UNIT I INTRODUCTION

1.1 Meaning of Quality

Quality referred as Grade of service / productreliability safetyconsistencyconsumer's

perception
Quality means "degree of excellence"implies "comparison “is not absolute
Quality – When a product or service meets or exceeds expectation considering the
intended use and the selling price.
Quality = performance / expectation

1.2 Dimensions of quality

1. Performance - Fulfilment of primary requirement

2. Features - Additional things that enhance performance
3. Conformance - Meeting specific standards set by the industry
4. Reliability - Consistence performance over a period of time
5. Durability - Long life and less maintenance
6. Service - Ease of repair, guarantee, and warranty
7. Response - Dealer customer relationship, human interface
8. Aesthetics - exteriors, packages
9. Reputation - Past performance, ranking, branding

1.3 Mission Statement, Vision Statement and Quality Policy

The mission statements answer the following questions: Who we are? Who are the
customers? What we do? Andhow we do it? It is the usually a one paragraph statement which
describes the function of the organization. It provides a clear statement of purpose for
employees, customers and suppliers.
Example: To meet customers ‘transportation and distribution needs by being the best at
moving their goods on time, safely and damage free. CANADIAN NATIONAL RAILWAYS

Vision Statement:
 It is a short declaration of what an organization aspires to be tomorrow. It is the ideal
state that might never reached but which you continuously strive to achieve.
Example: We will be the preferred provider of safe, reliable, and cost-effective products and
services that satisfy the electric-related needs of all customer segments.
FLORIDA POWER & LIGHT COMPANY

Quality Policy:
The Quality Policy is a guide for everyone in the organization as to how they should
provide products and service to the customers. The common characteristics are Quality is first
among equals. Meet the needs of the internal and external customers. Equal or exceed the
competition. Continually improve the quality. Include business and production practices. Utilize
the entire work force

1.4 Customer’s Satisfaction

Consumer's opinion of a product's (or a brand's) ability to fulfil his or her expectations. It
may have little or nothing to do with the actual excellence of the product, and is based on the
firms (or brand's) current public image (see corporate image), consumer's experience with the
firm's other products, and the influence of the opinion leaders, consumer's peer group, and
others.

Customer Satisfaction:
Customer – A person who buys the product or service or even a consumer who may
become future customer Satisfaction
1. Understanding customer needs
2. Defining quality
3. Teboul Model – Penetration
4. Customer satisfaction is a process never ending
Teboul Model – Penetration

Who is the customer

1. External customer – user of product or service, buyer and influencer
2. Internal customer – for his personal use only
Basic Requirement of Internal and External Customers
1. High level of quality – meeting all his needs
2. High degree of flexibility – product flexibility
3. High levels of service – maximum service
4. Low costs – value for money, customers pride is that he has bought for the lowest cost
5. Quick response – Less waiting period, demo, billing, packing, delivery
6. Little of no variability – minimum deviation from the target and expectation

1.5 Customer Perception of Quality

Before 1988 – Performance, Prize and service

After 1989 – Performance, service and prize ASQ – American Society for Quality
1. Performance – availability (ready for use), reliability (free from failure),
maintainability
2. Features – psychological and technical. Added feature along with main usage
3. Service – intangible, made up of many small things
4. Warranty – Vs guarantee. Customer feels comfortable with this
5. Price – value for money, ready to pay at the same time comparative study to be done
6. Reputation – Branding merges with quality. Good exp reaches 6 bad reaches 15

1.6 Customer Retention

It is the final result of customer satisfaction and customer loyalty

  Most cases what customer says or feels may vary from actual consumption or purchase
 Customer must refer more customers and increase the revenue
 External research must be done to feel the pulse of the customer
 Employee retention is proportional customer retention
Features of Feedback

 Finds dissatisfaction
 Dissatisfied customer normally tend to report and register complaint Priority for quality
 Match between organization perceptions of quality to that of customer Comparison with
competitors
 Evaluation by customers who would have known the competitors Customer needs
 The real needs of customers is known directly from the customer Scope for improvement
 Future enhancement in terms of quality
Sources of Feedback
1. Comment Card – card attached with the warranty to get the basic information. Asking reasons
for the purchase of product or service.
2. Questionnaire – Most popular. Mostly close ended and few open questions. Time consuming.
Analyze and interpret data.
3. Focus Group – Select few customer, call for a meeting and discuss and collect data from them.
Also ask them what their expectation is. Incentive for participation is assured in advance so that
the customer is comfortable and not forced to participate.
4. Toll Free Numbers – Free telephone customer can call for assistance, register complaints
5. Customer Visit – It is very effective as customer is put on top priority but at the same time
consuming, costly and customer interest.
6. Report Card – giving a grading sheet to the customer regarding the organization. Very
effective, customer is at pride that he could evaluate the product or service.
7. Internet – Online and email feedback. Though easy but not 100% reliable source and lot of
misrepresentation and lags seriousness on the part of the consumer.
8. Employee feedback – Untapped source of effective information. Customer says what is
happening employees say why it is happening. Reactive to proactive approach
9. Mass Customization – make instant changes to the requirement of the customer. Dress
materials, computer, furniture etc.

Complaints – Feedbacks are proactive complaints are reactive.

1. Organization must take complaints as a proactive device for the future.
2. All complaints must be acknowledge as early as possible
3. The complainant must get the information about the progress of the complaint
4. Dissatisfied customers complaints not adhered tend to move to the competitors
5. Small organization has the advantage of being in direct contact with the customer
 6. Frontline staffs get the direct complaint they must be trained to handle and take
decisions

Handling complaints
1. Investigate the complaint promptly both positive and negative
2. Develop procedure for complaints, recording, actions to be taken, inform the staffs
3. Categories the complaints – product, service, cost, ambience etc
4. Senior managers must have direct involvement
5. Communicate the process of handling the complaints to all staffs
6. Provide regular complaints reports – complaints received, decisions taken etc
7. Identify customer expectations before hand

1.7 Quality Cost

During the 1950‘s the concept of ―Quality Cost‖ emerged. Different people assigned
different meanings to the term. Some people equated quality cost with the cost of attaining
quality; some people equated the term with the extra incurred due to poor quality.
But, the widely accepted thing is ―Quality cost is the extra cost incurred due to poor or
bad quality of the product or service‖.
Quality costs are the costs associated with preventing, detecting, and remediating product
issues related to quality.
Quality costs do not involve simply upgrading the perceived value of a product to a
higher standard. Instead, quality is creating and delivering a product that meets the expectations
of a customer.
Thus, if a customer spends very little for an automobile, he will not expect leather seats
and air conditioning - but he will expect the vehicle to run properly.
Quality costs are generally considered to fall into four categories, which are:
Prevention costs.
The cost incurred in keeping failure and appraisal costs to a minimum.You incur a
prevention cost in order to keep a quality problem from occurring. It is the least expensive type
of quality cost, and so is highly recommended.
Prevention costs can include proper employee training in assembling products and
statistical process control (for spotting processes that are beginning to generate defective goods),
as well as a robust product design and supplier certification.

Examples are the costs of:

 New product review

 Quality planning
 Supplier capability surveys
  Process capability evaluations
 Quality improvement team meetings
 Quality improvement projects
 Quality education and training

Appraisal costs. The cost incurred in determining the degree of conformance to quality
requirement. As was the case with a prevention cost, you incur an appraisal cost in order to keep
a quality problem from occurring. You do so through a variety of types of inspection. The least
expensive is having production workers inspect both incoming and outgoing parts to and from
their workstations, which catches problems faster than other types of inspection. Other appraisal
costs include the destruction of goods as part of the testing process, the depreciation of test
equipment, and supervision of the testing staff.

These include the costs of:

 Incoming and source inspection/test of purchased material

 In-process and final inspection/test
 Product, process or service audits
 Calibration of measuring and test equipment
 Associated supplies and materials

Internal failure costs. The cost associated with defects that are found prior to transfer of the
product to the customer. You incur an internal failure cost when a defective product is produced.
This appears in the form of scrapped or reworked goods.

Examples are the costs of:

 Scrap
 Rework
 Re-inspection
 Re-testing
  Material review
 Downgrading

External Failure costs. The cost associated with defects that are found after product is
shipped to the customer. You also incur an external failure cost when a defective product was
produced, but now the cost is much more extensive, because it includes the cost of product
recalls, warranty claims, field service, and potentially even the legal costs associated with
customer lawsuits. It also includes a relatively unquantifiable cost, which is the cost of losing
customers.

Examples are the costs of:

 Processing customer complaints

 Customer returns
 Warranty claims
 Product recalls

1.8 Meaning of TQM

TQM is defined as both philosophy and a set of guiding principles that represent the
foundation of continuously improving organisation. It is the application of quantitative methods
and human resources to improve all the process within the organisation and exceed customer
needs now and in the future.
Total Quality Management is an effective system for integrating the quality development,
quality maintenance and quality improvement efforts of various groups in an organization
continuously, so as to enable marketing, engineering, production and service at the most
economic levels which allow for full customer satisfaction.

1.8.1 TQM Basic Concepts

1. Management Involvement – Participate in quality program, develop quality council, direct

participation
2. Focus on customer – who is the customer – internal and external, voice of the customer, do it
right first time and every time.
3. Involvement and utilisation of entire work force – All levels of management
4. Continuous improvement – Quality never stops, placing orders, bill errors, delivery,
minimise wastage and scrap etc.
5. Treating suppliers as partners – no business exists without suppliers.
6. Performance measures – creating accountability in all levels
1.9 Barriers in TQM Implementation

1. Lack of commitment from top management – avoiding training for self and employees,
meetings
2. Lack of employee involvement – particularly at managerial level, supportive attitude, trust 3.
Lack of team work – Co-operation and co-ordination within workers.
4. Lack of customer oriented approach – Know the customer need, demand, taste, shortcomings
5. Lack of attention to feedback and complaints
6. Supplier control – in terms of materials, cost, quality, delivery etc
7. Review quality procedures – up gradation, correct past errors. Learn from experience

1.10 Benefits of TQM

Customer satisfaction oriented benefits:

1. Improvement in product quality
2. Improvement in product design
3. Improvement in production flow
4. Improvement in employee morale and quality consciousness
5. Improvement in product service
6. Improvement in market place acceptance

Economic improvement oriented benefits :

1. Reduction in operating costs
2. Reduction in operating losses
3. Reduction in field service costs
4. Reduction in liability exposure