Lecture Four

Quality Management
 What is Quality?
Quality is the ability of a product or service to
consistently meet or exceed customer expectations.

Quality should encompass the entire enterpriseit is not

just a statistical analysis tool for manufacturing lines.
The cost in scrapped product, consumer lawsuits and lost
brand equity from defects and recalls are huge.
For example:
Toyota, the progenitor of a legendary quality-focused production system,
has suffered a rash of defects that have caused the company to drop in the
Annual Car Reliability Survey ratings-an important market barometer for its
consumers.
Product & Service Quality Dimensions
Parasuraman, Zeithamel, and Berry (1985),
three marketing professor form Taxes A&M
University, published a widely recognized 5
service quality dimensions.
Garvin (1988) developed a list of 8 quality
dimensions to describe product quality.
 Product Quality Dimensions
Dimension Definition
Basic operating characteristics of a product. How well the product
does the job for which it was intended.
Performance Ex: the fuel efficiency (90/92/95) for performance of an automobile is
different.
Refers to the Extra items added to basic features that enhance the
product appeal to the users.
Features Ex: stereo CD or a leather interior in a car, are powerful marketing tools
for which customers will pay a premium.
Refers to the trend of a product to perform every time, over its useful
design life - Is the chance that a product will not fail within a specific
Reliability time period.
(dependability) Ex: if a refrigerator has 2% chance of failure in a useful life of 10 years,
we say that it is 98% reliable.
Degree to which a product meets preestablished standards. When a
product is designed, certain numeric dimensions for the product's
performance will be established, such as capacity, speed, size, durability
(strength). These numeric product dimensions are referred to as
Conformance specifications. Specifications typically are allowed to vary a small
amount called a tolerance.
Ex: a refrigerator should not exceed its dimensions in order to pass from
the kitchens door.
 Product Quality Dimensions
Dimension Definition
Is the total lifetime of the product. How long product lasts before
Durability replacement.
Ex: batteries life differ from one type to another.
Is the ease of repair for a product, speed of repairs, politeness and
capability of repair person. A product is very serviceable if it can be
repaired easily and cheaply.
Serviceability Ex: if your computer need repair by technician, then this service is
given, easy to acquire/get; then the product have good serviceability.

Are subjective/individual characteristics, it represents personal

Aesthetics preference such as taste, feel, sound, look and smell.
(Appearance) Ex: although vinyl interiors in automobiles require less maintenance,
are less expensive, and are more durable - leather interiors are
generally considered more aesthetically pleasing.
Is based on brand name, advertising, reputation of the quality, etc.
It may have little or nothing to do with the actual excellence of the
Perceived product.
Quality Ex: Toyota is currently reaping (getting in) the benefits of higher
perceived quality, it took many years for customers to recognize its
quality advantage.
 Service Quality Dimensions
Dimension Definition
Include the physical appearance of the service facility, the
Tangibles equipment, the personnel, and the communication materials.

Ex: cleanliness of a hotel.
Is the ability to perform the promised service, to meet customers
Service expectations consistently (service is available when desired).
Reliability
Ex: customer has continual service over desired time.
Responsivenes Is the willingness to help customers promptly (on time).
s Ex: avoid keeping customers waiting for no apparent reason.

Is the ability to be available to communicate with and understand

Empathy the customers needs.

Ex: employees give personal attention to customers.

Is providing the service with the necessary courtesy (good
manners) and the knowledge of employees and their ability to
inspire trust and confidence.
Assurance Ex: if you needed heart surgery, you probably would not select a
/
doctor who appeared forgetful and disorganized during an office
consultation. Rather, you would want assurance that the doctor is
competent (capable).
 The determinants of quality
The degree to which a product or a service successfully satisfies its
intended purpose has four primary determinants:
Design.
How well the product or service conforms to the design.
Ease of use.
Service after delivery.

Quality of design refers to the intension 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.

A poor design can result in difficulties in production or service. For example, materials might be
difficult to obtain, specifications difficult to meet, or procedures difficult to follow.
 The determinants of quality
Quality of conformancerefers to the degree to which goods and services confirm to (i.e. , achieve) the intent of 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.

Ease of useuser instructions are important. They increase the chances, but do not guarantee, that a product will be used for its
intended purposes properly and safely.

Service after deliveryusers of a product or a service must be clearly be informed on what they should or should not do...after the
sale.
 The costs of quality
Category Description Examples
Appraisal relate to inspection, testing, Cost of inspectors, testing
costs and other activities intended to equipment, labs, quality audits, and
uncover defective products field testing.
and services, or to assure that
there are none.
Prevention relates to attempts to prevent Cost of planning, administration
costs defects from occurring. systems, working with vendors,
training, quality control procedures,
and extra attention in both the
design and production phases to
decrease the probability of defective
workmanship.
Internal Costs related to defective products Rework costs, problem solving, material
failure costs or services before they are and product losses, scrap and downtime.
delivered to customers.
External Costs related to delivering Returned goods, warranty costs, loss of
failure cost defective products or services to goodwill, liability claims and penalties.
customers
 The costs of quality

It is neither possible nor economically feasible to critically examine

every part of a product or every aspect of a service for control purposes.
Sometimes the costs outweigh the benefits.
The amount of inspection needed is governed by the costs of inspection
and the expected costs of passing defective items.
Evolution of Quality Management
The history of Quality Management, starts
from inspection to business excellence.
Inspection
Quality Control and Statistical Theory
Quality in Japan
Total Quality
Total Quality Management
Quality Awards and Excellence Models
 Evolution of Quality Management
Inspection involves measuring, examining, and testing
products, process and services against specified
requirements to determine conformity ... To decide
whether a job or a product is acceptable.

Intended to ensure that no faulty product left the factory;

Focuses on the detection of problems in the product;

Involves testing every item;

Is carried out at the end of the production process.

Evolution of Quality Management
Quality Control was introduced to detect and fix
problems along the production line to prevent the
production of faulty products.
Variation in the production process leads to variation in
product.
Statistical Quality Control:
Focuses on product and the detection and control of quality
problems;
Involves testing samples and statistically concludes conformity of
all products;
Is carried out at stages through the production process.
Evolution of Quality Management
The term total quality was used for the first time in a
paper by Feigenbaum at the first international
conference on quality control in Tokyo in 1969. The term
referred to wider issues within an organisation.

Ishikawa also discussed total quality control in a

different way, in Japan. According to his explanation, it
means company-wide quality control that involves all
employees, from top management to the workers, in
quality control.
Evolution of Quality Management
In the 1980s to the 1990s, a new phase of quality control
and management began. This became known as Total
Quality Management (TQM).
A typical definition of TQM includes phrases such as:
customer focus,
the involvement of all employees,
continuous improvement, and
integration of quality management into the total organisation.
Although the definitions were all similar, there was
confusion. It was not clear what sort of practices, policies,
and activities needed to be implemented to fit the TQM
definition.
Evolution of Quality Management
In 1988 a major step forward in quality management
was made with the development of the Malcolm
Baldrige Award in the United States. The model
represented as the first clearly defined and
internationally recognised TQM model. It was
developed by the United States government to
encourage companies to adopt the model and improve
their competitiveness.
In response to this, a similar model was developed by
the European Foundation of Quality Management in
1992. This EFQM Excellence Model is the framework
for the European Quality Award.
Principles of Quality Management
1. Vision based
2. Customer focused
3. Prevention oriented
4. Scientifically approached
5. Process given more important than end results
6. Data based analysis
7. Continuous improvement strategies
8. Cost conscious (aware) attempt
9. Documentation for traceability
10. Reward/Recognition assured
1. Vision Based
Vision describes a desired world.
Vision identifies the overall space shared with
competitors, customers, partners, suppliers, and
other stakeholders.
Vision will give a sense of direction.
Vision will help the organization to stay focused.
Absence of vision will lead to confusion/uncertainty.
Without vision an organization will fail.
 2. Customer Focused
Open economy has driven away monopoly
(control). It is buyer's market which is in
existence now.
One dissatisfied customer can create mess.
Retention of customer is the key issue in
business.
Creating better products or services offers

unquestionable customer experience, in turn build
deeper customer relationship.
 3. Prevention Oriented
Prevention is better than cure is a well
acknowledge phrase.
Prevention orientation will achieve nearer to "Zero
Defect" status.
Preventive approach is better than corrective
approach as it avoid call for costly monitoring
mechanism.
Also, correction does not stop repetition to faults.
4. Scientifically Approached
Scientific methods are well proved over the years
and hence chances of going wrong is
controlled.
Unscientific methods make one to depend on the
previous experience, which may not be
appropriate.
Scientific methods avoid the logical reasoning.
5.Process Given More Important
Than End Results
Zero defect is possible only if the process are
perfect.
Process orientation will make workers more
responsible.
Result orientation will end up with loss as all
the defects are to be rejected.
6. Data Based Analysis
Data based approach will always give the best
insight to the problem and solution.
Data collection is a tiring process; however the
returns will be higher as it provide solution to
problems or at least provide useful evidences.
Data collected and documented for one specific
purpose, can well be used for some other
purpose, thus providing a databank for multiple
applications.
7. Continuous Improvement
Strategies
No one at any point of time can say that
"Perfection" has been achieved.
Creativity and innovation are the order of the
day in business circles.
Established tools such as "benchmarking" are
available for continuous improvement.
Improved products will have a cutting edge
(advanced) in the market.
8. Cost Conscious (aware) Attempt

ROI (Return on Investment) is the performance

index for any business enterprise.
There are plenty of hidden costs that go
unnoticed, besides the visible quality costs.
Affordability is the key factor for customers and
profit margin is the key factor for manufacturers.
9. Documentation for Traceability

Documentation for Traceability and Identification

Documented actual-processes
Recordings of products, batches and results
Correction measures taken
Stakeholders are assured of the quality through
documentation.
Traceability is effective and easy with
documented information.
10. Reward/ Recognition Assured
Human component plays a major role as
compared to system component in quality
initiatives.
Recognition is one thing that every human being
look for.
Rewards may be helpful in motivating non-
performers to join quality initiators.
Disinterest in the job being done, is the main
reason for low productivity and poor quality.
The foundation of modern quality management

A genuine pioneer in the field of quality

controlis known as the father of
statistical quality control.

Deming compiled a famous list of 14

points he believed where the prescription
needed to achieve quality in an
organization.
His message was that the cause of
inefficiency and poor quality is the
system, not the employeeshe felt that it
was management responsibility to correct
the system to achieve the desired results.
 The foundation of modern quality management

1. Create consistency of purpose 7. Emphasize leadership

towards improvement.
8. Drive out fear
2. Lead to promote change
9. Break down barriers between
3. Build quality into the product; departments
stop depending on
inspections 10.Stop criticizing workers
4. Build long-term relationships 11.Support, help, and improve
based on performance 12.Remove barriers to pride in
instead of awarding business work
on price
13.Institute education and self-
5. Continuously improve improvement
product, quality, and service
14.Create a structure in top
6. Start training management to push for the
13 points
 The foundation of modern quality management
Quality begins by knowing what customers want. Quality
is fitness-for-use. He believed that roughly 80 percent of
quality defects are management controllable; thus, they
have the responsibility to correct this deficiency. He
described quality management in terms of a trilogy
consisting of quality planning, quality control, and quality
improvement.

Juran is credited as one of the first to measure the cost of

quality, and he demonstrated the potential for increased
profits that would result if the costs of poor quality could
be reduced.
The foundation of modern quality management
Developed the concept of zero defect
and popularized the phrase do it right
the first timehe stressed prevention,
and argued against the idea that
there will always be some level of
defectives

Top management must demonstrate

its commitment to quality.
Management must be persistent in
efforts to achieve good quality.
Management must spell out clearly
what it wants in terms of quality and
what workers must do to achieve that
Make it (or do it) right the first time.
The foundation of modern quality management

Among his key contributionsthe

development of the cause-and-effect
diagram for problem solving and the
implementation of quality circles, which
involve workers in quality improvement.
He was the first quality expert to call
attention to the internal customer-the
next person in the process, the next
operation, within the organization.