Chapter 5

Managing Quality

Operations Management
by
R. Dan Reid & Nada R. Sanders

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 Defining Quality
 In the long run, the most important factor that affects the
company’s competitive ability is the quality of its
products.
 In defining quality, we should realize the following points:
1. quality is
difficult to define because many factors
are involved in the definition and some of these
factors are subjective.
2. The definition of quality has changed over time.
3. The definition of goods quality differs from
services quality.

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 Defining Quality, continued
Goods’ quality can be defined by the following features:
1. Performance
How well the product performs the function expected from it?
2.Conformance to specifications

Does the product meet the design specifications defined by

designers?
3. Fitness for use
Does the product performance meet the purpose it was bought
for?
4. Value for the price paid
Evaluation of the product’s usefulness against the price paid for it
5. Support services
Quality of support services the customer receives after sale
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Defining Quality, continued
6. Reliability
How the product performs its function without failure in a given
period of time?
7. Durability
How long the product lasts?
8. Serviceability
The ease and speed of repair.
9. Features
Extra items added to the basic features of the product.
10. Appearance.
How the product looks like in terms of color, dimensions, style,
texture , beauty, size, smell, etc.
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Defining Quality, continued
Services’ quality
The intangible nature of services makes defining quality difficult.
Quality of services can be defined by the following features:

1. Consistency (the service is the same each time you consume it)
2. Responsiveness to customer needs
3. Courtesy or friendliness
4. Timeliness (the speed in offering the service)
5. Promptness (the speed in resolving customers’ complaints)
6. Psychological criteria (like tidiness, cleanliness, atmosphere or
comfort of surroundings, reputation, accuracy, competence..)

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Costs of quality

Costs of quality

Quality control costs Quality failure costs

Prevention Appraisal Internal failure External failure

costs costs costs costs

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 Costs of Quality
Costs of quality can be of the following types:
Quality control costs and quality failure costs
1. Quality control costs
These are the costs necessary for achieving high
quality. They consist of prevention costs and
appraisal costs.
a. Prevention costs: The costs of any work done
to prevent any defect occurring in the final product.
Examples: cost of designing the product and process
to ensure they are capable of achieving high product
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 Costs of quality, continued
quality, costs of training employees on quality, and costs
of keeping records about quality.
b. Appraisal costs :The costs of inspecting the product
to ensure that the design specifications are being
achieved. Examples: costs of inspectors’ time, cost of
equipment used in the testing.
2. Quality failure costs
These are the cost consequences of poor quality.
They consist of internal failure costs and external failure
costs.
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 Costs of quality, continued
a. Internal failure costs :costs related to discovering
product defects before the product reaches the customer
(e.g. cost of rework or repair, cost of scrap, cost of
machine downtime)
b. External failure costs: costs related to discovering
product defects that occur at the customer site. (e.g. costs
of returns, repairs, warranty, costs of recalls, costs of
litigation)
Companies should invest more in quality control costs to
avoid quality failure costs.

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 TQM Philosophy
 TQM focuses on identifying and eliminating the possible
causes of product defects.
 It involves the entire organization(everyone is
responsible for quality).
 It builds quality into the design of the product and the
design of the process to produce zero-defect products .
 It relies on the following seven basic concepts :
 Customer focus
 Continuous improvement
 Employee empowerment
 Use of quality tools
 Product design
 Process management
 Managing supplier quality
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 TQM Philosophy - concepts
1. Customer Focus
The customer’s needs should be the top priority of the company.
Quality is defined as meeting or exceeding customer
expectations.
2. Continuous Improvement
The company must continuously and actively work to improve
itself. Continuous never- ending improvement (Kaizen)is needed.
Two methods can used for continuous improvement:
plan
a. Plan-do-study-act cycle
(Deming wheel) Act Do

Study

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 TQM Philosophy Concepts, continued
b. Benchmarking: studying the practices of companies
considered the best in class(in the field) for
purposes of comparison and improvement.

3. Employee Empowerment
Part of the TQM philosophy is to
 Empower employees to discover quality problems and
correct them (this is after intensive training is given to
employees)
 Consider employees as internal customers. Internal
customers are employees who receive work (goods)
from other employees in the company. Just as a
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TQM Philosophy Concepts, continued
defective item should not be passed to an external
customer (who buys the company’s goods), a defective
item should not be passed to an internal customer(who
is a company’s worker or employee).

Place great emphasis on team work. One of the most

common types of teams is the quality circle. A quality
circle is a team of volunteer employees and their
supervisors who meet regularly to solve quality
problems.

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 TQM concepts, continued
4. Use of Quality Tools
These tools are used to identify and analyze quality
problems. The most common tools are:
1.Cause-and-Effect Diagrams

2.Flowcharts

3.Checklists

4.Control Charts

5.Scatter Diagrams

6.Pareto Analysis

7.Histograms
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 Cause-and-Effect diagrams
 They are used to organize a search for the possible
causes of particular quality problems.
 Also known as fishbone diagrams
Suppliers Workers Machines

Late deliveries training maintenance

Defects experience adjustment
Wrong material supervision age Quality
problem

Temperature poor product design type

dust poor process design grade
Ventilation poor quality management expired

Work Product Materials

environment and
Process

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Flowcharts
 Used to show the sequences of steps involved in a
process
 The solution to a quality problem might be in changing
the sequence of steps, adding or removing steps .
 Checklists
A checklist is a list of common defects and their
frequency of occurrence designed to identify the type of
quality problems at each work station, per shift, per
machine, per operator.
Defect type No. of Total
defects

Twisted pocket √ √ √ 3

Ripped material √√√√√ 5

Faded color √ √ 2

Missing buttons √ 1
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 Control Charts
 The chart has upper and lower control limits (UCL and LCL) that show whether the process is operating within expectations
(within allowable variations from the central limit CL)relative to some measured variable like volume, weight, width...
 As long as the variable, we are measuring, falls within these limits, the process is in control .
UCL (305) UCL (305)

CL (300) CL (300)

LCL (295) LCL (295 )

The process is in control The process is out of control

(no quality problem) (there is a quality problem)

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 Scatter Diagrams
A graph that shows how two variables are related to one another. For example, age of the machine and the no. of defects are directly related,
while worker’s years of experience and the no. of defects are indirectly related.
y .. y . .
. . . .
. . . .
. . . .
x x
The relation between the age of a machine (x) The relation between the worker’s years of
and the no. of defects (y) is direct. experience (x) and the no. of defects (y) is
indirect

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 Pareto Analysis
A technique that is used to identify major quality problems based on their degree of importance and focus on resolving
the most important first.
Pareto chart ranks the causes of poor quality in a decreasing order (from the highest to the lowest) based on the


percentage of defects each has caused.

Examples on causes of poor quality are poor product design (A),


operator error (B), defective parts (C), age of machine (D), inaccurate
machine adjustment (E).

percentage

of

defect

causes of poor quality

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 Histograms
 A histogram is a chart that shows the frequency distribution of a certain variable. Variations in a variable follow
the normal distribution
 Histograms show whether the distribution of the variation (the change from the average) is normal, i.e., the tails
of the curve are equal (in this case there is no quality problem), or skewed, i.e., one tail is longer than the other
(this means there is a quality problem)

Variations follow normal distribution Variations do not follow normal distribution

There is no quality problem The curve is skewed to the right (the right
tail is longer). There is a quality problem)

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 TQM Concepts, continued
5. Product Design
Products need to be designed to meet customer needs and
expectations .
Product design must take into account production capabilities, safety,
cost and other similar considerations. Design the product so that it can
be easy to produce and easy to use.
A poor product design can results in difficulties in production. For
example, materials might be difficult to obtain, specifications difficult to
meet, or procedures difficult to follow.
Research has shown that about 80% of all defective items are caused
by poor product design.
If companies make perfect design of their products they will eliminate
80% of their quality problems
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 TQM concepts, continued
6. Process Management
Quality products come from quality processes.
Quality must be built into the process. This is known as

‘quality at the source’

‘Quality at the source’ is the belief that it is better to

uncover the source of the quality problem (from where the

problem comes from) and correct it than to repair or scrap
defective items after production. If the source of the
problem is not corrected, the problem will continue.
Design the process so that it can produce the perfect

product from the first time.

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TQM concepts, continued
7. Managing supplier quality
TQM extends the concept of quality to the
company’s suppliers and ensures that they
engage in the same quality practices so that
their processes are capable of delivering
quality materials in a timely manner.

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