QUALITY

MANAGEMENT 1
CHAPTER
OUTLINE
• INTRODUCTION
• THE EVOLUTION OF QUALITY
MANAGEMENT
• THE FOUNDATION OF MODERN
QUALITY MANAGEMENT
• INSIGHTS ON QUALITY
MANAGEMENT
• QUALITY AWARDS
• QUALITY CERTIFICATION
• QUALITY AND THE SUPPLY CHAIN
INTRODUCTION
Quality refers to the ability of a
product or service to consistently
meet or exceed customer requirements
or expectations. However, different
customers will have different
requirements, so a working definition
of quality is customer-dependent.
INTRODUCTION
For a decade or so, quality was an important
focal point in business. But after a while, the
emphasis on quality began to fade, and
quality took a backseat to other concerns.
However, there has been an upsurge recently
in the need for attention to quality. Much of
this has been driven by recent experience
with costs and adverse publicity associated
with wide ranging recalls that have included
automobiles, ground meat, toys, produce,
dog food, and pharmaceuticals.
 WHAT
HAPPENED TO
QUALITY?
W. Edwards Deming
Microsoft’s X-box 360 video gaming platform
suffered a high-profile manufacturing defect
manufacturers of all that at one point had up to one-third of all
different sizes and stripes units suffering from a “fatal error” (device
owners called it “the red ring of death”) that
are still being dogged by
led at least indirectly to markedly weaker
highprofile manufacturing competitive positioning in the crucial holiday
selling season, as well as a warranty
quality defects.
extension that is estimated at more than 6
billion in unplanned accruals.
The Evolution
of Quality
Management
4 Evolutions of Quality
Management

QUALITY QUALITY QUALITY STRATEGIC

INSPECTION CONTROL ASSURANCE APPROACH
TO QUALITY

01 02 03 04
.
QUALITY INSPECTION

Prior to the Industrial Revolution,

skilled craftsmen performed all
stages of production. Pride of
workmanship and reputation often
provided the motivation to see
that a job was done right. Lengthy
guild apprenticeships caused this
attitude to carry over to new
workers.
 QUALITY INSPECTION

A division of labor accompanied the

Industrial Revolution; each worker was then
responsible for only a small portion of each
product. Pride of workmanship became less
meaningful because workers could no longer
identify readily with the final product. The
responsibility for quality shifted to the
foremen. Inspection was either nonexistent
or haphazard, although in some instances 100
percent inspection was used.
Frederick Winslow Taylor, the
“Father of Scientific Management,”
gave new emphasis to quality by
including product inspection and
gauging in his list of fundamental
areas of manufacturing
management.

G. S. Radford improved Taylor’s methods.

Two of his most significant contributions
were:
• The notions of involving quality
considerations early in the product
design stage and;
• Making connections among high quality,
increased productivity, and lower costs.
QUALITY CONTROL

World War II caused dramatic increase in

emphasis on quality control. The U.S. Army
refined sampling techniques for dealing with
large shipments of arms from many
suppliers. By the end of the 1940s, the U.S.
Army, Bell Labs, and major universities were
training engineers in other industries in the
use of statistical sampling techniques.
About the same time, professional quality
organizations were emerging throughout the
country.
One of these organizations was the American Society
for Quality Control (ASQC, now known as ASQ). Over
the years, the society has promoted quality with its
publications, seminars and conferences, and training
programs.
QUALITY ASSURANCE

During the 1950s, the quality

movement evolved into quality
assurance. In the mid-1950s, total
quality control efforts enlarged the
realm of quality efforts from its
primary focus on manufacturing to
include product design and incoming
raw materials. One important feature of
this work was greater involvement of
upper management in quality.
During the 1960s, the concept of “zero defects”
gained favor. This approach focused on
employee motivation and awareness, and the
expectation of perfection from each employee.
It evolved from the success of the Martin
Company in producing a “perfect” missile for
the U.S. Army.
• In the 1970s, quality assurance methods gained increasing
emphasis in services including government operations, health
care, banking, and the travel industry.
• An embargo on oil sales instituted by the Organization of
Petroleum Exporting Countries (OPEC) caused an increase in
energy costs, and automobile buyers became more interested in
fuel-efficient, lower-cost vehicles.
• Japanese auto producers, who had been improving their
products, were poised to take advantage of these changes, and
they captured an increased share of the automobile market.
• American producers, alarmed by their loss of market share,
spent much of the late 1970s and the 1980s trying to improve
the quality of their goods while lowering their costs.
STRATEGIC APPROACH
TO QUALITY

The evolution of quality took a

dramatic shift from quality assurance
to a strategic approach to quality in
the late 1970s. Up until that time,
the main emphasis had been on
finding and correcting defective
products before they reached the
market. It was still a reactive
approach.
• The strategic approach is proactive, focusing on
preventing mistakes from occurring in the first place. The
idea is to design quality into products, rather than to find
and correct defects after the fact.
• This approach has now expanded to include processes and
services. Quality and profits are more closely linked.
• This approach also places greater emphasis on customers
satisfaction, and it involves all levels of management as
well as workers in a continuing effort to increase quality.
THE FOUNDATION OF MODERN QUALITY
MANAGEMENT
THE GURUS
 Deming Prize

is one of the oldest and

most prestigious awards in
the field of quality
management.
Deming's 14 points
1. Create constancy of purpose toward improvement of product and service.

2. Reduce levels of delays, mistakes, defective materials, and defective workmanship.

3. Cease dependence on mass inspection. (Prevent defects rather than detect defects.)

4. Eliminate suppliers that cannot qualify with statistical evidence of quality.

5. Find problems. It is management's job to work continually on system improvement.

6. Institute modern methods of training on the job.

7. Emphasize quality instead of volume alone. Management must prepare to take immediate
action on reports from foremen concerning barriers such as inherent defects, machines not
maintained, poor tools, and fuzzy operational definitions.
8. Drive out fear, so that everyone may work effectively for the company.

9. Break down barriers between departments. People in research, design, sales, and production
must work as a team.

10. Eliminate goals and slogans asking for new levels of productivity without providing methods.

11. Eliminate work standards that prescribe numerical quotas.

12. Remove barriers that stand between the hourly worker and his right to pride of workmanship.

13. Institute a vigorous program of education and retraining.

14. Create a structure in top management that will push every day on the above 13 points.
INSIGHTS ON QUALITY MANAGEMENT

Successful quality management requires managers to

understand various aspects of quality, which include defining it
in operational terms and understanding the associated costs and
benefits. Managers need to recognize the negative effects of
poor quality, as well as ethical considerations.
Defining Quality: The Dimensions of
Quality

Quality is about how well a product or service

meets or exceeds customer expectations,
measured by the difference between
performance and expectations. If
performance matches expectations, quality is
acceptable; if it exceeds, it delights
customers; if it falls short, it disappoints.
Product Quality Dimensions:

1. Performance: The core functionality and main characteristics of the

product.

2. Aesthetics: The visual, tactile, and sensory aspects of the product

(appearance, smell, feel).

3. Special Features: Additional features that enhance the product.

4. Conformance: How well the product adheres to design specifications.

5. Reliability: The product's ability to consistently perform well without failing.

6. Durability: The product's longevity and ability to perform over time.

7. Perceived Quality: How customers indirectly evaluate quality, often through reputation or brand
image.

8. Serviceability: Ease of repairs and handling complaints effectively.

9. Consistency: The product's ability to deliver consistent performance without variation.

 Service Quality

The dimensions of product quality don't adequately

describe service quality. Instead, service quality is often
described using the following dimensions:
Convenience - the availability and accessibility of the service.

Reliability- the ability to perform a service dependably, consistently, and accurately.

Responsiveness- the willingness of service providers to help customers in unusual situ-

ations and to deal with problems.

Time- the speed with which service is delivered.

Assurance- the knowledge exhibited by personnel who come into contact with a cus tomer and their ability to
convey trust and confidence.

Courtesy-the way customers are treated by employees who come into contact with them.

Tangibles-the physical appearance of facilities, equipment, personnel, and communica- tion materials.

Consistency-The ability to provide the same level of good quality repeatedly.

Expectations - Meet (or exceed) customer expectations

Assessing Service Quality

A widely used tool for assessing service quality is SERVQUAL, an instrument

designed to obtain feedback on an organization’s ability to provide quality service
to customers. It focuses on five of the above-mentioned service dimensions that
influence customers’ perceptions of service quality: tangibles, reliability,
responsiveness, assurance, and empathy. The results of this service quality audit
help management identify service strengths and weaknesses. Of particular interest
are any gaps or discrepancies in service quality.
There may be discrepancies
between:

1. actual customer expectations and management perceptions of those

expectations.

2. management perceptions of customer expectations and service-quality

specifications.

3. service quality and service actually delivered.

4. service actually delivered and what is communicated about the service to

customers.

5. customers’ expectations of the service provider and their perceptions of provider

delivery.
The Determinants of
Quality
The degree to which a product or a service successfully satisfies its intended purpose has
four primary determinants:

1. Design.
2. How well the product or service conforms to the design.
3. Ease of use.
4. Service after delivery.
1. DESIGN

The design phase is the starting point for the level of quality
eventually achieved. Design involves decisions about the specific
characteristics of a product or service such as size, shape, and
location.
Quality of design refers to the intention of designers to include or
exclude certain features in a product or service.
Design decisions must take into account customer wants, production
or service capabilities, safety and liability (both during production and
after delivery), costs, and other similar considerations.
2. How well the product or service conforms to the design.

Quality of conformance refers to the degree to which

goods and services conform to the intent of the designers.

This is affected by factors such as the capability of

equipment used; the skills, training and motivation of
workers; the extent to which the design lends itself to
production; the monitoring process to assess conformance;
and the taking of corrective action when necessary.
3. EASE OF
USE:
The determination of quality does not stop once the product or
service has been sold or delivered. Ease of use and user
instructions are important. They increase the chances that a
product will be used for its intended purposes and in such a way
that it will continue to function properly and safely. Much of the
same reasoning can be applied to services. Customers, patients,
clients or other users must be clearly informed on what they
should or should not do; otherwise, there is the danger that they
will take some action that will adversely affect quality.
4. SERVICE AFTER DELIVERY

For a variety of reasons, products do not always perform as

expected and services do not always yield the desired
results. Whatever the reason, it is important from a quality
standpoint to remedy the situation-through recall and repair
of the product, adjustment, replacement or buyback or
reevaluation of a service —and do whatever is necessary to
bring the product or service up to standard.
Responsibility for Quality

Top management. Top management has the ultimate responsibility for quality.
While establishing strategies for quality, top management must institute
programs to improve quality; guide, direct, and motivate managers and workers;
and set an example by being involved in quality initiatives.
Examples include taking training in quality, issuing periodic reports on quality,
and attending meetings on quality.

Design. Quality products and services begin with design. This includes not only
features of the product or service; it also includes attention to the processes that
will be required to produce the products and/or the services that will be required to
deliver the service to customers.
Responsibility for Quality

Procurement. The procurement department has responsibility for obtaining goods

and services that will not detract from the quality of the organization’s goods and
services.

Production/operations. Production/operations has responsibility to ensure that

processes yield products and services that conform to design specifications.
Monitoring processes and finding and correcting root causes of problems are
important aspects of this responsibility.

Quality assurance. Quality assurance is responsible for gathering and analyzing data
on problems and working with operations to solve problems.
Responsibility for Quality

Packaging and shipping. This department must ensure that goods are not
damaged in transit, that packages are clearly labeled, that instructions are
included, that all parts are included, and that shipping occurs in a timely manner.

Marketing and sales. This department has the responsibility to determine customer
needs and to communicate them to appropriate areas of the organization. In
addition, it has the responsibility to report any problems with products or services.

Customer service. Customer service is often the first department to learn of

problems. It has the responsibility to communicate that information to appropriate
departments, deal in a reasonable manner with customers, work to resolve
problems, and follow up to confirm that the situation has been effectively
remedied.
Benefits of Good
Quality
The
Consequences
of Poor Quality
Loss of business
Customer Dissatisfaction: Poor
quality products or services lead to
dissatisfied customers who may
choose to take their business
elsewhere.

Negative Reputation: Word-of-

mouth and online reviews can
quickly spread negative perceptions
of a company's quality, leading to
decreased sales and market share.
 Liability
Product Liability: Organizations
can face legal claims and lawsuits
due to defective products or
services causing damage or injury.

Service Liability: Poorly executed

services can also lead to liability
issues, especially in industries like
healthcare and construction.
Manufacturing: Defective parts or products
require rework, leading to decreased output and
increased production time.

Services: Poor service quality can lead to

customers needing to have services redone,
reducing overall service productivity.
 Costs
If the problem is identified in the process,
the cheaper the costs to fix it. The costs
to fix problem at the customer end has
been estimated at about five times the
costs to fix a problem at the design or
production stages
 Costs of
Quality
Refers to the financial impact of defects, errors, and
failures in products, services, or processes.
Three categories of COQ:
• Appraisal Costs
• Prevention Costs
• Failure Costs
 Appraisal Costs
These costs are associated with
activities designed to ensure quality or
uncover defects. They represent the cost
of measuring, evaluating, and auditing
materials, parts, products, and services
to assess conformance with quality
standards.
Examples of Appraisal Cost
- Inspection equipment: Investing in tools, gauges, and
other equipment for inspecting products and materials.
- Testing: Conducting tests to verify product
performance, safety, and compliance with
specifications.
a

- Labs: Maintaining laboratories for conducting

specialized tests and analyses.
- Inspectors: Employing inspectors to monitor
production processes and identify defects.
 Prevention Costs
These costs relate to efforts aimed at
preventing defects from occurring.
They represent investments in quality
improvement programs, training,
monitoring, and design processes to
minimize the likelihood of errors.
Examples of Prevention Cost
- Training: Providing employees with training on quality
standards, procedures, and best practices.
- Monitoring: Establishing systems for monitoring
production processes and identifying potential
problems.
- Data collection and analysis : Gathering and analyzing
data to identify trends and areas for improvement.
- Design costs: Investing in robust design processes to
ensure products meet quality and safety requirements.
 Failure Costs
These costs are incurred due
to defective products or
services.

Internal Failure Costs External Failure Costs

Costs associated with Costs associated with
defects discovered defects discovered
AFTER delivery to
DURING production.
customers
Examples of IFC
- Rework costs: The cost of labor, materials, and
overhead associated with fixing defective products.
- Problem-solving: Investigating and analyzing the
root causes of defects to prevent future occurrences.
- Material and product losses : Scrap materials and
defective products that need to be discarded.
- Downtime: Production delays caused by addressing
quality issues.
Examples of EFC
- Returned goods: The cost of handling and processing
returned products.
- Warranty costs: The cost of repairing or replacing
defective products under warranty.
- Loss of goodwill: The cost of damage to the company's
reputation and customer loyalty due to poor quality.
- Liability claims: Legal expenses and settlements
related to injuries or damages caused by defective
products.
 The Value of Prevention
Quality gurus like Crosby and Juran advocate for a
proactive approach to quality management focused on
prevention and continuous improvement. Crosby's "zero
defects" philosophy emphasizes that striving for
perfection is both achievable and economically beneficial,
arguing that the cost of poor quality far outweighs the
cost of doing things right from the start. Juran's "Quality
Trilogy" stresses the importance of quality planning,
control, and improvement, emphasizing that quality is a
continuous journey requiring ongoing efforts to improve
processes and products. By embracing these principles,
organizations can create a culture of quality, minimize
costs, enhance customer satisfaction, and achieve long-
term success.
Return of Quality (ROQ)
focuses on the economics of quality
efforts. This approach views quality
improvement projects as investments,
evaluating them like any other
investment using metrics related to
return on investment (ROI).
Ethics and Quality
Management E t h i c a l considerations are
important in quality
management. Companies
should be honest and
transparent about potential
quality issues, prioritize
customer safety, and avoid
unethical practices like
concealing defects.
 Ethical considerations in
Substandard
QM work
It encompassing defective products, poor designs,
shoddy workmanship, and substandard materials,
violates ethical quality management by breaching
trust, potentially harming consumers, and incurring
financial and reputational costs. Organizations must
prioritize quality standards, continuous
improvement, employee empowerment, and ethical
conduct to avoid such practices.
Transparency and Disclosure

Organizations have an ethical responsibility to be

transparent about quality issues, especially when
products are already in service. Withholding
information about actual or potential problems,
failing to issue product recalls, or concealing
information can damage trust and lead to legal
consequences.
Employee Responsibility

All members of an organization, from top

management to frontline employees, have an ethical
obligation to perform their duties with integrity and
commitment to quality. This includes reporting
quality issues, adhering to ethical standards, and
striving for excellence in their work.
Customer Focus
Ethical quality management places a strong
emphasis on customer needs and expectations.
Organizations should prioritize customer
satisfaction and strive to deliver products and
services that meet or exceed their expectations.
This includes being honest and transparent about
product limitations and providing fair and equitable
solutions to customer issues.
Quality
Awards
Quality Awards

Quality awards have been established to

generate improvement in quality

Well-known awards given anually:

• The Malcolm Baldrige Award
• The European Quality Award
• Deming Prize
The Baldrige Award

Baldrige award is an annual award given

by the U.S. government to recognize
quality achievements of U.S. companies.
The Baldrige Award

• Established: 1988
• Administered: National Institute of Standards and
Technology (NIST)
• Purpose
1. Stimulate efforts to improve quality
2. Recognize quality achievements
3. Publicize successful programs
• Award Categories;
1. Manufacturing
2. Small Businesses
3. Service
4. Education
5. Health Care
Quality Awards
The Baldrige Award
• Evaluation Criteria:
1. Leadership
2. Information and Analysis
3. Strategic Planning
4. Human Resource Management
5. Customer and Market Focus
6. Process Management
7. Business Results

• Even organizations don’t win benefit from applying for the

award: All applicants receive a written summary of the
strengths and weaknesses of their quality management and
suggestions for improvement.
Philippine Quality Awards

The Philippine Quality Award is the highest

level of national recognition for exemplary
organizational performance. It is
equivalent to the very prestigious Baldrige
Performance Excellence Program in the
U.S. and other National Quality Awards
nationwide.
Philippine Quality Awards

Established through Executive Order No. 448,

issued by former President Fidel V. Ramos on
October 3, 1997, the award is given to
organizations in the private and public sectors
that excel in quality, productivity and business
performance.
It was institutionalized through the signing of
Republic Act No. 9013 on February 28, 2001,
otherwise known as the Philippine Quality
Award Act.
Philippine Quality Awards

The Award focuses on results, including

customer satisfaction. It is not an award for
product quality or service quality but for a
quality management system which hinges on
continuous improvement in the delivery of
products and/or services, and provides a way
of satisfying and responding to customers'
needs and requirements
Philippine Quality Awards

Eligibility Criteria: The Criteria consist of seven (7)

1. Small and Medium Scale Categories:
Enterprises • Leadership
2. Large Enterprises • Strategic Planning
3. Public Sector • Customer Focus
• Measurement Analysis and
Knowledge Management
• Workforce Focus
• Operations Focus
• Results
Philippine Quality Awards

However, those who do not make this grade but somehow achieve a
degree of superior performance can also merit Recognition for:

• Mastery in Quality Management. For demonstrating superior

results linked to clearly robust management systems and thus
serve as a role model that other organizations could emulate.
• Proficiency in Quality Management. For achieving significant
progress in building sound processes.
• Commitment to Quality Management. For serious commitment to
Total Quality Management.
The European Quality Award

The European Quality Award is Europe’s

most prestigious award for organizational
excellence.
The European Quality Award

• The European Quality Award sits at the top

of regional and national quality awards, and
applicants have often won one or more of
those awards prior to applying for the
European Quality Award.

• Recognizes outstanding quality

management and improvement practices
The Deming Prize

The Deming Prize, named in honor of the

late W. Edwards Deming, is Japan’s highly
coveted award recognizing successful
quality efforts.
The Deming Prize

• The major focus of the judging is on statistical quality

control, making it much narrower in scope than the
Baldrige Award, which focuses more on customer
satisfaction.

• Evaluation Criteria:
1. Companies must demonstrate detailed and
well-communicated quality programs.
2. Their quality improvement programs reflect the
involvement of senior management and employees
, customer satisfaction and training.
Deming Prize

Florida Power and Light became the first U.S. company to

win in 1989, highlighting the award's international
recognition
Quality
Certification
 INTERNATIONAL ORGANIZATION FOR
STANDARDIZATION

The International Organization for Standardization (ISO)

promotes worldwide standards for the improvement of
quality, productivity, and operating efficiency through a series
of standards and guidelines.
 ISO STANDARDS

• ISO 9000 - A set of international standards on quality management

and quality assurance, critical to international business.

• ISO 14000 - A set of international standards for assessing a

company’s environmental performance.

• ISO 24700 - A set of international standards that pertain to the

quality and performance of office equipment that contains reused
components.
 ISO STANDARDS
• Both ISO 9000 and ISO 14000 focus on an organization’s processes rather than its
products or services, emphasizing continual improvement. These standards are designed
to be generic, applicable to any organization seeking to establish a quality or
environmental management system, requiring essential elements outlined in each
standard.

• Organizations must document quality procedures and undergo on-site assessments, a

process that typically takes 12 to 18 months. Once certified, they are listed in an ISO
directory, giving them preference over unregistered companies when suppliers seek
certified partners.
• A key requirement for ISO registration is for companies to review and refine essential
functions, including process control, inspection, purchasing, training, packaging, and
delivery. This review process involves significant self-appraisal to identify problems and
foster improvement, similar to the Baldrige Award. However, unlike the Baldrige Award,
ISO-registered companies must undergo ongoing audits and re-register every three
years to maintain their certification.

• ISO 9000 certification offers clear benefits for companies engaging with the European
Union and is especially valuable for those without an existing quality management
system, providing essential guidelines for establishing and improving that system.
EIGHT QUALITY MANAGEMENT PRINCIPLES FORM THE BASIS OF
THE LATEST VERSION OF ISO 9000:

1. A CUSTOMER FOCUS.
2. LEADERSHIP.
3. INVOLVEMENT OF PEOPLE.
4. A PROCESS APPROACH.
5. A SYSTEM APPROACH TO MANAGEMENT.
6. CONTINUAL IMPROVEMENT.
7. USE OF A FACTUAL APPROACH TO DECISION MAKING.
8. MUTUALLY BENEFICIAL SUPPLIER RELATIONSHIPS.
The standards for ISO 14000 certification bear upon three major
areas:

• Management Systems - systems development and integration of

environmental responsibilities into business planning

• Operations - consumption of natural resources and energy

• Environmental Systems - measuring, assessing, and managing

emissions, effluents, and other waste streams
 ISO 24700

• Focus on office equipment with reused components

• Specifies Product characteristics for conformity
• Ensures performance equivalent to new products
• Meets safety and environmental criteria
• Relevant for products with reused manufacturing process
QUALITY AND
THE SUPPLY
CHAIN
 SUPPLY CHAIN QUALITY
MANAGEMENT

The emphasis in supply chain quality management is

on reducing outsourcing risk as well as product or
service variation and overhead.

• Risk comes from the use of substandard materials or

work methods, which can lead to inferior product quality
and potential product liability. Tighter control of
vendors and worker training can reduce these risks.
• Variation results from processes that are not in control;
it can be reduced through statistical quality control.
 SUPPLY CHAIN QUALITY
MANAGEMENT

• Overhead can be reduced by assigning quality assurance

responsibility to vendors, while customers operate in a
quality audit mode, with some monitoring of vendor quality
efforts.

Supply chain quality management can benefit from a

collaborative relationship with suppliers that includes helping
suppliers with quality assurance efforts as well as information
sharing on quality-related matters. Ideally, improving supply
chain quality can become part of an organization’s continuous
improvement efforts.
THANK YOU!!!