Decision and Commitment
• Establishment of Quality Council
• Appoint your Management Representative
• Establish Quality Policy and Objectives
• Establish QMS Organization
• Provide Infrastructure and other Resources
• Review of Current QMS (Gap Analysis)
• Documentation Process (Technical & QA)
• Implementation of Processes and Monitoring through KPIs
• Perform Internal Audit
• Improve performance by corrective and preventive actions
• Perform Assessment
• External Audit and Certification
ISO 9001 Implementation and
Certification Process

Implementation Certification Maintenance

Activities Activities Activities

• Gap Analysis • Audit • Surveillance Audits

•System Design • Corrective Actions

• Implementation • Award of Certificate

& Documentation

6~12 Months 1~3 Months After each year

Some Reasons of Failure
• Over Documentation

• Emphasis on adherence and not adequacy

• Just get the certificate!

• Loss of direction and credibility

• Short term Corrective/ Preventive Actions

• Weak auditing system

Benefits of ISO Certification
Financial benefits:
• Profits are enhanced because of increased acceptability
• More work is done in less time thus increasing production rate
• Cost of quality comes down as a whole
For the Organization:
• Products are of consistent quality
• Production is more efficient with less reworks
• Export marketing is easier
• Increased market share
• Customer confidence is enhanced as they expect products of consistent
quality
For Employees:
• Better understanding of their work.
• Reduced stress level because of an efficient management system
Quality is the result of a carefully
constructed cultural environment. It has
to be the fabric of the organization, not
part of the fabric

(Philip B. Crosby)