1

Module
Basic Concepts of Quality

Introduction
Post LPG, lot of changes in the corporate world. Competition has changed the marketplace.

Survival of the fittest. To survive organizations need to Innovate, Anticipate & Achieve
Total Quality Management is a management approach that originated in the 1950s and has steadily become more popular since the early 1980s.

Total quality is a description of the culture, attitude and organization of a company that strives to provide customers with products and services that satisfy their needs.
Total Quality Management, TQM, is a method by which management and employees can become involved in the continuous improvement of the production of goods and services. It is a combination of quality and management tools aimed at increasing business and reducing losses due to wasteful practices

What is Quality?
Quality is defined as fitness for the purpose at reasonable cost

Joseph M. Juran
Quality is conformance to requirements Philip B. Crosby Quality is totality of features and characteristics of a product or service that bears on its ability to meet stated or implied needs. ISO 8402 Quality is meeting or exceeding customer's expectations. Thus, Quality is defined in terms of customer needs, it is a

measure of customer satisfaction; it ensures that no defectives

reach the customers and it builds the image of the company.

Importance of Quality
If 20 customers are dissatisfied 19 dont complain. 14 of the 20 will take their business somewhere else

Dissatisfied customers tell at an average of 10 other people about their bad experience, 12% tell upto 20 people.
Satisfied customers just tell at an average of 5 people about their positive experience.

It takes 5 times more to attract a new customer than to keep an existing one.
In many industries, quality of service is one of the few variables that can distinguish a business from its competition.

Providing high quality service can save you money. The same skills which lead to increased customer satisfaction also lead to increased employee productivity.
Customers are willing to pay more for better products and services

Quality Dimensions of a Product

1. Performance Ability of the product to achieve its intended purpose 2. Reliability- Capability of the product to perform consistently over its life cycle 3. Features The various attributes that supplement the products performance eg additional features in Nokia handsets like camera, FM Radio etc 4. Conformance Products meeting the specifications which are defined

during the design

5. Durability Degree to which products withstand stress without failure 6. Serviceability- Ability of the company to provide after sales service and also availability of the spare parts needed for service requirements 7. Aesthetics Product appearance, artistic look etc

Dimensions of Service Quality

Reliability
Ability to perform the promised service dependably and accurately. Knowledge and courtesy of employees and their ability to inspire trust and confidence. Physical facilities, equipment, and appearance of personnel.

Assurance
Tangibles

Empathy

Caring, individualized attention the firm provides its customers.

Responsiveness Willingness to help customers and provide

prompt service.

Reliability

Most important determinant of perception of Service Quality.

It broadly means that company delivers on its promises promises about delivery, service provision, problem resolution, pricing etc. Customers want to do business with companies that keep their promises, particularly their promises about the service outcomes and the core service attributes. For eg Fed Ex

Assurance: Inspiring Trust and Confidence

Employees knowledge and courtesy and the ability of the firm and its employees to inspire trust and confidence.
This dimension is likely to be important for services that customers perceive as high risk or for services of which they feel uncertain about their ability to evaluate outcomes- for eg banking, insurance, brokerage, medicine, legal services etc. In such service contexts the company seeks to build trust and loyalty between key contact people and individual customers.

Tangibles: Representing the services physically

Defined as appearance in physical facilities, equipment, personnel and communication material.
Service industries that emphasize tangibles in their strategies include hospitality services in which the customer visits the establishment to receive the service such as hotels, restaurants, retail stores, cinema halls etc.

Empathy

Caring individualized attention the firm provides its customers.

The essence is conveying through personalized or customized service, that customers are unique and special & their needs have been understood. Customers want to feel understood by and important to firms that provide service to them.

Responsiveness: Being Willing to help

Willingness to help customers and provide prompt service.
This dimension emphasizes attentiveness and promptness in dealing with customer requests, questions, complaints and problems.

This is communicated to the customer by the length of time they have to wait for assistance, answer to questions or attention to problems.
Responsiveness perceptions diminish when customers wait to get through to a company by telephone are put on hold, are put to a complex voice mail system or have trouble accessing the firms website.

Managing Quality : Quality Trilogy

Managing for quality consists of three basic quality-oriented processes: Quality planning, Quality control, and Quality improvement. The role of quality planning is to design a process that will be able to meet established goals under operating conditions. The role of quality control is to operate and when necessary correct the process so that it performs with optimal effectiveness. The role of quality improvement is to devise ways to take the process to unprecedented levels of performance.

1. Quality Planning
Quality planning stems from a unity of purpose that spans all functions of an organization. The subject of planning can be anything -- an engineering process for designing new products, a production process for making goods, or a service process for responding to customer requests. Quality Planning involves
1. Identifying customers, both internal and external 2. Determining their needs 3. Specifying the product features that satisfy those needs at minimum cost. 4. Designing the processes that can reliably produce those features. 5. Proving that the process can achieve its goals under operating conditions.

2. Quality Control
The process of managing operations to meet quality goals. The process of Quality Control involves:
1. 2. 3. 4. 5. 6. Choosing control parameters. Choosing units of measurement Establishing a measurement procedure Measuring Interpreting differences between measurement and goal. Taking action to correct significant differences

3. Quality Improvement
Assuming the process is under control, any waste that occurs must be inherent in the design of the process. The object of quality improvement is to reduce chronic waste to a much lower level. The steps in Quality Improvement:
1. 2. 3. 4. 5. 6. 7. 8. Prove the need for improvement Identify specific projects for improvement Organize to guide the projects Organize for diagnosis -- discovery of causes Diagnose the causes Provide remedies Prove that the remedies are effective under operating conditions Provide for control to maintain the gains.

Terminologies used in Quality Management

What is Quality Control? What is Inspection? What is Quality Assurance? What is the difference between Quality Assurance, Quality Control and Inspection?

What is Total Quality Control (TQC)?

What is TQM?

Cont.

What is Quality Control?

It is a systematic control of all those variables which affects the quality of a product. It also aims at prevention of defects. Quality Control is a system of routine technical activities, to measure and control the quality of the inventory as it is being developed. The QC system is designed to: 1. Provide routine and consistent checks to ensure that there are no deviations; 2. Identify and address errors defect; 3. Document and record all quality related activities.

QC is a set of activities for ensuring quality in products. The activities focus on identifying defects in the actual products produced.
Quality Control refers to all those functions or activities that must be performed to fulfill the companys objectives pertaining to quality.

What is Inspection?

Inspection is the process of comparing actual quality characteristics of a product with a predetermined or specific set of standards in order to segregate good products from bad products. Inspection is one example of a QC activity

What is Quality Assurance?

QA is a set of activities for ensuring quality in the processes by which products are developed. Quality Assurance is any action directed toward providing customers with goods and services of appropriate quality. It relies on comprehensive system of planning, documentation, statistical process control and certification of product. Quality Assurance activities include a planned system of review procedures conducted by personnel not directly involved in the inventory compilation/development process

Difference between Quality Assurance & Quality Control

Quality Assurance QA is a set of activities for ensuring quality in the processes by which products are developed. Quality Control QC is a set of activities for ensuring quality in products. The activities focus on identifying defects in the actual products produced. QC aims to identify (and correct) defects in the finished product. Quality control, therefore, is a reactive process.

Definition

QA aims to prevent defects with a focus on the process used to Focus on make the product. It is a proactive quality process.

Goal

How

The goal of QA is to improve development and test The goal of QC is to identify defects processes so that defects do after a product is developed and not arise when the product is before it's released. being developed. Establish a good quality Finding & eliminating sources of management system and the quality problems through tools & assessment of its adequacy. equipment so that customer's Periodic conformance audits of requirements are continually met. the operations of the system.

Difference between Quality Assurance & Quality Control

Quality Assurance Prevention of quality problems through planned and systematic activities including documentation. Everyone on the team involved in developing the product is responsible for quality assurance. Verification is an example of QA QA is a managerial tool Quality Control The activities or techniques used to achieve and maintain the product quality, process and service. Quality control is usually the responsibility of a specific team that tests the product for defects. Validation/Software Testing is an example of QC QC is a corrective tool

What

Responsibility

Example
As a tool

What is Total Quality Control?

TQC can be defined as an effort at continuous quality improvement of all processes, products and services through universal participation that results in increased customer satisfaction, loyalty and improved business results. It expands QA philosophy beyond manufacturing operations to other areas of organizational life. Popularized by the US quality pioneer Armand Val Feigenbaum in his 1951 book 'Total Quality Control

What is TQM?
TQM is a corporate business management philosophy which recognizes that customer needs and business needs are inseparable. TQM is a management philosophy that seeks to integrate all organizational functions (marketing, finance, design, engineering, production, customer service etc) to focus on meeting customer needs and organizational objective. TQM views an organization as collection of processes. The simple objective of TQM is Do the right things, right the first time, every time. TQM is the foundation for activities which include 1. Commitment by senior management and all employees 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Meeting customer requirements Reducing development cycle time JIT/ Demand flow manufacturing Improved Teams Reducing Product and Service Cost Systems to facilitate improvements Line management ownership Employee involvement and empowerment Recognition and celebration Challenging quantified goals and benchmarking Focus on processes/ improvement plans Specific incorporation in strategic planning

This shows that TQM must be practiced in all activities by all personnel in manufacturing, marketing, engineering, R&D, sales, Purchasing, HR etc

What is TQM?

Contd.

It focuses on Total Satisfaction of Customer through continuous improvement Total: Everyone associated with company is involved in continuous improvement (including customers and suppliers) Quality: Customers expressed and implied needs are fully met Management: executives are fully committed

Basic Principles of TQM

Customer Focus

Participation and Teamwork

Process Focus Continuous Improvement Kaizen

Kai in Japanese means Change and Zen means Good. The literal meaning of Kaizen is Change for Good. Kaizen is the Japanese philosophy of continuous improvement by all the employees in an organization so that they perform their tasks a little better each day. It is a never ending journey centered on the concept of starting each new day with the principle that the methods can always be improved
Four Pillars of TQM 1. Satisfying Customers 2. System / Process Approach 3. 4. Improvement Tools People

Differences between Traditional Management and TQM

Characteristics Management Understanding and attitude TQM Approach Considers quality management as an essential part of the company system Quality organization status Quality management as essential part of the company system Traditional Approach Tends to blame quality department for quality problems Considers that quality is hidden in manufacturing or operations

Problem handling

Emphasis on prevention of
problems

Fire fighting approach

Quality improvement action

Continuous activity

No organizational activity

Priority
Focus

Quality is topmost priority

Customer satisfaction

Profit is topmost priority

Managements requirements
Cont.

Characteristics Organization

TQM Approach Networking across and among the functions

Traditional Approach Hierarchical-Vertical

Span of control

Large span of control,

authority pushed to lower levels

Short span

Responsibility for quality Employee

With top management High involvement and

Delegated to subordinates Very less participation

participation
Strategic planning Quality planning is integrated to strategic business planning Team work High emphasis Very low Focus on financial and marketing issues

Cost of Quality
Cost of Quality (COQ) is defined as the sum of everything that would not have been necessary if everything else was done right the first time. According to quality guru A V Feigenbaum, cost of quality is defined as

Those costs associated with the creation and control of quality as well as the
evaluation and feedback of conformance of quality, reliability and safety requirements, and those costs associated with the consequences of failure to meet the requirements both within the factory and in the hands of the customer The "cost of quality" isn't the price of creating a quality product or service. It's the cost of NOT creating a quality product or service.
Cont.

Costs of Quality Components

Cost of Quality

Conformance

Non-conformance

Prevention

Appraisal

Internal Failure

External Failure

Cont.

Components of Costs of Quality

COQ Category
Internal failure costs External

Typical Descriptions (may vary between different organizations)

Costs associated with internal losses (ie. within the process being analyzed) Costs external to the process being analyzed (ie. occur outside, not within). These costs are usually discovered by, or affect third parties (eg. customers). Some external costs may have originated from within, or been caused, created by, or made worse by the process being analyzed. They are defined as external because of where they were discovered, or who is primarily or initially affected. Costs associated with the prevention of future losses

Examples
Off-cuts, equipment breakdowns, spills, scrap, yield, productivity customer complaints, latent defects found by the customer, warranty

Preventive

Planning, scheduled assurance

mistake-proofing, maintenance, quality

Assessment

Costs associated with assessment of the process.

measurement

and

KPIs, inspection, quality check, dock audits, third party audits, measuring devices, reporting systems, data collection systems, forms

Quality Performance Measures

Measurement of performance is a major requirement for any organization. Performance indicators are selected on the basis of Critical Success factors for achievement of desired results. Some of the important performance measures are:

Process Performance Measures

1. Schedule/Delivery performance measures 2. Quality 3. Downtime

2. Rework
3. Repair Costs 4. Warranty Costs 5. Complaints Organizational Performance Measures 1. Market Share 2. Retained Customers 3. Brand

4. Expediting Costs
5. Inventory levels 6. Work in process levels Product or Service Performance Measures 1. Scrap

4. Profits

Relation between Quality and Profitability

Improved Quality of Design Improved Quality of Conformance

Higher Perceived Value

Higher Prices

Lower Manufacturing and Service Costs

Increased Market Share

Increased Revenues Higher Profitability

Historical Milestones in the Development of TQM

Control Chart (1924) Acceptance Sampling Plans (1925) The Cause-and-Effect Diagram/The Ishikawa Diagram (1943) Statistical Thinking in Japan Deming Cycle (1950) The Jurans Trilogy (1951) Total Quality Control (TQC / Total Quality Management (TQM) (1960s 1980s) Zero Defects (1979) and Six Sigma (1980s)

Assignment Questions 1. Define the term Quality. Explain Quality Dimensions for Product and Service? 2. What is the difference between Quality Control and Quality Assurance? 3. What is the meaning of Cost of Quality? Explain the components of Cost of Quality? 4. Define the term TQM. Explain the basic principles of TQM? 5. Differentiate between traditional Quality Management and TQM?