Total Quality Management

Professional Program
Video Recording

Hesham Khalil
Before We Start
Learning Objectives
At the end of this course you will be able to:
• Describe in detail the TQM various aspects such as Quality
Management Systems, Quality Tools, and Quality
Management Models and Methodologies.
• Demonstrate ISO 9001 standard and conducting audits.
• Use quality tools, sampling, and quality costs.
• Demonstrate six sigma methodology, lean, service quality
model, planning for top quality, & satisfaction measurement.

Total Quality Management Program 2

 Contents
 Introduction
 Quality Management Systems
 Quality Tools
 QM Models and Methodologies

Total Quality Management Program 3

 Contents
 Introduction
 Quality Management Systems
 Quality Tools
 QM Models and Methodologies

Total Quality Management Program 4

Introduction
 Definitions
 History
 Evolution of Quality Management
 Quality Management Principles

Total Quality Management Program 5

Introduction
Definitions
Quality
• Quality is: “Fulfillment of requirements”
• Requirements include:
o Price
o Function
o Level of Service
o Time
o Location

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Introduction
Definitions
Quality and Grade:
• Quality as a delivered performance or result is the degree to
which a set of inherent characteristics fulfill requirements
according to ISO 9000 definition. Quality is the compliance
with the requirements.
• Grade as design intent is a category assigned to deliverables
having the same functional use but different technical
characteristics.
• The problem when a quality level fails to meet quality
requirements not when having low grade of quality.

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Introduction
Definitions
Accuracy and Precision:
• Accuracy is a measure of correctness while precision is a
measure of exactness.

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Introduction
History

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Introduction
History
Walter A. Shewhart, (1891 - 1967)
• Proposed the control chart as a method to determine when a
process was in a state of statistical control

W. Edwards Deming (1900 - 1993)

• Statistical Process Control in manufacturing
• Deming cycle - PDCA continuous improvement cycle

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Introduction
History
Joseph M. Juran (1904 - 2008)
• Quality circles
• Money is the language of management
• Juran Trilogy
o Quality Planning
o Quality Control
o Quality Improvement

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Introduction
History
Philip R. Crosby (1926–2001)
• Four Absolutes of Quality Management:
o Quality is defined as conformance to requirements
o Prevention, rather than inspection for defects
o Zero defect, rather than “that’s close enough”
o True measure of quality is the price of nonconformance

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Introduction
History
Shiego Shingo (1909–1990)
• Mistake proofing for zero defects (Poka-Yoke)
• Single-Minute Exchange of Dies (SMED)
• JIT manufacturing system

Taiichi Ohno (1912–1990)

• Toyota Production System (TPS)
• Basis for Lean Manufacturing
• Continuous-flow manufacturing
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Introduction
Evolution of Quality Management

Inspection
• Detection of defects and identification of the sources of non-
conformance
Quality Control
• Monitor and improve the conformance of products, processes
or services
Quality Assurance
• “Planned and systematic” actions necessary to assure that a
product or service will satisfy the specified requirements

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Introduction
Evolution of Quality Management

Total Quality Management

• Management system for a customer focused organization that
involves all employees in continuous improvement of all
aspects of the organization to establish a customer’s goodwill
and value-for-money reputation.

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Introduction
Evolution of Quality Management

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Introduction
Quality Management Principles
Customer
Focus

Supplier
Leadership
Relationship

Decision Involvement
Making of People

Continuous Process
Improvement Approach

System
Approach

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Introduction
Quality Management Principles
Customer Focus
• Identify customer
o Internal
o External
• Understand customer needs and
expectations
• Measure customer satisfaction and
acting on results

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Introduction
Quality Management Principles
Leadership
• Establishing a clear vision of the organization’s future
• Setting challenging goals and targets
• Providing the required resources and freedom to act
• Being proactive and leading by example
• Building trust and eliminating fear

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Introduction
Quality Management Principles
Involvement of People (Culture)
• Seeking opportunities to enhance
people competencies
• Sharing knowledge and experience
in teams and groups
• Deriving satisfaction from their work
• Being proud to be part of the
organization

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Introduction
Quality Management Principles
Process Approach (Commitment)
• Defining the process with clear responsibility.
• Identifying inputs and outputs.
• Identifying the processes interface.
• Evaluating possible risks.

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Introduction
Quality Management Principles
System Approach to Management
• Understanding the interdependencies among the processes of
the system
• Establishing resource constraints prior to action
• Structuring the system to achieve objectives in the most
efficient way
• Continually improving the system
through measurement and evaluation

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Introduction
Quality Management Principles
Continuous Improvement
• Continual improvement of products, processes and systems
• Using periodic assessments against established criteria of
excellence to identify areas for potential improvement
• Promoting prevention based activities
• Providing training on methods of
continual improvement

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Introduction
Quality Management Principles
Factual Approach to Decision Making (Control)
• Taking measurements and collecting data
• Ensuring data are sufficiently accurate
• Analyzing data using valid methods
• Understanding the value of appropriate
statistical techniques
• Making decisions and taking action based
on the results of logical analysis balance
with experience.

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Introduction
Quality Management Principles
Mutually beneficial supplier relationships
• Identifying and selecting key suppliers
• Balance short-term gains with long-term
considerations
• Sharing information and future plans
• Initiating joint development and
improvement
• Recognizing supplier improvements
and achievements

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 Contents
 Introduction
 Quality Management Systems
 Quality Tools
 QM Models and Methodologies

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Quality Management Systems
 Introduction
 ISO 9001:2018
 Auditing

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Quality Management Systems
Introduction
 About QMS
 ISO
 Product & Service Characteristics
 ISO 9001:2015
 Process-Based QMS
 Plan-Do-Check-Act
 Documents Structure
 Advantages and Disadvantages

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Quality Management Systems
Introduction
About QMS

• Not intended to be applied as standard format

• Guidelines may be applied in any product or service in any
organization type or size.
• There are differences due to:
o Organization type
o Organization size
o Product and Service

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Quality Management Systems
Introduction
ISO

• Non-governmental organization established in 1947 when

delegates from 25 countries met at the Institute of Civil
Engineers in London and decided to create a new
international organization ‘to facilitate the international
coordination and unification of industrial standards’.
• Derived from the Greek “ISOS”, meaning "equal".
• Network of the national standards institutes of 163 countries
• Central secretariat in Geneva, Switzerland.
• World's largest developer and publisher of international
standards. Total Quality Management Program 30
Quality Management Systems
Introduction
Product & Service Characteristics

Product Characteristics:
• Tangible (materialized)
• Ability to be stored
• Relatively easy to measure quality

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Quality Management Systems
Introduction
Product & Service Characteristics

Service Characteristics:
• Inability to be stored
• Required more interaction between
customer and service provider
• Relatively difficult to measure quality

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Quality Management Systems
Introduction
ISO 9001:2015

• The ISO 9000 family addresses various aspects of quality

management and provides guidance and tools for companies
and organizations who want to ensure that their products and
services consistently meet customer’s requirements, and that
quality is consistently improved.
• There are many standards in the ISO 9000 family, including:
o ISO 9000:2015 – Fundamentals And Vocabulary
o ISO 9001:2015 – International Standard for QMS
o ISO 9004:2018 – Guidance to achieve sustained success
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Quality Management Systems
Introduction
Process-Based QMS

• Focuses on the effectiveness of the quality management

system in meeting customer requirements, includes:
o Quality Management System Documentation
o Management Responsibility
o Resource Management
o Product Realization
o Measurement, Analysis and Improvement

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Quality Management Systems
Introduction
Process-Based QMS

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Quality Management Systems
Introduction
Plan-Do-Check-Act

• Plan: establish the objectives and processes necessary to

deliver results in accordance with customer requirements and
the organization's policies.
• Do: implement the processes.
• Check: monitor and measure
processes and product against
policies, objectives and requirements
for the product and report the results.
• Act: take actions to continually improve process performance.

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Quality Management Systems
Introduction
Documents Structure

Policy

Manual

Procedures

Work Instructions

Records

Job Description

Reference Documents

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Quality Management Systems
Introduction
Documents Structure

Policy:
• Few simple sentences (documented and approved)
o Scope and purpose of the organization.
o Commitment to comply with requirements
o Continually improve the effectiveness of system.
o Communicated and understood within the organization.
o Reviewed for continuing suitability.

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Quality Management Systems
Introduction
Documents Structure

Policy:
• Provide framework for establishing and reviewing Quality
objectives.
• SMART Rule
o S: Specific
o M: Measurable
o A: Agreed
o R: Realistic
o T: Time Framed
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Quality Management Systems
Introduction
Documents Structure

Manual:
• Quality Manual should at least include:
o Organizational overview
o Quality policy and objectives
o Scope of the quality management system
o Justification for any exclusion (clause 7 only)
o Sequence and interaction between processes
o List of procedure
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Quality Management Systems
Introduction
Documents Structure

Procedures:
• Describe WHO is responsible for doing WHAT, WHEN &
WHERE? Usually, HOW is described in work instructions
• Procedure Contents:
1. Purpose of procedure
2. Scope of procedure implementation
3. Explanations for operation definition
4. Responsibilities of participants in procedure execution
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Quality Management Systems
Introduction
Documents Structure

Procedures:
• Procedure Contents:
5. Forms and Templates
6. Procedure Steps
7. Flowchart (steps required to execute procedure)
8. Measurements required to evaluate the effectiveness
9. Records required to provide evidence that procedure
results are achieved
10. References Total Quality Management Program 42
Quality Management Systems
Introduction
Documents Structure

Procedures:
• Mandatory Documented Procedures:
o Control of documents
o Control of records
o Control of non-conforming product
o Corrective action
o Preventive action
o Internal Audit
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Quality Management Systems
Introduction
Documents Structure

Work Instructions:
• Detailed requirements for a specific activity
• At least should include:
o Tasks involved
o HOW these should be performed
o Standard to be used

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Quality Management Systems
Introduction
Documents Structure

Records:
• Special type of documents
• Result of applying the procedure
• Provide evidence of activities performance
• May be available in any form or medium

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Quality Management Systems
Introduction
Documents Structure

Job Description:
• Determined for each employee to define:
o Responsibility
o Authority
o Reporting and interfacing relationship
o Needed skills and competencies to accomplish the
responsibilities

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Quality Management Systems
Introduction
Documents Structure

Reference Document:
• Documentation that needs to be consulted:
o Technical Codes
o Standards
o Law
o Regulations
o Equipment's Manual

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Quality Management Systems
Introduction
Advantages and Disadvantages

Documentation Advantages:
1. Define requirements
2. Define authority and responsibilities
3. Fulfill requirements of regulation and certificates
4. Used as a base for future improvement
5. Reference for audit
6. Used in new staff orientation
• May be available in any form or medium.
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Quality Management Systems
Introduction
Advantages and Disadvantages

Documentation Disadvantages:
1. Requires resources
2. Consumes time
3. Needs continuous update
4. Limiting creativity

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Quality Management Systems
ISO 9001:2018
 1 Scope
 2 Normative References
 3 Terms and definitions
 4 Context of the organization
 5 Leadership
 6 Planning
 7 Support
 8 Operation
 9 Performance evaluation
 10 Improvement

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Quality Management Systems
ISO 9001:2018
1 Scope

- You only need to have a simply worded policy statement of your business’s
approach to quality and customers, plus a reference to meeting any statutory or
regulatory requirements as applicable

- In order to demonstrate compliance with the above scope you should develop a
simple, straightforward, structured set of records. These records should then be
used as part of your internal audits and these will be of value in external audits

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Quality Management Systems
ISO 9001:2018
2 Fundamental Concepts

- ISO 9000:2015 is a mandatory reference document. It contains all of the technical

definitions of terms used in ISO 9001 and you need to make sure that words used are
only interpreted in the way ISO 9000 directs you to

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Quality Management Systems
ISO 9001:2018
3 Terms and definitions

• No terms or definitions are included in ISO 9001:2015. To fully understand the

technical meaning of terms, it is important that you refer to ISO 9000:2015.

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Quality Management Systems
ISO 9001:2018
4 Context of the organization
• Asks you to start by understanding your organization and its context
before you start developing its quality management system (QMS). It asks
you to consider the external and internal issues that are relevant to your
organization's purpose and strategic direction and to think about the
influence these issues could have on its QMS and the results it intends to
achieve.
• This means that you need to understand your organization's external
environment, its culture, its values, its performance, and its interested
parties before you develop its QMS. Why? Because your QMS will need to
be able to manage all of these influences. Once you’ve considered all of
this, you're ready to define the scope of your QMS and to begin its
development.

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Quality Management Systems
ISO 9001:2018
4 Context of the organization

4.1 Understanding the organization and its context

4.2 Understanding the needs and expectations of interested
parties
4.3 Determining the scope of the quality management system
4.4 Quality management system and its processes

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Quality Management Systems
ISO 9001:2018
5 Leadership
• Asks your organization's top management to provide leadership for its
QMS by showing that they support it, by expecting people to focus on
quality and on customers, by expecting them to provide compliant
products and services, and by expecting them to manage risks and
opportunities. Section 5 also expects top management to establish a
quality policy and to assign QMS roles, responsibilities, and authorities.

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Quality Management Systems
ISO 9001:2018
5 Leadership

5.1 Leadership and commitment

5.2 Policy
5.3 Organizational roles, responsibilities and authorities

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Quality Management Systems
ISO 9001:2018
6 Planning
• Asks you to plan the development of your QMS. It asks you to address the
risks and opportunities that could influence your organization's QMS or
disrupt its operation and to consider how its context and its interested
parties could affect its QMS and the results it intends to achieve. Section 6
also asks you to set quality objectives and to develop plans to achieve
them. Finally, it asks you to control changes to your QMS.

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Quality Management Systems
ISO 9001:2018
6 Planning

6.1 Actions to address risks and opportunities

6.2 Quality objectives and planning to achieve them
6.3 Planning of changes

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Quality Management Systems
ISO 9001:2018
7 Support
• Asks you to support your QMS by managing communications and by
providing the necessary resources. It asks you to provide competent
people, to provide an appropriate infrastructure and environment, to
provide suitable monitoring and measuring technologies, to provide the
knowledge that is needed to support process operations, and to provide
documented information.
• It asks you to start by figuring out how extensive your documented
information should be and then asks you to select and include all the
documentation your organization needs in order to ensure that its
processes are being carried out as planned and all the documentation it
needs in order to comply with the ISO 9001 standard. It asks you to
manage the creation and modification of this documentation and to
control how it is used.
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Quality Management Systems
ISO 9001:2018
7 Support

7.1 Resources
7.2 Competence
7.3 Awareness
7.4 Communication
7.5 Documented information

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Quality Management Systems
ISO 9001:2018
8 Operation
• Asks you to develop, implement, and control the operational processes
that your organization needs in order to provide products and services and
to manage and control risks and opportunities. It asks you to clarify how
product and service requirements will be managed and how
communications with customers will be handled.

• Section 8 also asks you to establish a product and service design and
development process (when necessary), to monitor externally provided
products and services, to manage production and service provision, to
supervise product and service release, and to control nonconforming
outputs in order to prevent unintended use.

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Quality Management Systems
ISO 9001:2018
8 Operation

8.1 Operational planning and control

8.2 Requirements for products and services
8.3 Design and development of products and services
8.4 Control of externally provided processes, products and
services
8.5 Production and service provision
8.6 Release of products and services
8.7 Control of nonconforming outputs.

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Quality Management Systems
ISO 9001:2018
9 Performance evaluation
• Asks you to monitor, measure, analyze, and evaluate the performance of
your organization's QMS. It asks you to monitor customer satisfaction, to
evaluate monitoring and measuring results, to audit conformance and
performance, and to review the suitability, adequacy, and effectiveness of
your QMS.

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Quality Management Systems
ISO 9001:2018
9 Performance evaluation

9.1 Monitoring, measurement, analysis and evaluation

9.2 Internal audit
9.3 Management review

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Quality Management Systems
ISO 9001:2018
10 Improvement
• Asks you to identify opportunities to improve your organization's
processes, products and services, and to enhance customer satisfaction. It
also asks you to control nonconformities, to take corrective actions, and to
enhance the suitability, adequacy, and effectiveness of your QMS.

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Quality Management Systems
ISO 9001:2018
10 Improvement

10.1 General
10.2 Nonconformity and corrective action
10.3 Continual improvement

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Quality Management Systems
ISO 9001:2018
Summary

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Quality Management Systems
Auditing
 Definitions
 Advantages and Disadvantages
 Audit Phases

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Quality Management Systems
Auditing
Definitions

Internal Audit
• Systematic, independent and
documented process for obtaining
audit evidence and evaluating it
objectively to determine the
extent to which audit criteria are
fulfilled

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Quality Management Systems
Auditing
Definitions

Types of Audit
• 1st Party Audit: “Us On Us” –
such as internal audit
• 2nd Party Audit: “Us On Them”
– such as Supplier Audit
• 3rd Party Audit: Independent
organization perform audit on
us on behalf of other parties

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Quality Management Systems
Auditing
Definitions

Auditors Role
• To objectively audit the working practices
against standards, procedures and other
planned arrangements
• To report the results to the Management
Team and all other concerned parties
• To assist understanding and
interpretation.

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Quality Management Systems
Auditing
Advantages and Disadvantages

Advantages of Internal Audit

1. Increased confidence of system effectiveness
2. Highlights weak areas and new requirements
3. Improves understanding of the system
4. Identifies means for continual improvement
5. Supports a preventive culture

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Quality Management Systems
Auditing
Advantages and Disadvantages

Disadvantages of Internal Audit

1. Causes anxiety
2. Uses peoples time
3. Disrupts daily works

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Quality Management Systems
Auditing
Audit Phases

1. Planning Phase
2. Field Work Phase
3. Reporting Phase
4. Follow-up Phase

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Quality Management Systems
Auditing
Audit Phases

1. Planning Phase
• Scope
• Schedule & frequency
• Assign resources
• Study documents
• Determine sampling technique
• Logistic Preparation
• Notify Auditee
• Prepare Checklist
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Quality Management Systems
Auditing
Audit Phases

1. Planning Phase
• Prepare Checklist
o Structured guide
o Easy to be memorized
o Formatted
o Printed

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Quality Management Systems
Auditing
Audit Phases

2. Field Work Phase

2.1. Opening Meeting
2.2. Examination
2.3. Evaluation
2.4. Closing Meeting with Auditee

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Quality Management Systems
Auditing
Audit Phases

2. Field Work Phase

2.1. Opening Meeting
o Introductions
o Scope: what you will be examining
o Time: how long you intend to take
o Conduct: how you will conduct the audit
o Disclaimer: no problems found does not mean non exist
o Categories of findings
o Feedback: the closing meeting schedule
o Guide: sometimes required for external auditor
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Quality Management Systems
Auditing
Audit Phases

2. Field Work Phase

2.2. Examination
o Interviews
o Checking documents & records
o Observation of current activities
o Make notes - record ALL observations
o Explain possible nonconformities
o Stick to Schedule

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Quality Management Systems
Auditing
Audit Phases

2. Field Work Phase

2.2. Examination
o Auditor & Auditee Behavior
 Confrontational: Remain calm and focused
 Time wasting: Imply that you may have to extend the audit
 Distraction: Stick to the audit
 The ‘Bended Knee’: Ignore

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Quality Management Systems
Auditing
Audit Phases

2. Field Work Phase

2.2. Examination
o Questioning Techniques
 Open questions vs. Closed questions
 Ask for objective evidence
 Phrase questions to suit Auditee’s understanding
 Ask others the same questions – to ensure common understanding

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Quality Management Systems
Auditing
Audit Phases

2. Field Work Phase

2.2. Examination
o Auditor Do
 Be diplomatic
 Keep control
 Be unbiased
 Be aware and observant
 Listen
 Be prepared

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Quality Management Systems
Auditing
Audit Phases

2. Field Work Phase

2.2. Examination
o Auditor Don’t
 Give in
 ‘Nit Pick’
 Accept Anything As Fact
 Impatient
 Pessimistic
 Arrogant
 Unprofessional (Code of Ethics)
 Ignorant
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Quality Management Systems
Auditing
Audit Phases

2. Field Work Phase

2.2. Examination
o Auditee Do
 Check and read system documents
 Check your records
 Inform your department/team
 Be clear on the audit scope
 Confirm audit scope at the opening meeting
 Be brief, polite & truthful
 Do not answer questions that have not been asked

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Quality Management Systems
Auditing
Audit Phases

2. Field Work Phase

2.3. Evaluation
o The evaluation meeting (wash-up meeting) is pre-closing meeting
o The Auditee is not party to this stage
o Auditors attendance only
o Analyze the notes
o Determine Audit Results:
 Major Nonconformance
 Minor Nonconformance
 Potential Nonconformance

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Quality Management Systems
Auditing
Audit Phases

2. Field Work Phase

2.3. Evaluation
o Major Nonconformance
 Contradiction with standard and/or Documented Quality Management
System, such as:
– An applicable clause of the standard has not been addressed
– Failure of management system
 Frequency of related Minor nonconformance is unacceptable

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Quality Management Systems
Auditing
Audit Phases

2. Field Work Phase

2.3. Evaluation
o Minor Nonconformance
 Momentary lapse in the system, such as:
– Isolated incident
– Incorrectly filed
– Signature omitted

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Quality Management Systems
Auditing
Audit Phases

2. Field Work Phase

2.3. Evaluation
o Potential Nonconformance
 Not a nonconformance at the time
 But there is a risk of the observation becoming a nonconformity if ignored

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Quality Management Systems
Auditing
Audit Phases

2. Field Work Phase

2.4. Closing Meeting with Auditee
o Thank Auditee
o Disclaimer
o Present the nonconformities
o Present the observations
o Ensure understanding of all points
o Discuss corrective/preventive action
o Indicate timing of the report and general format
o Usual courtesies and leave
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Quality Management Systems
Auditing
Audit Phases

3. Reporting Phase
• Identification; Purpose, Scope, Objective
• Details of; Audit Schedule, Auditor &
Auditee, and Organization, area, location
• Reference to audited area’s documents
• Nonconformance, Observations, and Evidence
• Recommendations, Conclusions, and Summary
• Distribution List
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Quality Management Systems
Auditing
Audit Phases

4. Follow-up Phase
• Corrective action implementation & effectiveness
• Determine next audit date and scope
• Determine next follow-up date

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 Contents
 Introduction
 Quality Management Systems
 Quality Tools
 QM Models and Methodologies

Total Quality Management Program 93

Quality Tools
 Seven Basic Quality Tools
 Quality Management Tools
 Quality Costs
 Sampling

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Quality Tools
Seven Basic Quality Tools
 Cause & Effect Diagram (Fishbone Diagram) (5M Diagram)
 Flowchart (Process Maps)
 Check-Sheet
 Pareto Diagram (Vital Few) (80/20 Rule)
 Histogram
 Control Chart (with Control Limits)
 Scatter Diagrams (Correlation Charts “X&Y”)

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Quality Tools
Seven Basic Quality Tools
Cause & Effect Diagram

• Also called Fishbone, Ishikawa, or 5M Diagram.

• It is used to identify the possible reasons for a problem.
• The problem statement placed at the head of the fishbone.
• The causes are found by looking at the problem statement
and asking “why” until the actionable root cause has been
identified or until the reasonable possibilities on each
fishbone have been exhausted.

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Quality Tools
Seven Basic Quality Tools
Cause & Effect Diagram

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Quality Tools
Seven Basic Quality Tools
Flowchart (Process Maps)

• Flowcharts, which are also referred to as process maps

because they display the sequence of steps.
• Flowcharts show the activities, decision points, branching
loops, and parallel paths.
• It uses graphic symbols to depict the nature and flow of the
steps in a process.

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Quality Tools
Seven Basic Quality Tools
Flowchart (Process Maps)

• Flow

• Start and End

• Process Step

• Decision

• Document

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Quality Tools
Seven Basic Quality Tools
Check-Sheet

• Check-sheets, which are also known as tally sheets is a

structured sheet to collect and analyze data and may be used
as a checklist when gathering data.
• A check sheet Check-sheets are used to organize facts in a
manner that will facilitate the effective collection of useful
data about a potential quality problem.
• For example, data about the frequencies or consequences of
defects collected in check-sheets are often displayed using
Pareto diagrams.

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Quality Tools
Seven Basic Quality Tools
Check-Sheet

Length 1.10-1.12 1.12-1.14 1.14-1.16 1.16-1.18 1.18-1.20

First Shift 1 6 11 6 1 25

Second Shift 2 5 13 5 - 25

Third Shift 3 5 6 4 2 20

6 16 30 15 3 70

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Quality Tools
Seven Basic Quality Tools
Pareto Diagram

• Pareto diagrams used to identify the vital few sources that are
responsible for causing most of a problem’s effects.
• The categories shown on the horizontal axis exist as a valid
probability distribution that accounts for 100% of the possible
observations.
• The relative frequencies of each specified cause listed on the
horizontal axis decrease in magnitude until the default source
named “other” accounts for any non-specified causes.

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Seven Basic Quality Tools
Pareto Diagram

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Seven Basic Quality Tools
Pareto Diagram

• How to build Pareto Chart:

1. Determine the total cost then sort ascending
2. Determine the accumulative cost
3. Draw the Pareto chart and determine the vital few.

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Pareto Diagram

• Example
Total Total Acc
Item Quantity Cost Item Quantity Cost
Cost Cost Cost
A 300 50 15000 G 30 1500 45000 45000
B 40 20 800 F 50 500 25000 70000
C 150 40 6000 A 300 50 15000 85000
D 500 10 5000 C 150 40 6000 91000
E 100 20 2000 D 500 10 5000 96000
F 50 500 25000 E 100 20 2000 98000
G 30 1500 45000 H 60 20 1200 99200
H 60 20 1200 B 40 20 800 100000

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Seven Basic Quality Tools
Histogram

• Histograms, are a special form of bar chart and are used to

describe the central tendency, dispersion, and shape of a
statistical distribution.
• Unlike the control chart, the histogram does not consider the
influence of time on the variation that exists within a
distribution.
• The shape of the histogram provides insight into the pattern
of variation in the data.

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Seven Basic Quality Tools
Histogram

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Seven Basic Quality Tools
Histogram

• How to build Histogram:

1. Determine the largest and the smallest number in the
array of data and define the range.
2. Divide the range into a convenient number of class
intervals having the same size
3. Determine the number of observations falling into each
class to find the class frequency.

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Seven Basic Quality Tools
Histogram

• Example:

119 129 117 122 115 123 120 106 112 134

113 138 122 128 111 123 133 118 125 120

130 118 109 122 128 140 134 113 114 120

124 114 136 116 105 114 106 113 135 119

122 117 121 129 120 116 113 117 125 107

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Seven Basic Quality Tools
Histogram

• Bell shape
This is the classic normal distribution
• Bimodal shape
Two distinct peaks, indicating two distinct processes at work
(two shifts)
• Skewed shape
o Positive (skewed to the right)
o Negative (skewed to the left)
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Seven Basic Quality Tools
Histogram

• Standard Deviation measures variability statistically

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Seven Basic Quality Tools
Control Chart

• Control Chart is a special type of Run Chart that aims to

understand the variation. It is used to determine whether or
not a process is stable or has predictable performance.
• Upper and lower specification limits are based on
requirements of the agreement. They reflect the maximum
and minimum values allowed.
• Upper and lower control limits are different from specification
limits. The control limits are determined using standard
statistical calculations.

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Seven Basic Quality Tools
Control Chart

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Seven Basic Quality Tools
Control Chart

• The statistically calculated control limits are used to identify

the points at which corrective action will be taken to prevent
unnatural performance.
• For repetitive processes, the control limits are generally set at
±3 s around a process mean that has been set at 0 s.
• A process is considered out of control when:
1. A data point exceeds a control limit
2. 3 consecutive points are above/below the warning limits
3. 7 consecutive points are above/below the mean
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Seven Basic Quality Tools
Scatter Diagrams

• Scatter diagrams, plot ordered pairs (X, Y) and are sometimes

called correlation charts because they seek to explain a
change in the dependent variable, Y, in relationship to a
change observed in corresponding independent variable, X.
• The direction of correlation may be proportional (positive
correlation), inverse (negative correlation), or a pattern of
correlation may not exist (zero correlation).
• If correlation can be established, a regression line can be
calculated and used to estimate how a change to the
independent variable will influence the value of the
dependent variable. Total Quality Management Program 115
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Seven Basic Quality Tools
Scatter Diagrams

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Quality Management Tools
 Affinity Diagrams (similar to Mind Mapping)
 Process Decision Program Charts (PDPC) (Structures)
 Interrelationship Digraphs (Relations Diagram)
 Activity Network Diagrams (AON & AOA)
 Tree Diagrams (Decomposition Hierarchy like WBS)
 Prioritization Matrices (Weighted Criteria Decision Making)
 Matrix Diagrams (2by2 or 3by3 Matrices)

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Quality Management Tools
Affinity Diagrams

• Organizing large amounts of data in categories.

• It allows a group to creatively generate a large number of
ideas/issues and then organize them and summarize natural
groupings among them to understand the essence of a
problem and breakthrough solutions.
• Sometimes it is drawn into a mind-map

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Quality Management Tools
Affinity Diagrams

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Quality Management Tools
Process Decision Program Charts

• Used to understand a goal in relation to the steps for getting

to the goal.
• The PDPC is useful as a method for contingency planning
because it aids teams in anticipating intermediate steps that
could derail achievement of the goal.

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Quality Management Tools
Process Decision Program Charts

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Quality Management Tools
Interrelationship Digraphs

• To allow a team to systematically identify, analyze, and classify

the cause and effect relationship that exist among all critical
issues so that key drivers or outcomes can become the heart
of an effective solution.
• It encourages team members to think in multiple directions
rather than linearly.

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Quality Management Tools
Interrelationship Digraphs

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Quality Management Tools
Activity Network Diagrams

• Tool for determining shortest time for accomplishing a task

and graphically displaying activity flow.
• Example:

Activity Precedence Duration

A - 4
B A 5
C - 6
D B,C 3

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Quality Management Tools
Activity Network Diagrams

• Activity on Node (AON)

o Nodes represent activities and arrows show dependencies

A B
4 5

D
Start Finish
3

C
6

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Quality Management Tools
Activity Network Diagrams

• Activity on Arrow (AOA)

o Arrows represent activities and nodes show start and end

2
A B
4 5
C D
1 3 4
6 3

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Quality Management Tools
Tree Diagrams

• It is a planning tool used to map out the tasks that need to be

accomplished in order to achieve a primary goal and all
related sub-goals.
• It is used to subdividing major items into smaller, more
manageable components.
• It provides an easy to read graphical representation of the
work and provides a logical structure for studying an effort.

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Quality Management Tools
Tree Diagrams

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Quality Management Tools
Prioritization Matrices

• Identify the key issues and the suitable alternatives to be

prioritized as a set of decisions for implementation.
• Criteria are prioritized and weighted before being applied to
all available alternatives to obtain a mathematical score that
ranks the options.

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Quality Management Tools
Prioritization Matrices

• Averaging:
Criteria Solution 1 Score Solution 2 Score

1 10/10 5/10
2 10/10 5/10
3 5/10 10/10
4 5/10 10/10
5 5/10 10/10
Total 35/50 40/50
Total (%) 70% 80%

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Quality Management Tools
Prioritization Matrices

• Weighted Average
Solution Solution
Solution Solution
Criteria Weight 1 Actual 2 Actual
1 Score 2 Score
Score Score
1 40% 10/10 400 5/10 200
2 40% 10/10 400 5/10 200
3 10% 5/10 50 10/10 100
4 5% 5/10 25 10/10 50
5 5% 5/10 25 10/10 50
Total 900/1000 600/1000
Total (%) 90% 60%

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Quality Management Tools
Matrix Diagrams

• A quality management and control tool used to perform data

analysis within the organizational structure created in the
matrix.
• The matrix diagram seeks to show the strength of
relationships between factors, causes, and objectives that
exist between the rows and columns that form the matrix.

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Quality Management Tools
Matrix Diagrams

• 2 by 2 Matrix:

Factor Y

High 2 2 4

Low 1 1 2

1 2
Factor X
Low High
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Quality Management Tools
Matrix Diagrams

• 3 by 3 Matrix:

Factor Y

High 3 3 6 9

Med 2 2 4 6

Low 1 1 2 3

1 2 3
Factor X
Low Med High
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Quality Tools
Quality Costs
 Introduction
 Cost of Conformance
 Cost of Non Conformance
 Total Quality Costs

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Quality Costs
Introduction

• Quality costs are all the costs incurred by a business to ensure

that the total service it provide to customers conforms to the
customer’s requirement
• First suggested by Philip Crosby in his book “Quality is Free”
introduced the concept of quality cost:
o Quality is free
o It is not the quality that costs, but the lack of quality “Cost
of Poor Quality”
o 30% of a company’s expenditure are quality costs related
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Quality Costs
Introduction

• Cost of Conformance is what is spent during the work to avoid

failures, and includes:
o Prevention Cost including training, time to do it right, equipments,
and document processes.
o Appraisal Cost including testing, destructive testing loss, and
inspection
• Cost of Non-Conformance is what is spent during and after
the work because of failures, and includes:
o Internal Failure Cost including rework and scrap
o External Failure Cost including liabilities, warranty, and business loss.
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Quality Costs
Cost of Conformance

Prevention Costs
• Effects devoted to planning the quality system.
• Costs incurred in planning, implementing and maintaining a
quality management system that is intended to ensure
conformance to quality requirement.
• These costs are related to activities
which concern keeping failure and
appraisal costs at a minimum

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Quality Costs
Cost of Conformance

Prevention Costs Examples:

• Procedure Writing • Survey
• Quality Training • Vendor Evaluation and Selection
• Job Descriptions • Personnel Recruitment Interviews
• Market Analysis • Capability Studies
• Prototype • Periodical Maintenance
• Pilot Projects • Housekeeping
• Quality Incentives • Forecasting
• Safety Procedure
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Quality Costs
Cost of Conformance

Appraisal Costs
• Efforts to verify that quality is being
obtained.
• Costs incurred to appraisal of the
state of products and processes in
order to assess whether or not the
products/process satisfy given
requirement

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Quality Costs
Cost of Conformance

Appraisal Costs Examples:

• Material Inspection • Re-calculation
• Activity Inspection • Drawing Checking
• Laboratory Test • Design Review
• Shipping Inspection • Final Inspection
• Audit • In-Process Inspection
• Document review

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Quality Costs
Cost of Non Conformance

• Failures resulting from inadequate systems.

• Costs are considered to be the efforts devoted to products
that:
o Do not meet specification
o Fail to meet customer satisfaction
• These costs would not exist if the product has been made
right in the first time.

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Quality Costs
Cost of Non Conformance

Internal Failure Cost

• Costs that arise where products,
components, and materials fail
to conform to quality
requirements before transfer of
ownership to the customer

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Quality Costs
Cost of Non Conformance

Internal Failure Costs Examples:

• Scrap • Accounting error corrections
• Accidents • Design Changes
• Equipment Downtime • Repair Cost
• Over Processing • Re-inspection
• Excess Inventory • Re-testing
• Excess Expenses • Material Waste
• Excess Material Handling • Sorting
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Quality Tools
Quality Costs
Cost of Non Conformance

External Failure Cost

• Costs incurred when products fail to
conform to quality requirements after
transfer of ownership to the
customer.

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Quality Costs
Cost of Non Conformance

External Failure Costs Examples:

• Invoice Errors • Excess Transportation Costs
• Customer Overpayments • Penalties
• Excess Installation Costs • Warranty Expense
• Customer Dissatisfaction • Re-Calls
• Loss of Market Share • Liability
• Loss of Reputation

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Quality Costs
Total Quality Costs

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Quality Costs
Total Quality Costs

• Quality cost cannot eliminate the costs of nonconformance, it

is only a tool to measure.
• Quality cost is measure of effectiveness and efficiency of a
Quality Improvement Project

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Quality Tools
Sampling
 Introduction
 Why Sampling
 Sample Size
 Sampling Techniques

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Sampling
Introduction

• Sampling is concerned with the selection of a subset of

individuals from within a statistical population to estimate
characteristics of the whole population.
• Acceptance sampling is used to determine if a production lot
of material meets the governing specifications.

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Sampling
Why Sampling

• It’s very hard and sometimes impossible to check and test

every element in a certain population.
• It is used when:
o The population is large
o The cost of inspection is high
o It takes a lot of time to test the whole population
o Destructive testing is required

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Sampling
Sample Size

• It is about choosing the number of observations.

• Sample Size attributes:

Population

Sample
Size
Confidence Confidence
Interval Level

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Sampling
Sample Size

• Sample Size Calculation:

Sample size =

• N = Population Size
• e = Margin of error (percentage in decimal form)
• z = z-score
• P = The Sample Proportion

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Sampling
Sampling Techniques

Simple Random Sampling:

• Description:
o A sample chosen from a population where each individual
is chosen randomly and entirely by chance, such that each
individual has the same probability of being chosen at any
stage during the sampling process, and each subset
of k individuals has the same probability of being chosen
for the sample as any other subset of k individuals.
o It can be with replacement or without.

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Sampling
Sampling Techniques

Simple Random Sampling:

• Advantages:
o Free of classification error
o Requires minimum advance knowledge of the population
o Simple where it is relatively easy to interpret data collected
o Low sampling cost
• Advantages:
o Not very efficient
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Sampling
Sampling Techniques

Systematic Random Sampling:

• Description:
o It is a statistical method involving the selection of elements
from an ordered sampling frame (ordering scheme).
o The sampling starts by selecting an element from the list at
random and then every kth element in the frame is
selected, where k, the sampling interval (sometimes
known as the skip): this is calculated as: k = N / n;
where n is the sample size, and N is the population size.

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Sampling
Sampling Techniques

Systematic Random Sampling:

• Advantages:
o More efficient
• Disadvantages:
o Systematic sampling is to be applied only if the given
population is logically homogeneous, because systematic
sample units are uniformly distributed over the
population. The researcher must ensure that the chosen
sampling interval does not hide a pattern.
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Sampling
Sampling Techniques

Stratified Sampling:
• Description:
o Where the population embraces a number of distinct
categories (subpopulations), the frame can be organized
by these categories into separate "strata." Each stratum is
then sampled as an independent sub-population, out of
which individual elements can be randomly selected.

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Sampling
Sampling Techniques

Stratified Sampling:
• Advantages:
o Can ensure that specific groups are represented, even
proportionally, by selecting individuals from strata list.
o Enable researchers to draw inferences about specific
subgroups that may be lost in a more generalized sample.
o Sometimes the data are more available for subgroups
o Allows use of different sampling techniques for different
subpopulations.
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Sampling
Sampling Techniques

Stratified Sampling:
• Disadvantages:
o More complex
o More expensive
o Requires greater effort than simple random; strata must be
carefully defined
o Is not useful when there are no homogeneous subgroups

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Sampling
Sampling Techniques

Cluster Sampling:
• Sampling is often clustered by geography, or by time periods.
If surveying households within a city, we might choose to
select 100 city blocks and then interview every household
within the selected blocks.
Quota Sampling:
• Select individuals as they come to fill a quota by
characteristics proportional to populations. The problem is
that these samples may be biased because not everyone gets
a chance of selection.
Total Quality Management Program 161
 Contents
 Introduction
 Quality Management Systems
 Quality Tools
 QM Models and Methodologies

Total Quality Management Program 162

QM Models & Methodologies
 Six Sigma Methodology
 Lean Technique
 Service Quality Model
 Customer Satisfaction Measurement
 Planning for Top Quality

Total Quality Management Program 163

QM Models & Methodologies
Six Sigma Methodology
 Introduction
 Methodology
 Process
 Six Sigma Organization

Total Quality Management Program 164

QM Models & Methodologies
Six Sigma Methodology
Introduction

• When a Japan firm took over a Motorola factory that

manufactured television in the USA in the 1970. They
promptly set about making dramatic changes in the way of
the factory operated.
• Under Japanese management, the factory was soon
producing TV sets with 1/20th as many defects as they have
produced under Motorola management.
• They did this using the same work force, technology, design
and lowing the cost of production. Making it clear that the
problem was Motorola's management.
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QM Models & Methodologies
Six Sigma Methodology
Introduction

• By using six sigma Motorola became known as quality leader

and profit leader.
• Companies such as GE and Allied signal have taken up six
sigma and used it to lead themselves to new levels of
customer service and productivity.
• Six Sigma is a statistically-based process improvement
methodology that aims to reduce defects to a rate of 3.4
defects per million defect opportunities.
• It works to identify and eliminate causes of variation in
business processes.
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Six Sigma Methodology
Introduction

Sigma Score
• Sigma score is a measure for process capability. If the process
is working at 6σ level, it means that error level is 3.4 defects
per million opportunity.

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Six Sigma Methodology
Introduction

DPMO
• Defects per million opportunities or DPMO is a measure of
process performance. A defect is defined as nonconformance
of a quality characteristic (e.g., strength, width response time)
to its specification. It is defined as:

• Note that DPMO differs from reporting defective parts per

million (PPM) in that it comprehends the possibility that a unit
under inspection may be found to have multiple defects of
the same type or may have multiple types of defects.
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QM Models & Methodologies
Six Sigma Methodology
Introduction

DPMO

Lean Six Sigma Yellow Belt 169

QM Models & Methodologies
Six Sigma Methodology
Introduction

Specifications

Lean Six Sigma Yellow Belt 170

QM Models & Methodologies
Six Sigma Methodology
Introduction

Lean Six Sigma Yellow Belt 171

QM Models & Methodologies
Six Sigma Methodology
Methodology

Lean Six Sigma Yellow Belt 172

QM Models & Methodologies
Six Sigma Methodology
Methodology

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Six Sigma Methodology
Phases

1. Define
• Identify the problem
• Build the business case
• Identify recourses required for the project
• Develop project schedule
• Identify items Critical to Quality (CTQ)

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Six Sigma Methodology
Phases

2. Measure
• Define measurement system capability
• Measure of CTQ’s
• Identify errors in measurements
• Validate the problem

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Six Sigma Methodology
Phases

3. Analyze
• Identify the root causes using:
o Histogram
o Scatter Diagram
o Control Chart
o Regression Analysis
o Design of Experiment

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Phases

4. Improve
• Identify ways to remove causes of variation
• Develop alternative solutions
• Cost/benefit analysis
• Design of experiments
• Implementation plan

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Six Sigma Methodology
Phases

5. Control
• Control plan
• Control charts
• Failure Mode & Effects Analysis (FMEA)

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Six Sigma Methodology
Six Sigma Organization

Champion
Master
Black Belt

Black Belt

Green Belt

Yellow Belt

Total Quality Management Program 179

QM Models & Methodologies
Lean Technique
 Introduction
 Thinking Lean
 The Seven Types of Waste
 Lean Tools

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QM Models & Methodologies
Lean Technique
Introduction

What is Lean?
• Focuses on eliminating waste in processes
• It is not about eliminating people
• It is about expanding capacity by reducing costs and
shortening cycle times between order and ship date.
• It is about what is important to the customer.
• It is about minimizing waste (fats that burden the system)
• Started after the World War II in Japan by Toyota Production
System
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QM Models & Methodologies
Lean Technique
Introduction

Why Lean?
• It is used to:
o Shorten time line between customer order and delivery
o Improve quality of products and service
o Reduce costs by eliminating waste, using process
standardization and improvement (kaizen)
• It was evolved from JIT and also called continuous flow
manufacturing.

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Lean Technique
Introduction

Definitions
• Value
o A capability provided to a customer at the right time at an
appropriate price, as defined in each case by the customer.
Features of the product or service, availability, cost, and
performance are the dimension of value
• Waste
o Any activity that consumes resources but creates no value.

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Lean Technique
Introduction

Barriers to Lean
• It is not an isolated technique
• Culture change
• Takes time and effort
• Needs more rapid response from a lot of stakeholders
• Needs buy-in

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Lean Technique
Thinking Lean

1. Specify Value
• Value addition is judged by customer through:
o Specific products
o With specific capabilities
o At specific prices
o Through dialogue with specific customers

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Lean Technique
Thinking Lean

2. Identify the value stream

• It is all of the activities that are necessary to bring a specific
product through three critical business tasks:
o Problem solving
o Information management
o Physical transformation

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Lean Technique
Thinking Lean

3. Flow
• The distance that product/information must travel and the
time it takes:
o Reduce non-value add time by reducing time and/or
distance between resources
o Create continuous flow (TAKT Time)

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Lean Technique
Thinking Lean

4. Pull
• Real customer demand pulls products and information
through the system:
o Inventory is waste and producing/working on items that
are not used is waste
o Remove excess capacity or increase the rate of customer
pull

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Lean Technique
Thinking Lean

5. Perfection
• Opportunities for improvement are identified and
implemented:
o Reduction of effort, time, space, cost, mistakes
o Increasing customer satisfaction

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Lean Technique
Thinking Lean

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Lean Technique
The Seven Types of Waste

1. Transportation – moving material or

product from one place to another
2. Inventory – material or product waiting
to be processed
3. Motion – excess movement and/or
poor ergonomics
4. Waiting – delays caused by shortage,
approval, downtimes.

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QM Models & Methodologies
Lean Technique
The Seven Types of Waste

5. Overproduction – producing more

than what is needed
6. Over-processing – adding more value
than the customer is willing to pay for
7. Defect / Rework – correcting mistakes
o Defect: Deviation from required target
o Rework: Extra work required to fix defect
o Scrap: Disposal of defective unit or part of it

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QM Models & Methodologies
Lean Technique
Lean Tools

• Kanban – Inventory Management

• Economical Order of Quantity – Inventory Management
• Process Cycle Efficiency – Lean KPI (Value/Total)
• TAKT Time – Flow Enhancement
• Poka Yoke – Error Proofing
• Rolled Yield – Quality at Stations
• Single Minute Exchange of Dies (SMED) – Flow Enhancement
• 5S – Work Environment
• Ergonomics – Work Environment
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QM Models & Methodologies
Lean Technique
Lean Tools

• 5S

Total Quality Management Program 194

QM Models & Methodologies
Lean Technique
Lean Tools

• Ergonomics

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QM Models & Methodologies
Service Quality Model
 Introduction
 Definition
 Dimensions
 Gaps

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QM Models & Methodologies
Service Quality Model
Introduction

• Measuring quality of product

o Measurable Quality Metrics
o Defined Targets
• Measuring quality of service
o Attributes
o Personal Opinion
o Judged by the Customers, not the Organizations

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Service Quality Model
Definition

• Service Quality is the difference between Customers’

Expectations & Perceptions.
• SERVQUAL Model was established by Zeithaml, Parasuraman
& Berry from 1985 to 1990. Its abbreviation is derived from
“Service Quality”.
• SERVQUAL Model measures quality of service against 10
dimensions. Each dimension could be measured through
several attributes

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Service Quality Model
Dimensions

1. Tangible
• Buildings
o Age
o Status
o Furniture
o Facilities (meeting rooms, presentation tools, …etc.)
o Technology
o Air-condition
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Service Quality Model
Dimensions

2. Reliability
• Confidence in organization
• A reduced amount of mistake
• Providing the service right, from the first time
• Accuracy of Records

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Service Quality Model
Dimensions

3. Responsiveness
• Instant response to customer request
• Service delivery time
• Response to customer changes
• Response to customer inquiries
• Response to customer complain

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Service Quality Model
Dimensions

4. Understanding Needs
• Listen to “Voice of Customer”
• Define customer requirements precisely (Stated needs vs.
Real needs)
• Consider customer suggestions
• Design service standards to meet customer requirements

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QM Models & Methodologies
Service Quality Model
Dimensions

5. Access
• Easy access to service provider
o Location
o Parking
o Telephone
o Website

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Service Quality Model
Dimensions

6. Communication
• Provide customer with required information
o Written communications
o Verbal communications
• Body language
• Eye contact
• Persuading Skills

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Service Quality Model
Dimensions

7. Credibility
• Organization reputation
• Competitive edge
• Commitment to promises
• Fulfillment of obligations

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Service Quality Model
Dimensions

8. Competence
• Employees’ experience
o Background education & Knowledge
o History in the field
o Training
o Understanding of organization’s system
• Handling difficult situations

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Service Quality Model
Dimensions

9. Security
• Customer Perception of security:
o During service delivery
o After service delivery
• Confidentiality of customers’ information:
o Personal information
o Business transactions
o Proprietary information
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Service Quality Model
Dimensions

10. Empathy
• Customer comes first
• Polite attitude
• Personal concern
• Friendly attitude
• Compassion when problem occurred

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Service Quality Model
Gaps

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Service Quality Model
Gaps

Gap 1: Understanding
• The difference between consumer expectations and
management perceptions of consumer expectations
Gap 2: Service Standards
• The difference between management perceptions of
consumer expectations and service quality specifications
Gap 3: Service Performance
• The difference between service quality specifications and the
service actually delivered
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Service Quality Model
Gaps

Gap 4: Communications
• The difference between service delivery and what is
communicated about the service to consumers
Gap 5: Service Quality
• The difference between customer expectations of service
quality & customer perceptions of organization’s performance
Note:
o Gaps 1 to 4 affect the way service is delivered
o Gap 5 depends on the size and direction of these four gaps
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QM Models & Methodologies
Customer Satisfaction Measurement

 Introduction
 Calculating the NPS
 Industry Averages
 Analysis

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Customer Satisfaction Measurement

Introduction

• Provides direct, measurable feedback from consumers on

their experience with our products and customer care
• Global Standard since 2003 allows benchmarking across
industries and competitors
• Easy to measure and communicate across functions and
markets and strong platform for organizational change
• The basic question: Based on your recent experience, how
likely are you to recommend products and service to a friend
or family member, on a scale of 0 to 10?
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Customer Satisfaction Measurement

Introduction

• Percentage of customers % of customers

likely to talk or tell others likely to say
something
negative

about their service about their

service
positive

experience: experience

% of customers
who had a
negative
service
interaction who
• Unhappy and dissatisfied told 10+ people
about it
positive

customers are much more

10% 30% 50% 70%
likely to talk about and tell Harvard Business Review, June 2010
others about their
experience . . .
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Customer Satisfaction Measurement

Introduction

• The Economics of Poor Customer Experience

Case Study numbers from Gartner 2004.
Assume 20m customers At risk — 34%
Revenue = €6000m per year
30,000 customers
Average Revenue per Customer = €300 per year Issue not resolved €9m
25,000 customers
Complain Defect — 28% €7m
2% 90,000
Poor experience customers
22% 4.4m Resolved — 38%
customers

Don’t At risk — 55% 2.4m customers

Positive complain 4.31m Decline in wallet $711m
experience 98% customers share
78%
1.94m customers
Defect — 45%
€582m

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QM Models & Methodologies
Customer Satisfaction Measurement

Calculating the NPS

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QM Models & Methodologies
Customer Satisfaction Measurement

Calculating the NPS

NPS Detractors: Passives: Promoters:

Score 0-6 7-8 9-10
Extended “free” sales
Provide new ideas for
force, use social media to
Provide insight into SKUs, product
Value to send praise, positive
people, process and tools improvements, product
company word of mouth, identify
that are not working extensions, fixes to
things going well, provide
issues, beta testing, etc.
live testimonial stream
Spread bad word of Contact competitors, use Defect to other brands,
Damage,
mouth, loss of repeat social media to talk about apathy leads to curiosity
if ignored
sales issues of other offers

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Customer Satisfaction Measurement

Industry Average

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Customer Satisfaction Measurement

Analysis

• Scores vary across Industry, country and experience measured

(e.g. Retail, product or customer service)
• Scores should not be compared across countries!
• More important than the actual score is to move forward !
• We can go deep in analyzing the root causes of the score
through a list of potential positive/negative sub-levels.

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QM Models & Methodologies
Planning for Top Quality
 Introduction
 Pillars

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QM Models & Methodologies
Planning for Top Quality
Introduction

• Structured process for developing products (goods or

services)
• Ensures that customer needs are met by the final result

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QM Models & Methodologies
Planning for Top Quality
Pillars

1. Establish Project
• Deliver a new or revised product
• Prepare a mission statement for each project
• Establish a team to carry out the project
• Plan the project

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Planning for Top Quality
Pillars

2. Identify Customer
• There are two primary groups of customers:
o Internal customers
o External customers

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Planning for Top Quality
Pillars

3. Collect Customer Needs

• Plan to collect customers’ needs
• Collect a list of customers’ needs in their language
• Analyze and prioritize customers’ needs
• Translate their needs into “our” language
• Establish units of measurement and sensors

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Planning for Top Quality
Pillars

4. Develop Product
• Design the product that will meet customer needs.
• Objectives for this step are:
o Determine which product features will provide the optimal
benefit for the customer
o Identify what is needed so that the designs can be
delivered without deficiencies.

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Planning for Top Quality
Pillars

5. Develop Process
• Means by which the product will be created and delivered on
a continuing basis
• Including:
o Sub-processes
o Activities

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Planning for Top Quality
Pillars

6. Develop Process Controls

• Develop controls for the processes, arrange to transfer the
entire product plan to operational forces, and validate the
implementation of the transfer.
• The major activities in this step are:
o Identify controls needed
o Design feedback loop

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 Thanks
Hesham Khalil

010-1113-2289
[email protected]