Chapter – Five

Quality Control and

Improvement

© 2006 Prentice Hall, Inc. 6–1

 Defining Quality
 David Garvin:
 Quality is superiority’ or ‘innate
excellence’.
 Goods and services that best satisfy
individual consumers unique needs or
wants
 American Society for Quality:
 The totality of features and
characteristics of a product or service
that bears on its ability to satisfy stated
or implied needs
© 2006 Prentice Hall, Inc. 6–2
 Different Views
 User-based views:– better performance,
more features or fitness for intended use
 Manufacturing views:-based –
conformance to standards, making it
right the first time or able to meet design
specification.
 Product-based views: – specific and
measurable attributes of the product
 Value based views:- provides a
predetermined level of performance at
an acceptable price
© 2006 Prentice Hall, Inc. 6–3
 Quality and Strategy
 Managing quality supports
differentiation, low cost, and
response strategies
 Quality helps firms increase sales
and reduce costs
 Building a quality organization is a
demanding task

© 2006 Prentice Hall, Inc. 6–4

 Quality at the source
 Quality at the source means that
the person who is doing the
production takes responsibility for
making sure that his/ her output
meets specification.
 Errors or defects should be
caught and corrected at the
source, not passed along to an
internal customer.

© 2006 Prentice Hall, Inc. 6–5

 Ways Quality Improves
Productivity
Sales Gains
 Improved response
 Higher Prices
 Improved reputation
Improved Increased
Quality Profits
Reduced Costs
 Increased productivity
 Lower rework and scrap costs
 Lower warranty costs

© 2006 Prentice Hall, Inc. 6–6

 Dimensions of Quality
 Performance:
 It is a measure of products primary operating
characteristics.
 for example, automobile how fast in a certain mph
and its fuel efficiency in terms of miles per gallon.
 Features:
 While features are not the primary operating
characteristics of a product, nonetheless, be very
important to the customer.
 Reliability:
 It is relates to the probability that the product will fail
within a specified time.
 It also refers consistency of performance.

© 2006 Prentice Hall, Inc. 6–7

 Dimensions of Quality
 Durability:
 It is relates to the expected operational life of the product.
 It is a useful life of the product.
 Serviceability:
 It is concerned with how readily the product can be repaired and
the response (i.e. speed, competence, and courtesy) associated
with that repair.
 Aesthetics:
 It is a high degree of individual judgment and that is also highly
subjective.
 Good quality to one group of customers might even be perceived
as poor quality to another group.
 Perceived quality:
 It is directly related to the reputation of the firm that
manufactures the product.
 Customers relay heavily on the past performance and reputation
of the firm making the product.
© 2006 Prentice Hall, Inc. 6–8
 Costs of Quality
 Prevention costs: - reducing the potential
for defects before they happen
 Appraisal costs: - are costs incurred in
assessing the level of quality attended by
the operating system.
 Internal failure: - costs result from defects
that are discovered during the production
of a product or services.
 External costs: - costs arise when a
defect is discovered after the customer
has received defective products or
services.
© 2006 Prentice Hall, Inc. 6–9
 Costs of Quality
Total
Cost Total Cost
External Failure

Internal Failure

Prevention
Appraisal
Quality Improvement
Good quality management also requires the proper balance between
appraisal and prevention costs, so that total control costs are at the
minimum.
© 2006 Prentice Hall, Inc. 6 – 10
 Quality Circles
 Group of employees who meet
regularly to solve problems
 Trained in planning, problem
solving, and statistical methods
 Often led by a facilitator
 Very effective when done
properly

© 2006 Prentice Hall, Inc. 6 – 11

 International Quality
Standards
 Industrial Standard Z8101-1981 (Japan)
 Specification for TQM
 ISO 9000 series (Europe/EC)
 Common quality standards for products
sold in Europe (even if made in U.S.)
 2000 update places greater emphasis on
leadership and customer satisfaction
 ISO 14000 series (Europe/EC)

© 2006 Prentice Hall, Inc. 6 – 12

 ISO 14000
Environmental Standard
Core Elements:
 Environmental management
 Auditing
 Performance evaluation
 Labeling
 Life-cycle assessment

© 2006 Prentice Hall, Inc. 6 – 13

 Ethics and Quality
Management
 Operations managers must
deliver healthy, safe, quality
products and services
 Poor quality risks injuries,
lawsuits, recalls, and regulation
 Organizations are judged by
how they respond to problems

© 2006 Prentice Hall, Inc. 6 – 14

 TQM
Encompasses entire organization, from
supplier to customer
Quality is every body’s responsibility
Stresses a commitment by management to
have a continuing, companywide drive
toward excellence in all aspects of
products and services that are important
to the customer

© 2006 Prentice Hall, Inc. 6 – 15

 Seven Concepts of TQM
 Continuous improvement
 Six Sigma
 Employee empowerment
 Benchmarking
 Just-in-time (JIT)
 Taguchi concepts
 Knowledge of TQM tools

© 2006 Prentice Hall, Inc. 6 – 16

 Continuous Improvement
 Represents continual
improvement of all processes b/c
customer expectation change
over time.
 Involves all operations and work
centers including suppliers and
customers
 People, Equipment, Materials,
Procedures
© 2006 Prentice Hall, Inc. 6 – 17
 Shewhart’s PDCA Model

1.Plan
4. Act Identify the
Implement improvement
the plan and make
a plan

3. Check 2. Do
Is the plan Test the
working? plan

© 2006 Prentice Hall, Inc. 6 – 18

 Six Sigma
 Originally developed by Motorola,
Six Sigma refers to an extremely
high measure of process capability
 A Six Sigma capable process will
return no more than 3.4 defects per
million operations (DPMO)
 Highly structured approach to
process improvement

© 2006 Prentice Hall, Inc. 6 – 19

 Six Sigma
1. Define critical outputs
and identify gaps for
improvement DMAIC Approach
2. Measure the work and
collect process data
3. Analyze the data
4. Improve the process
5. Control the new process to
make sure new performance
is maintained

© 2006 Prentice Hall, Inc. 6 – 20

 Employee Empowerment
 Getting employees involved in product
and process improvements
 85% of quality problems are due to process
and material
 Techniques
 Build communication networks that include
employees
 Develop open, supportive supervisors
 Move responsibility to employees
 Build a high-morale organization
 Create formal team structures

© 2006 Prentice Hall, Inc. 6 – 21

 Benchmarking
Selecting best practices to use as a
standard for performance
 Determine what to
benchmark
 Form a benchmark team
 Identify benchmarking partners
 Collect and analyze benchmarking
information
 Take action to match or exceed the
benchmark
© 2006 Prentice Hall, Inc. 6 – 22
 Just-in-Time (JIT)
Relationship to quality:
 JIT cuts the cost of quality
 JIT improves quality
 Better quality means less
inventory and better, easier-to-
employ JIT system

© 2006 Prentice Hall, Inc. 6 – 23

 Just-in-Time (JIT)
 ‘Pull’ system of production scheduling
including supply management
 Production only when signaled
 Allows reduced inventory levels
 Inventory costs money and hides process
and material problems
 Encourages improved process and
product quality

© 2006 Prentice Hall, Inc. 6 – 24

 Taguchi Concepts
 Experimental design methods to
improve product and process design
 Identify key component and process
variables affecting product variation
 Taguchi Concepts
 Quality robustness
 Quality loss function
 Target-oriented quality
 Target-oriented quality yields more product in
the “best” category
 Target-oriented quality brings product toward
© 2006 Prentice Hall, Inc. the target value 6 – 25
 Quality Robustness
 Ability to produce products
uniformly in adverse manufacturing
and environmental conditions
 Remove the effects of adverse
conditions
 Small variations in materials and
process do not destroy product
quality

© 2006 Prentice Hall, Inc. 6 – 26

 Quality Loss Function
 Shows that costs increase as
the product moves away from L = D 2
C
what the customer wants where
L = loss to society
D = distance from
 Costs include customer target value
C = cost of
dissatisfaction, warranty and deviation

service, internal scrap and

repair, and costs to society
 Traditional conformance
specifications are too simplistic

© 2006 Prentice Hall, Inc. 6 – 27

 Tools of TQM
 Tools for Generating Ideas
Check sheets
Scatter diagrams
Cause and effect diagrams
 Tools to Organize the Data
Pareto charts
Flow charts
 Tools for Identifying Problems
Histogram
Statistical process control chart
© 2006 Prentice Hall, Inc. 6 – 28
 Seven Tools for TQM
(a) Check Sheet: An organized method of
recording data

Hour
Defect 1 2 3 4 5 6 7 8
A /// / / / / /// /
B // / / / // ///
C / // // ////

© 2006 Prentice Hall, Inc. 6 – 29

 Seven Tools for TQM
(b) Scatter Diagram: A graph of the value
of one variable vs. another variable
Productivity

Absenteeism

© 2006 Prentice Hall, Inc. 6 – 30

 Seven Tools for TQM
(c) Cause and Effect Diagram: A tool that
identifies process elements (causes) that
might effect an outcome

Cause
Materials Methods
Effect

Manpower Machinery

© 2006 Prentice Hall, Inc. 6 – 31

 Seven Tools for TQM
(d) Pareto Charts: A graph to identify and plot
problems or defects in descending order of
frequency
Frequency

Percent
A B C D E

© 2006 Prentice Hall, Inc. 6 – 32

 Seven Tools for TQM
(e) Flow Charts (Process Diagrams): A chart
that describes the steps in a process

© 2006 Prentice Hall, Inc. 6 – 33

 Seven Tools for TQM
(f) Histogram: A distribution showing the
frequency of occurrence of a variable
Distribution
Frequency

Repair time (minutes)

© 2006 Prentice Hall, Inc. 6 – 34

 Seven Tools for TQM
(g) Statistical Process Control Chart: A chart with
time on the horizontal axis to plot values of a
statistic

Upper control limit

Target value

Lower control limit

Time

© 2006 Prentice Hall, Inc. 6 – 35

 Statistical Process Control
(SPC)
 Uses statistics and control charts to
tell when to take corrective action
 Drives process improvement
 Four key steps
 Measure the process
 When a change is indicated, find the
assignable cause
 Eliminate or incorporate the cause
 Restart the revised process

© 2006 Prentice Hall, Inc. 6 – 36

 An SPC Chart
Plots the percent of free throws missed

Upper control limit

20%

Coach’s target value

10%

| | | | | | | | | Lower control limit

0% 1 2 3 4 5 6 7 8 9

Game number

© 2006 Prentice Hall, Inc. 6 – 37

 Inspection
 Involves examining items to see if
an item is good or defective
 Detect a defective product
 Does not correct deficiencies in
process or product
 It is expensive
 Issues
 When to inspect
 Where in process to inspect

© 2006 Prentice Hall, Inc. 6 – 38

 When and Where to Inspect
1. At the supplier’s plant while the supplier is
producing
2. At your facility upon receipt of goods from
the supplier
3. Before costly or irreversible processes
4. During the step-by-step production
processes
5. When production or service is complete
6. Before delivery from your facility
7. At the point of customer contact

© 2006 Prentice Hall, Inc. 6 – 39

 TQM In Services

 Service quality is more difficult to

measure than the quality of goods
 Service quality perceptions depend on:
 Intangible differences between products
 Intangible expectations customers have
of those products

© 2006 Prentice Hall, Inc. 6 – 40

 Determinants of Service Quality
 Reliability:
 It is consistency of performance and dependability, accuracy in
billing, keeping records correctly, performing the service right
at the designated time.
 Responsiveness:
 willingness or readiness of employees to provide service,
timeliness of service
 calling the customer back quickly, giving prompt service.
 Competence:
 possession of the required skills and knowledge to perform the
service,
 Access:
 approachability and ease of contact, the service is easily
accessible by telephone, etc.
 Courtesy:
 politeness, respect, consideration, friendliness of contact
personnel, consideration for the consumer's property, clean
© 2006 Prentice Hall,and
Inc. neat appearance of public contact personnel. 6 – 41
 Determinants of Service Quality
 Communication:
 Keeping customers informed in language they can understand
and listening to them, explaining the service itself and its cost,
assuring the consumer that a problem will be handled.
 Credibility:
 Trustworthiness, believability, honesty, company reputation,
having the customer's best interests at heart, personal
characteristics of the contact personnel.
 Security:
 Freedom from danger, risk, or doubt, physical safety, financial
security, confidentiality.
 Understanding/ knowing the customer:
 Understanding customer needs, learning the customer's
specific requirements, providing individualized attention,
recognizing the regular customer.
 Tangibles:
 Physical evidence and representations of the service,
© 2006 Prentice Hall, Inc. 6 – 42