CHAPTER 8

Quality
Management
Presented by:
Group 4
Altea Mae Siga-an
Maria Pearl faytaren
Lea Rose Beriong
Allen Chrizzel Dela Cruz
Kate Matinong BSA 1-B
Andrelina Sheila Mae Go
Cleo Amor Dela Cruz
 CHAPTER OBJECTIVES:
After studying this chapter, you should be able to do the following:
1. define the term quality and explain why quality is important and the
consequences of poor quality
2. identify the determinants of quality
3. describe the cost associated with quality
4. describe the quality awards and the philosophies of quality Gurus
5. describe TQM
6. list and briefly explain the elements of the control process
7. explain how control charts are used to monitor a process and the
concepts that underlie their use
 INTRODUCTION
Broadly defined, quality refers to the ability of a
product or service to consistently meet or exceed customer
requirements or expectations. Different customers will have
different requirements, so a working definition of quality is
customer-dependent.

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
wideranging recalls that have included automobiles, ground
meat, toys, produce, dog food, and pharmaceuticals.

Customer expectations can be broken down into a

number of categories, or dimensions, that customers use to
judge the quality of a product or service. Understanding
these helps organizations in their efforts to meet or exceed
customer expectations. The dimensions used for goods are
somewhat different from those used for services.
Defining Quality: The Dimensions of Quality

One way to think about quality is the degree to

which performance of a product or service meets or
exceeds customer expectations. The difference between
these two, that Performance – Expectations, is of great
interest. If these two measures are equal, the difference is
zero, and expectations have been met. If the difference is
negative, expectations have not been met, whereas if the
difference is positive, performance has exceeded customer
expectations.
 Product Quality
Product quality is often judged on eight dimensions of quality:

● 1. Performance —main 5. Reliability —dependable

characteristics of the performance.
product. 6. Durability —ability to
● 2. Aesthetics —appearance, perform over time.
feel, smell, taste. 7. Perceived quality —indirect
● 3. Special features —extra evaluation of quality (e.g.,
characteristics. reputation).
● 4. Conformance —how well 8. Serviceability —handling of
a product corresponds to complaints or repairs.
design specifications.
Service Quality. The dimensions of product quality don’t
adequately describe service quality. Instead, service quality is
often described using the following dimensions:

1. Convenience —the availability and accessibility of the service.

2. Reliability —the ability to perform a service dependably,

consistently, and accurately.

3. Responsiveness —the willingness of service providers to help

customers in unusual situations and to deal with problems.

4. Time —the speed with which service is delivered.

5. Assurance —the knowledge exhibited by personnel who come
into contact with a customer and their ability to convey trust and
confidence.

6. Courtesy —the way customers are treated by employees who

come into contact with them.

7. Tangibles —the physical appearance of facilities, equipment,

personnel, and communication materials.

8. Consistency —The ability to provide the same level of good

quality repeatedly.
 The Determinants of Quality
The degree to
which a product
or a service 1. Design. 3. Ease of use.
successfully
satisfies its
intended 2. How well the
purpose has four product or service 4. Service after
primary conforms to the delivery.
determinants: 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. For example, many different models of automobiles are
on the market today. They differ in size, appearance, roominess,
fuel economy, comfort, and materials used. These differences
reflect choices made by designers that determine the quality of
design. 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.
Quality of conformance refers to the degree to which
goods and services conform to (i.e., achieve ) 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 the action (e.g.,
through problem solving) when necessary. One important
key to quality is reducing the variability in process outputs
(i.e., reducing the degree to which individual items or
individual service acts vary from one another).
Ease of use and user instructions are
important. They increase the chances, but do
not guarantee, that a product will be used for its
intended purposes and in such a way that it will
continue to function properly and safely.
Responsibility for Quality
It is true that all members of an organization have some responsibility
for quality, but certain parts of the organization are key areas of
responsibility:

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. Self-assembly
instructions for IKEA flat pack furniture.
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.

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.

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.

* Poor quality increases certain costs incurred by the

organization. The following section provides further detail on
costs associated with quality.
The Consequences of Poor Quality
It is important for management to recognize the different ways in
which the quality of a firm’s products or services can affect the
organization and to take these into account in developing and
maintaining a quality assurance program. Some of the major areas
affected by quality are

1. Loss of business 2. Liability

3. Productivity 4. Costs
 The Costs of Quality
Any serious attempt to deal with quality issues must take into
account the costs associated with quality. Those costs can be
classified into three categories: appraisal, prevention, and failure.

Appraisal costs relate to Prevention costs relate to attempts to

inspection, testing, and other prevent defects from occurring. They
activities intended to uncover include costs such as planning and
defective products or services, administration systems, working with
or to assure that there are none. vendors, training, quality control
They include the cost of procedures, and extra attention in both
inspectors, testing, test the design and production phases to
equipment, labs, quality audits, decrease the probability of defective
and field testing. workmanship.
Failure costs are incurred by defective parts or products or by
faulty services. Internal failures are those discovered during the
production process; external failures are those discovered after
delivery to the customer. Internal failures occur for a variety of
reasons, including defective material from vendors, incorrect
machine settings, faulty equipment, incorrect methods, incorrect
processing, carelessness, and faulty or improper material handling
procedures. The costs of internal failures include lost production
time, scrap and rework, investigation costs, possible equipment
damage, and possible employee injury. Rework costs involve the
salaries of workers and the additional resources needed to
perform the rework (e.g., equipment, energy, raw materials).
 THE EVOLUTION OF QUALITY MANAGEMENT
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.
Moreover, one person or a small group of people were responsible for an
entire product.

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.
In 1924, Bell Telephone Laboratories introduced statistical control charts
that could be used to monitor production. Around 1930, H. F. Dodge and H. G.
Romig, also of Bell Labs, introduced tables for sampling. Nevertheless,
statistical quality control procedures were not widely used until World War
II, when the U.S. government began to require vendors to use them.
 World War II caused a 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.

During the 1950s, the quality movement evolved into quality

assurance. In the mid1950s, total quality control efforts enlarged the realm
of quality efforts from its primary focus on manufacturing to also 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. Something else happened in the 1970s
that had a global impact on quality. 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. The quality of
their automobiles enhanced the reputation of Japanese producers,
opening the door for a wide array of Japanese-produced goods.

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. 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 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 customer satisfaction, and it involves all levels of
management as well as workers in a continuing effort to increase
quality.
THE FOUNDATIONS OF MODERN QUALITY MANAGEMENT: THE GURUS
A core of quality pioneers shaped current thinking and practice. This
section describes some of their key contributions to the field.
Walter Shewhart
Walter Shewhart was a genuine pioneer
in the field of quality control, and he
became known as the “father of
statistical quality control.” He developed
control charts for analyzing output of
processes to determine when corrective
action was necessary. Shewhart had a
strong influence on the thinking of two
other gurus, W. Edwards Deming and
Joseph Juran.
W. Edwards Deming
Deming, a statistics professor at New York University in the 1940s,
went to Japan after World War II to assist the Japanese in improving quality
and productivity. The Union of Japanese Scientists, who had invited Deming,
were so impressed that in 1951, after a series of lectures presented by Deming,
they established the Deming Prize, which is awarded annually to firms that
distinguish themselves with quality management programs.

Although the Japanese revered Deming, he was largely unknown to

business leaders in the United States. In fact, he worked with the Japanese for
almost 30 years before he gained recognition in his own country. Before his
death in 1993, U.S. companies turned their attention to Deming, embraced his
philosophy, and requested his assistance in setting up quality improvement
programs.
The Deming’s 14 Points for Management
Joseph M. Juran

Juran, like Deming, taught Japanese

manufacturers how to improve the quality of their goods,
and he, too, can be regarded as a major force in Japan’s
success in quality.

Juran viewed quality as fitness-for-use. He also

believed that roughly 80 percent of quality defects are
management controllable; thus, management has the
responsibility to correct this deficiency. He described
quality management in terms of a trilogy consisting of
quality planning, quality control, and quality improvement.
 According to Juran, quality
planning is necessary to establish processes
that are capable of meeting quality
standards; quality control is necessary in
order to know when corrective action is
needed; and quality improvement will help
to find better ways of doing things. A key
element of Juran’s philosophy is the
commitment of management to continual
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.
Armand Feigenbaum

Feigenbaum was instrumental in advancing the

“cost of nonconformance” approach as a reason for
management to commit to quality. He recognized
that quality was not simply a collection of tools and
techniques, but a “total field.” According to
Feigenbaum, it is the customer who defines quality.
 Crosby developed the concept of zero defects
Philip B. Crosby and popularized the phrase “Do it right the first time.” He
stressed prevention, and he argued against the idea that
“there will always be some level of defectives.” In 1979, his
book Quality Is Free was published.

The quality-is-free concept is that the costs of

poor quality are much greater than traditionally defined.
According to Crosby, these costs are so great that rather
than viewing quality efforts as costs, organizations should
view them as a way to reduce costs, because the
improvements generated by quality efforts will more than pay for themselves.
Crosby believes that any level of defects is too high and he maintains that
achieving quality can be relatively easy. His book Quality without Tears: The Art
of Hassle-Free Management was published in 1984.
Kaoru Ishikawa
The late Japanese expert on quality was
strongly influenced by both Deming and Juran,
although he made significant contributions of his
own to quality management. Among his key
contributions were the development of the cause-
and-effect diagram (also known as a fishbone
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.
Genichi Taguchi

Taguchi is best known for the Taguchi

loss function, which involves a formula for
determining the cost of poor quality. The idea
is that the deviation of a part from a standard
causes a loss, and the combined effect of
deviations of all parts from their standards can
be large, even though each individual deviation
is small.
Taiichi Ohno and Shigeo Shingo
Taiichi Ohno and Shigeo
Shingo both developed the
philosophy and methods of kaizen, a
Japanese term for continuous
improvement (defined more fully
later in this chapter), at Toyota.
Continuous improvement is one of
the hallmarks of successful quality
management
QUALITY AWARDS
Quality awards have been established to generate improvement in quality.
The Malcolm Baldrige Award, the European Quality Award, and the Deming
Prize are well-known awards given annually to recognize firms that have
integrated quality management in their operations.
The Baldrige Award
Named after the late Malcolm Baldrige, an
industrialist and former secretary of commerce,
the annual Baldrige Award is administered by
the National Institute of Standards and
Technology. The purpose of the award
competition is to stimulate efforts to improve
quality, to recognize quality achievements, and to
publicize successful programs.
 Benefits of the Baldrige competition include the following:

1. Winners achieve financial success.

2. Winners share their knowledge.

3. The process motivates employees.

4. The process provides a well-designed quality system.

5. The process requires obtaining data.

6. The process provides feedback.

The European Quality Award
The European Quality Award is Europe’s most prestigious
award for organizational excellence. 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.

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. It is given annually to any
company that meets the award’s standards. Although
typically given to Japanese firms, in 1989, Florida Power
and Light became the first U.S. company to win the
award.
QUALITY CERTIFICATION
Many firms that do business internationally recognize the importance of quality
certification.
ISO 9000, 14000, and 24700 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. Used by industrial and business organizations, regulatory agencies,
governments, and trade organizations, the standards have important economic
and social benefits.
Not only are they tremendously important for designers,
manufacturers, suppliers, service providers, and customers, but the standards
make a tremendous contribution to society in general: They increase the levels
of quality and reliability, productivity, and safety, while making products and
services affordable. The standards help facilitate international trade. They
provide governments with a base for health, safety, and environmental
legislation. And they aid in transferring technology to developing countries.
 Two of the most well-known of these are ISO 9000 and ISO
14000. ISO 9000 pertains to quality management. It concerns what an
organization does to ensure that its products or services conform to its
customers’ requirements. ISO 14000 concerns what an organization does
to minimize harmful effects to the environment caused by its
operations. Both ISO 9000 and ISO 14000 relate to an organization’s
processes rather than its products and services, and both stress
continual improvement. Moreover, the standards are meant to be
generic; no matter what the organization’s business, if it wants to
establish a quality management system or an environmental
management system, the system must have the essential elements
contained in ISO 9000 or in ISO 14000.
 The ISO 9000 standards are critical for companies doing
business internationally, particularly in Europe. They must go through a
process that involves documenting quality procedures and onsite
assessment. The process often takes 12 to 18 months. With certification
comes registration in an ISO directory that companies seeking suppliers
can refer to for a list of certified companies. They are generally given
preference over unregistered companies. More than 40,000 companies
are registered worldwide; three-fourths of them are located in Europe
PROBLEM SOLVING

Problem solving is one of the basic procedures of TQM. In order

to be successful, problem solving efforts should follow a standard
approach.

The Plan-Do-Study-Act Cycle

The plan-do-study-act (PDSA) cycle, also referred to as either
the Shewhart cycle or the Deming wheel, is the conceptual basis for
problem-solving activities. The cycle is illustrated in Figure 9.2 .
Representing the process with a circle underscores its continuing
nature.
 There are four basic steps in the cycle:
Begin by studying the current process.
Document that process. Then collect data on Evaluate the data collection
the process or problem. Next, analyze the during the do phase. Check how
data and develop a plan for improvement. closely the results match the
Specify measures for evaluating the plan. original goals of the plan phase.

1. Plan 2. Do 3. Study 4. Act

Implement the plan, on a small scale if If the results are successful, standardize the
possible. Document any changes made new method and communicate the new method
during this phase. Collect data to all people associated with the process.
systematically for evaluation. Implement training for the new method.

If the results are unsuccessful, revise the plan and repeat the process or cease this project.
Employing this sequence of steps provides a systematic approach to continuous improvement.
PROCESS IMPROVEMENT
Process improvement is a
systematic approach to
improving a process. It
involves documentation,
measurement, and analysis for
the purpose of improving the
functioning of a process.
Typical goals of process
improvement include increasing customer satisfaction, achieving higher
quality, reducing waste, reducing cost, increasing productivity, and
reducing processing time.
QUALITY TOOLS
There are a number of tools that an organization can use for problem solving and
process improvement. This section describes eight of these tools. The tools aid in
data collection and interpretation, and provide the basis for decision making.

The first seven tools are often referred to as the seven basic quality tools. Figure
9.4 provides a quick overview of the seven tools.
1. Flowcharts

A flowchart is a visual representation of a process. As a problem-

solving tool, a flowchart can help investigators in identifying possible
points in a process where problems occur. Figure 9.5 illustrates a
flowchart for catalog telephone orders in which potential failure points
are highlighted. The diamond shapes in the flowchart represent decision
points in the process, and the rectangular shapes represent procedures.
The arrows show the direction of “flow” of the steps in the process.

To construct a simple flowchart, begin by listing the steps in a

process. Then classify each step as either a procedure or a decision (or
check) point. Try to not make the flowchart too detailed or it may be
overwhelming, but be careful not to omit any key steps.
2. Check Sheets.

A check sheet is a simple tool frequently used for problem

identification. Check sheets provide a format that enables users to
record and organize data in a way that facilitates collection and
analysis. This format might be one of simple checkmarks. Check
sheets are designed on the basis of what the users are attempting to
learn by collecting data.

Many different formats can be used for a check sheet and

there are many different types of sheets. One frequently used form
of check sheet deals with type of defect, another with location of
defects. These are illustrated in Figures 9.6 and 9.7 (on page 401).
 Figure 9.6 shows tallies that denote the type of defect and the time of
day each occurred. Problems with missing labels tend to occur early in the
day and smeared print tends to occur late in the day, whereas off-center
labels are found throughout the day. Identifying types of defects and when
they occur can help in pinpointing causes of the defects. Figure 9.7 makes it
easy to see where defects on the product—in this case, a glove—are
occurring. Defects seem to be occurring on the tips of the thumb and first
finger, in the finger valleys (especially between the thumb and first finger),
and in the center of the gloves. Again, this may help determine why the
defects occur and lead to a solution.
3. Histograms

A histogram can be useful in getting a sense of the distribution

of observed values. Among other things, one can see if the distribution is
symmetrical, what the range of values is, and if there are any unusual
values. Figure 9.8 illustrates a histogram. Note the two peaks. This
suggests the possibility of two distributions with different centers.
Possible causes might be two workers or two suppliers with different
quality.
4. Pareto Analysis

Pareto analysis is a technique for focusing attention on the

most important problem areas. The Pareto concept, named after the
19th-century Italian economist Vilfredo Pareto, is that a relatively few
factors generally account for a large percentage of the total cases (e.g.,
complaints, defects, problems). The idea is to classify the cases according
to degree of importance and focus on resolving the most important,
leaving the less important. Often referred to as the 80–20 rule, the
Pareto concept states that approximately 80 percent of the problems
come from 20 percent of the items. For instance, 80 percent of machine
breakdowns come from 20 percent of the machines, and 80 percent of
the product defects come from 20 percent of the causes of defects.
 Often, it is useful to prepare a chart that shows the number of occurrences by
category, arranged in order of frequency. Figure 9.9 illustrates such a chart
corresponding to the check sheet shown in Figure 9.6 . The dominance of the
problem with off-center labels becomes apparent. Presumably, the manager and
employees would focus on trying to resolve this problem. Once they accomplished
that, they could address the remaining defects in similar fashion; “smeared print”
would be the next major category to be resolved, and so on. Additional check
sheets would be used to collect data to verify that the defects in these categories
have been eliminated or greatly reduced. Hence, in later Pareto diagrams,
categories such as “offcenter” may still appear but would be much less prominent.
5. Scatter Diagrams

A scatter diagram can be useful in deciding if there is a correlation

between the values of two variables. A correlation may point to a cause of a
problem. Figure 9.10 shows an example of a scatter diagram. In this
particular diagram, there is a positive (upwardsloping) relationship between
the humidity and the number of errors per hour. High values of humidity
correspond to high numbers of errors, and vice versa. On the other hand, a
negative (downward-sloping) relationship would mean that when values of
one variable are low, values of the other variable are high, and vice versa.
6. Control Charts

A control chart can be used to monitor a process to see if

the process output is random. It can help detect the presence of
correctable causes of variation. Figure 9.11 illustrates a control chart.
Control charts also can indicate when a problem occurred and give
insight into what caused the problem. Control charts are described
in detail in Chapter 10.
7. Cause-and-Effect Diagrams
A cause-and-effect diagram offers a structured approach to the
search for the possible cause(s) of a problem. It is also known as a fishbone
diagram because of its shape, or an Ishikawa diagram, after the Japanese
professor who developed the approach to aid workers overwhelmed by the
number of possible sources of problems when problem solving. This tool
helps to organize problem-solving efforts by identifying categories of
factors that might be causing problems. Often this tool is used after
brainstorming sessions to organize the ideas generated. Figure 9.12
illustrates one form of a cause-and-effect diagram.
Benchmarking

Benchmarking is an approach that can inject new energy

into improvement efforts. Summarized in Table 9.9 , benchmarking is
the process of measuring an organization’s performance on a key
customer requirement against the best in the industry, or against
the best in any industry. Its purpose is to establish a standard
against which performance is judged, and to identify a model for
learning how to improve.

A benchmark demonstrates the degree to which customers of

other organizations are satisfied. Once a benchmark has been identified,
the goal is to meet or exceed that standard through improvements in
appropriate processes.
 The benchmarking process usually involves these steps:

1. Identify a critical process that needs improvement (e.g., order

entry, distribution, service after sale).
2. Identify an organization that excels in the process, preferably the
best.
3. Contact the benchmark organization, visit it, and study the
benchmark activity.
4. Analyze the data.
5. Improve the critical process at your own organization.
 Do you have any
questions?
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