Quality Management KMBNOM03

Quality Concepts Unit 1

1
Evolution of Quality Management Unit 1
2
Concepts of Quality Unit 1
3
Quality Control v/s Quality assurance Unit 1
4
Principles of Quality Unit 1
5
Deming’s, Juran’s & Crosby’s Quality Philosophy Unit 1
6
Quality Cost Unit 1
7
Quality Leadership Unit 1
8
Role of Top Management Unit 1
Quality Management System & Process Quality
Improvement
9
Basics of QMS, 7 QC tools Unit 2
10
Regression Control Charts, Process Capability and Unit 2
Analysis
11
Measurement system Analysis, Design and Unit 2
Analysis of Experiment (DOE)
12
Acceptance sampling plan Unit 2
13
Different Cost associated with Quality like Unit 2
Assurance cost
14
Failure cost , prevention cost Unit 2
15
rectification cost, appraisal cost Unit 2
16
Process failure mode and effect analysis (PFMEA) Unit 2
17
Understanding Service Quality, case studies Unit 2
 UNIT -1
Definition Total Quality Management

Total Quality Management is an enhancement to the traditional way of doing business. It is a proven
technique to guarantee survival in world-class competition. Only by changing the actions of management
will the culture and actions of an entire organization be transformed. TQM is for the most part common
sense. Analyzing the three words, we have:

Total— Made up of the whole.

Quality—Degree of excellence a product or service provides.

Management—Act, art, or manner of handling, controlling, directing, etc

Therefore, TQM is the art of managing the whole to achieve excellence. The Golden Rule is a simple, but
effective way to explain it: Do unto others as you would have them do unto you. TQM is defined as both
a philosophy and a set of guiding principles that represent the foundation of a continuously improving
organization. It is the application of quantitative methods and human resources to improve all the
processes within an organization and exceed customer needs now and in the future. TQM integrates
fundamental management techniques, existing improvement efforts, and technical tools under a
disciplined approach.

Evolution of Quality Management

The history of quality control is undoubtedly as old as industry itself. During the middle Ages, quality
was to a large extent controlled by the long periods of training required by the guilds. This training
instilled pride in workers for quality of a product.

The concept of specialization of labor was introduced during the Industrial Revolution. As a result, a
worker no longer made the entire product, only a portion. This change brought about a decline in
workmanship. Because most products manufactured during that early period were not complicated,
quality was not greatly affected. In fact, because productivity improved there was a decrease in cost,
which resulted in lower customer expectations. As products became more complicated and jobs more
specialized, it became necessary to inspect products after manufacture.
In 1924, W. A. Shewhart of Bell Telephone Laboratories developed a statistical chart for the control of
product variables. This chart is considered to be the beginning of statistical quality control. Later in the
same decade, H. F. Dodge and H. G. Romig, both of Bell Telephone Laboratories, developed the area of
acceptance sampling as a substitute for 100% inspection. Recognition of the value of statistical quality
control became apparent by 1942. Unfortunately, U.S. managers failed to recognize its value.

In 1946, the American Society for Quality Control was formed. Recently, the name was changed to
American Society for Quality (ASQ). This organization, through its publications, conferences, and
training sessions, has promoted the use of quality for all types of production and service.

In 1950, W. Edwards Deming, who learned statistical quality control from Shewhart, gave a series of
lectures on statistical methods to Japanese engineers and on quality responsibility to the CEOs of the
largest organizations in Japan. Joseph M. Juran made his ¿rst trip to Japan in 1954 and further emphasized
management’s responsibility to achieve quality. Using these concepts the Japanese set the quality
standards for the rest of the world to follow.

In 1960, the first quality control circles were formed for the purpose of quality improvement. Simple
statistical techniques were learned and applied by Japanese workers.

By the late 1970s and early 1980s, U.S. managers were making frequent trips to Japan to learn about the
Japanese miracle. These trips were really not necessary—they could have read the writings of Deming
and Juran. Nevertheless, a quality renaissance began to occur in U.S. products and services, and by the
middle of 1980 the concepts of TQM were being publicized.

In the late 1980s the automotive industry began to emphasize statistical process control (SPC). Suppliers
and their suppliers were required to use these techniques. Other industries and the Department of Defense
also implemented SPC. The Malcolm Baldrige National Quality Award was established and became the
means to measure TQM. Genechi Taguchi introduced his concepts of parameter and tolerance design and
brought about a resurgence of design of experiments (DOE) as a valuable quality improvement tool.

Emphasis on quality continued in the auto industry in the 1990s when the Saturn automobile ranked first
in customer satisfaction (1996). In addition, ISO 9000 became the worldwide model for a quality
management system. ISO 14000 was approved as the worldwide model for environmental management
systems.

The new millenium brought about increased emphasis on worldwide quality and the Internet.

Quality Movement in India:

Before India gained independence in the year 1947, quality within industries and other sectors was
practiced in an informal way. It was only post-independence that importance was given to formal quality
management.

Professor P. C. Mahalanobis set up the Statistical Laboratory in Presidency College, Kolkata, sometime in
the 1920s. In the year 1931, the Indian Statistical Institute was founded. This institute gained the status of
an Institution of National Importance by an act of parliament in India in 1959. The of¿ces of this institute,
located in several cities in India, have been primarily engaged in projects and consultancy in Statistical
Quality Control and Operations Research.

American physicist, engineer, and statistician, Dr Walter Shewhart, had visited India in 1947–48 under
Mahalanobis’s sponsorship. During his three-month stay, Dr Shewhart toured the country, held
conferences, and stimulated interest in statistical quality control among Indian industrialists.

In the 1960s, the public sector companies led by the Department of Space, the Department of Atomic
Energy, and later followed by Bharat Heavy Electricals Limited (BHEL) and Steel Authority of India
Limited (SAIL) initiated formal quality measures.

Consolidation of quality movement was further achieved in 1980s with the efforts of Confederation of
Indian Industries (CII). Large scale application of quality tools in the private industry sectors was steered
through other industry associations like FICCI (Federation of Indian Chambers of Commerce and
Industry) and ASSOCHAM (Associated Chambers of Commerce and Industry of India).

Professor Ishikawa, the founder of the quality movement in Japan, was invited by the CII in 1986 when
he addressed the ¿rst National Conference for Top Management on TQC in India. A similar address was
made by Dr Juran in 1987.

It was not until 1987 that the ISO 9000 standards were introduced and several organizations adopted these
standards as their business strategies in the 1990s. The concept of TQM gradually spread over the service
and technology sector, branching beyond the traditional engineering applications.

Quality Council of India (QCI) was set up in 1997 by the Government of India jointly with collective
Indian industry as an autonomous body under the administrative control of the Department to establish
and operate the National Accreditation Structure for conformity assessment bodies; providing
accreditation in the ¿eld of education, health, and quality promotion. Besides the role of assigning the
accreditation structure, it also promotes the adoption of quality standards relating to Quality Management
Systems (ISO 14001 Series), Food Safety Management Systems (ISO 22000 Series), Product
Certi¿cation, and Inspection Bodies through the accreditation services provided by the National
Accreditation Board for Certi¿cation Bodies (NABCB).

During his speech on the occasion of India’s 68th Independence Day, that is, on 15 August 2015, Prime
Minister Narendra Modi embarked on a major strategic objective for the country’s industry: Zero Defect
and Zero Effect (ZED). This was especially meant for the Micro, Small, and Medium Enterprises
(MSMEs). As a follow-up of this announcement, the Indian government initiated the ZED program for
the MSMEs.

With an aim to make India a global manufacturing hub, the Indian Prime Minister gave an open invitation
to manufacturers and investors across the world to establish manufacturing units in the country. Modi
said, ‘I want to appeal to the people world over, “Come, make in India”, “Come, manufacture in India”.
Sell in any country of the world but manufacture here. We have got skill, talent, discipline, and
determination to do something.’ He further added, ‘the country wants to give the world a favorable
opportunity to manufacture from electrical to electronics, from automobiles to agro value addition, paper,
plastic, satellite, or submarine, and this message of “Make in India” should reach every corner of the
world, which should be our shared dream.’

Concepts of Quality

TQM requires six basic concepts:

A committed and involved management to provide long-term top-to-bottom organizational support.

An unwavering focuses on the customer, both internally and externally.

Effective involvement and utilization of the entire work force.

Continuous improvement of the business and production process.

Treating suppliers as partners. 6. Establish performance measures for the processes.

These concepts outline an excellent way to run an organization. A brief paragraph on each of them is
given here. The next six chapters cover these concepts in greater detail.

Management must participate in the quality program. A quality council must be established to develop a
clear vision, set long-term goals, and direct the program. Quality goals are included in the business plan.
An annual quality improvement program is established and involves input from the entire work force.
Managers participate on quality improvement teams and also act as coaches to other teams. TQM is a
continual activity that must be entrenched in the culture—it is not just a one-shot program. TQM must be
communicated to all people.

The key to an effective TQM program is its focus on the customer. An excellent place to start is by
satisfying internal customers. We must listen to the “voice of the customer” and emphasize design quality
and defect prevention. Does it right the First time and every time, for customer satisfaction is the most
important consideration.

TQM is an organization-wide challenge that is everyone’s responsibility. All personnel must be trained in
TQM, statistical process control (SPC), and other appropriate quality improvement skills so they can
effectively participate on project teams. Including internal customers and, for that matter, an internal
supplier on project teams is an excellent approach. Those affected by the plan must be involved in its
development and implementation. They understand the process better than anyone else. Changing
behavior is the goal. People must come to work not only to do their jobs, but also to think about how to
improve their jobs. People must be empowered at the lowest possible level to perform processes in an
optimum manner.

There must be a continual striving to improve all business and production processes. Quality
improvement projects, such as on-time delivery, order entry efficiency, billing error rate, customer
satisfaction, cycle time, scrap reduction, and supplier management, are good places to begin. Technical
techniques such as SPC, benchmarking, quality function deployment, ISO 9000, and designed
experiments are excellent for problem solving.

On the average 40% of the sales dollar is purchased product or service; therefore, the supplier quality
must be outstanding. A partnering relationship rather than an adversarial one must be developed. Both
parties have as much to gain or lose based on the success or failure of the product or service. The focus
should be on quality and life-cycle costs rather than price. Suppliers should be few in number so that true
partnering can occur.

Definition Product-oriented Customer-oriented

Priorities Second to service and cost First among equal soft service
and cost

Decisions Short-term Long-term

Emphasis Detection Prevention

 Errors Operations System

Responsibility Quality control Everyone

Problem Solving Managers Teams

Procurement Price Life-cycle costs, partnership

Manager’s Role Plan, assign, control, and enforce Delegate, coach, facilitate, and
mentor

Performance measures such as uptime, percent nonconforming, absenteeism, and customer satisfaction
should be determined for each functional area. These measures should be posted for everyone to see.
Quantitative data are necessary to measure the continuous quality improvement activity.

The purpose of TQM is to provide a quality product and/or service to customers, which will, in turn,
increase productivity and lower cost. With a higher quality product and lower price, competitive position
in the marketplace will be enhanced. This series of events will allow the organization to achieve the
objectives of profit and growth with greater ease. In addition, the work force will have job security, which
will create a satisfying place to work.

As previously stated, TQM requires a cultural change. Table 1-1 compares the previous state with the
TQM state for typical quality elements. This change is substantial and will not be accomplished in a short
period of time. Small organizations will be able to make the transformation much faster than large
organizations.

Quality Control v/s Quality assurance

As well as providing a definition of quality, it is necessary to understand the difference between three
other important quality ideas. These are the distinctions made between quality control, quality assurance
and total quality.

Quality Control:-

The history of quality control is undoubtedly as old as industry itself. During the Middle Ages, quality
was to a large extent controlled by the long periods of training required by the guilds. This training
instilled pride in workers for quality of a product.
Professor P. C. Mahalanobis set up the Statistical Laboratory in Presidency College, Katakana, sometime
in the 1920s. In the year 1931, the Indian Statistical Institute was founded. This institute gained the status
of an Institution of National Importance by an act of parliament in India in 1959.The offices of this
institute, located in several cities in India, have been primarily engaged in projects and consultancy in
Statistical Quality Control and Operations Research. American physicist, engineer, and statistician, Dr
Walter Shewhart, had visited India in 1947–48under Mahalanobis’s sponsorship. During his three-month
stay, Dr Shewhart toured the country, held conferences, and stimulated interest in statistical quality
control among Indian industrialists.

In the 1960s, the public sector companies led by the Department of Space, the Department of Atomic
Energy, and later followed by Bharat Heavy Electricals Limited (BHEL) and Steel Authority of India
Limited (SAIL) initiated formal quality measures.

Consolidation of quality movement was further achieved in 1980s with the efforts of Confederation of
Indian Industries (CII). Large scale application of quality tools in the private industry sectors was steered
through other industry associations like FICCI (Federation of Indian Chambers of Commerce and
Industry) and ASSOCHAM (Associated Chambers of Commerce and Industry of India).5Professor
Ishikawa, the founder of the quality movement in Japan, was invited by the CII in 1986when he addressed
the 􀂿rst National Conference for Top Management on TQC in India. A similar address was made by Dr
Juran in 1987.It was not until 1987 that the ISO 9000 standards were introduced and several organizations
adopted these standards as their business strategies in the 1990s. The concept of TQM gradually spread
over the service and technology sector, branching beyond the traditional engineering applications.

Quality Council of India (QCI) was set up in 1997 by the Government of India jointly with collective
Indian industry as an autonomous body under the administrative control of the Department to establish
and operate the National Accreditation Structure for conformity assessment bodies; providing
accreditation in the fillled of education, health, and quality promotion. Besides the role of assigning the
accreditation structure, it also promotes the adoption of quality standards relating to Quality Management
Systems (ISO 14001 Series), Food Safety Management Systems (ISO 22000Series), Product
Certifications and Inspection Bodies through the accreditation services provided byte National
Accreditation Board for Certifications Bodies (NABCB).6

During his speech on the occasion of India’s 68th Independence Day, that is, on 15 August 2015,Prime
Minister Narendra Modi embarked on a major strategic objective for the country’s industry: Zero Defect
and Zero Effect (ZED). This was especially meant for the Micro, Small, and Medium Enterprises
(MSMEs). As a follow-up of this announcement, the Indian government initiated the ZED program for
the MSMEs.

With an aim to make India a global manufacturing hub, the Indian Prime Minister gave an open invitation
to manufacturers and investors across the world to establish manufacturing units in the country. Modi
said, ‘I want to appeal to the people world over, “Come, make in India”, “Come, manufacture in India”.
Sell in any country of the world but manufacture here. We have got skill, talent, discipline, and
determination to do something.’ He further added, ‘the country wants to give the world a favorable
opportunity to manufacture from electrical to electronics, from automobiles to agro value addition, paper,
plastic, satellite, or submarine, and this message of “Make in India” should reach every corner of the
world, which should be our shared dream.’

Primary objectives of the ZED model are:

To create proper awareness in MSMEs about ZED manufacturing and motivate them for assessmentof
their enterprise for ZED rating.

To drive manufacturing with adoption of Zero Defect production processes without impacting
theenvironment (Zero Effect).

To encourage MSMEs to constantly upgrade their quality standards in products and processes.

To support “Make in India” campaign.

ZED Maturity Assessment Model is an integrated and holistic certification system, which accountsfor the
processes related to:

Production Management

Quality Managementt

Design Management

Safety Management

Environmental Management

Energy Management

Natural Resource Management

Human Resource Management

Intellectual Property Management

Performance Management

Quality control is the oldest quality concept. It refers to the detection and elimination of components or
final products that are not up to standard. It is an after-the-event process concerned with detecting and
rejecting defective items. As a method of ensuring quality it may involve a considerable amount of waste,
scrap and reworking. Quality controllers or inspectors usually carry out quality control. Inspection and
testing are the most common methods of quality control, and are widely used in education to determine
whether standards are being met.

Quality control and inspection are processes that ensure that only products that meet a per-determined
specification leave the factory gate. However, quality control is an after-the-event process. It is divorced
from the people who produce the product. Inspection and quality control are designed to detect defective
products. They are necessary processes under mass production, but they are often wasteful and expensive,
involving considerable amounts of scrap and reworking. Quality control and inspection in the past 20
years have increasingly been seen as uneconomic and wasteful, as they do not assure that the workforce
care about quality. Many companies are replacing or augmenting them with methods of quality assurance
and quality improvement that seek to build quality into the production process by returning to workers
their responsibility for quality. Notions of quality improvement and quality assurance began to emerge
after the Second World War. However, in Britain and the United States they only began to attract
attention on a large scale in the 1980s as companies started to ask questions about why the Japanese were
at the time capturing larger and larger shares of world markets in a wide range of manufactured products.
Questions were asked about their success, and whether it is bound up with their national culture and their
novel quality management techniques. To find the origin of this new quality movement we need to start
the search in the United States in the late 1920s.

Quality Aassurance:-

Quality assurance is different from quality control. It is a before and during the event process concerned
to prevent faults occurring in the first place. Quality assurance is about designing quality into the process
to attempt to ensure that the product is produced to a predetermined specification. Put simply, quality
assurance is a means of producing defect- and fault-free products. The aim in the words of Philip B
Crosby is ‘zero defects’. Quality assurance is about consistently meeting product specification or getting
things right first time, every time. The quality of the good or service is assured by there being a system in
place, known as a quality assurance (QA) system, that lays down exactly how production should take
place and to what standards. Quality standards are maintained by following the procedures laid down in
the QA system. Quality assurance is the responsibility of the workforce, usually working in quality circles
or teams, rather than the inspector, although inspection can have a role to play in quality assurance. Total
quality management incorporates quality assurance, and extends and develops it. TQM is about creating a
quality culture where the aim of every member of staff is to delight their customers, and where the
structure of their organization allows them to do so. In TQM the customer is sovereign. It is the approach
popularized by Peters and Waterman (1982), and which has been a constant theme of Tom Peters’
writings ever since TQM is about providing the customer with what they want, when they want it and
how they want it. It involves moving with changing customer expectations and fashions to design
products and services that meet and exceed their expectations. Only by delighting customers will they
return and tell their friends about it (this is sometimes called the sell-on definition of quality). The
perceptions and expectations of customers are recognized as being short term and fickle, and so
organizations have to find ways of keeping close to their customers to be able to respond to their changing
tastes, needs and wants.

Principles of Quality:

One of the definitions of a “ principle ” is that it is a basic belief, theory or rule that has a major influence
on the way in which something is done. “ Quality management principles ” are a set of fundamental
beliefs, norms, rules and values that are accepted as true and can be used as a basis for quality
management. The QMPs can be used as a foundation to guide an organization’s performance
improvement. They were developed and updated by international experts of ISO/TC 176, which is
responsible for developing and maintaining ISO’s quality management standards.

The seven quality management principles are :

Customer focus

Leadership

Process approach

Engagement of People

Improvement

Evidence-based decision making

Relationship management

Customer focus:

The first quality management principle begins with the customer. Having a customer focus ensures that
your customer receives the benefit of a product or service you are offering. This lies at the centre of most
organizations, because without customers, your organization will serve no purpose to exist.

Ultimately, your customers are fundamental to your organization and therefore you need to understand
the importance of achieving quality and strive to do this you must have a customer focus.

Customer focus involves the organization;

Identify your customers (both internal and external)

Ensuring everyone across the organization has a strong grasp on your customers, suppliers, and
competitors of the organization

Identify your customer's needs by constantly seeking feedback from them

Be willing to make changes based upon this feedback, and respond to customers.

Examples of Customer focus:

If you look at successful organizations that have focused on quality, Apple immediately springs to mind.

Apple has an unwavering focus on the customer and the customer experience with their products and
services. Even if you’re not an Apple fan yourself, it’s impossible to deny that people who love
Apple really love Apple.

Apple puts the customer front and centre, and is rewarded with enormous loyalty. Take a leaf from
Apple’s book and consider the impact of every part of your quality management system on the
customer. Yes, every part.

Customers focus here at Mango:

In creating our own quality management system (QMS) at Mango we debated and discussed – and
continue to debate and discuss – these questions:

When developing our software we ask ourselves “ who is the customer for this feature?”

When supporting the product we always consider “ what is the customer asking?”

When implementing the software on-site we determine “what are the customer requirements?”

During inductions of staff we talk about “ what will make us successful in the eyes of the customer?”

The requirements of your customers aren’t something you leave to the marketing department so that you
can focus on calibration, training and perhaps safety.

Once you’ve worked out these customer requirements, you can then build that into your QMS.

Following that, it’s a matter of doing what ISO talks about, namely striving to exceed customer
expectations. Exceeding expectations will help you achieve customer satisfaction and earn a ton of
customer love (think of those millions of devoted Apple fans).

Leadership:

Ensuring there are leaders at all levels in your organization will help in establishing a unity of purpose. It
will help to create working conditions in which your people are committed to achieving your
organization's quality objectives.
Having a good sense of leadership throughout your organization will improve the coordination of your
organizations processes. This will be through better forms of communication between different levels of
the organization.

It is important to realize the difference between displaying leadership and authority. Leadership will
help you guide your employees toward a desired outcome.

What does a good leader look like?

As a Quality leader you will have to display an impressive array of skills. Top leaders think and act
strategically. Nailing down a clearly defined strategy that top management believes in will give you a)
momentum and b) credibility.

Sit down with your Senior Management Team (SMT) and thrash out a Quality strategy that everyone
believes in. Make sure that it clearly links to your company strategy. Get the whole team sign off on it.

Keep top management involved by having them take part in the Management Review process. The SMT
must not only buy-in to the QMS, but they must be seen to buy-in.

All of this looks easy on paper, but how on earth do you actually get buy-in in the first place? This is
where you need to display another leadership skill: that of a top sales person. It’s up to you to constantly
sell the benefits of QMS to managers and staff alike.

Become a collector of anecdotes, case studies and stories about the times that the QMS turned
organizations around. Think back over your work history for some examples. Use your networks to find
evidence of success - Linked In is full of good stories. Another excellent place to look is
the ISO.org website which has articles on the benefits of standards.

If you have a great store of examples and stories it will be much easier for your team to follow your path,
because they will know that other teams have already successfully followed that very same path. Back up
your examples with reliable numbers relating to waste, complaints received and so forth – solid numbers
are crucial for setting targets and measuring progress and for keeping those with an eye on the bottom line
happy.

On the flip side, you will also need to make your team aware of the costs of letting a QMS slide into
atrophy. It’s the less positive way to get traction with the SMT, but sometimes, a horror story of a missed
contract or stuffed-up order can work wonders for getting buy-in. Used wisely, cautionary tales can help
jump-start action.
The third leadership skill that you’ll need is the courage to take action if people don’t follow the
system. You want to be tough, fair, and consistent, demonstrating total commitment to the
processes. You have to walk the talk. If the procedures say that each article must be signed off by the
Quality Manager, then each article must be signed off by the Quality Manager, no questions asked. If the
procedures say monthly audits must be done, then monthly audits must be done, no exceptions. If you let
things slide or apply procedure haphazardly, then your colleagues will infer that these tasks are
unimportant, and that – by extension – the whole system is irrelevant. And if that becomes the prevailing
culture in your organization, then you’ve got an expensive, difficult mess to put right.

Running a QMS can be tough, but we wouldn’t be in this profession if we didn’t believe that the rewards
of a well-oiled system can be enormous.

Be enthusiastic, be informed, and be strategic.

Make sure that you are a success story worth telling.

Process Approach

The Process Approach principle, is all about recognizing that business activities are best understood and
managed as interrelated processes. And not only is it an important approach to use when you implement
your system, but it’s also vital to use it when maintaining your system.

The process approach will first involve defining your processes and the desired result it sets out to
achieve, which will then lead to:

The ability to identify and measure the inputs and outputs of the process

Ability to identify the interfaces of the process with the functions of the organization

Evaluate any potential risks, consequences or impacts of processes on customers or other stakeholders

Establish straightforward authority, responsibility and accountability for the management of the process

Despite being around for many years, the process approach is still quite a revelation to many management
teams.

The process approach will give you transparency. It will bring significant gains in efficiency. It will
provide you with consistent results. Your team will enjoy clarity and a feeling of ownership. Your
customers will love the effect it has on their experience. And naturally, all of that will make the
shareholders and owners of the business very happy indeed.
When you start getting into it, it’s likely that you will be staggered by the sheer number of processes that
need managing and perhaps documenting.

Taking inputs and turning them into outputs doesn’t happen with the wave of a magic wand. There’s the
design process, the measurement process, the internal auditing process, the delivery process,
the training process, the distribution process, the customer communication process, the monitoring
process, the traceability process, the complaints process, the market research process … and dozens and
dozens more.

To add to the fun, the output of one process often becomes the input of another. The processes contained
in even a small business are numerous and complex.

As great as it is, there’s no mistaking that using the process approach is a hefty undertaking. There will
be much discussion and debate, and lot of back-and-forth with differing ideas and viewpoints. You’ll go
to a lot of meetings. You’ll talk to a lot of staff. You’ll listen to a lot of staff. Many hours of your day
will be spent mapping out the many dozens of processes that your organization is built on. It’s important
work that requires commitment and energy.

Good results from using the process approach will surely come, but how to manage the complexity? In a
word - flowcharts.

Flowcharts will be your new best friend on this journey. They are an elegant and useful piece of
design. Whether your business is large or small, flowcharts will enable you to take control of your
processes. They will simply and beautifully illustrate what would otherwise take many paragraphs of
dense text to understand. They will enable you to get to the core of problems. They will make your
organization lighter on its feet.

I can’t say it strongly enough - there really isn’t a downside to getting on board with the process
approach, especially when you have flowcharts in your holster.

Engagement of People

To ensure all your employees are striving towards meeting the objectives of your organization, there is a
strong need for them to be fully involved. Involvement of your people will enable their abilities to be
used for the benefit of your organization, and will see many other positive actions by your people. These
include:

Ownership and responsibility of solving your problems

Your people will actively want to seek out opportunities that will enhance their competencies, knowledge
and experience.

Increase in knowledge sharing between your groups and teams

There will be a strong focus on creating value for your customers.

More satisfied workers who are enthusiastic and proud to work for your organization

Think about it - your staff know their processes inside and out. Many of them were probably working
there years - some before the senior management team (SMT). They’ve seen management fads become
hot, then disappear without trace. They know what goes wrong. They see patterns. They know exactly
who in your organizations is lacking in training or experience. They know which people really have a
grip on things, those individuals who can quickly and precisely cut to the heart of a problem. Newer staff
also has much to offer – they have seen how things worked (and didn’t work) on the factory floors of your
suppliers or competitors.

And yet … few Quality Managers ever ask staff what they think, or know, or see. Once a year during an
audit they might ask a few staff a question or two. But for the most part, your staffs’ knowledge and
experience is never drawn upon. Instead, managers tend to spend most of their time talking with each
other, or asking questions of their peers on sites such as Linked In.

Example of engaging people:

I was reminded of this recently when talking with a colleague who is a Quality Manager of a local
factory. When he first started at his job, he was knowledgeable about the quality management system
(QMS), but he lacked any practical experience. He was a young guy starting out, and his challenge was
big – he had to introduce a new QMS into an established manufacturing site.

If that wasn’t tough enough, he had a spanner in the works in the shape of an older man who had worked
at the place for years. This man had influence, but he also didn’t give a damn about QMS. And not only
didn’t care, he was also a master at bucking the system, at subtly and not-so-subtly undermining any
attempts at change. He was belligerent. He was intimidating. He had the potential to stop the QMS in its
tracks, and he knew it.

My colleague’s response was simple – he went to the "Gemba". In Japanese Gemba refers to the place
where value is created; in manufacturing the gemba is the factory floor. In other words, he went to seek
the truth. He walked the manufacturing floor every day, and each day made a point of talking with this
man. They discussed the man’s fears (that he might lose his job; that he might be asked to do things that
he couldn’t do; that he might be made to look a fool). They talked about the principles behind QMS, and
about the various issues the employees had with it. My colleague asked a lot of questions, and did a
lot of listening.

Over many weeks, the older man learned that he could trust my colleague, and with that, his behavior did
a 180 degree turn. The belligerent, negative QMS-hater turned into a staunch advocate of the
system. The man who had been against the very idea of a QMS became its very vocal cheerleader among
st the other employees.

My young colleague gained a lot of respect from the other workers and from management for being able
to turn around such an influential naysayer. The QMS has gone from strength to strength, and is deeply
embedded into the organization.

The company has achieved ISO 9001 certification and is regarded as the leading QMS among st its
corporate group. It could have so easily been a very different story.

Improvement

An objective for any organization should be to continuously improve. This involves having goals set for
improving the improvement of products, processes and systems throughout your organization. In addition,
and ensuring all your employees are aware of these. These improvements could be Incremental or
breakthrough.

In order to identify areas of improvement, periodic assessments against set criteria of excellence can be
used. There then needs to be an established set of measures and goals that can track and guide any
improvements. It is also important to be able to recognize improvements. Some of you are probably
thinking that focusing on compliance is surely a good thing, right? Aren’t we supposed to be ticking
boxes? Attending to checklists? Making compliance a priority?

Most of the efforts around compliance are non-value-adding for the customer. Yes, non-value-
adding. And all of this "busy" non-value-adding work stops the very things that do create value – namely,
improvement initiatives - in their tracks. And that’s a big problem.

Quality management should be all about the customer, always. How do you satisfy your customers, and
continue to satisfy them? By formatting spreadsheets? By making sure your certificates are hanging on
your wall? By tidying up your filing cabinet? Of course not. Only continuously improving what you do
to keep your customers - and thus shareholders - happy.

Improvement is what really matters. Improvement is fun. It’s stimulating. It’s satisfying for you and
your customers. Compliance is none of these things.

Quality Managers need to commodities their compliance efforts and focus more of their efforts on
improvement. Commissioning means to design the compliance tasks in such a way that anyone can do
them. Make it so that compliance doesn’t rely on you because you’ve got much more important fish to
fry.

By spending less time on compliance and more time on improving processes and systems, you’ll see
improved productivity and increased profits.

Quality Managers need to look for problems and then try to solve those problems. You need to get
yourself into a prevention mind-set. As quality thought-leader Phil Crosby once said: “Why spend all
this time finding, fixing, and fighting when you could have prevented the problem in the first
place?”

Aligned with continuous improvement is the idea that prevention based activities should be put in
place. This may require all members of your organization be provided with adequate education and
training around areas such as:

Problem solving

Process re-engineering

Process Innovation

The Plan-Do-Check-Act Cycle.

Evidence Based Decision Making

This principle relates to the idea that effective decisions are based on the analysis of data and information,
rather than guess-work or instinct. Applying this principle to quality management may involve:

Collecting data and information relevant to the objective

Ensure the data and information gathered is accurate, reliable and accessible
Ensure the analysis of this data and information is done using valid methods – this involves understanding
the value of suitable statistical techniques

Use these results of logical analysis paired with intuition and experience to make informed decisions

For many organizations, this principle can be a tricky one to get right. When you consider the hundreds
of decisions that are made every single day by workers, management and Boards, that’s a lot of scope for
getting things wrong.

It’s so very easy for businesses to eventually find themselves in an unproductive position, wondering how
on earth they arrived there. Well, unfortunately that’s the cumulative result of many thousands of
decisions made with poor information, gut-instinct or around personalities. You reach a dead-end many
miles from where you were aiming.

Creating a culture of evidence-based decision making isn’t easy, and ISO 9000 recognizes this:

With such complex systems it’s vital you collect data and to use it to make decisions every single day.

Don’t let data passively reside in spreadsheets or databases, instead you use it to drive action.

It should be key in shaping your continuous improvement initiatives. The collection of data and evidence,

and then doing analysis based on that data and evidence, is key. But – and here’s the trick - you must

collect the right data.

One of Mango’s clients put the collection of data first and foremost when it developed its quality

management processes. Each process must collect data and present it in such a way that is readable and

understandable by the shop floor staff. To do this they use display boards in each department showing

things like control charts, check sheets, action lists and problem sheets. The staff enter the data

themselves and can easily see if processes are in or out of control. With the relevant and up-to-date data

placed exactly where it’s needed, decisions are made quickly and accurately.

To give you a visual, the company has moved its quality management system from this:
To this:

This change in approach has reduced the number of internal quality non-conformance and customer
complaints. Money has been saved and profits have increased. The business has deftly avoided the
pitfalls of shonky decision-making.

Relationship Management

This quality principle is all about the mutually beneficial relationship between the organization and its
interested parties, which will increase the ability of both to create value.

Relationship Management may involve:

Recognizing and selecting key suppliers

Initiate supplier relationships that have a balance between short-term gains and long-term considerations
for the organization and society at large

Be clear and open with communications

Establish joint development and improvement of products and processes

Have a joint understanding of customer needs

Openly share information and plans for the future

Your interested parties - suppliers, contractors, partners, customers, investors, employees or society as a
whole - can significantly influence the performance of your business. Ignoring the management of these
relationships is a serious and common quality management error.

Poor relationships with your interested parties can significantly harm your profits – this can happen
through increased costs, or by a reduction in revenue. Your top and bottom lines are at risk here.

It’s true that relationship management takes time. It takes money. It takes effort. But people typically
like to take the shortest path between two points, so for many the easiest way to “do” relationship
management is to…not do it. Many compliance professionals instead decide that it’s more important to
make their documents look pretty, their priority for the day being to get the conditional formatting right
on their spread-sheets.

Actively managing your relationships is a great idea that will pay off. If you even do just that minimum
amount, you will be streets ahead of most other organizations. But…if you want go further than the basics
and really excel in relationship management (and why wouldn’t you?), there are a couple of things you
can do.

First, when there’s a problem, rather than diving headfirst into blame and shame, instead take a moment
to step back. Bring the customer into focus. How does the issue affect them? What do you all stand to
lose if the customer’s needs aren’t met? Pointing the finger at each other – effectively leaving the
customer forgotten in the margins – moves you exactly nowhere. Changing an adversarial customer-
supplier relationship into a mutually beneficial partnership will improve quality, reduce costs, and
increase market share for both parties.

Second, focus on trust, especially in your supplier relationships. You can come back to what Deming says
about suppliers. This is point 4 of his 14 points for management: “End the practice of awarding
business on the basis of price tag. Instead, minimize total cost. Move toward a single supplier
for any one item, on a long-term relationship of loyalty and trust”. Relationships are never a one-
way street. It’s so easy to blame the other party for any issues that arise. It is much harder – and
obviously, much smarter - to work with them to prevent the issue from happening in the first place. Trust
can be a long-term game changer.
This isn’t just a fine theory. Take the example of the company Bama, apple pie supplier to
McDonald. The two companies have been working together since 1957, with Bama currently earning
$250 million dollars annually in sales from their relationship with the fast-food restaurant. In all of that
time Bama has never had a written contract with McDonald. As Paula Marshall, CEO of Bama
says: “McDonald’s in the only one that today, still, does not put any stock in a contract. They put
stock in relationships”. You should consider doing the same.

Deming’s , Juran’s & Crosby’s Quality Philosophy

The Deming Philosophy:-

Deming’s philosophy is given in his 14 points. Most of these points were given in a seminar for
21Presidents of leading Japanese industry in 1950. The rest were developed and the original ones
modified over a period of three decades.

Create and Publish the Aims and Purposes of the Organization

Management must demonstrate constantly their commitment to this statement. It must include investors,
customers, suppliers, employees, the community, and a quality philosophy. The statement is forever-
changing document that requires input from everyone. Organizations must develop a long term view of at
least ten years and plan to stay in business by setting long-range goals. Resources must be allocated for
research, training, and continuing education to achieve the goals. Innovationist promoted to ensure that
the product or service does not become obsolete. A family organizational philosophy is developed to send
the message that everyone is part of the organization

Learn the New Philosophy

Top management and everyone must learn the new philosophy. Organizations must seek never ending
improvement and refuse to accept non conformance. Customer satisfaction is the number one priority,
because dissatisfaction customers will not continue to purchase nonconforming products and services.
The organization must concentrate on defect prevention rather than defect detection. By improving the
process, the quality and productivity will improve. Everyone in the organization, including the union,
must be involved in the quality journey and change his or her attitude about quality. The supplier must be
helped to improve quality by requiring statistical evidence of conformance and shared information
relative to customer expectations.

Understand the Purpose of Inspection

Management must understand that the purpose of inspection is to improve the process and reduce its cost.
For the most part, mass inspection is costly and unreliable. Where appropriate, it should be replaced by
never-ending improvement using statistical techniques. Statistical evidence is required of self and
supplier. Every effort should be made to reduce and then eliminate acceptance sampling. Mass inspection
is managing for failure and defect preventions managing for success.

Stop Awarding Business Based on Price Alone

The organization must stop awarding business based on the low bid, because price has no meaning
without quality. The goal is to have single suppliers for each item to develop a long-term relationship of
loyalty and trust, thereby providing improved products and services. Purchasing agent’s must be trained
in statistical process control and require it from suppliers. They must follow the materials throughout the
entire life cycle in order to examine how customer expectations are affected and provide feedback to the
supplier regarding the quality.

Improve Constantly and Forever the System

Management must take more responsibility for problems by actively nonbinding and correcting problems
so that quality and productivity are continually and permanently improved and costs are reduced. The
focus is on preventing problems before they happen. Variation is expected, but there must bea continual
striving for its reduction using control charts. Responsibilities are assigned to teams to remove the causes
of problems and continually improve the process.

Institute Training

Each employee must be oriented to the organization’s philosophy of commitment to never-ending

improvements. Management must allocate resources to train employees to perform their jobs in the best
manner possible. Everyone should be trained in statistical methods, and these methods should be used to
monitor the need for further training.

Teach and Institute Leadership

Improving supervision is management’s responsibility. They must provide supervisors with training in
statistical methods and these 14 points so the new philosophy can be implemented. Instead of focusing on
a negative, fault-nonbinding atmosphere, supervisors should create a positive, supportive one where pride
in workmanship can flnourish. All communication must be clear from top management to supervisors to
operators

Drive Out Fear, Create Trust, and Create a Climate for Innovation

Management must encourage open, effective communication and teamwork. Fear is caused by general
feeling of being powerless to control important aspects of one’s life. It is caused by a lack of job security,
possible physical harm, performance appraisals, and ignorance of organization goals, poor supervision,
and not knowing the job. Driving fear out of the workplace involves managing for success. Management
can begin by providing workers with adequate training, good supervision, and proper tools to do the job,
as well as removing physical dangers. When people are treated with dignity, fear can be eliminated and
people will work for the general good of the organization. In this climate, they will provide ideas for
improvement.

Optimize the Efforts of Teams, Groups, and Staff Areas

Management must optimize the efforts of teams, work groups, and staff areas to achieve the aims and
purposes of the organization. Barriers exist internally among levels of management, among departments,
within departments, and among shifts. Externally, they exist between the organization and its customers
and suppliers. These barriers exist because of poor communication, ignorance of the organization’s
mission, competition, fear, and personal grudges or jealousies. To break down the barriers, management
will need a long-term perspective. All the different areas must work together. Attitudes need to be
changed; communication channels opened; project teams organized; and training in teamwork
implemented. Multifunctional teams, such as used in concurrent engineering, are an excellent method.

Eliminate Exhortations for the Work Force

Exhortations that ask for increased productivity without providing specific improvement methods can
handicap an organization. They do nothing but express management’s desires. They do not produce better
product or service, because the workers are limited by the system. Goals should be set that are achievable
and are committed to the long-term success of the organization. Improvements in the process cannot be
made unless the tools and methods are available.

11a. Eliminate Numerical Quotas for the Work Force

Instead of quotas, management must learn and institute methods for improvement. Quotas and work
standards focus on quantity rather than quality. They encourage poor workmanship in order to meet their
quotas. Quotas should be replaced with statistical methods of process control. Management must provide
and implemental strategy for never-ending improvements and work with the work force to reflact the new
policies.

11b. Eliminate Management by Objective

Instead of management by objective, management must learn the capabilities of the processes and how to
improve them. Internal goals set by management, without a method, are a burlesque. Management by
numerical goal is an attempt to manage without knowledge of what to do. An excellent analysis
supporting this point is given by Caste llano and Rohm.

12. Remove Barriers That Rob People of Pride of Workmanship

Loss of pride in workmanship exists throughout organizations because: (1) workers do not know how to
relate to the organization’s mission, (2) they are being blamed for system problems, (3) poor designs lead
to the production of ‘junk,’ (4) inadequate training is provided, (5) punitive supervision exists, and (6)
inadequate or ineffective equipment is provided for performing the required work. Restoring pride will
require a long-term commitment by management. When workers are proud of their work, they will grow
to the fullest extent of their job. Management must give employees operational job descriptions, provide
the proper tools and materials, and stress the workers’ understanding of their role in the total process. By
restoring pride, everyone in the organization will be working forth common good. A barrier for people on
salary is the annual rating of performance.

13 Encourage Education and Self-Improvement for Everyone

What an organization needs is people who are improving with education. A long-term commitment to
continuously train and educate people must be made by management. Deming’s 14 points and the
organization’s mission should be the foundation of the education program. Everyone should be retrained
as the organization requirements change to meet the changing environment.

14. Take Action to Accomplish the Transformation

Management has to accept the primary responsibility for the never-ending improvement of the process. It
has to create a corporate structure to implement the philosophy. A cultural change is required from the
previous “business as usual” attitude. Management must be committed, involved, and accessible if the
organization is to succeed in implementing the new philosophy. Hollerith & Bradsby Co., the makers of
the Louisville Slugger baseball bat, have used Deming’s 14 points since 1985 and now have 70% of the
professional baseball bat market.

The Juran’s Philosophy:

Process improvement involves planning. One of the best approaches is the one developed by Dr. Joseph
Juran. It has three components: planning, control, and improvement, and is referred to as the Juran
Trilogy. It is based loosely on financial processes such as budgeting (planning), expense measurement
(control), and cost reduction (improvement).

Juran’s Philosophy: Joseph M. Juran was another influential figure in the field of quality management,
who developed a holistic approach to quality management that emphasized the importance of planning,
control, and improvement. Juran’s philosophy of quality focuses on the needs of the customer, the role of
leadership in driving quality improvement, and the importance of building a culture of quality within an
organization.

Planning: The planning component begins with external customers. Once quality goals are established,
marketing determines the external customers, and all organizational personnel (managers, members of
multifunctional teams, or work groups) determine the internal customers. External customers may be
quite numerous, as is the case of a bank supply organization, where they include tellers, financial
planners, loan officers, auditors, managers, and the bank’s customers. Where there are numerous
customers, a Pareto diagram (see Chapter 18) might be useful to determine the vital few.

Once the customers are determined, their needs are discovered. This activity requires the customers to
state needs in their own words and from their own viewpoint; however, real needs may differ from stated
needs. For example, a stated need may be an automobile, whereas the real need is transportation or a
status symbol. In addition, internal customers may not wish to voice real needs out of fear of the
consequences. One might discover these needs by (1) being a user of the product or service, (2)
communicating with customers through product or service satisfaction and dissatisfaction information, or
(3) simulation in the laboratory. Because customer needs are stated from their viewpoint, they should be
translated to requirements that are understandable to the organization and its suppliers.

The next step in the planning process is to develop product and/or service features that respond to
customer needs, meet the needs of the organization and its suppliers, are competitive, and optimize the
costs of all stakeholders. This step typically is performed by a multifunctional team. Quality function
deployment (Chapter 12), Taguchi’s quality engineering (Chapter 20), and quality by design (Chapter 13)
are some of the approaches that can be used. It is important that the design team, rather than a single
department, approve the final design and that the team be composed of all functional areas within an
organization as well as customers and suppliers.

The fourth step is to develop the processes able to produce the product and/or ser-vice features. Some of
this planning would have occurred during the previous step. This step is also performed by a
multifunctional team with a liaison to the design team. Activities include determining the necessary
facilities, training, and operation, control, and maintenance of the facilities. Of particular concern will be
the “scaling up” from the laboratory or prototype environment to the real process environment. Additional
activities include process capability evaluation and process control type and location.

Control:

Control is used by operating forces to help meet the product, process, and service requirements. It uses the
feedback loop and consists of the following steps:

1. Determine items/subjects to be controlled and their units of measure.

2. Set goals for the controls and determine what sensors need to be put in place to measure the product,
process, or service.

3. Measure actual performance.

4. Compare actual performance to goals. 5. Act on the difference.

Quality Improvement:

Juran also created, designed and advocated a ten-step process for quality improvement programmers:

Establish awareness for the need to improve and the opportunities for improvement.

Set goals for improvement.

Organize to meet the goals that have been set.

Provide training.

Implement projects aimed at solving problems.

Report progress.
Give recognition.

Communicate results.

Keep score.

Maintain momentum by building improvement into the company's regular systems.

Crosby’s Quality Philosophy:

Critical-for-Quality (CoQ) is frequently characterized as the sum of costs associated with insuring
conformance to standards and the costs associated failing creating a quality product or service on the first
pass (e.g. non-conformance). Thus, every time a defective product is produced, or a less than satisfactory
service is delivered, the cost of quality increases. Examples include reworking a manufactured item,
retesting an assembly, rebuilding a tool, correction of a bank statement, or the reworking of a service,
such as the reprocessing of a loan operation or the replacement of a food order in a restaurant. In other
words, any cost incurred as the result of failing to produce a quality item the first time, contributes to the
cost of quality. There have been several approaches to the measuring of. . Feigenbaum classified quality
costs into three main categories: prevention, appraisal, and failure. The basic premise of this P-A-F model
is that investments in prevention and appraisal activities will reduce failures, and that continued
investments in prevention activities will lead to reduction in appraisal costs. The costs categories in the P-
A-F model are generally described as follow; Prevention costs are those costs associated with all activities
designed to prevent poor quality. Examples include;

New product reviews

Quality planning

Supplier capability surveys and certification programs

Process capability evaluations

Quality improvement projects and associated team meetings

Quality education and training

Appraisal costs are those costs associated with the measuring, evaluating or auditing to assure
conformance to quality standards and performance requirements. Examples include;
Incoming and source inspection/test of purchased material

• In-process and final inspection/test

• Product, process or service monitoring and control systems and audits

• Maintenance and calibration of measuring and test equipment

• Associated supplies and materials

Internal failure costs are those costs resulting from not conforming to specifications. Here, the defect is
caught prior to delivery of the product, or the furnishing of a service, to the customer. Examples include;

• Scrap and its associated opportunity costs

• Rework

• Re-inspection

• Re-testing

• Material review

• Downgrading of materials or services

External failure costs are those costs associated with the defect being caught after delivery of the product.
In these cases, an additional service has to be provided to the customer. Examples include; • Processing
customer complaints

• Customer returns • Warranty claims

• Product recalls

• Lost sales (typically unknowable)

Accepting Crosby’s definition of quality as “conformance to requirements”, CoQ’s can be calculated as

the sum of the price of conformance and the price of non-conformance. The principle differences of this
calculation form the P-A-F model is that price is defined as including all the benefits, overheads, and
whatever else that is associated with the real costs of the company. The British Standards Institute, in an
effort to extend the concept of quality costing to all functions of an enterprise and to non-manufacturing
organizations, published a model focused on process costs (BS 6143: Part 1, 1992). In this model, the
CoQ’s are collected for a specific process, as opposed to the whole company. This model pursues a
continuous improvement approach to process management that is reflective of both the Kaizen approach
and to Deming’s (1986) Plan-Do-Check-Act (PDCA) cycle.

Quality Cost

“Cost of quality” is an approach to measure and track ¿nancial impact of various quality activities. Until
1950s, the concept did not explicitly extend to the quality function and the activities related to inspection,
testing and audits were merely categorized as “overheads”. In the 1950s, Dr. Armand Feigenbaum
suggested to consider reporting systems focusing on quality costs. Dr. Joseph Juran also started
emphasizing the need to speak of the language of upper management which is money. As the upper
management best understands the language of money, reporting cost of quality can help in prioritizing
appropriate improvement activities to minimize overall costs.

Customer returns, warranty, rejections, scrap

Lost customers, customer representatives, service network and infrastructure, in process rework, drawing errors, mistyped
letters, inventories, wastes, long lead times, late delivery, number of setups, follow-up to expedite, delayed shipments,
excess movements, motion, pilferage, obsolescence,

Figure 7-4 Iceberg of Cost of Poor Quality (Reproduced with permission from the Institute of Quality and
Reliability, Pune, www.world-class-quality.com)

With the increasing efforts towards quality control, more and more resources were allocated to the quality
function and it became necessary to account for them separately. The heads of quality departments also
had to sell their activities to the top management. Since the management understands only one language,
money, there was the emergence of the concept of studying quality related costs. Such studies were
undertaken and they led to many surprising results. The quality related costs were much more than those
shown in accounting statements. These costs were not only limited to factory operations but also extended
to support functions. Big chunk of the cost was on account of poor quality. Cost of poor quality is often
compared with the tip of an iceberg. Figure 7-4 shows that the warranty costs and scrap costs are clearly
visible but significant portion of the financial impact of poor quality is hidden like an iceberg. The term
“Quality Cost” means different to different people. Some perceive it as the cost involved in attaining the
quality, whereas some equate it with the cost of running Quality Department. The interpretation of quality
specialists has been to equate the “quality cost” with the cost of poor quality.

Quality Leadership

Effective leadership in quality management is essential for the success of any organization. It involves
establishing and preserving an internal atmosphere that supports a continual improvement and quality
culture. The International Organization for Standardization (ISO) has recognized leadership as a critical
component of quality management system performance.

Leaders are responsible for ensuring that their company's goals and quality policy align with the
company's strategic direction and the environment in which it operates. They must also collaborate with
their staff to ensure that the objectives are met and that the policy is conveyed, comprehended, and
implemented.

Defining Quality Leadership: Leadership is typically defined by the traits, qualities and behaviors of a
leader. What traits reflect quality leadership and which leadership theories are most closely aligned to it.
“Both leadership theories and TQM have had as primary objectives the enhanced performance of
organizations and increased job satisfaction for employees.” (Puffer and McCarthy, The key differences
in leadership between TQM and traditional organizations are as follows:

• “Strategic leadership is more important in TQM organizations because TQM is more likely to emphasis
that internal systems be aligned with external environments

• Visionary leadership because the success of TQM depends on employees sharing a common vision or
goal

• Designing reward systems for all stakeholders to foster creativity and innovation

• Empowerment and teamwork, timely responses to customer concerns by having all employees take a
leadership role as well as share information and expertise

Perhaps the leadership style that most relates to quality leadership, is transformational leadership which
“searches for ways to help motivate followers by satisfying high order needs and more fully engaging
them in the process of the work.”
This is directly “related to quality because transformational leaders are able to communicate and reinforce
values and express an inspirational vision focusing on quality. They also encourage quality improvement
by building trust and reducing fear, creating awareness for change, developing a culture to support that
change and initiating new problem solving strategies.”

Core Principles of Leadership in Quality Management

Effective leadership is essential to the adoption and sustainability of quality management techniques.
Here are a few core quality leadership principles:

Emphasis on the Customer:

It is important to ensure that quality management meets customer expectations. A customer-centric

mindset needs to be ingrained throughout the company by leaders. This includes learning about the
demands of the consumer, getting their input, and using it to enhance both processes and goods.

Employee Engagement:

Effective leadership in quality management promotes transparent communication, includes staff members
in decision-making procedures, and offers the tools and training required for ongoing skill growth.
Employees who feel empowered are more inclined to accept responsibility for their jobs and add to a
culture of excellence.

Constant Enhancement:

The dedication to ongoing improvement is a fundamental component of quality management. Leaders

create a culture in which staff members are encouraged to point out areas for improvement and where
procedures are routinely examined and improved.

Moral Guidance;

Meeting standards on ethical grounds is one of the best practices in quality leadership. Leaders set an
example of moral behavior by encouraging decency, truthfulness, and openness. Ethical leadership leads
to building trust with internal and external stakeholders, in addition to helping the organization succeed in
the long run.

Risk Evaluation;
Successful quality management executives realize the significance of risk identification and mitigation.
They anticipate possible obstacles to quality and devise plans of action to stop or resolve problems before
they affect the finished goods or services.

Role of top management

According to NBR ISO 9000:2015 on quality management – Terms and definitions, Top Management “is
a person or group of people who directs and controls an organization at the highest level.” It is also states
that “Top management has the power to delegate authority and provide resources within the
organization.”

This means that top management is who holds authority, resources and decision-making power regarding
changes at the company. In addition to leadership, it should also show a commitment with respect to the
quality management system.

The standard is recognized as containing no obligations regarding which position(s) must undertake this
role. Nevertheless, it is important that this person or this group be aware of its responsibilities and
demonstrates knowledge, engagement and active participation throughout the process involving the
management system.

Leadership; Leadership is the accomplishment of a goal through the direction of human assistants. The
man who successfully marshals his human collaborators to achieve particular ends is a leader. A great
leader is one who can do so day after day, and year after year, in a wide variety of circumstances.

Monitoring and reviewing the qms: Leadership is indispensable so that the QMS fulfills the
organization's strategic goals, therefore increasing customer satisfaction. It is not an easy task.

Setting corporate culture; Setting Corporate Culture. The corporate policies and acceptable
behaviors generally start at the top level of management. The leaders of the company.

Allocating Resources; this is the responsibility of determining budget allocations for various
departments and projects..

Quality management; Quality management ensures that an organization, product or service

consistently functions well. It has four main components: quality planning, quality assurance, quality
control and quality improvement. Quality management is focused not only on product and service quality,
but also on the means to achieve it.
Communication: Communication is commonly defined as the transmission of information. Its precise
definition is disputed and there are disagreements about whether unintentional or failed transmissions are
included and whether communication not only transmits meaning but also creates it.

Decision Making: In psychology, decision-making is regarded as the cognitive process resulting in the
selection of a belief or a course of action among several possible alternative options. It could be either
rational or irrational.

Customer requirements are determined and met ; Customer requirements can be

determined through research, customer feedback, and indentify how customers want to products.
 UNIT -2
Basics of QMS, 7 QC tools
A quality management system (QMS) is defined as a formalized system that documents
processes, procedures, and responsibilities for achieving quality policies and objectives. A QMS
helps coordinate and direct an organization’s activities to meet customer and regulatory
requirements and improve its effectiveness and efficiency on a continuous basis.

ISO 9001:2015, the international standard specifying requirements for quality management
systems, is the most prominent approach to quality management systems. While some use the
term "QMS" to describe the ISO 9001 standard or the group of documents detailing the QMS, it
actually refers to the entirety of the system. The documents only serve to describe the system.

7 QC tools:

1. Stratification: Stratification analysis is a quality assurance tool used to sort data,

objects, and people into separate and distinct groups. Separating your data using
stratification can help you determine its meaning, revealing patterns that might not
otherwise be visible when it's been lumped together.
2. Histogram: Histogram is a bar graph which shows the distribution of data. It shows the
snap shot of the data taken from a process. The Data spread in the process is the result of
the variation that exists in the process.
3. Check sheet: Check sheet collects data in the form of check or tally marks that indicate
how many times a particular value has occurred, allowing you to quickly zero in on
defects or errors within your process or product, defect patterns, and even causes of
specific defects.
4. Cause-and-effect diagram: Cause and Effect Diagram also known as Fishbone
Diagram helps in identifying the potential causes of an effect or a problem. In addition to
sorting ideas in respective categories, it also helps in understanding the areas of
opportunity through effective brainstorming.
 5. Pareto chart (80-20 rule) as a quality control tool, the Pareto chart operates according to
the 80-20 rule. This rule assumes that in any process, 80% of a process's or system's
problems are caused by 20% of major factors, often referred to as the “vital few.”
6. Scatter diagram: A Scatter diagram is one of the Seven Basic Quality Tools. It plots two
sets of observations against each other; the horizontal axis represents one set of
observations (independent variable) while the vertical axis represents the second set of
observations (dependent variable).

7. Control chart: Graph used to study how a process changes over time. Comparing
current data to historical control limits leads to conclusions about whether the process
variation is consistent (in control) or is unpredictable (out of control, affected by special
causes of variation).

Regression Control Charts, Process Capability and Analysis

Regression Control Charts; Regression control charts are a type of statistical process control
chart used to monitor the performance of a process over time. These charts use regression
analysis to model the relationship between a process variable (such as a measurement or quality
characteristic) and time, allowing for the detection of any changes or trends in the process.

There are two main types of regression control charts: linear and non-linear. Linear regression
control charts are used when the relationship between the process variable and time can be
modeled using a straight line, while non-linear regression control charts are used when the
relationship is more complex.

To construct a regression control chart, data on the process variable and time are collected over a
period of time. The data is then plotted on a graph, with time on the horizontal axis and the
process variable on the vertical axis. A regression line is then fitted to the data, and control limits
are calculated based on the variability of the data.

Any points that fall outside the control limits indicate that the process is out of control and
requires investigation and corrective action. Additionally, any trends or changes in the process
variable over time can be identified using the regression line, allowing for proactive quality
improvement efforts.
Regression control charts are a powerful tool for monitoring and improving the performance of a
process over time. By using these charts, organizations can detect and correct quality issues
early, reducing waste, improving efficiency, and increasing customer satisfaction.

Capability and Analysis; Process capability analysis is a statistical technique used to assess the
ability of a process to produce output that meets customer specifications. The analysis is
typically conducted by comparing the variability of the process output to the variability allowed
by the specifications.

There are two main indices used in process capability analysis: Cpk and Cp. Cpk is a measure of
how well the process output is centered between the upper and lower specification limits, while
Cp is a measure of the spread of the process output relative to the specification limits.

To conduct a process capability analysis, data on the process output and customer specifications
are collected. The data is then analyzed using statistical software to calculate the Cpk and Cp
indices. If the Cpk is less than 1, the process is considered incapable of meeting customer
specifications. If the Cp is less than 1, the process is considered to have too much variability and
may require improvement.

Process capability analysis is an important tool for improving process performance and reducing
defects. By identifying areas where the process is not meeting customer specifications or has too
much variability, organizations can take proactive measures to improve the process and reduce
the likelihood of defects and customer complaints. Additionally, process capability analysis can
help organizations identify opportunities for process improvement and optimization, leading to
increased efficiency, productivity, and profitability.

Measurement System analysis

Measurement System Analysis (MSA) is a statistical technique used to assess the reliability and
accuracy of a measurement system. The purpose of MSA is to determine how much variation in
the data is due to the measurement system itself, and how much is due to the actual variation in
the process being measured.

MSA typically involves three main steps:

Gage Repeatability and Reproducibility (R&R) Study: In this step, the variation in the
measurement system is assessed by collecting data on a set of samples and having multiple
operators measure the same samples. The data is then analyzed using statistical techniques to
determine the sources of variation in the measurement system, such as repeatability (the variation
in measurements taken by the same operator) and reproducibility (the variation in measurements
taken by different operators).

Bias Study: In this step, the accuracy of the measurement system is assessed by comparing the
measurements taken by the system to a known standard or reference value. The difference
between the measurements and the reference value is known as bias, and the magnitude of the
bias can be used to determine the accuracy of the measurement system.

Linearity Study: In this step, the linearity of the measurement system is assessed by measuring a
set of samples with varying levels of the characteristic being measured. The data is then analyzed
to determine if the relationship between the measurements and the characteristic being measured
is linear or if there is any nonlinearity in the measurement system.

.MSA is an important tool for ensuring the accuracy and reliability of measurement systems. By
identifying sources of variation and bias in the measurement system, organizations can take
corrective action to improve the system and reduce the likelihood of measurement errors and
variability. Additionally, MSA can help organizations ensure compliance with quality standards
and regulations, improve product quality, and increase customer satisfaction.

Design and Analysis of Experiment;

Design and Analysis of Experiments (DOE) is a statistical methodology used to systematically

investigate and optimize processes, products, and systems. DOE involves planning, conducting,
analyzing, and interpreting controlled experiments to identify the factors that have a significant
impact on a response variable.

The main steps in DOE are:

Define the problem and objectives: The first step in DOE is to define the problem or process that
needs improvement and establish clear objectives for the experiment.
Identify the factors and levels: The next step is to identify the key factors that may affect the
response variable and determine the levels or settings for each factor.

Design the experiment: In this step, a design plan is developed that specifies the experimental
conditions, the number of runs or observations, and the order in which the experimental
conditions are tested.

Conduct the experiment: The experiment is conducted according to the design plan, and data is
collected on the response variable and the factors.

Analyze the data: The data is analyzed using statistical methods to identify the main effects and
interactions of the factors on the response variable.

Interpret the results: The results are interpreted to understand the impact of the factors on the
response variable and identify opportunities for improvement.

DOE is widely used in various fields such as manufacturing, engineering, agriculture, medicine,
and social sciences. DOE can help organizations to:

Improve product or process quality by identifying the most important factors and optimizing
their levels.

Reduce variability and improve consistency by identifying sources of variation and eliminating
or reducing their effects.

Reduce costs by identifying the most cost-effective levels of the factors.

Improve productivity and efficiency by identifying opportunities for process improvement.

Ensure compliance with quality standards and regulations by providing a systematic and
objective approach to process optimization and improvement.

Acceptance sampling plan

Acceptance sampling is a statistical method used in quality control to determine whether a batch
of products or materials meets certain quality standards. The purpose of acceptance sampling is
to make a decision about whether to accept or reject a batch based on a sample of items from the
batch, rather than inspecting every item.

An acceptance sampling plan involves selecting a random sample of items from a batch and
inspecting them for defects or other quality issues. The number of items in the sample and the
criteria for acceptance or rejection are determined by the acceptance sampling plan.

There are two main types of acceptance sampling plans: attribute sampling plans and variable
sampling plans.

Attribute sampling plans are used when the quality characteristic of interest is categorical, such
as whether an item is defective or non-defective. The most commonly used attribute sampling
plan is the single-sampling plan, in which a single sample of items is inspected and the decision
to accept or reject the batch is based on the number of defective items in the sample.

Variable sampling plans are used when the quality characteristic of interest is continuous, such
as the length or weight of an item. The most commonly used variable sampling plan is the lot-by-
lot sampling plan, in which a sample of items is taken from each lot and the decision to accept or
reject the lot is based on the sample mean and standard deviation.

Acceptance sampling plans are widely used in industries such as manufacturing,

pharmaceuticals, and food production to ensure that batches of products or materials meet the
required quality standards. The use of acceptance sampling can help to reduce inspection costs,
improve efficiency, and ensure that defective items are detected before they are shipped to
customers.

Different Cost associated with Quality like Assurance cost

Different costs associated with quality are as follows:

Prevention costs: These are costs incurred to prevent defects from occurring in the first place.
Prevention costs include the costs of training employees, implementing quality systems,
designing products and processes for quality, and conducting supplier evaluations. These costs
are incurred prior to the production of a product.
Appraisal costs: These are costs incurred to ensure that the product meets the required quality
standards. Appraisal costs include the costs of inspecting and testing raw materials, in-process
goods, and finished products. These costs are incurred during the production process.

Failure costs: These are costs incurred when a product fails to meet the required quality
standards. Failure costs can be further classified into two types:

a) Internal failure costs: These are costs incurred when defects are detected before the product is
shipped to the customer. Internal failure costs include the costs of rework, scrap, and retesting.

b) External failure costs: These are costs incurred when defects are detected after the product is
shipped to the customer. External failure costs include the costs of warranty repairs, product
recalls, and legal liabilities.

Rectification costs: These are costs incurred to rectify the defects identified during the appraisal
or failure costs. Rectification costs include the costs of repairing or replacing defective products
or materials, and can also include the costs of shipping and handling.

Assurance costs: These are costs incurred to maintain and improve the quality of the product.
Assurance costs include the costs of quality audits, product certifications, and ongoing training
and development.

Understanding these different types of costs can help organizations identify areas where quality
improvements can lead to cost savings and increased profitability. By investing in prevention and
assurance activities, organizations can reduce the incidence of failure and rectification costs, and
improve their overall profitability.

Process Failure Mode and effect Analysis (PFMEA)

Process Failure Mode and Effect Analysis (PFMEA) is a technique used in quality management
to identify and analyze potential failures in a process, and to assess the impact of those failures
on product quality, safety, and customer satisfaction. PFMEA is a proactive approach to quality
management that can help organizations to identify and address potential problems before they
occur, reducing the likelihood of defects and other quality issues.

The PFMEA process involves the following steps:

Identify the process: The first step in PFMEA is to identify the process that will be analyzed.
This could be a manufacturing process, a service delivery process, or any other process that is
critical to the organization’s success.

Break down the process: Once the process has been identified, it is broken down into individual
steps or components. This helps to identify potential failure modes at each stage of the process.

Identify potential failure modes: For each step or component of the process, potential failure
modes are identified. A failure mode is a way in which the process could fail to meet the desired
quality standards.

Determine the effects of each failure mode: For each potential failure mode, the effects on the
process and the product are determined. This includes identifying the potential impact on safety,
quality, and customer satisfaction.

Assign a severity rating: Each potential failure mode is assigned a severity rating based on the
impact of the failure mode on the process and product.

Identify the cause of each failure mode: The next step is to identify the root cause of each
potential failure mode. This helps to identify the underlying issues that need to be addressed in
order to prevent the failure mode from occurring.

Assign a detection rating: For each potential failure mode, the probability of the failure mode
being detected is assessed. This includes considering the effectiveness of current quality control
processes, as well as potential improvements that could be made to detection methods.

Calculate the risk priority number: The risk priority number (RPN) is calculated for each
potential failure mode by multiplying the severity, occurrence, and detection ratings. This helps
to prioritize the potential failure modes based on the level of risk they pose to the process and
product.

Develop a plan for addressing high-risk failure modes: Based on the RPN scores, a plan is
developed for addressing high-risk failure modes. This may include implementing process
improvements, adding quality controls, or making changes to the product design.
By using PFMEA, organizations can proactively identify and address potential quality issues,
reducing the likelihood of defects and other quality problems. This can lead to improved product
quality, customer satisfaction, and overall business success.

Service Quality: Service quality is a measure of how an organization understands its users'
needs and fulfills their expectations. Understanding how to improve the service quality of your
product is the key step to growth for any organization. Measuring and improving service quality
is a valuable art. Service is the key part of keeping users engaged with an organization. Even if
an organization has the best product on the market but misses out on providing an equally good
service the chances that they might get lost to completion are inevitable. This is where
understanding what service quality means and how it can be kept at its best comes into the
picture.

Service Quality Components

1. Service Quality Reliability Service Quality Tangibility

2. Responsiveness

3. Service Quality Assurance

4. Empathy
 Subject name: Quality Management

Subject Code : KMBNOM03

Concepts of Quality, Total Quality and Total Quality Management

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 Objectives

After going through this lesson, you will be able to:

 Understand the concept of Quality in day-to-day life and business.

 Differentiate between Quality and Quality Management

 Elaborate the concept of Total Quality Management

Introduction

Quality is a buzz word in our lives. When the customer is in market, he or she is

knowingly or unknowingly very cautious about the quality of product or service. Imagine

the last buying of any product or service, e.g., mobile purchased last time. You must have

enquired about various features like RAM, Operating System, Processor, Size, Body

Colour, Cover, etc. If any of the features is not available, you might have suddenly

changed the brand or have decided not to purchase it. Remember, how our mothers buy

fruits, vegetables or grocery items. They are buying fresh and look-wise firm fruits,

vegetable and groceries. Simultaneously, they are very conscious about the price of the

fruits, vegetable and groceries. So, by nature, we are inclined to get various features of

products or services or these are supposed to be provided by the manufacturers. If we get

the desired standard features in a product or service, we generally say that the quality of

the product or service is up to the mark. It means the features of products and services

give satisfaction. These features can be termed as quality characteristics. Cost

considerations are also taken care of while measuring the quality considerations, but have

you ever imagined how the producers or manufactures identify and provide these features

of products and services?

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 Concept of Quality

The meaning of ‘Quality’ in Oxford Dictionary is ‘the standard of something when it is

compared to other things.’ ISO defines quality as ‘the totality of features and

characteristics of a product or service that bears on its ability to meet a stated or implied

need.’ The meaning of the quality could be understood from two perspectives: (i)

Producer’s perspective (ii) Consumer’s perspective. From Producer’s Perspective the

quality is to conform to the specifications with cost considerations. Providing maximum

quality features while having minimum cost is the focus point for producers or

manufacturers. Consumer’s perspective is to consider quality characteristics with price

considerations. Getting maximum quality features while having price as the focus point is

the motto of maximum consumers. Quality is defined in terms of different perspectives as

mentioned under:

Producer-based definitions:

 Crosby defines quality as the means to conform to standards, specifications or

requirements.

 Parasuraman defines quality as the concerned with meeting or exceeding customer

expectations.

Consumer-based definitions:

 Edeward defines quality in terms of the capacity to satisfy needs.

 Gilmore defines quality as the degree to which a specific product satisfies the

wants of a specific consumer.

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  Juran defines quality as fitness for use.

Dimensions of Quality

Quality is an attitude of mind. Quality is in the eye of the consumers. It is the total sum of

features liked by the consumers while purchasing a product or service. Let’s take an

example of product. For some consumers, it is the processor of mobile and for some

consumers it is the RAM, which matters. For some consumers both RAM and process of

mobile matter. In the case of a restaurant, for some consumers taste of meal and parking

matters, while for some consumers it is the aesthetics of the restaurant that matters. For

some consumers both aesthetics and taste of meal matter. Therefore, quality is the

specific feature of the product and service that satisfies the needs of the consumers.

Quality is advanced design and engineering technology. Let’s take an example of

automobile industry where every company is striving hard to deliver at least two new cars

in the market. Have you ever imagined how the companies like Toyota, Ford,

Volkswagen, Audi, and Mercedes Benz are capable of giving newer model of cars with

innovated and advanced features in-built in a car? They are committed to deliver flawless

products consistently. Delivering flawless products is called quality. They have precise

manufacturing facilities in their plants. Their processes are standardised. Having

standardised processes is called quality. The standardisation of processes gives them

advantage to deliver quality products consistently. They have achieved excellence in

quality output. They have no room for errors. Here, Quality is having policy of no room

for errors. The Indian companies like Tata Motors, Maruti Suzuki are not far behind in

delivering quality products and services internationally. They also have zero error policy.

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Quality is also called zero error policy. Quality could be called as giving standard

products with zero defects. So, we can say that companies live with quality commitment.

The management works very hard to deliver error free standardised products consistently.

They strive hard to give innovated products to the market. The ultimate satisfaction of

consumers leads to upgrade the standard of living of the society.

Application / Usage of Quality for General Public / Consumers

 It ensures error free products.

 It enhances the development of new or innovated products. (e.g. HUL’s Pure it)

 It helps to give warranty or guarantee of products. (e.g. 2 years warranty with

Bajaj Fans)

 It enables good customer service.

 It promises timely delivery.

 It helps in getting all the desired features in products and services.

 Quality helps in getting satisfaction after the use of products and services.

Application of Quality for Producers or Manufacturers

 Quality helps in meeting the changing demands of the consumers.

 It ensures delivery of flawless or zero error products or services.

 It ensures delivery of products or service on time.

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  It helps in giving superior products produced with advanced engineering

technology.

 Quality helps in meeting or fulfilling the commitment.

Factors affecting Quality

The following factors affect the quality of any product or services:

 Management

The concept of quality management starts from the top management. It is the top

management which initiates the quality concept in an organisation. For this purpose the

top management creates a culture in the organisation where everybody is responsible for

the quality. The commitment for quality is must from top management side.

 Dedicated Employees

Every employee is responsible for the quality planning, quality production, quality

delivery, quality after-sale service etc.

 Suppliers

Suppliers supply machines and raw material to the company. As for example Tata Nano

plant receives raw material and other component supplies from more than 600 suppliers.

So, we can say that the suppliers play an important role as far as quality of product is

concerned.

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 Quality Management

Quality management includes all the functions of the organisation to design and provide

quality products and services which fulfils the needs of the customers and generate

ultimate satisfaction. The core concept of quality management is quality planning, quality

controlling and quality improvement. The traditional approach of quality management

covers typical inspection aspect and the ‘do it right from the first time’ concept. The

modern quality management covers all the concepts given by thinkers called Quality

Gurus like W. Edwards Deming, Philip B. Crosby, Armand V. Feigenbaum, Kaoru

Ishikawa, Joseph M. Juran and Genichi Taguchi etc.

Quality Planning

The first and foremost step in quality planning is to plan and know who your customer is,

and what are his needs and wants. After optimising the product or service features, the

organisation designs and develops the product or service. The next step is to standardise

the processes so that the products or services can be standardised. The consistent

production of desired quality products and services require high involvement and

contribution of employees in planning.

Quality Control

It is a very important step in quality management. It requires extensive, proper and

consistent training of employees so that errors can be controlled. Inconsistency in

products and services can be avoided by using Statistically Process Control techniques.

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 Total Quality Management

Total Quality Management is mainly concerned with continuous improvement in all

work. It is a long term planning. It is the consistent improvement in the quality. It is a

never ending process. Total Quality Management consists of three words: Total, Quality

and Management

Total

Make up of the whole.

Quality

Degree of excellence a product or service provides.

Management

It is a process of planning, organising, directing and controlling.

Therefore, TQM is the art of managing the whole to achieve excellence. TQM covers all

the set rules, regulations, guidelines and principles that contribute in improving the

organization continuously. It is a continuous process of improvement for individuals,

groups of people and the whole organisation. It is the application of quantitative methods

and human resources to improve all the processes within an organization to satisfy the

needs of customers consistently. TQM integrates all the fundamental management

techniques, existing improvement efforts, and technical tools under a disciplined

approach. It covers the most quality principles and practices proposed by quality gurus.

Total Quality Management (TQM) is a management approach for an organization,

centered on quality, based on the participation and commitment of all the internal and

8
external customers and aiming at strategically long-term success through customer

satisfaction, and benefits to all members of the organization and to society.

Total Quality Management (TQM) is a top-management strategy aimed at embedding

awareness of quality in all organizational processes.

Total Quality Management is a total system approach and it is an integral part of the

strategic decision making of the top management. It works horizontally across all the

functions and departments. It involves all the employees of three levels, i.e., top level,

middle level and bottom level. It extends backward and forward and covers supply chain

management as well as logistics management also. So, we can say that it is a consistent

effort by everyone in the organisation to meet the expectations of the customers leading

100 per cent satisfaction. TQM requires that the company maintain the quality standard in

all aspects of its business. This requires ensuring that things are done right the first time

and that defects and waste are eliminated from operations.

Characteristics / Nature of TQM

 TQM Starts from Top Management

The quality concept is initiated by the top management. The whole credit of the

initiation of total quality management goes to the top management. Only the top

management can create an environment that develops team-oriented environment and

creates quality oriented culture that can prevent problems and continually improve.

 It is a Consistent Process

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To produce quality product and service is not an easy job. Sometimes it takes years to

give the desired results. All the employees have to work consistently as a team in one

direction to improve all the processes in the organisation.

 It is a Part of Strategic Planning and Thinking

TQM policy is a long term planning. The quality policy must be the part of strategic

planning to get the desired results.

 It is Customer Focused / Oriented

The end result of TQM is complete satisfaction of customers by giving them quality

products and services. It is possible only when TQM programme is customer centric.

 It is a Team Work

Success in terms of standard quality is possible only when the organizations has a

culture of team formation and the employees work in teams and give their maximum.

Teams can be formed vertically and horizontally. When top management is involving

the lower level employees it is vertically and when the different departmental

employees are involved then it is horizontally (employees of marketing, sales,

production and finance departments are working for critical and complex projects).

Teams are inter-organisational when the employees of other organisations are

involved (like employees of banks, suppliers, audit companies, consultants etc.

 It is Related with Consistent Improvement of Quality

10
To deliver quality products and services is not an easy job. All the processes have to

be developed and standardised by consistent improvement.

 Every Employee is Involved in Quality Improvement Aspect

All the employees internal as well as external are involved in the TQM programme.

Internal employees include all the employees included from top to bottom and

external employees are suppliers, banks and other institutions which are involved in

the TQM process.

 Every Employee is Responsible for the Success of TQM

If all the employees are determined and committed for the quality products and

services, then only quality could be delivered.

The TQM Practices Followed by Multinational Companies

All the MNC’s like Sony, Toyota, Xerox, Motorola follow the Total Quality

Management practices. The salient features of TQM approach followed by the best

companies are as following:

 The companies create a sense of an environment of mutual trust, respect and

dignity.

 The management act immediately on new ideas and suggestions.

 The companies are meeting and exceeding customers’ requirements and

expectations on consistent basis.

 The companies hear and learn from the dissatisfied/unhappy customers and

responsible for complete customer satisfaction.

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  The companies are committed to their both internal as well as external employees.

They know the value of workers’ involvement and intensive training.

 The companies develop the teams to have broad decision –making powers and

responsibilities.

 They apologize for the complaints.

 The companies know that labour-management relations could do more for quality

and productivity.

 The companies empower their employees to make them responsible.

 The companies implement statistical process control and monitor defect rates.

Summary

Quality is a buzz word in our lives. When the customer is in market, he or she is

knowingly or unknowingly very cautious about the quality of product or service. The

features of products and services give satisfaction. These features could be called as

quality characteristics. Cost considerations are also taken care of while measuring the

quality considerations. The producers or manufactures identify and provide these features

of products and services. ISO defines quality as ‘the totality of features and characteristics

of a product or service that bears on its ability to meet a stated or implied need.’ The

meaning of the quality could be understood from two perspectives: (i) Producer’s

perspective (ii) Consumer’s perspective. Quality management include all the functions of

the organisation to design and produce quality products and services which fulfils the

needs of the customers and generate ultimate satisfaction.

12
Total Quality Management is mainly concerned with continuous improvement in all

work. It is a long term planning. It is the consistent improvement in the quality. It is a

never ending process. Total Quality Management consists of three words: Total, Quality

and Management. TQM starts from top management; it is a consistent process; it is a part

of strategic planning and thinking; it is customer focused; it is a team work; it is related

with consistent improvement of quality; every employee is involved in quality

improvement aspect; and every employee is responsible for the success of TQM.

Keywords

Quality

It is the totality of features and characteristics of a product or service that bears on its

ability to meet a stated or implied need.

Total Quality Management

TQM covers all the set rules, regulations, guidelines and principles that contribute in the

continuously improving organization.

13
Approaches of Total Quality & Cost of Quality

Structure

Objectives
Approaches to Total Quality Management: An Introduction
The Deming Management Philosophy
System of Profound Knowledge
Deming’s 14 Points for Management
The Juran Philosophy
Juran’s Quality Trilogy
Juran’s 10 Points for Management
The Crosby Philosophy
Four Absolutes of Quality Management
Crosby’s 14 Points for Management
The Kaoru Ishikawa Philosophy
Framework for Quality and Performance Excellence
Just-in-Time (JIT)
Business Process Reengineering
Kaizen Approach – A Continuous Improvement Tool
ISO-9000 Standards
Quality Audit
Principles of Quality Management
Seven Principles by Gerald F. Smith
International Quality Award Programs
The Deming Prize

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 The Malcolm Baldrige National Quality Award
The European Quality Award
The Rajiv Gandhi National Quality Award
Cost of Quality
Examples of ‘Cost of Quality’
Summary
Keywords
Self Assessment Questions
References / Suggested Readings

Objectives
After going through this lesson, you will be able to:

 Understand the different approaches to Total Quality Management

 Know the importance of Framework for Quality and Performance

Excellence

 Understand the Principles of Total Quality Management

 Familiar with the concept of Quality Cost

 Know the basics of International Quality Award Programs

Approaches to Total Quality Management: An Introduction

Total Quality Management is mainly concerned with continuous improvement in all

works and functional activities of an organisation. It is a long term planning. It is the

consistent improvement in the quality. It is a never ending process. It describes a

management approach to long–term success through customer satisfaction. In a TQM

effort, all members of an organization are involved in improving processes, products,

2
services, and create a culture in which they work. The success of the TQM depends on

the significant changes in organisation design, work processes, and culture. There are

various approaches to TQM. Some organisations give importance to the use of quality

programme like statistical process control and some organisations give importance to

the tool like quality function deployments. Sometimes, the organisations fail to realize

quality improvements because of lack of holistic understanding of the quality tool(s) or

concept(s) by the entire organisation.

“Total Quality Management (TQM) is a comprehensive and structured approach to

organizational management that seeks to improve the quality of products and services

through ongoing refinements in response to continuous feedback. TQM requirements

may be defined separately for a particular organization or may be in adherence to

established standards, such as the International Organization for Standardization's ISO

9000 series. TQM can be applied to any type of organization; it originated in the

manufacturing sector and has since been adapted for use in almost every type of

organization imaginable, including schools, highway maintenance, hotel management,

and churches. As a current focus of e-business, TQM is based on quality management

from the customer's point of view.” (www. searchcio.techtarget.com)i

Total Quality Management is a management approach for an organization, centered on

quality, based on the participation and commitment of all the internal and external

customers and aiming at strategically long-term success through customer satisfaction,

and benefits to all members of the organization and to society. It uses strategy, data, and

effective communications to integrate the quality discipline into the culture and

activities of the organization. So, some organisations adopt a problem-solving focus and

3
concentrate on production as well as customer service processes. They adopt quality

circles and team approaches. Some organisations concentrate on error prevention

through continuous process improvement and business process reengineering.

Most of the successful companies have adopted unique approaches of total quality

management according to their own requirements because one approach suitable for

one organisation may be not suitable for another organisation. The reason is the

difference in the culture. Every organisation has different culture. Total Quality

Management requires a set of guiding principles and concepts. The all-over world

famous quality gurus like Deming, Juran, Crosby, Ishikawa, as well as many others,

have made substantial contribution to the theory and practice of quality management.

Their philosophies, concepts, principles have helped to shape the framework for quality

management. Quality management as a discipline is incomplete without their

contribution and approaches to total quality. A discussion of their philosophies which

are actually more about management of quality as follows:

The Deming Management Philosophy

William Edwards Deming (1900-1993) was an American engineer, statistician,

professor, author, lecturer, and management consultant. He developed some sampling

techniques which are still used by the U.S. Department of the Census and the Bureau of

Labor Statistics. He always advocated that there is no substitute for knowledge. He

found great inspiration in the work of Walter Shewhart like Statistical Process Control,

Operational Definitions, and the PDSA (Plan-Do-Study-Act) Cycle. The Deming called

PDSA as ‘The Shewhart Cycle’. He taught statistical process controls to the Japanese

engineers and managers and the message was very much clear that the improvement in

4
quality will reduce expenses while increasing productivity and market share. Deming is

best known for his 14 Points for quality and his system of thought called the System of

Profound Knowledge. He stressed that the system of profound knowledge is very

important because it helps the managers to transform within their organizations which

improves the outcomes in the form of quality.

System of Profound Knowledge

The four parts of the System of Profound Knowledge are:

 Appreciation of a System

 Knowledge of Variation

 Theory of Knowledge

 Knowledge of Psychology

Deming’s 14 Points for Management

The Deming’s fourteen principles are named as:

i. Constancy of Purpose

ii. Adopt the New Philosophy

iii. End Lowest Tender Contracts

iv. Improve Every Process

v. Institute Training on the Job

vi. Drive Out Fear

vii. Break-down Barriers

viii. Eliminate Exhortations

5
 ix. Eliminate Arbitrary Numerical Targets

x. Permit Pride in Workmanship

xi. Encourage Education

xii. Top Management Commitment to Action

xiii. Cease the Need for Mass Inspection

xiv. Institute Leadership

The Juran Philosophy

Joseph M. Juran was an industrial engineer. He Joined Western Electric in the 1920s.

He authored ‘The Quality Control Handbook’ which is often referred to as the quality

bible and is a classic reference for quality engineers. Juran proposed a simple definition

of quality: “fitness for use.” This definition of quality suggests that it should be viewed

from both external and internal perspectives; that is, quality is related to “(a) product

performance that results in customer satisfaction; (b) freedom from product

deficiencies, which avoids customer dissatisfaction.” He believed that quality

improvement should be achieved through projects. He revolutionized the Japanese

philosophy on quality management. Dr. Juran was the first to incorporate the human

aspect of quality management which is referred to as Total Quality Management. He

focused on three major quality processes, called the

Juran’s Quality Trilogy

According to Juran, quality processes are summed up by the Triology. It means that the

management of quality consists of three inter-related quality oriented processes namely:

6
  Quality Planning;

 Quality Control; and

 Quality Improvement.

Juran’s 10 Points for Management

Juran has given 10 Points for Quality Improvement:

i. Build awareness of need and opportunity for improvement to realize that all

processes are improvable

ii. Set-goals for improvement

iii. Organize to reach goals

iv. Provide training

v. Carryout projects to solve problems

vi. Report progress

vii. Give recognition

viii. Communicate results

ix. Keep score

x. Maintain momentum by making annual improvement part of the regular systems

and processes of the company

The Crosby Philosophy

Philip Bayard Crosby, (1926 –2001) was a businessman and author who contributed to

management theory and quality management practices. He is best known in relation to

the concepts of ‘Zero Defects’ and ‘Do it Right First Time’. He authored a number of

7
books, of which the book entitled ‘Quality is Free’ is the most popular in which he

stated that “Quality is free. It’s not a gift, but it is free. What costs money are the

unquality things -- all the actions that involve not doing jobs right the first time.” His

two other books are ‘Quality without Tears’ and ‘The Art of Getting Your Own Sweet

Way’.

Four Absolutes of Quality Management

Crosby’s TQM approach is based on his four absolutes of Quality Management:

 First absolute: Quality is defined as conformance to requirements

 Second absolute: Problems are functional in nature

 Third absolute: There is no optimum level of defects

 Fourth absolute: Cost of quality is the only useful measurement

Crosby’s 14 Points for Management

Philip Crosby developed 14 steps for an organization to follow in building an effective

quality program:

i. Management Commitment

ii. Quality Improvement Team

iii. Quality Measurement

iv. Calculate the Cost of Quality

v. Raise Quality Awareness among Employees

vi. Instigate Corrective action

8
vii. Monitor Progress of Quality Improvement – establish a ‘Zero Defects’

Committee

viii. Train Supervisors in Quality Improvement

ix. Zero Defects Day

x. Encouraging Employees to Create Quality Improvement Goals

xi. Error-cause Removal

xii. Recognise Participants’ Effort

xiii. Create Quality Councils

xiv. Do it over again

The Kaoru Ishikawa Philosophy

This approach was given by Kaoru Ishikawa was born in July 13, 1915. He graduated in

applied chemistry in 1939. He was a Japanese organizational theorist, Professor at the

Faculty of Engineering at The University of Tokyo. He is one of the Japan’s quality

control pioneers. He is considered a key figure in the development of quality initiatives

in Japan, particularly ‘the quality circles’ in which small group of employees meet

regularly to improve quality and productivity. He developed the Ishikawa or cause and

effect diagram or fishbone diagram often used in the analysis of industrial processes. He

emphasised the development of participation and bottom-up of quality which is now

main philosophy of the Japanese approach to quality management. He advocated that

the first concern for management is the happiness of the people connected with it. If

people are not happy then it does not deserve to survive.

Framework for Quality and Performance Excellence

9
The framework of quality and performance excellence cover Just-in-Time philosophy,

Business Process Reengineering, Kaizen – A Continuous Improvement Tool, ISO-9000

Standards, Quality Audit tools, etc. The details are as follows:

Just-in-Time (JIT)

Just-in-time is an approach which means producing only what is needed, when it is

needed, not early, not late; not less, not more. The key target is achieving high volume

production using minimal inventories. It is an integrated but simplified system.

According to this philosophy, anything which is not generating value is called waste.

JIT advocates minimising all types of wastes. Top management is responsible for

change in the organisation. For that sake, it has to create an environment in the

organisation. The management has to develop a culture in the organisation. In order for

JIT implementation to be successful, the organisation must frame these policies

regarding JIT and must get commitment from the employees to follow the guidelines

lead down in the policies by words and means. The implementation of JIT is not just for

the sake of change. Most of the organisations implement JIT just for the sake to beat

the competitors. In this way they miss the true essence of the philosophy and the results

are like half-hearted. The success of JIT philosophy lies in the commitment of the

employees. This philosophy covers the whole organisation under one umbrella. All the

departments have to work with coordination and follow the guidelines with full spirit.

The top executives have to be the leaders involved in JIT and they must be the guiding

light for all the employees. Getting everyone involved and committed is the first step to

successful implementation of JIT and the first step to an increase in continuous

improvement.

10
 Business Process Reengineering

Business process reengineering (BPR) is redesigning business processes in the

organisation. BPR brings radical changes in the processes those generate value to the

customers. Business process reengineering is a dramatic change initiative which is

processed in four steps: (i) Start from beginning / scratch; (ii) Identification of goals and

purposes; (iii) Analysis of current processes; and (iv) Action time. It makes the

employees to be more productive for their customers not their bosses. It generates

empowered employees who work in process teams rather in functional departments.

The controlled employees are empowered employees who are read to perform

multidimensional work. BPR helps to understand and measure the existing processes. It

helps to develop a vision and sense of belonging among employees. It lowers cost and

increases customers’ satisfaction. It helps organisation to face competitiveness and

generates excellent capability advantages. It helps to improve efficiency. It helps to

develop solution and make new processes operational. Sometimes, BPR fails because

the organisation is failed to focus on the customers’ needs and satisfaction level. The

organisation may fail to integrate information technology. Sometimes, the managers get

confused and assumed that the change will bring insecurity.

Kaizen Approach – A Continuous Improvement Tool

Kaizen is a Japanese word and the meaning is continuous improvement. It's made up of

two words in Japanese: kai, which means 'change,' and 'zen,' which means 'good.'

Kaizen is the practice of continuous improvement. Kaizen is considered a slow but it is

an ongoing process of improvement. ‘Kaizen’ word was used by Masaaki Imai in his

11
book entitled ‘The Key to Japan’s Competitive Success’ first time in 1986. It illustrates

an organisational culture where everyone from the top to the bottom is involved in the

regular evaluation of his or her work and sense the ways to improve it. The concept is

that small improvements on a regular basis will head towards the large improvements

over time. One of the most notable features of kaizen is that big results come from

many small changes accumulated with the passage of time. However, this has been

misunderstood to mean that kaizen equals small changes. Today Kaizen is

acknowledged worldwide as an important part of an organization’s long-term

competitive strategy.

Kaizen means involvement for improvements. It is continuous improvement that is

based on certain guiding principles like no process is thought to be perfect and it should

be improved continuously. Everything can and should be improved. Further, Kaizen is

teamwork and it is everybody’s business. It is possible with the change in the mindset

of employees.

ISO-9000 Standards (International Standards Organisation)

ISO-9000 standards are developed by International Standards Organisation to

effectively design and implement efficient quality systems. The ISO-9000 standards

were published in 1987. It has undergone revision in 2000 and 2005. It covers

definitions, requirements, and continual improvements. These standards provide a

framework that can give guidance for the processes to be made auditable. These

standards help organisations to work effectively. To follow ISO standards is voluntary

for the organisations. It is not legally to purchase standards by the organisations. But,

the standards are recognised internationally. ISO-9000 standards are market driven

12
designed by experts. These standards are reviewed once in five years to decide whether

to modify, maintained or withdrawn. ISO-9000 standards indicate the customers that

the organisations have adopted quality standards, quality procedures and quality

processes. It helps external auditors to show that all the internal processes are in place

and well documented. ISO-9000 standards implementation shows that all the processes

used for manufacturing products are audited internally and well documented. The ISO

quality standards are frequently followed for food safety, data security in computers,

agriculture, healthcare industry, education institutions etc. In fact, quality standards

developed by ISO impact our lives by giving quality and standard products and raising

standard of living.

Quality Audit

Quality audit is defined as a systematic and independent monitoring to determine

whether activities and related results comply with planned manuals and whether these

manuals are implemented effectively and are suitable to achieve objectives. A quality

audit is a process by which the management reviews and evaluates an element of the

business to ensure that it is meeting certain standards. A quality audit can be applied to

various aspects of a business, like it can be applied on inventory or service, employees,

management, or databases. The objectives of the quality audit are to monitor and drives

continuous improvement in quality. It ensures quality of the product and determines the

required improvement. It assesses effectiveness of quality assurance system. The

management knows problems or potential problems by quality audit. It ensures timely

correction of problems. It shows management support of the quality program and

establishes high degree of confidence, trust, understanding and communication among

13
internal employees. There are three types of quality audits, namely, first party (internal),

second party (external) and third party (extrinsic) audits. Quality audit ensures that the

business is offering a value to the customers through high-quality product or services. It

gives information to the customers that the company is committed to quality standards

and performs regular audits programmes. It helps to increase consumer confidence in

the business. Finally, regular quality audits help protect the business from issues that

could arise from selling a poor quality product.

Principles of Quality Management

Total quality management is an organization-wide philosophy to satisfy customers. It is

continuously improving the quality of its product and services as well as the quality of

processes. The main focus is to meet and exceed customers’ desired expectations. TQM

is the task of everyone in the organization (from top to bottom). Teamwork plays a key

role in providing quality of products, services and processes. All the stakeholders like

the suppliers and the customers are part and parcel of the quality improvement

programme. Some of the principles of total quality management are: TQM starts from

Top Management, Customer Satisfaction, Create an Ultimate TQM Environment,

Employee Involvement and Commitment, Integrated System Approach, Continuous

Improvements in Quality. The details are as follows:

 TQM starts from Top Management

The quality concept is initiated by the top management. The whole credit of the

initiation of total quality management goes to the top management. The top

14
management is responsible to create a quality oriented culture which can prevent

problems and improve processes.

 Customer Satisfaction

Total Quality Management’s focus is customers’ satisfaction. The customer ultimately

determines the level of quality. No matter what an organisation does to foster quality

improvement, the customer determines whether the efforts are worthwhile or not. The

consistent improvements in the processes help to meet customer’s expectations and to

lower down the customer dissatisfaction level.

 Create an Ultimate TQM Environment

Every employee must be mentally prepared to make and accept changes in the TQM

processes. Make quality a buzz word and as the nature of all the employees. Without it,

all the corporate statements, procedures and standards will prove to be rules that are

meant to be broken. Employees and departments should not feel burden and as if they

are in competition with one another. The ultimate TQM environment will help the

employees to feel pride to be member of cross-functional teams in the organisation. The

organisation should increase attention towards the individual’s contribution and

reward for the self-improvement and cooperative efforts.

 Employee Involvement and Commitment

Employee involvement is very important in achieving and sustaining high levels of

quality. All the employees should participate in working for achieving common goals.

Employees must be encouraged and involved to participate in quality improvement

programmes. The employees must be empowered and developed to be totally

15
committed for the quality improvement. For that regular training and development of

employees is essential for achieving and sustaining high levels of quality.

 Integrated System Approach

The organisations comprise of different departments for different functions. The focus

of all the departments of the organization should be on quality and continuous

improvement. Every department in the organisation should have a thorough

understanding of the quality policies, standards, objectives, and important processes. It

will help to generate commitment for continuous improvement. Involve all the

departments in cross-functional quality improvements processes. It is very important to

promote a quality work culture in the organisation as it helps to achieve excellence and

surpass customer expectations. An integrated system ensures continual improvement

and helps organisations to gain competitive advantage.

 Continuous Improvements in Quality

Continuous improvement in quality is a never ending process and the top

management is completely involved in the quality improvement process rather than

simply supportive of it. For this purpose, a strategic plan is very necessary to ensure

quality for long period. The strategic planning includes the formulation of strategic

plans that integrates quality as a core process with other processes. The management

should focus on identifying and eliminating causes of poor quality consistently. Quality

should be made the responsibility of everyone in the organisation.

Seven Principles by Gerald F. Smith

16
The following seven principles have been suggested by Gerald F. Smith, in his book

‘Quality Problem Solving’:

(i) Strive for the quality in all things.

(ii) The customer is the criterion of quality.

(iii) Improve the process or system by which products are produced.

(iv) Quality improvement is continuous and never ending activity.

(v) Workers’ involvement is essential.

(vi) Ground decisions and actions in knowledge.

(vii) Encourage team work and co-operation.

International Quality Award Programs

There are several quality awards worldwide such as The Deming Prize in Japan, The

Malcolm Baldrige National Quality Award in USA, The European Quality Award, etc.

The broad purposes of these awards are to increase awareness about total quality

management, its contribution and to encourage companies to share and spread latest

information about the quality improvement programmes. These award models provide a

framework for the organisations in the area of quality management. These models

provide an insight into the practical way of applying Total Quality Management.

The Deming Prize

17
The Japanese Deming Prize is awarded by the Japanese Union of Scientists and

Engineers (JUSE). The Deming Prize is a global quality award that recognizes both

individuals for their contributions to the field of Total Quality Management (TQM) and

businesses that have successfully implemented TQM. It is the oldest and most widely

recognized quality award in the world. It was established in 1951 to honor W. Edwards

Deming. The company is eligible and can apply after five years once the company got

this award. Deming contributed greatly to Japan’s proliferation of statistical quality

control after World War II. His teachings helped Japan build its foundation by which

the level of Japan’s product quality has been recognized as the highest in the world, was

originally designed to reward Japanese companies for major advances in quality

improvement. Over the years it has grown, the Japanese Union of Scientists and

Engineers (JUSE) regulate this prize under its guidance.

The Deming Award consists of two categories:

 The Deming Application Prize; and

 The Deming Prize for Individuals.

The Deming Application Prize is an annual award given to the company that has

achieved distinctive performance through the application of total quality management

concepts. The non-Japanese companies can apply for the award but its operations

should be in Japan. The awards ceremony is broadcasted every year in Japan on

national television. More than 160 companies have been awarded the Deming

Application Prize. The Deming Prize is acknowledged globally as one of the best

symbols of recognition for building business excellence.

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 The Malcolm Baldrige National Quality Award

The Malcolm Baldrige National quality Award was established by the US Congress in

1987. This award recognizes U.S. organizations in the business, health care, education,

and non-profit sectors to promote better quality management practices. The Baldrige

Award is the only formal recognition of the performance excellence of both public and

private U.S. organizations given by the President of the United States. In many ways, it

is the American prize equivalent to Japan’s ‘Deming Prize’. It is administered by

the Baldrige Performance Excellence Program, which is based at and managed by

the National Institute of Standards and Technology, an agency of the U.S. Department

of Commerce. The award’s ‘Criteria for Performance Excellence’ establish a

framework for integrating total quality principles and practices in any organisation. Up

to 18 awards are given annually across six eligibility categories—manufacturing,

service, small business, education, health care, and non-profit. As of 2014, 105 awards

have been presented to 99 organizations. The main purpose of this award is to help and

stimulate American companies to attain excellence in quality and productivity. The

criterion for the selection of the said award is difficult. It covers seven categories: (i)

Leadership (110 points); (ii) Strategic Planning Area (80 points); (iii) Customer and

Market Focus (80 points); (iv) Information and Analysis (80 points); (v) Human

Resources Focus (110 points); (vi) Process Management (100 points); and (vii)

Business Results (450 points). The companies which apply for awards are evaluated on

the basis of 1000 points for seven categories.

The European Quality Award

19
The European Quality Award is given by European Foundation for Quality

Management (EFQM). It was started in 1991 to recognize the European companies. The

main objective of the award is to support, encourage, aware and recognize the

development in the area of total quality management among European companies.

The Rajiv Gandhi National Quality Award

The Rajiv Gandhi National Quality Award is the Indian national quality award given by

the Bureau of Indian Standards to Indian organisations that deliver excellence

performance. The award aims to promote quality services to the consumers and to give

special recognition to organisations that contribute significantly in the development of

quality.

Cost of Quality

Meaning: Cost of Quality is a term that’s widely used and widely misunderstood. 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. Every time work is redone, the cost of

quality increases. The examples include the reworking of a manufactured item, the

retesting of an assembly, the rebuilding of a tool, the correction of a bank statement etc.

The term ‘Cost of Quality’ is sometimes confusing to some persons. It does not indicate

the costs such as costs of producing high quality products or services. The term refers to

all of the costs that are incurred to prevent poor quality. Preventing, detecting and

dealing with defects cause costs that are called costs of quality. Cost of quality is a

method that allows an organization to determine the extent to which its resources are

20
used for activities that prevent defects or failures. The prior knowledge of the resources

used in as the result of internal and external failures allows an organization to determine

the potential savings to be gained by implementing process improvements.

The cost of quality is defined as the sum of the costs that would not have been required

if everything had done right the first time. It refers to the costs incurred due to the lack

of quality. Generally, the most effective way to manage quality costs is to avoid having

defects in the first place. It is much less costly to prevent a problem from ever

happening than it is to find and correct the problem after it has occurred. There are four

types of quality costs namely: (i) Prevention Costs, (ii) Appraisal Costs, (iii) Internal

Failure Costs and (iv) External Failure Costs and these four quality costs are divided

into two groups. The first two types of quality costs (prevention costs and appraisal

costs) are included in one group because these are incurred to prevent poor quality

production of products or services. The organisations adopt various quality tools and

techniques of total quality management like statistical process control, business process

engineering, quality circle, training, etc. to avoid poor or defective quality products and

services. The last two types of quality costs (‘internal failure costs’ and ‘external failure

costs’) are grouped because internal and external failure costs are incurred because

defects are produced despite efforts to avoid them therefore these costs are also known

as costs of poor quality. Four types of quality costs are briefly explained below:

(i) Prevention Costs

The purpose of this cost is to prevent the number of defects or to avoid quality

problems. These costs are associated with the product design, product or service

21
 requirements, quality tools implementation, quality planning, quality assurance, quality

training, maintenance of the production systems, etc. These costs follows:

 Process control Costs

It is related with the costs of analysing production processes and implementing

standard processes, establishment of specifications for incoming materials, finished

products or services etc.

 Quality Planning Costs

It is related with the planning of the quality standards, product design, reliability,

operations, production, new equipment design, teams, inspection, etc.

 Quality Assurance Costs

It is related with the prevention of defects or errors in the production and maintenance

of the quality system.

 Training Costs

It is related with development, preparation, and training of programs to educate the

employees as well as suppliers.

(ii) Appraisal Costs

Appraisal costs are associated with measuring and monitoring activities related to

quality. These costs are associated with the efforts to ensure conformance to

requirements like test and inspection costs, verification costs, suppliers rating costs,

22
quality audits etc. Appraisal costs are sometimes called inspection costs because these

are incurred to identify defective products before the products are shipped to customers.

(iii) Internal Failure Costs

Internal failure costs are all the raw materials and labour expenses incurred due to

waste, scrap or rework. These costs occur when the output of production work fails to

reach designed & planned standard quality. Internal failure costs are resulted from

identification of defects before they are shipped to customers. These costs include

scrap, rejected products, reworking of defective units, and downtime caused by quality

problem.

(iv) External Failure Costs

External failure costs include all costs incurred due to defected delivery to the customer.

These are incurred to remedy defects discovered by customers. These costs occur when

products or services that fail to reach design quality standards are not detected until the

products are used by the customers. These include repairs, servicing, recall, legal suit

settlements, lost sales, warranty claims, handling complaints, returns, transport costs,

etc.

Examples of ‘Cost of Quality’

Prevention Costs Internal Failure Costs

23
Systems development Net cost of scrap
Quality engineering Net cost of spoilage
Quality training Rework labor and overhead
Quality circles Re-inspection of reworked products
Statistical Process Control Retesting of reworked products
Supervision of prevention activities Downtime caused by quality problems
Quality data gathering, analysis, and Disposal of defective products
reporting Analysis of the cause of defects in
Quality improvement projects production
Technical support provided to suppliers Re-entering data because of keying errors
Audits of the effectiveness of the quality Debugging software errors
system

Appraisal Costs External Failure Costs

Test and inspection of incoming materials Cost of field servicing and handling
Test and inspection of in-process goods complaints
Final product testing and inspection Warranty repairs and replacements
Supplies used in testing and inspection Repairs and replacements beyond the
Supervision of testing and inspection warranty period
activities Product recalls
Depreciation of test equipment Liability arising from defective products
Maintenance of test equipment Returns and allowances arising from
Plant utilities in the inspection area quality problems
Field testing and appraisal at customer site Lost sales arising from a reputation for
poor quality.

24
Summary

Total Quality Management requires a set of guiding principles and concepts. There are

various approaches of TQM. The all-over world famous quality gurus like Deming,

Juran, Crosby, Ishikawa, as well as many others, have made substantial contribution to

the theory and practice of quality management. Their philosophies, concepts, principles

have helped to shape the framework for quality management. Quality management as a

discipline is incomplete without their contribution and approaches to total quality.

Some of the principles of total quality management are: TQM starts from Top

Management, Customer Satisfaction, Create an Ultimate TQM Environment, Employee

Involvement and Commitment, Integrated System Approach, Continuous

Improvements in Quality.

There are several quality awards worldwide such as The Deming Prize in Japan, The

Malcolm Baldrige National Quality Award in USA, The European Quality Award, etc.

The term ‘Cost of Quality’ refers to all the costs that are incurred to prevent poor

quality. Preventing, detecting and dealing with defects cause costs that are called costs

of quality. There are four types of quality costs. Two of these groups are known

as ‘prevention costs’ and ‘appraisal costs’. These are incurred to prevent poor quality

production of products or services. The other two groups of costs are known as ‘internal

failure costs’ and ‘external failure costs’. Internal and external failure costs are incurred

because defects are produced despite efforts to avoid them therefore these costs are also

known as costs of poor quality.

25
Keywords

Total Quality Management (TQM)

Total Quality Management (TQM) is a comprehensive and structured approach to

organizational management that seeks to improve the quality of products and services

through ongoing refinements in response to continuous feedback.

Business Process Reengineering (BPR)

Business process reengineering (BPR) is redesigning business processes in the

organisation to bring radical changes in the processes to generate value to the

customers.

Cost of Quality

Cost of quality is a method that allows an organization to determine the extent to which

its resources are used for activities that prevent defects or failures.

26
Designing Organisation for Quality and Quality Policy

Structure

Objectives

Total Quality Management (TQM) and Senior Management

Quality Management System

Elements of Quality Management System

Quality Policy

Elements of Quality Management Policy Statement

Examples of the Quality Policy

Quality Objectives

Quality Manual

Quality Documentation

Pillars of Quality Management System

1.11 ISO-9000

Eight Principles of Quality Management

Quality Audit

Generic Model for Implementing Quality Management Systems

Benefits of implementing a Quality Management System

1
 Summary

Keywords

Self Assessment Questions

References / Suggested Readings

Objectives

After going through this lesson, you will be able to:

 Understand the rational for designing organisation for quality and quality

policy.

 Know the elements of quality management system.

 Understand the concept of quality objectives, quality manual and quality

documentation.

 Get familiar with the implementation and benefits of quality

management system.

Total Quality Management (TQM) and Senior Management

Total Quality Management (TQM) is introduced and led by top management. It is a

management approach which is focused on quality. Its long term success is based on the

quality culture of the organisation, the participation & commitment of the employees

and the consistent delivery of quality products and services. The management take the

help of TQM for customer satisfaction and benefits of all the stakeholders of the

organisation. In other words, with the help of TQM philosophy, the management

2
manages an organisation in such a way that enables to meet stakeholder needs and

expectations consistently in terms of quality. The total in TQM applies to the whole

organisation as it is applied to every activity in the organisation. The management

covers the soft issues such as ethics, attitude and culture through TQM. Generally, the

management apply Quality Management System (QMS) to achieve the success of the

total quality programme.

Simple statistics and random sampling were used to get the results from the production

line in early days of Quality Management Systems (QMS). By the 20th century, the

importance was shifted to team cooperation and dynamics due to the labour inputs as

the most costly inputs. In the 21st century, the quality issues and customer satisfaction

were become as important part of the QMS and considered as the primary task of it

because of the sustainability and transparency initiatives. In this regime, the ‘ISO

9000 family of standards’ as well as ‘quality audit’ are used extensively worldwide for

quality up-gradation. Besides this, it is assumed that other quality problems can be

reduced as result of the systematic as well as analytical thinking, transparency in the

processes, standard documentation and problem solving environment in the

organisation.

Quality Management System

According to the American Society for Quality (ASQ), Quality Management System

(QMS) is “the organisational structure, processes, procedures and resources needed to

implement, maintain and continually improve the management of quality. It is also

considered as a set of co-ordinated activities to direct and control an organisation in

order to consistently improve the effectiveness and efficiency of its performance.”

3
An effective quality management system (QMS) helps the organisation in terms of

implementation of total quality management as it covers quality policy, quality

objectives, goals, documentation of information, business processes focused on

consistently meeting customer requirements and enhancing their satisfaction. Its success

is dependent upon its alignment with company's strategic planning. It is expressed as

the total sum of organizational quality policies, standards/processes, objectives and

goals, documented information, quality tools and resources needed to implement and

maintain it.

Elements of Quality Management System

The quality management system consists of the following elements as under:

 Quality Policy

 Quality Objectives

 Quality Manual

 Organizational Structure and Responsibilities

 Understanding customers and fulfilling their satisfaction

 Continuous improvement of processes

 Facilitate employees’ education and quality training

 Using quality tools, techniques and parameters

 Data/Record management through standard documentation

 Quality control

Quality Policy

4
“Quality Policy is a mirror, which shows the structure of QMS, which drives

implementation. It monitors effectiveness, it guides working, it allows perceptions, it

thinks future, overall quality policy is management's commitment towards QMS.”

(www.qualitygurus.com)

“Quality policy is the top management's expression of its intentions, direction, and aims

regarding quality of its products and processes.” (www.businessdictionary.com)

Quality Policy is a written statement coined by the top management of an organisation

with regard to manufacture or supply of quality product/service that meet the customer's

expectations. The written quality policy is very much helpful to demonstrate that its

internal quality controls are effective and to assure the stakeholders regarding the

management of quality. The written quality policy assures all the stakeholders that the

organisation can product and deliver the desired quality product or services with

standard specifications on time and within budget.

In quality management system, a quality policy is a document designed by top

management, senior managers and quality experts to express the quality statement of

the organization. It clearly depicts the acceptable level of quality and the duties of

specific departments to ensure consistency of quality production and delivery. Quality

policy management is a long term strategic issue. The quality policy is thus a

commitment from the top management to ensure compliance with the Quality

Management System, and to ensure regularity in customer satisfaction.

Section 4.1.1 of ISO 9001 requires the organisation to define and document the Quality

Policy and Quality Objectives for quality and commitment to quality. These must be

relevant to the organizational goals and customer expectations. It is a brief statement or

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document that defines the quality goals and objectives, a commitment to meeting them

as well as continuous improvement. It should provide an outline for creating, stating,

and measuring your performance of the quality objectives. The ISO standard requires a

written, well defined quality policy that is communicated and understood within an

organization. Section 5.3 also sets out some of the requirements for quality policies.

The management should ensure that all employees are not only aware of, but fully

understand the objectives stated through the Quality Policy.

Elements of Quality Management Policy Statement

The major elements described in quality policy are aimed at the following:

 To describe managements’ commitment to maintaining standards of the

company’s product or service.

 To identify the ownership and involvement within the organisation of all staff

and specifically those with key roles in maintaining the quality of the company’s

product or service.

 To state how the company’s product or service is monitored to ensure that it

continues to meet customer and market place needs.

 To state how the importance of meeting the customers’ needs it communicated

within the organisation.

 To state how the company ensures customer satisfaction is achieved.

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  To detail how the company provides adequate resources to enable the above to

happen.

 To state that the company systems or processes will be reviewed periodically to

ensure that they remain effective in delivering customer satisfaction.

Examples of the Quality Policy

Most companies today have a written quality policy or mission statement. It is the

established policy regarding the standards to be followed and the intention of the

company to provide its customers regular quality products or services which conform to

customer requirements and are delivered on time within the budget. This will be

ensured through a defined quality program as detailed in the company quality manual.

Goodyear’s quality policy is “our mission is constant improvement in products and

services to meet our customers’ needs. This is the only means to business success for

Goodyear and prosperity for its investors and employees.”

Motorola’s quality policy is “Doing the right thing. Every day. No excuses.”

Nestle’s Quality Policy is “To sustainably create value and to effectively and efficiently

build customer and consumer trust, Quality at Nestlé is to: (i) Guarantee food safety

and full compliance by respecting our policies, principles and standards with full

transparency, (ii) Ensure preference and consistency to delight consumers and

customers by valuing what they value and by offering products, systems and services

that always meet or exceed their expectations, (iii) Strive for zero defects and no waste

by constantly looking for opportunities to apply our continuous improvement approach

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to deliver competitive advantage, and (iv) Engage everybody’s commitment across our

complete value chain and at all levels of our organization to build the Nestlé quality

culture.”

Quality Objectives

Quality objectives are measurable steps towards achieving the organisational quality

policy. Quality objectives state the answer of what to do to meet the goals fixed in the

quality policy? These can be the best way to spotlight the key elements of the quality

policy. The quality objectives can be to improve on-time deliveries, reduction in

internal scrap, lower down the defects in production, cost reduction through elimination

of wastes by 90-95 percent within one year, etc. The objectives must be controlled by

considering them as the part of a procedure and making them part of the quality manual.

The quality policy is created with the customer requirements/needs in mind, then

quality objectives are linked back to the customer requirements/needs through the

quality policy. These quality objectives would then be communicated to each level of

the organization. The quality objectives should be designed to be specific, measurable,

achievable, realistic and time-based.

Quality Manual

Quality manual is an official document produced by a business that details how its

quality management system operates. A typical quality manual will include the

company's quality policy and goals, as well as a detailed description of its quality

control system that might include staff roles and relationships, procedures, systems and

8
any other resources that relate to producing high quality goods or services. The

purposes of the quality manual are as under:

 The quality manual identifies the scope of the Quality Management System. In fact,

it identifies the limits of the QMS. This is the explanation of what the business is? Is

it a fast food chain? Or Is it a retail store? Or Is it an automotive industry?

 The quality manual consists of flowcharts which explains the connectivity of the all

the different processes. This in-depth flowchart may help the employees to better

understand the interactions between processes in the organization.

 It includes a top-level management structure so that people can better understand

how the organisation is controlled.

The quality manual should be smaller, more graphic, more informative and easier to

read and understand. The mission and vision statements of the company, quality policy

and quality objectives can be a part of the quality manual. A good quality manual gives

a clear picture about the success of the Quality Management System.

Quality Documentation

Quality documentation means the process of documenting the information. The

information is related with each and every process, procedure, quality objective,

checklist, drawing, flowchart, forms, diagram, etc. These quality documents describe

the functioning of the quality management system. It is also mandatory as per the

provisions of ISO 9000 certification as some information/documents are required to get

the quality certificate.

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 Pillars of Quality Management System

Each organization is unique in terms of the culture, management practices, and the

processes used to create and deliver its products and services. The quality management

strategy will then vary from organization to organization; however, a set of primary

elements should be present in some format. ISO 9000 (which contains eight quality

management principles) and quality audit are the two important pillars upon which the

efficient, effective and adaptable quality management system is to base. The eight

quality management principles are applicable throughout industry, commerce and the

service sectors:

ISO-9000 (International Standards Organisation)

The ISO-9000 standard was published in 1987. It had undergone revision in 2000 and

2005. It covers definitions, requirements, and continual improvements. ISO-9000

standards are developed to effectively design and implement efficient quality systems.

These provide a framework that can provide guidance for the processes to be made

auditable. These standards help organisations to work effectively. ISO-9000 standards

are market driven designed by experts. These standards are reviewed once in five years

to decide whether to modify, maintained or withdrawn. ISO-9000 is helpful to show the

customers that the organisation have adopted quality procedures, quality processes and

quality standards. It helps external auditors to show that all the internal processes are in

place and well documented. ISO-9000 standards implementation shows that all the

processes used for manufacturing products are audited internally and well documented.

The ISO quality standards are frequently followed for food safety, data security in

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computers, agriculture, healthcare industry, education institutions etc. In fact, Quality

Standards developed by ISO impact our lives by giving quality and standard products

and raising standard of living. The standards are recognised internationally.

Eight Principles of Quality Management

ISO standards are based on eight principles of quality management that can be applied

by senior managers to improve their organisation:

i) Customer Focus

Customers are the backbone of the organisation. The organisations must have clear

understanding of the customers’ needs and do their best to meet the needs. Through

regular survey the customers’ dissatisfaction can be known.

ii) Leadership

Leaders should be ready to take the front positions at the time of problems. Only

best leaders can guide their employees the right vision.

iii) Involvement

At the time of requirement or problem, the employees can be involved and their

talent as well as skills be utilised.

iv) Process Approach

Companies activates are managed in the form of processes. The input,

transformation and output are managed as a process.

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 v) System approach to management

At this step, all the processes of the organisation are examined thoroughly.

vi) Continuous Improvements

At this step, the management should try to find the long-term and consistent

solutions of the problems.

vii) Right approach of decision making

The decision making must be based on the relevant data and information

subsequently.

viii) Long term relationships with Suppliers

Long term relationships with the suppliers create value.

Quality Audit

A good quality management system (QMS) will not function or improve without

adequate audits and reviews. Quality audit is defined as a systematic and independent

monitoring to determine whether activities and related results comply with planned

manuals and whether these manuals are implemented effectively and are suitable to

achieve objectives. A quality audit is a process by which the management reviews and

evaluates an element of the business to ensure that the process is meeting certain

standards. A quality audit can be applied to various aspects of a business, such as

inventory, service, employees, management, or databases. The objectives of the quality

audit are to monitor and drives continuous improvement in quality. It ensures quality of

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the product and determines the required improvement. It assesses effectiveness of

quality assurance system. The management knows problems or potential problems by

quality audit. It ensures timely correction of problems. It shows management support of

the quality program and establishes high degree of confidence, trust, understanding and

communication among internal employees. There are three types of quality audits,

namely, first party (internal), second party (external) and third party (extrinsic) audits.

Quality audit ensures that the business is offering a value to the customers through

high-quality product or services. It gives information to the customers that the company

is committed to quality standards and performs regular audits programmes. It helps to

increase consumer confidence in the business. Finally, regular quality audits help

protect the business from issues that could arise from selling a poor quality product.

Generic Model for Implementing Quality Management Systems

The American Society for Quality (ASQ) has given a generic model for implementing

quality management systems which is given below:

 Top management learns about and decides to commit to TQM. TQM is

identified as one of the organization’s strategies.

 The organization assesses current culture, customer satisfaction, and quality

management systems.

 Top management identifies core values and principles to be used, and

communicates them.

 A TQM master plan is developed on the basis of steps 1, 2, and 3.

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  The organization identifies and prioritizes customer demands and aligns

products and services to meet those demands.

 Management maps the critical processes through which the organization meets

its customers’ needs.

 Management oversees the formation of teams for process improvement efforts.

 The momentum of the TQM effort is managed by the steering committee.

 Managers contribute individually to the effort through planning, training,

coaching, or other methods.

 Daily process management and standardization take place.

 Progress is evaluated and the plan is revised as needed.

 Constant employee awareness and feedback on status are provided and a

reward/recognition process is established. (www.asq.org)

Benefits of implementing a Quality Management System

The benefits of implementing a quality management system are as under:

 QMS ensures that all the quality processes are operating efficiently and

effectively.

 QMS ensures consistent quality output in terms of products or services. Hence,

the customer loyalty is generated when he/she is getting consistent good quality

products/services.

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 An effective QMS is helpful in generating value for both the organisation and its

customers.

 QMS ensures that all the processes are aligned together which is helpful in

getting good desired results.

 The QMS ensures good operational results such as increase in revenue and

increase in market share.

 The organisation is ready to response to market opportunities if QMS is

operational.

 It reduces costs through the effective and efficient use of resources.

 QMS ensures improved organisational capabilities which is helpful for the

companies to get competitive advantage.

 QMS is helpful in the communication of quality motives of the top management

to all the stakeholders. It helps in proper understanding of the corporate

philosophy regarding quality and its culture.

 QMS is helpful in motivating employees towards achieving the company’s

quality objectives.

 QMS is helpful in the continuous improvement of the processes.

 QMS increases confidence of interested parties in the effectiveness and

efficiency of the business and reputation.

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 Summary

The top management apply Quality Management System (QMS) to achieve the success

of the total quality programme. Quality Management System (QMS) is the

organisational structure, processes, procedures and resources needed to implement,

maintain and continually improve the management of quality. It is also considered as a

set of co-ordinated activities to direct and control an organisation in order to

consistently improve the effectiveness and efficiency of its performance. The quality

management system consists of the following elements as under: Quality Policy,

Quality Objectives, Quality Manual, Organizational Structure and Responsibilities,

Understanding customers and fulfilling their satisfaction, Continuous improvement of

processes, Facilitate employees’ education and quality training, Using quality tools,

techniques and parameters, Data/Record management through standard documentation

and Quality control. Quality Policy is a mirror, which shows the structure of QMS,

which drives implementation. It monitors effectiveness, it guides working, it allows

perceptions, it thinks future, overall quality policy is management's commitment

towards QMS. Quality objectives are measurable steps towards achieving the

organisational quality policy. Quality objectives state the answer of what to do to meet

the goals fixed in the quality policy? Quality manual is an official document produced

by a business that details how its quality management system operates. A typical quality

manual will include the company's quality policy and goals, as well as a detailed

description of its quality control system that might include staff roles and relationships,

procedures, systems and any other resources that relate to producing high quality goods

or services. Quality documentation means the process of documenting the information.

The information is related with each and every process, procedure, quality objective,

16
checklist, drawing, flowchart, forms, diagram, etc. These quality documents describe

the functioning of the quality management system.

Keywords

Quality Management System

Quality Management System (QMS) is the organisational structure, processes,

procedures and resources needed to implement, maintain and continually improve the

management of quality. It is also considered as a set of co-ordinated activities to direct

and control an organisation in order to consistently improve the effectiveness and

efficiency of its performance.

Quality Policy

Quality Policy is a mirror, which shows the structure of QMS, which drives

implementation. It monitors effectiveness, it guides working, it allows perceptions, it

thinks future, overall quality policy is management's commitment towards QMS.

Quality Objectives

Quality objectives are measurable steps towards achieving the organisational quality

policy.

Quality Manual

Quality manual is an official document produced by a business that details how its

quality management system operates. A typical quality manual will include the

company's quality policy and goals, as well as a detailed description of its quality

17
control system that might include staff roles and relationships, procedures, systems and

any other resources that relate to producing high quality goods or services.

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Contribution of TQM by W.E. Deming, Joseph M. Juran & Philip Crosby and Kaoru
Ishikawa

Structure

Objectives

Contribution of W. E. Deming

Deming's System of Profound Knowledge

Deming’s 14 Key Points for Quality

Seven Deadly Diseases

Contribution of Joseph M. Juran

Juran’s Quality Trilogy

Juran’s 10 Points for Quality Improvement

Contribution of Philip B. Crosby

Four Absolutes of Quality Management

Philip B. Crosby’s Zero Defect Programme

Crosby’s Fourteen Steps for Quality Improvement

Contribution of Kaoru Ishikawa

Ishikawa Diagram

Uses of Cause and Effect Diagram

Summary

1
 Self Assessment Questions

References / Suggested Readings

Objectives

After going through this lesson, you will be able to:

 Understand the basic contribution given by quality gurus namely W. E.

Deming, Joseph M. Juran, Philip B. Crosby and Kaoru Ishikawa.

 Know the concepts of Deming's System of Profound Knowledge and Seven

Deadly Diseases.

 Understand Juran’s Quality Trilogy and Crosby’s Zero Defect Programme

 Elaborate the concept of Cause and Effect Diagram

Introduction

Total Quality Management requires a set of guiding principles and concepts. The all-

over world famous quality gurus like Deming, Juran, Crosby, Ishikawa, as well as many

others, have made substantial contribution to the theory and practice of quality

management. Their philosophies, concepts, principles have helped to shape the

framework for quality management. Quality management as a discipline is incomplete

without their contribution and approaches to total quality. A discussion of their

philosophies which are actually more about management of quality as follows:

Contribution of W. E. Deming

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William Edwards Deming was an American engineer, statistician, professor, author,

lecturer, and management consultant. He was born in October 14, 1900 Sioux City,

Lowa, United States and died in December 20, 1993). He was an electrical

engineer initially and later specializing in mathematical physics. Deming was a

professor of statistics at New York University’s Graduate School of Business

Administration. He taught at Columbia University’s Graduate School of Business also.

He helped in the development of the sampling techniques which are still used by the

U.S. Department of the Census and the Bureau of Labor Statistics. He always advocated

that there is no substitute for knowledge.

He found great inspiration in the work of Walter Shewhart like Statistical Process

Control, Operational Definitions, and the PDSA (Plan-Do-Study-Act) Cycle. The

Deming called PDSA as ‘The Shewhart Cycle’. This was in response to the growing

popularity of PDSA, which Deming viewed as tampering with the meaning of

Shewhart's original work.

Deming is best known for his work in Japan after World War-II, particularly his work

with the leaders of Japanese industry. That work began in August 1950 at the Hakone

Convention Center in Tokyo when Deming delivered a seminal speech on what he

called Statistical Product Quality Administration. He taught statistical process controls

to the Japanese engineers and managers and the message was very much clear that the

improvement in quality will reduce expenses while increasing productivity and market

share. Many in Japan credit Deming as the inspiration for what has become known as

the Japanese post-war economic miracle of 1950 to 1960, when Japan rose from the

3
ashes of war to start Japan on the road to becoming the second largest economy in the

world. He is credited with enabling Japan to become a world business power by the

1980’s due to image of quality. He worked for Ford Motor Co. during the period of

1979-1982 and he is credited for making Ford the most profitable US Auto

manufacturer by 1986. Deming is best known for his 14 Points for quality and his

system of thought called the System of Profound Knowledge.

Deming's System of Profound Knowledge

The Profound Knowledge System consists of four parts. Deming advocated that all

managers need to understand the System of Profound Knowledge. He stressed that the

system of profound knowledge is very important because it helps the managers to

transform within their organizations which improves the outcomes in the form of

quality. The four parts are as follows:

 Appreciation of a System: The systems consist of all the processes involving

suppliers, producers, and customers of goods and services. The managers must

understand the system thoroughly that they are looking to manage. The

understanding of the system will help them in fixing the problems.

 Knowledge of Variation: It covers the range and causes of variation in quality and

the use of statistical quality control. Deming suggested two basic types of causes for

variation: (i) Common Causes – This type of variations are resulted from within the

system and can be predicted with probabilities. (ii) Special Causes – This type of

variations are generated with special causes are variations that occurs unexpectedly.

The variation from a special cause can come after a change in the system (with or

4
 without realization that a change has occurred), and special cause variation cannot

be predicted. The knowledge of these two types of variations is must for managers.

If they know the cause of variation, then they can handle the problem efficiently or

at least be ready to face it.

 Theory of Knowledge: It covers the concepts explaining knowledge and the limits

of what can be known. Knowledge depends on theory and experience teaches

nothing without theory.

 Knowledge of Psychology: It consists of the concepts of human nature. Leaders

must understand the human behaviour to motivate, coordinate, manage employees

and lead teams to optimize the system.

The clear understanding and applying the four parts of Deming's theory will create a

better leadership culture. The four parts of Deming's theory tie into his fourteen points.

Deming’s 14 Key Points for Quality

W. Edwards Deming offered 14 key principles for management to follow for

significantly improving the effectiveness of a business or organization. He created 14

principles which provide a framework to develop the knowledge in the organisation and

can be used to guide long term business plans and aims at workplace. Many of the

principles are philosophical. Others are more programmatic. However, all the principles

are transformative in nature. The 14 principles were first published in his book ‘Out of

the Crisis’. These principles are widely discussed and interpreted by many thinkers of

quality and other management disciplines. The fourteen principles are named as (i)

Constancy of Purpose (ii) Adopt the New Philosophy (iii) End Lowest Tender Contracts

5
(iv) Improve Every Process (v) Institute Training on the Job (vi) Drive Out Fear (vii)

Break-down Barriers (viii) Eliminate Exhortations (ix) Eliminate Arbitrary Numerical

Targets (x) Permit Pride in Workmanship (xi) Encourage Education (xii) Top

Management Commitment to Action (xiii) Cease the Need for Mass Inspection (xiv)

Institute Leadership. The details are as follows:

(i) Constancy of Purpose

Constancy of purpose means that the management should commit resources for quality

programmes for long-term period. Deming advocated that there is no short-cut for

quality programmes and the quality improvement programmes can only be effective in

long time. The principle states that quality is the continuous improvement of products

and service and allocating resources for long term rather than short term. The vision of

the management must be long term profitability rather short term profitability. The

improvement of product and service must be with the aim to become competitive and to

stay in business in long run. It is the development of the organizations goals and

philosophy from long term view.

(ii) Adopt the New Philosophy

According to this principle, the management must awaken to the challenges, take their

responsibilities and bring radical changes in the system. Today, no business can live

longer with poor quality of goods and services, commonly accepted levels of delays,

mistakes, defective materials, customer complaints and grievances. A high level of

transformation in terms of new philosophy is required to halt the continued problems of

the businesses because the customer satisfaction is the most important task. Business

6
can live long life with happy customers only. So, the new philosophy is to identify and

remove barriers to achieving quality and involve everybody consistently.

(iii) End Lowest Tender Contracts

According to this principle, the practice of awarding tender on the basis of ‘lowest price

tag /quotation’ must be ended. The organisations must try to depend on a single supplier

in spite of many suppliers for one item. Working with single supplier will help in the

development of goods relationships and will bring loyalty and trust. It will minimise the

overall cost. The shifting from multiple suppliers to single supplier is a good strategy

and the demand of the time.

(iv) Improve Every Process

According to this principle, every organisation must try to improve the production

system constantly and forever to improve quality consistently. It will help to minimize

the overall cost gradually. The system must try to reduce waste gradually and improve

quality continually. Deming advocated the use of quality tools like Statistical Quality

Control Charts, Flow Charts, etc to manage the quality of goods and services.

(v) Institute Training on the Job

In the organisations, the employees require training regularly for consistent

improvement. Modern methods of training are required to make better use of every

employee because new skills are required to keep up-date the employees with changes

in raw materials/parts, methods/processes, product/service design, technology,

machinery, techniques, etc.

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(vi) Drive out Fear

Deming advocated driving out fear so that everyone may work effectively for the

company as the fear can be the main source of stress and emotional

problems. Encourage effective and open two-way communication process and other

means to drive out fear throughout the organization so that everybody can contribute

maximum and can work effectively with more productivity. Rewarding teamwork and

promoting creativity can reduce the fear also.

(vii) Break-down Barriers

Top management should build teamwork between departments and not competition. It

should break down barriers between departments and optimize the efforts of teams,

groups and staff. As for example, managers in research, design, sales, and production

must work together as a team to foresee the problems of production as well as

customers facing from products and services.

(viii) Eliminate Exhortations

The top management should eliminate slogans, exhortations, and targets for the work

force to encourage productivity. The targets for zero defects and new levels of

productivity generate adverse effects. The bulk of the causes of low quality and low

productivity belong to the system and thus lie beyond the power of the work force. The

top management should support regular training to help employees to achieve stated

standard of quality.

(ix) Eliminate Arbitrary Numerical Targets

8
Get rid of or eliminate Management by Objective (MBO), numbers or numerical goals

as the numbers and quotas focus on quantity rather than quality. Instead, learn how the

processes can be improved. Try to replace Management by Objective (MBO) with

never-ending and long lasting improvements. Top management should stress to

eliminate numerical quotas in order to take account of quality and processes rather than

just number game.

(x) Permit Pride in Workmanship

Remove barriers to pride of workmanship. Employees must be treated as the valuable

asset of the organisation. Avoid monotonous tasks, inferior machines and working extra

hours. Deming believed that one of the highest barriers to pride in workmanship is

performance appraisal. Performance appraisal destroys team work by promoting

competition for limited resources. So, eliminate performance organisation.

(xi) Encourage Education

The top management should have a policy regarding education and training for their

employees. It must stress on a vigorous program of both training and development for

the workforce. The employees should be educated to make them ready to face the

challenges in the current jobs. Today, the organizations need not only just good &

skilled people but also it needs people that are consistently upgrading with education.

(xii) Top Management Commitment to Action

Top management must take action to accomplish the transformation for quality

improvements. Management and workforce must work together for the same. Include

all the stakeholders of the organisation to work to accomplish the transformation. The

9
transformation is everybody's job and it is possible only with the commitment of the top

management.

(xiii) Cease the Dependence on Mass Inspection to achieve Quality

Eliminate the need for mass inspection for quality control and depend on process

control through statistical techniques.

(xiv) Institute Leadership and Modern Methods of Supervision

Leadership is a learned skill, so the organisations must institute leadership. Supervision

must be done with the practical knowledge of statistical methods. The aim of leadership

should be not only being to tell the people about what to do but also to guide and work

with them to do a better job.

Seven Deadly Diseases

The dreadful diseases are management practices that are harmful, but, Deming

advocated that these are easier to cure. However, it requires a complete change of

management style. The 7 deadly diseases are as follows:

 Lack of constancy of purpose;

 Emphasis on short term profits or performance, quarterly dividends etc.;

 Evaluation by performance merit rating or annual reviews;

 Management mobility;

 Running the company on visible figures alone.

 Excessive medical costs

 Excessive costs of liability.

10
 Contribution of Joseph M. Juran

Joseph M. Juran was an industrial engineer. He Joined Western Electric in the 1920s.

He authored ‘The Quality Control Handbook’ which is often referred to as the quality

bible and is a classic reference for quality engineers. He made many contributions to the

field of quality management in his more than seventy active working years. Juran

proposed a simple definition of quality: “fitness for use.” This definition of quality

suggests that it should be viewed from both external and internal perspectives; that is,

quality is related to “(a) product performance that results in customer satisfaction; (b)

freedom from product deficiencies, which avoids customer dissatisfaction.”

He believed that quality improvement should be achieved through projects. He

revolutionized the Japanese philosophy on quality management. Dr. Juran was the first

to incorporate the human aspect of quality management which is referred to as Total

Quality Management. The process of developing ideas was a gradual one for Dr. Juran.

Top management involvement, the Pareto principle, the need for widespread training in

quality, the definition of quality as fitness for use, the project-by-project approach to

quality improvement--these are the ideas for which Juran is best known, and all

emerged gradually. He focused on three major quality processes, called the Quality

Trilogy.

Juran’s Quality Trilogy

According to Juran, quality processes are summed up by the Triology. It means that the

management of quality consists of three inter-related quality oriented processes namely

quality planning, quality control and quality improvement. The Trilogy provides a

11
framework of how an organisation can improve the quality by better understanding the

relationships that plan, control and improve quality. The details of trilogy are as

follows:

 Quality Planning

It is all that begins with quality planning. It is preparing and developing a process to

meet quality goals. The purpose of quality planning is to determine the customers

and identifying their needs and expectations. In fact, quality planning provides the

operating forces with the means of producing products that can meet the customer’s

needs.

 Quality Control

Once planning is completed, the plan is turned over to the operating forces. Quality

control evaluates the actual quality performance and compares it to the quality

goals. Quality control is meeting quality goals during operations by addressing the

variation problems.

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 Quality Improvement

It is the achieving of standard levels of performance. It is to make sure that no

process is deficient, no wastage and avoiding quality deficiencies.

Juran, like Deming, was invited to Japan in 1954 by the Union of Japanese Scientists

and Engineers (JUSE). His lectures introduced the management dimensions of

planning, organizing, and controlling and focused on the responsibility of management

to achieve quality and the need for setting goals. Juran defines quality as fitness for use

in terms of design, conformance, availability, safety, and field use. Juran tends to take a

more strategic and planning approach to improvement than does Deming.Thus, his

concept more closely incorporates the viewpoint of customer. He is prepared to

measure everything and relies on systems and problem-solving techniques. Unlike

Deming, he focuses on top-down management and technical methods rather than

worker pride and satisfaction. Juran promotes the view that organizational quality

problems are largely the result of insufficient and ineffective planning for quality. The

means proposed by Juran establish specific goals to be reached and plans for reaching

those goals.

Juran’s 10 Points for Quality Improvement

Actions taken in the 10 points mentioned below involve the people and sustaining their

involvement in the improvement activities is must. Juran’s 10 points to quality

improvement are:

 Build awareness of need and opportunity for improvement to realize that all

processes are improvable;

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 Set-goals for improvement;

 Organize to reach goals;

 Provide training;

 Carryout projects to solve problems;

 Report progress;

 Give recognition;

 Communicate results;

 Keep score and;

 Maintain momentum by making annual improvement part of the regular systems

and processes of the company.

Juran is the founder of Juran Institute in Wilton, Connecticut. Juran contribution may,

over the longer term, greater than Deming’s because Juran has broader concept, while

Deming’s focus on statistical process control is more technical oriented.

Contribution of Philip B. Crosby

Philip Bayard Crosby, (June 18, 1926 – August 18, 2001) was a businessman and

author who contributed to management theory and quality management practices. He

worked as corporate vice-president for quality at International Telephone also. He is

best known in relation to the concepts of ‘Zero Defects’ and ‘Do it Right First Time’.

He authored a number of books, of which the book entitled ‘Quality is Free’ is the most

popular in which he stated that “Quality is free. It’s not a gift, but it is free. What costs

money are the unquality things -- all the actions that involve not doing jobs right the

first time.” His two other books are ‘Quality without Tears’ and ‘The Art of Getting

Your Own Sweet Way’.

14
 Four Absolutes of Quality Management

Crosby’s TQM approach is based on his four absolutes of Quality Management:

 First absolute: Quality is defined as conformance to requirements

Quality is defined as conformance to requirements and not as 'goodness' or

'elegance'. Requirements must be clearly stated so they can’t be misunderstood.

 Second absolute: Problems are functional in nature

It means that the problems are to be identified and the system for causing quality

must be corrected and prevented.

 Third absolute: there is no optimum level of defects

It means error-free products and services are possible and perfect quality has to be

the aim. Doing the job right the first time is always cheaper. Crosby asserts that it is

reasonable to expect a level of zero defects. Management determination is required

for the success of ‘Zero Defects’ a reality.

 Fourth absolute: cost of quality is the only useful measurement

It means the measure of quality is the prices of non-conformance and not indices.

Crosby advocated in costing quality as a key motivation for management. It means

quality cost data are useful. Crosby estimated that most companies spend 15 to 20

percent of their sales on quality costs.

Philip B. Crosby’s Zero Defect Programme

15
Crosby advocated that 80 % of problems are caused by management and only the

balance by workers. He therefore advocated the need for training the management

including executives and managers. Like Frederick Taylor, Philip Crosby's ideas came

from his experience on an assembly line. He focused on zero defects. Crosby was quick

to point out that zero defects are not something that originates on the assembly line. To

create a manufacturing process that has zero defects management must set the tone and

atmosphere for employees to follow. The employees cannot be blamed if management

has not set any policy for zero defects. The benefit of zero defects policy are many like

dramatic decrease in waste of valuable resources and time spent in producing goods or

services that consumer's do not want. He believed that ‘zero defects’ is a realistic goal.

He defined the cost of quality as the expense of nonconformance. Crosby initiated

the Zero Defects program at the Martin Company. As the quality control manager of

the Pershing missile program, Crosby was credited with a 25 percent reduction in the

overall rejection rate and a 30 percent reduction in scrap costs.

Crosby identified many other principles and concepts for quality improvement other

than ‘zero defects’ principle like management participation, management responsibility

for quality, employee recognition, education, reduction of the cost of quality, doing

things right for the first time etc. Crosby has given the valuable contribution of ‘Quality

Management Grid’ which can be used by the organisations to evaluate their quality

management maturity. The five stages of this grid are uncertainty, awakening,

enlightenment, wisdom and certainty. It is a quality tool for managers to evaluate their

quality status.

Crosby’s Fourteen Steps for Quality Improvement

16
Philip Crosby has developed 14 steps for an organization to follow an effective

quality program namely: Management Commitment, Quality Improvement Team,

Quality Measurement, Calculate the Cost of Quality, Raise Quality Awareness among

Employees, Instigate Corrective action, Monitor Progress of Quality Improvement –

establish a ‘Zero Defects’ Committee, Train Supervisors in Quality Improvement, Zero

Defects Day, Encouraging Employees to Create Quality Improvement Goals, Error-

cause Removal, Recognise Participants’ Effort, Create Quality Councils and Do it over

again. The details are as follows:

 Management Commitment

The management should clearly state its commitment by a quality policy and implement

it. The need for quality policy must be recognised and adopted by management. The top

management should clarify its stand on quality as it is necessary to consistently produce

conforming products and services at the optimum price.

 Quality Improvement Team

Crosby advocated that there is a requirement to create quality improvement teams with

representatives from all workgroups and functions. These teams run the quality

improvement program and their representatives should have sufficient authority to

commit the area they represent to action. Since every function of an operation

contributes to defect levels so every function must participate in the quality

improvement effort.

 Quality Measurement

17
Establish quality measures for each activity throughout the organisation. To avoid

confusion, everyone needs a clear method of measurement of quality. If the quality

measures for each area of activity are recorded then the improvement in the process is

possible.

 Calculate the Cost of Quality

The cost of quality should be clearly defined and measured. The cost of quality if not

handled properly, can be a cause of more trouble. The best way to reduce the cost of

quality is through prevention. The components of the overall cost of quality are wastes,

scrap, rework, service apart from regular maintenance, inspection etc.

 Raise Quality Awareness among Employees

Quality awareness means making employees aware about the quality issues, cost of

quality, knowledge about defects, conformance of the product or service to the quality,

types and expense of the quality problems etc. The awareness of the employees

regarding quality improvements can be enhanced through proper training.

 Instigate Corrective action

Establish a systematic method of permanently resolving the quality problems that are

identified through previous action steps. Try to document the problems and then resolve

formally. There must be a regular discussion about the quality problems which are

arising frequently so that permanent solution can be obtained and implemented. People

need to see that problems are being discussed and resolved on a regular basis.

Corrective action should then become a habit.

18
 Monitor Progress of Quality Improvement – establish a ‘Zero Defects’

Committee

Zero Defects is not a motivation programme. Its purpose is to communicate the clear

message that everyone should do things right first time. The quality improvement task

team should list all the individual action plans of the ‘Zero Defects Programme’. This

programme will provide a clean energy flow into an organization for a wide ‘Zero

Defects’ commitment.

 Train Supervisors in Quality Improvement

Undertake all supervisors to undergo formal training on the 14 steps before they are

implemented. This supervisor training must be a part of quality improvement program.

A supervisor should understand each of the 14 steps well enough to be able to explain

them to his or her people. Therefore, the supervisor must be given primary

consideration when laying out the program.

 Zero Defects Day

Hold zero defects day to establish the new attitude and give an impression about the

quality issues. It is important that the commitment to Zero Defects as the performance

standard of the company should give an impact. Create this event in such a positive way

that each employee realize that the management want a change. Zero Defects should be

like a revolution in the organisation where everybody is involved to lead a new way of

commitments and understanding. Therefore, it is necessary that all members of the

company participate in an experience that will make them aware of this change.

 Encouraging Employees to Create Quality Improvement Goals

19
Each supervisor gets his or her people to establish specific, measurable goals on 30, 60,

and 90 day basis. These goals should be specific and measurable. These goals guide the

employees in the areas of performance measurement and evaluation. The issue is to deal

quality issues at the forefront of organisational priorities.

 Error-cause Removal

One of the most difficult problems employees face is their inability to communicate

problems to management. Error-cause removal is the identification of quality problems

that prevent error free work. Employees are encouraged to detail such quality

issues/troubles that prevent them from carrying out error-free work. Problems should be

acknowledged and addressed permanently. It will boost the morale of the employees if

the problems are addressed and dealt with on time.

 Recognise Participants’ Effort

Establish recognition for those who meet goals or perform outstanding acts. The act of

recognition is important. Appreciate those who participate. Recognize their contribution

publicly as it will motivate them.

 Create Quality Councils

The quality councils should comprise of quality professionals and team-leaders. There

should be held regular meetings of quality councils to discuss the quality improvements

issues. There should be a planned communication on a regular basis for the regular up

gradation of the quality programme via quality councils.

 Do it over again

20
The management should emphasize that the quality improvement program never ends.

It should be remembered that march towards quality is never-ending journey. It is very

necessary to set up a new team for quality up gradation and begin the programme over

again with an emphasis on ‘Zero Defects Programmes’. This 'do it all over again' helps

quality to become deep-rooted or embedded in the organisation.

Contribution of Kaoru Ishikawa

Kaoru Ishikawa was born in July 13, 1915. He graduated in applied chemistry in

1939. He was a Japanese organizational theorist, Professor at the Faculty of

Engineering at The University of Tokyo. He is one of the Japan’s quality control

pioneers. He was a Japanese quality authority until his death. He is known for his

quality management innovations. He is considered a key figure in the development of

quality initiatives in Japan, particularly ‘the quality circles’ in which small group of

employees meet regularly to improve quality and productivity. He developed the

Ishikawa or cause and effect diagram or fishbone diagram often used in the analysis

of industrial processes. He emphasised the development of participation and bottom-up

of quality which is now main philosophy of the Japanese approach to quality

management. He advocated that the first concern for management is the happiness of

the people connected with it. If people are not happy then it does not deserve to survive.

He got the Grant Award in 1971 from the American Society for Quality Control for his

educational programmes in quality control. He died in April 16, 1989.

Ishikawa Diagram

21
Kaoru Ishikawa invented Ishikawa Diagram in 1968. Ishikawa diagram is also known

as fishbone diagram or cause-and-effect diagrams. It is a visualization tool for

categorizing the potential causes of a problem in order to identify its root causes. It

shows the causes of a specific event. The Ishikawa diagram is used in quality defect

prevention to identify potential factors causing an overall effect. Each cause or reason

causes variability in the output. Causes are grouped into major categories to identify the

real source of variation. The categories categorically can be people, methods/process,

machines, materials, measurements, environment, equipment etc.

Fig: Fishbone Diagrams/Cause-and-Effect Diagrams

Fishbone or Cause-and-Effect diagram has a fishbone shape and the diagram resemble

the skeleton of a fish. The main causes are the categories drawn as ‘bones’ attached to

the spine of the fish. The broad causes in the form of categories are people,

methods/process, machines, materials, measurements, environment, equipment etc.

Cause-and-effect diagram can give a view of key relationships among various causes

and the possible causes provide additional insight into process behaviour. These causes

can be derived from brainstorming sessions. Then, these groups are to be labelled as

categories of the fishbone.

22
 Uses of Cause and Effect Diagram

Using the Cause and Effect Diagram to identify the root cause(s) of a problem provides

several benefits to the quality improvement team like:

 Construction of a Cause and Effect diagram is straightforward, simple and easy

to learn.

 It is helpful to identify potential causes of the problem.

 It is helpful to summarize major causes under categories.

 It is a visual tool for organizing critical thinking and gives an overall view of the

problems to the whole team.

 It is helpful to explore root causes of the problems.

 It also helps to analyse the situation at one go and take corrective actions.

Summary

William Edwards Deming was an American engineer, statistician, professor, author,

lecturer, and management consultant. He was born in October 14, 1900 Sioux City,

Lowa, United States and died in December 20, 1993). He helped in the development of

the sampling techniques which are still used by the U.S. Department of the Census and

the Bureau of Labor Statistics. He always advocated that there is no substitute for

knowledge. He found great inspiration in the work of Walter Shewhart like Statistical

Process Control, Operational Definitions, and the PDSA (Plan-Do-Study-Act) Cycle.

The Deming called PDSA as ‘The Shewhart Cycle’. He taught statistical process

controls to the Japanese engineers and managers and the message was very much clear

that the improvement in quality will reduce expenses while increasing productivity and

market share. Deming is best known for his 14 Points for quality and his system of

23
thought called the System of Profound Knowledge. He stressed that the system of

profound knowledge is very important because it helps the managers to transform

within their organizations which improves the outcomes in the form of quality. The four

parts of the System of Profound Knowledge are: Appreciation of a System, Knowledge

of Variation, Theory of Knowledge and Knowledge of Psychology. The fourteen

principles are named as (i) Constancy of Purpose (ii) Adopt the New Philosophy (iii)

End Lowest Tender Contracts (iv) Improve Every Process (v) Institute Training on the

Job (vi) Drive Out Fear (vii) Break-down Barriers (viii) Eliminate Exhortations (ix)

Eliminate Arbitrary Numerical Targets (x) Permit Pride in Workmanship (xi)

Encourage Education (xii) Top Management Commitment to Action (xiii) Cease the

Need for Mass Inspection (xiv) Institute Leadership.

Joseph M. Juran was an industrial engineer. He Joined Western Electric in the 1920s.

He authored ‘The Quality Control Handbook’ which is often referred to as the quality

bible and is a classic reference for quality engineers. Juran proposed a simple definition

of quality: “fitness for use.” This definition of quality suggests that it should be viewed

from both external and internal perspectives; that is, quality is related to “(1) product

performance that results in customer satisfaction; (2) freedom from product

deficiencies, which avoids customer dissatisfaction.” He believed that quality

improvement should be achieved through projects. He revolutionized the Japanese

philosophy on quality management. Dr. Juran was the first to incorporate the human

aspect of quality management which is referred to as Total Quality Management. He

focused on three major quality processes, called the Quality Trilogy namely quality

planning, quality control and quality improvement. Juran has given 10 Points for

Quality Improvement.

24
Philip Bayard Crosby, (June 18, 1926 – August 18, 2001) was a businessman and

author who contributed to management theory and quality management practices. He is

best known in relation to the concepts of ‘Zero Defects’ and ‘Do it Right First Time’.

He authored a number of books, of which the book entitled ‘Quality is Free’ is the most

popular in which he stated that “Quality is free. It’s not a gift, but it is free. What costs

money are the unquality things -- all the actions that involve not doing jobs right the

first time.” His two other books are ‘Quality without Tears’ and ‘The Art of Getting

Your Own Sweet Way’. Crosby’s TQM approach is based on his four absolutes of

Quality Management namely: Quality is defined as conformance to requirements,

Second absolute: Problems are functional in nature, Third absolute: there is no optimum

level of defects and Fourth absolute: cost of quality is the only useful measurement.

Philip Crosby has developed 14 steps for an organization to follow an effective

quality program: Management Commitment, Quality Improvement Team, Quality

Measurement, Calculate the Cost of Quality, Raise Quality Awareness among

Employees, Instigate Corrective action, Monitor Progress of Quality Improvement –

establish a ‘Zero Defects’ Committee, Train Supervisors in Quality Improvement, Zero

Defects Day, Encouraging Employees to Create Quality Improvement Goals, Error-

cause Removal, Recognise Participants’ Effort, Create Quality Councils, Do it over

again.

Kaoru Ishikawa was born in July 13, 1915. He graduated in applied chemistry in

1939. He was a Japanese organizational theorist, Professor at the Faculty of

Engineering at The University of Tokyo. He is one of the Japan’s quality control

pioneers. He is considered a key figure in the development of quality initiatives in

Japan, particularly ‘the quality circles’ in which small group of employees meet

25
regularly to improve quality and productivity. He developed the Ishikawa or cause and

effect diagram or fishbone diagram often used in the analysis of industrial processes. He

emphasised the development of participation and bottom-up of quality which is now

main philosophy of the Japanese approach to quality management. He advocated that

the first concern for management is the happiness of the people connected with it. If

people are not happy then it does not deserve to survive.

26
Quality Planning: Understanding Customers and their Needs

Structure

Objectives

Quality Planning

Principles of Quality Planning

Quality Plan

Quality Plan Components

Uses of Documenting Quality Plan

Quality Planning Tools

Affinity Diagram

Procedure of Design Affinity Diagram

Advantages of the Affinity Diagram

Tree Diagram

Steps of Tree Diagram Formation

Arrow Diagram

Understanding Customers and their Needs

Definitions of Customer

Customer Groups

1
 Customer Needs

Basic Requirements of the Customers

Benefits of Meeting Expectations

Customer Orientation

Steps by Companies to bring Customer Orientation

The American Customer Satisfaction Index (ACSI) Model

The Kano Model – Customer’s Need Analysis

Steps to use Kano Model

Summary

Keywords

Self Assessment Questions

References / Suggested Readings

Objectives

After going through this lesson, you will be able to:

 Understand the basic concepts of quality planning and quality plan

 Know the importance of planning tools.

 Understand the customer and their needs.

 Know the models of customer satisfaction and customer need analysis.

Quality Planning

2
Quality Planning is the initial step of the quality management programme in which a

clear definition of the goal and objective of the quality plan is mentioned. It is the task

of determining what factors are important for the quality of the products or services or

processes and to figure out how to meet those factors. Quality planning is the process

for identification of quality standards and determining how to implement them.

Quality planning is a systematic process that translates quality policy into measurable

objectives and requirements, and lays down a sequence of steps for realizing them

within a specified time frame.

Quality planning is an essential part of quality management, which is required for the

effective management of quality from the buying of raw materials/parts to the final

delivery of products or services to the customers. An effective quality planning defines

quality policies, procedures, standards, criteria for and areas of application, and roles,

responsibilities and authorities. It is to identify what standards are relevant and how the

team will meet them. There are three steps involved in a quality management: Quality

Planning, Quality Assurance and Quality Control. The quality planning is crafted

during the strategic planning phase of the organisation and is important for the

managers, team, employees, suppliers, etc. Quality planning is necessary to maintain

the standard of quality for the processes. It is the establishment of procedures,

standards, and tools for all the processes of the organisation. It ensures the consistent

and timely delivery of product with reduced delivery risk.

The major questions to be answered while deciding the objective of the plan are: What

is the product or deliverable supposed to accomplish? What does it look like? What is it

supposed to do? How do you measure customer satisfaction? How do you determine

3
whether or not the project was successful? An appropriate answer to these questions can

help you to identify and define the goals for the quality management. Once the goals

have been decided, the discussion can be made for the tools and techniques used for

achieving the set goals. An effective quality planning includes assessing the risks to

success, setting high standards, documenting everything, and defining the methods and

tests to achieve, control, predict and verify success. It should ensure that an effective

and efficient quality plan is maintained in the project plan to track the quality metrics of

the entire project.

Principles of Quality Planning

The organisations should follow some principles for the quality planning:

 Customer Satisfaction is the Prime Task

The focus of quality planning is customers’ satisfaction. The customer ultimately

determines the level of quality. No matter what an organisation does to foster quality

improvement, the customer determines whether the efforts are worthwhile or not.

Quality is defined by the requirements of the customers. Hence, a better quality

planning is required for the consistent improvements in the processes to meet

customer’s expectations or to lower down the customers’ dissatisfaction level.

 Quality Planning is the Responsibility of Management

The quality concept is initiated by the top management. The whole credit of the

initiation of quality management goes to the top management. The top management is

4
responsible for all the costs of the quality management. Hence, the quality planning is

an important consideration and serious issue.

 Continuous Improvements in Quality

A continuous improvement in quality of products and processes is a never ending

process and the top management is completely involved in the quality improvement

process rather than simply supportive of it. For this purpose, a consistent quality

planning is very necessary to ensure quality. It includes the formulation of plans that

integrates quality as a core process with other processes.

 Prevention over Inspection

It is better to avoid mistakes than to inspect and repair the mistakes. Better quality

planning is a pro-active approach for this issue.

Quality Plan

A quality plan is a document that specifies quality standards, practices, resources,

specifications, and the sequence of activities relevant to a particular product, service,

process, project, or contract. It helps to set quality targets to meet the needs of the

customers. It can be used further to schedule quality control and quality

assurance activities to assure the customers that the quality targets will be met.

Quality Plan Components

A good quality plan describes the following components:

 It covers quality objectives of the organisation

5
  It covers key processes for desired quality in the organisation

 It covers quality specifications and standards desired to keep the processes right

 It covers the allocation of responsibilities, authority, and resources

 It covers quality assurance and control activities for quality planning to be

successful

 It covers suitable testing methods, inspection, examination, and audit programs

for controlling the processes and quality of products or services

 It covers quality tools to be used in the organisation

Uses of Documenting Quality Plan

Documenting the quality plan(s) has multiple uses, such as:

 It assures conformance to customer requirements;

 It assuring conformance to external and internal standards and procedures;

 It facilitates traceability;

 It providing objective evidence;

 It furnishes a basis for training; and

 It provides a basis for evaluating the effectiveness and efficiency of the quality

management system.

Quality Planning Tools

There are seven management and planning tools named as Affinity Diagram,

Relations Diagrams, Tree Diagrams, Matrix Diagrams, Arrow Diagrams, Process

Decision, Program Charts, and Matrix data analysis. These tools are useful in

6
structuring the unstructured ideas, making plans and organising as well as controlling

projects.

Affinity Diagram

The term affinity diagram was devised by Jiro Kawakita in the 1960s and it is also

called as the ‘KJ Method’. It is designed to organise the unstructured ideas resulted

from brainstorming. It is a group decision-making technique designed to sort a large

number of ideas, process variables, concepts, and opinions into naturally related

groups. These groups are connected by a simple concept. The affinity diagram

organizes ideas. When the related ideas are grouped into the meaningful categories, it

is called affinity sets. In the affinity diagram process, first of all each idea is recorded

on cards or notes then look for ideas that seem to be related and in last, sort cards into

groups until all cards have been used.

Affinity diagram is a tool/method that gathers large amounts of intertwined verbal data.

It organizes the verbal data into groups based on natural relationship. Such formation of

distinct groups helps a meaningful picture to emerge, thereby making it feasible for

further analysis and to find a solution to the problem.

Procedure of Design Affinity Diagram

The following steps are needed to design Affinity Diagram:

Step 1: Select a topic. Describe the problem or issue

Step 2: Generate ideas by brainstorming and collect the data

7
Step 3: Write each idea on a separate card and put these on a wall or flip chart or spread

the cards on the table. The purpose of this step is the visibility of all the cards at one go

Step 4: Move data cards into groups of similar themes. Sort data cards on the basis of

similarity of ideas or connectivity of ideas

Step 5: Combine statements on data cards to create new affinity statement

Figure 5.1: The Affinity Diagram

Step 6: Continue to combine until 4- 5 groups

Step 7: Once the cards have been sorted into groups the team may sort large clusters

into subgroups for easier management and analysis

Step 8: Complete the diagram

Advantages of the Affinity Diagram

There are many advantages of the affinity diagram as follows:

 The tool is commonly used as quality planning tool.

8
  It facilitates breakthrough thinking and stimulates fresh ideas.

 It allows large numbers of ideas stemming from brainstorming which are to be

sorted into groups.

 It permits the problem to be pinned down accurately

 It is beneficial when the team is confronted with many ideas, thoughts, fact and

the situation is becoming a chaos.

 It ensures that everyone clearly recognizes the problem

 It incorporates opinions of entire group and helpful especially when the issues

seem too large and complex.

 It encourages team spirit and helpful in promoting group consensus.

 It raises everyone’s level of awareness

 It spurs to the group into action

Tree Diagram

Tree diagram is a diagram with a structure of branching, connecting lines, representing

different processes and relationships. It is simply a way of representing a sequence of

events. It is also called systematic diagram or analytical tree or hierarchy diagram. It

starts with one item that branches into two or more, each of which branch into two or

more, and so on. It expands a purpose into the tasks required to accomplish it. It is used

to break down broad categories into finer and finer levels of detail. Developing the tree

diagram helps you move your thinking step by step from generalities to specifics.

9
 Figure 5.2: Basic Structure of Tree Diagram

Steps of Tree Diagram Formation

 It begins with the purpose to be accomplished

 It brainstorms all the probable numbers of goals are generated to accomplish the

purpose

 It links each goal to the purpose (these are the first branches of the tree)

 It continues the process till all the goals are exhausted

 It reviews the completed tree

Arrow Diagram

Arrow diagram is a networking techniques which uses nodes to show events and the

activities are shown with arrows. It is helpful in planning, scheduling and monitoring of

the quality programmes. With the help of this tool ideal plan can be worked out and the

progress can be monitored effectively.

10
 Figure 5.3 : Arrow Diagram

The events are represented by circular nodes and the length of the arrow represent the

duration of the activity. All the activities have to be completed before reaching the final

node.

Understanding Customers and their Needs

Mahatma Gandhi, the Father of Nation, had expressed his views about the customer. He

had given an important place to customers in the business. He advocated that it is the

business that is dependent on the customer. Further, he stated that:

“A customer is the most important visitor in our premises.

He is not dependent on us. We are dependent on him.

He is not an interruption in our work. He is the purpose of it.

He is not an outsider to our business. He is part of it.

We are not doing him a favour by serving him.

He is doing us a favour by giving us an opportunity to do so.

A customer is not someone to argue with.

Nobody ever won an argument with the customer.

A customer is the person who brings us his wants.

It is our job to handle profitably to him and to ourselves.” (Mahatma Gandhi)

A customer is an individual or business that purchases the goods or services produced

by a business. The proverb ‘the customer is always right’ is very famous in the business

world. The terms ‘customer’ and ‘consumer’ are almost synonymous. Customer is the

individual who purchases goods or services and the consumer is the individual who is

11
the end user. A customer is the end consumer of a product. This distinguishes true

customers from resellers and vendors, who usually make purchases to sell later.

Businesses take a keen interest in knowing who is purchasing their products and

services and who is using/consuming their products and services. So, they conduct

regular research activities for this purpose and tailor their marketing mix according to

the customer base and their needs. Customers are often segmented according to

their demographics, e.g., age, race, sex, marital status, religion, income level,

geographic location, etc. The marketer is always interested in the customer's

demographic profile. This information helps companies approach the segments with

more offers where they are already strong and deepen ties with loyal customers and to

approach new segments where sales are weak, thus creating a new base of customers

for further expansion.

The satisfied customers are expected to continue buying goods and services again and

again from companies that meet their needs. Feedback through questionnaire and

interviews is the process through which many companies closely monitor the

satisfaction level of the customers. The organisations develop good relationships with

customers.

Definitions of Customer

In sales, commerce and economics, a customer (sometimes known as a client, buyer,

or purchaser) is the recipient of a good or a service or a product or an idea - obtained

from a seller, vendor, or supplier via a financial transaction or exchange for money or

some other valuable consideration.

12
In general, a customer is a party that receives or consumes products (goods or

services) and has the ability to choose between different products and suppliers. In

quality control a customer is an entity within a firm who establishes the requirement of

a process (accounting, for example) and receives the output of that process (a financial

statement, for example) from one or more internal or external.

Customer Groups

Customers may fall into one of three customer groups:

 Existing Customers

It consists of customers who have purchased or otherwise used an organization’s

goods or services, typically within a designated period of time.

 Former Customers

This group consists of those who have formerly had relations with the marketing

organization typically through a previous purchase.

 Potential Customers

The third category of customers includes those who have yet to purchase but possess

what the marketer believes are the requirements to eventually become existing

customers.

13
 Customer Needs

The success of an organisation is dependent on its ability to create and deliver products

and/or services according to the customer needs. Despite this fact, number of companies

fails to do so. More specifically, the marketers fail to find the characteristics of the

structured customer need statement should possess. The first and foremost step to

become a customer-centric organization is to research and define customer needs

accurately. Understanding customer need is must before developing solutions. It is the

hallmark of the customer satisfaction. A need assessment is a systematic process for

determining and addressing needs, or finding the gaps between current conditions and

desired conditions. Research with structured interviews by trained interviewers and

structured questionnaire with clear, relevant statements are helpful in determining the

real customer needs.

Basic Requirements of the Customers

Some of the most common and basic requirements of the customers include:

 Customers always expect high levels of quality.

 Customers expect fast, efficient, accurate and timely service.

 Customers are price conscious. They expect high quality products/services at a

competitive price.

 Customers expect zero deviation from expected performance of products or

services.

14
  The customers always expect friendly, helpful service staff ready to provide

timely information and ready to be served every time. They expect quick

response of their queries.

 The customers don’t expect long queues, waits or hold for long time.

 The customers expect easy to surf website(s). They don’t like unnecessary

advertisements or promos and unnecessary links.

Benefits of Meeting Expectations

When the organisations are able to accurately identify and adequately meet the

customers' expectations, the customer service reputation and word-of-mouth will

automatically be enhanced. Some of the benefits of meeting your customers'

expectations include:

 Customers are transformed from first-time visitors to loyal clients.

 The sales are increased as customers feel more comfortable doing business with the

organisation.

 More referrals from satisfied customers are generated who bring in additional

business by word of mouth.

There is no doubt that adequately meeting customer expectations is an essential part of

a robust customer service department. By accurately identifying those expectations, and

meeting or exceeding them consistently, the company is likely to enjoy happier

customers and a healthier bottom line.

15
 Customer Orientation

Customer orientation is the prime issue in today’s marketing practices. Consumer

orientation is a key to achieve business goals. A firm can achieve marketing goals by

concentrating on customer satisfaction. A customer orientation approach means that the

company gives high importance to the customer and is a customer focused company.

Such customer oriented companies design customer oriented marketing strategies. The

key to having customer orientation is to add value as much as possible to the product

and services. The customers are loyal to the companies which give them value.

Customer orientation is a business strategy that requires management and employees to

focus on the changing wants and needs of its customers. In other words, the customer’s

wants and needs are the first priority of management as well as employees. It refers to a

series of actions taken by the management to support the needs of their customers by

engaging their employees in order to ensure customer satisfaction.

Customer orientation is a group of actions taken by a business to support its sales and

service staff in considering client needs and satisfaction. Business strategies that tend to

reflect a customer orientation might include: developing a quality product appreciate by

consumers; responding promptly and respectfully to consumer complaints and queries;

and dealing sensitively with community issues.

The consumer orientation is modern marketing philosophy and approach that guide the

marketing managers to design their marketing mix in such a way that the firm can offer

maximum possible satisfaction to target consumers. Every marketing effort and every

decision is aimed at satisfying needs and wants of the target consumers. Generally,

16
most of the satisfied consumers buy large quantities of same products and services more

frequently. They generate positive word-of-mouth and give valuable suggestions.

Steps by Companies to bring Customer Orientation

Customer orientation requires following steps to be taken by organisation:

 The organisation should conduct research and define the target market carefully.

 Find out customers’ actual and genuine needs and wants after collecting relevant

information.

 The development of the product has to be done keeping the end user in mind. It

must be as per their expectations.

 To match the expectation of the customers, the production must be according to the

demand. Long wait for products or services affect the satisfaction level of the

customers. Always maintain equilibrium in demand and supply.

 The organisation must have fair deal with customers and ensure commitment

toward them.

 Establish and maintain long-term relations with consumers. Good relationships with

customers are helpful in getting feedback for further development. (Customer

Relationship Management etc.)

 The customers always consider value for their money. If they get value for their

money, they are satisfied. The delighted customers are those who receive products

beyond their expectations.

 Provide them correct information as and when demanded.

 Safeguard their long-term interest/welfare.

 Treat them as business partners.

17
 Always be ready to get consumers’ suggestions, feedbacks and resolve grievances.

 Find out the best way to greet them, and meet their expectations.

The American Customer Satisfaction Index (ACSI) Model

The American Customer Satisfaction Index (ACSI) model was developed at the Ross

School of Business, University of Michigan's. In this model, various multivariable

components are measured by several questions that are weighted within the model.

Further, it uses customer interviews as input to a multi-equation econometric. The ACSI

model is a cause-and-effect model with indices for drivers of satisfaction on the left side

(customer expectations, perceived quality, and perceived value), satisfaction (ACSI) in

the center, and outcomes of satisfaction on the right side (customer complaints and

customer loyalty, including customer retention and price tolerance). The arrows in the

model represent ‘impacts.’ The ACSI model is self-weighting to maximize the

explanation of customer satisfaction (ACSI) on customer loyalty. Looking at the

indexes and impacts, users can determine which drivers of satisfaction, if improved,

would have the most effect on customer loyalty.

Figure: ACSI Model

18
 Figure 5.4 : ACSI Model

 Customer Satisfaction (ACSI)

The customer satisfaction (ACSI) index score is calculated as a weighted average of

three survey questions that measure different facets of satisfaction with a product or

service. ACSI researchers use proprietary software technology to estimate the

weighting for each question.

 Customer Expectations

Customer expectations combine customers’ experiences with a product or service and

information about it via prior personal usage/ experience, media, advertising,

salespersons, and word-of-mouth from other customers. Customer expectations

influence the evaluation of quality and forecast (from customers’ pre-purchase

perspective) how well the product or service will perform. It is a measure of the

customer's anticipation of the quality of a company's products or services.

 Perceived Quality

Perceived quality proves to have the greatest impact on customer satisfaction. It is a

measure of the customer's perception about the quality and the recent consumption

experience of the company's products or services. Perceived quality is measured

through three constructs: (1) overall quality, (2) reliability, and (3) the extent to which a

product or service meets the customer’s needs.

 Perceived Value

19
Perceived value is a measure of quality relative to price paid. The perceived value

directly influences customer satisfaction, and is affected by customer expectations and

perceived quality.

 Customer Complaints

Customer complaints are measured as a percentage of respondents who indicate they

have complained to a company directly about a product or service within a specified

time frame. More complaints mean more dissatisfaction.

 Customer Loyalty

Customer loyalty is measured by likelihood to purchase a company’s products or

services at various price points. It is the customer's likelihood to repurchase from the

same supplier in the future. Customer satisfaction has a clear effect on loyalty.

Customer loyalty is the critical component of the model as it stands as a proxy for

profitability.

The Kano Model – Customer’s Need Analysis

The Kano model is useful in understanding a customer’s needs. This model is helpful

for the company as it analyzes customer needs and it easily determines what delights

the customers. In other words, it is a useful technique for deciding which features the

organisations should include in a product or service. Kano Model was developed by Dr

Noriaki Kano and his colleagues in the 1980s in Tokyo Rika University. This is Kano’s

theory: For some customer requirements, customer satisfaction is proportional to the

extent to which the product or service is fully functional. Dr. Noriaki Kano identified

20
three levels of customer expectations: that is, what it takes to positively impact

customer satisfaction. The figure below portrays the three levels of need: Basic,

Performance, and Excitement.

 Basic Needs: Satisfying of basic needs allows a company to get into the market.

 Performance Needs: Satisfying of performance needs allows a company to remain

in the market.

 Excitement Needs: Satisfying of excitement needs allows a company to excel, to

be world class.

According to this model, a product or service can have three types of attribute or

property:

 Threshold Attributes: The customers expect threshold attributes to be present

in the product.

 Performance Attributes: These are not absolutely necessary, but increase the

customer's enjoyment of the product.

 Excitement Attributes: The customers are unknown about these attributes but

are delighted when they find them.

21
 Figure 5.5: The Kano Model

Steps to use Kano Model

Kano Model is intended to help prioritize customer needs. This model states the

philosophy that the company must realize customers’ expectations and/or needs which

vary over a period of time.

 Brainstorm all of the possible features and attributes of the product or service,

and everything the organisation can do to please your customers.

 Classify these as three attributes ‘Threshold’, ‘Performance’, ‘Excitement’ and

‘Not Relevant’ attribute.

 Make sure your product or service has all appropriate Threshold Attributes. If

necessary, cut out Performance Attributes so that you can get these – you're

going nowhere fast if these aren't present.

 Where possible, cut out attributes that are "Not Relevant".

 Look at the Excitement Attributes, and think how you can build some of these

into your product or service. Again if necessary, cut some Performance

Attributes, so that you can "afford" your Excitement Attribute.

 Select appropriate Performance Attributes so that you can deliver a product or

service at a price the customer is prepared to pay, while still maintaining a good

profit margin.

22
Summary

Quality planning is the process for identifying quality standards and determining how

to implement them. An effective quality planning defines quality policies, procedures,

standards, criteria for and areas of application, and roles, responsibilities and

authorities. It is to identify what standards are relevant and how the team will meet

them. There are three steps involved in a quality management: Quality Planning,

Quality Assurance and Quality Control. The quality planning is crafted during the

strategic planning phase of the organisation and is important for the managers, team,

employees, suppliers, etc. Quality planning is necessary to maintain the standard of

quality for the processes. It is the establishment of procedures, standards, and tools for

all the processes of the organisation. It ensures the consistent and timely delivery of

products with reduced delivery risk. The organisations should follow some principles

for the quality planning like Customer Satisfaction is the Prime Task, Quality Planning

is the Responsibility of Management, Continuous Improvements in Quality, Prevention

over Inspection.

A quality plan is a document, or several documents, that together specify quality

standards, practices, resources, specifications, and the sequence of activities relevant to

a particular product, service, process, project, or contract. It helps to set quality targets

to meet the needs of the customers. There are seven management and planning tools

named as Affinity Diagram, Relations Diagrams, Tree Diagrams, Matrix Diagrams,

Arrow Diagrams, Process Decision, Program Charts, and Matrix data analysis. These

tools are useful in structuring the unstructured ideas, making plans and organising as

well as controlling projects.

23
The affinity diagram tool is designed to organise the unstructured ideas resulted from

brainstorming. It is a group decision-making technique designed to sort a large

number of ideas, process variables, concepts, and opinions into naturally related

groups. These groups are connected by a simple concept. The affinity diagram

organizes ideas. When the related ideas are grouped into the meaningful categories, it

is called affinity sets.

Tree diagram is a diagram with a structure of branching, connecting lines, representing

different processes and relationships. It is simply a way of representing a sequence of

events. It is also called systematic diagram or analytical tree or hierarchy diagram. It

starts with one item that branches into two or more, each of which branch into two or

more, and so on.

Arrow diagram is a networking techniques which uses nodes to show events and the

activities are shown with arrows. It is helpful in planning, scheduling and monitoring of

the quality programmes. With the help of this tool ideal plan can be worked out and the

progress can be monitored effectively.

A customer is an individual or business that purchases the goods or services produced

by a business. The terms ‘customer’ and ‘consumer’ are almost synonymous. Customer

is the individual who purchase goods or services and the consumer is the individual

who is the end user. Customers are categorised in three groups: Existing Customers,

Former Customers, Potential Customers.

A customer orientation approach means that the company gives high importance to

the customer and is a customer focused company. Such customer oriented companies

design customer oriented marketing strategies. The key to having customer orientation

24
is to add value as much as possible to the product and services. The customers are loyal

to the companies which give them value. Customer orientation is a business strategy

that requires management and employees to focus on the changing wants and needs of

its customers. In other words, the customer’s wants and needs are the first priority of

management as well as employees. It refers to a series of actions taken by the

management to support the needs of their customers by engaging their employees in

order to ensure customer satisfaction.

The ACSI model is a cause-and-effect model with indices for drivers of satisfaction on

the left side (customer expectations, perceived quality, and perceived value),

satisfaction (ACSI) in the center, and outcomes of satisfaction on the right side

(customer complaints and customer loyalty, including customer retention and price

tolerance). The arrows in the model represent ‘impacts.’ The ACSI model is self-

weighting to maximize the explanation of customer satisfaction (ACSI) on customer

loyalty. Looking at the indexes and impacts, users can determine which drivers of

satisfaction, if improved, would have the most effect on customer loyalty.

The Kano model is useful in understanding a customer’s needs. This model is helpful

for the company as it analyze customer needs and it easily determines what delights the

customers. Or we can say that it is a useful technique for deciding which features the

organisations should include in a product or service. The figure below portrays the three

levels of need: Basic, Performance, and Excitement. According to this model, a product

or service can have three types of attribute or property: Threshold Attributes,

Performance Attributes, Excitement Attributes.

Keywords

25
Quality Planning: quality planning defines quality policies, procedures, standards,

criteria for and areas of application, and roles, responsibilities and authorities.

Quality Control: It is a very important step in quality management. It is to check the

inconsistency in the quality of products and services. It requires extensive, proper and

consistent training of employees so that errors can be controlled. Inconsistency in

products and services can be avoided by using statistically process control techniques.

Quality Plan

A quality plan is a document that specifies quality standards, practices, resources,

specifications, and the sequence of activities relevant to a particular product, service,

process, project, or contract.

26
Quality of Purchased Materials: Determinations and Description

Structure

Objectives

Quality of Purchased Material

Materials Management

Supply Chain Management

Purchasing

Organizational Purchase

Purchasing Process/Cycle

Materials Requirement Planning (MRP)

Just-in-time (JIT)

Quality Inspection of Incoming Materials and Parts

Importance of Receiving and Incoming Quality Inspection

Materials Handling

Objectives of Material Handling

Value Analysis

Supplier Evaluation and Supplier Selection Process

1
 Vendor Rating

Objectives of Vendor Rating

Warehouse Management

Summary

Keywords

Self Assessment Questions

References / Suggested Readings

Objectives

After going through this lesson, you will be able to:

 Understand the basic concept and various factors of quality of purchased

materials.

 Know the importance of materials management, SCM, MRP, JIT in the

quality of purchased materials.

 Understand the role of supplier evaluation and selection process

 Know the vendor rating and warehouse managment.

Quality of Purchased Material

The quality of purchased materials and parts is helpful in the improvement of

productivity with fewer defects and waste. Hence, it strengthens the competitive

position of the organisation. It generates the adaptability to changing or emerging

market conditions and to environmental and other government regulations. The quality

2
production is the result of the quality raw materials and parts. The output of this

exercise is the improvement in the market image and market share. The quality of

purchase materials and parts leads the reduction in the overall production cost due to

less wastes and defects. Thus, it helps in better cost management. More customers are

satisfied due to good quality and the customer loyalty is increased. All the shareholder

and stakeholder are happy with the improved value and innovative processes. The

quality of purchased materials is determined by many factors like Materials

Management, Purchasing Management, Purchasing Process, Materials Requirement

Planning (MRP), Just-in-time (JIT), Quality Inspection, Material Handling, Value

Analysis, Supplier Evaluation and Selection Process, Vendor Rating, Warehouse

Management, etc.

Materials Management

Materials management consists of many activities which determine the quality of

materials and parts purchased. Material management is defined as the planning,

acquiring, storing, moving and controlling of materials as per the requirement of the

organisation. It is basically related with the smooth flow of materials. It includes

planning, organising, communicating, directing and controlling of all those activities

mainly concerned with the flow of materials into an organisation. Material management

views material flows as a system. The major activities covered under materials

management are the anticipation of the materials required in the organisation from time-

to-time. It involves ordering and obtaining materials from the suppliers, introducing the

materials to the organisation and monitoring the status of materials. It helps to optimize

the usage of facilities, personnel and funds and to provide service to the user in the line

3
with the organizational aims. Materials management is the coordination and control of

the various material activities. The key material activities are:

 Purchasing Activities

It involves mainly identification of materials needs, market research,

maintaining materials records etc.

 Procurement Activities

It involves material specifications, materials studies, receiving materials etc.

 Inventory Management

It involves planning and controlling of materials handling, storing materials and

managing material supplies etc.

 Supply Management

It involves monitoring in-plant material handling, strategic planning of materials

etc.

Supply Chain Management

Supply chain management consists of many activities which determine the quality of

materials and parts purchased. Supply chain management (SCM) is the flow of

materials, information, products and finances as they move in a process from supplier to

manufacturer to wholesaler to retailer to consumer. Supply chain management involves

coordinating and integrating these flows both within and among companies. The key

activities involved in supply chain management are purchasing, logistics, warehousing

and information handling. In fact, the purchasing is the key and integral part of the

supply chain management.

Purchasing

4
The smooth functioning of the production department depends upon a large extent on

the right type of materials purchased at right time, at right cost and at right quality. The

right quality of materials purchased leads to good saving. It is possible through efficient

buying. For the quality materials buying, the purchase manager must be technically

skilled, innovative, intelligent, vigilant and efficient in bargaining.

Quality purchasing describes the effective process of buying. It is the learning of the

right requirement, identifying & selecting a right supplier, and settlement of price

through negotiation. Quality purchasing is an element of the wider function of

procurement and it includes many activities such as ordering, expediting, receipt and

payment. Quality purchasing is responsible for obtaining the right materials, parts,

supplies and services needed to produce of right product or service.

Organizational Purchase

A purchase will be considered to be organizational if it is made in the name of a

company or organization, regardless of size, from a medium sized company up to a

multinational or state company. Organization consists of business, industries, retailers,

wholesaler, government and non- government organizations.

 Business and industries purchase materials for business use or as a raw material

to produce other product.

 Wholesalers/Retailers/traders buy product for resell at profit.

 Government organisations purchase products for use in offices or provide

services to people.

 Non-government organizations purchase products to provide services to their

client.

5
 Purchasing Process/Cycle

Purchasing process/cycle consists of many activities which determine the quality of

materials and parts purchased. The purchasing process begins with a genuine request

generated from within the organization to purchase materials, parts, equipments,

supplies, or other items from outside the organization with the right description. The

important step in the quality purchasing is the right selection of the supplier. Then, the

order is placed after the bargaining of terms, conditions and price and the order is

monitored & followed. The purchase department is notified about the satisfactory

arrival of shipment and the process ends with the approval of the payment to the

supplier. The main steps in the purchasing cycle are as under:

 Right recognition and right description of need

 Right selection of suppliers

 Determination of prices through bargaining

 Preparation and placing the order with a right supplier

 Monitoring and follow up the order

 Receiving the ordered materials in the stipulated time period

 Checking and approving for payment to supplier

In the whole purchasing process, the quality is an important part and the checking

quality matters as the raw materials and parts enter the factory. Before any part or raw

material is used in the manufacturing process, it is the responsibility of the purchasing

department to ensure that the materials and parts that arrive are of right quality

specification. Right recognition and right description of need is possible through

Materials Requirement Planning (MRP).

6
 Materials Requirement Planning (MRP)

Materials requirement planning consists of many activities which determine the quality

of materials and parts purchased. It is a computerized inventory control system. It helps

in knowing the need of raw materials and helps to calculate the demand for a particular

item. It takes into account the lead time required to order automatically with the help of

software. It helps in tracking the records of the raw materials especially when the

materials like raw materials or components parts are required. Basically MRP is an

information system which generates automatic results in the area of systematic planning

of materials requirement. It uses three important input data: bill of materials data,

inventory data, and master production schedule to calculate the demand for particular

items like raw materials or components parts. Many upgraded versions are made

available till now. The benefits of MRP are remarkable as it generates work orders and

purchase orders automatically. Now in these days MRP-II is available, which is known

as Manufacturing Resource Planning.

Just-in-time (JIT)

Just-in-time consists of many activities which determine the quality of materials and

parts purchased. It is a philosophy which means purchasing only what is needed, when

it is needed, not early, not late; not less, not more. The key target is achieving high

volume production using minimal inventories. JIT purchasing involves fewer suppliers

dependency and developing long-term relationships with the suppliers. According to

this philosophy, anything which is not generating value is called waste. JIT advocates

minimising all types of wastes. The success of JIT philosophy lies in the commitment

of the employees. This philosophy covers the whole organisation under one umbrella.

7
All the departments have to work with coordination and follow the guidelines with full

spirit. The top executives have to be the leaders involved in JIT and they must be the

guiding light for all the employees. Getting everyone involved and committed is the

first step to successful implementation of JIT and the first step to an increase in

continuous improvement. Applications of JIT are as follows:

 Inventory Reduction as a Tool for Improvement

Inventory reduction is directly related with cost. Costs are reduced greatly if

inventory is reduced.

 Waste Reduction

If any activity that increases cost but does not add value to any process in an

organisation is called waste. Eliminate waste of labor, material or equipment.

JIT advocates zero waste in organisation.

 Supplier Relationships

There must be good relationship with suppliers. Its helps in getting raw material

supply exactly when required.

 Minimum batch sizes

The batch sizes must be kept as small as possible. The defects can be observed

easily in small batches.

 Minimum Movements

The movements must be kept low in production plants. The computerized

equipments are very much helpful in minimising the movements in the plants.

8
  Total Quality Assurance

The production department must control all the processes time to time to control

the variation in the production output in terms of quality. Proper training is very

much in the total quality assurance.

 Preventive Maintenance

The inspection after the accident is useless. Preventive maintenance is needed to

reduce variation in the process. This requires a regular and complete

examination of all the processes on a regular basis.

Quality Inspection of Incoming Materials and Parts

Quality inspection consists of many activities which determine the quality of materials

and parts purchased. It aims at regular checking, measuring and testing of the

following: (i) incoming materials and parts; (ii) one or more processes; and (iii) finished

goods. Quality inspection of incoming materials and parts is also called receiving

inspection. It is checking, measuring and testing of incoming materials and parts that

are supplied before they are taken to store or inventory. Incoming inspection can be

conducted either at supplier’s end or at manufacturer’s gate. If the incoming materials

are bulky or large in quantity and involve huge transportation cost, it is economical to

inspect them at the place of vendor or supplier.

Importance of Receiving and Incoming Quality Inspection

Quality Inspection consists of checking, measuring and testing of all the purchased raw

materials and parts received from the suppliers. It is must before the materials and parts

are taken into stock. Receiving Inspection is the most important aspect because the

9
purchased raw materials and parts are to be used in the manufacturing. The sub-

standard raw materials and spare parts generate sub-standard products which is

unacceptable at any stage by any stakeholder.

Receiving and incoming of materials and parts is a routine work, hence, it is considered

as clerical task and understated by some companies. Sometimes this job is considered

very light in terms of receiving, incoming and generating documents. It is a very serious

mistake. If the poor quality, pilferage, shortage or damaged quantity is overlooked at

the receiving stage and the problem(s) is discovered at later stage, it will prove to be a

disaster. It will not only increase the cost of the product, but also waste the precious

time of the employees. The problem(s) must be considered at the receiving to run the

production smoothly.

Materials Handling

Materials handling consists of many activities which determine the quality of materials

and parts purchased. It is the movement, protection, storage and control of raw

materials, parts and products in the plant. Wide ranges of manual, semi-automated and

automated equipments are incorporated in it. Material handling means providing the

right amount of the right raw materials/parts/products, in the right condition, at the right

place, in right sequence, at the right time, in the right position, and for the right cost, by

using the right method. It is simply picking up, moving, and lying down of raw

materials/parts/products in the organisation at various places. It applies to the

movement of raw materials, parts in process, finished goods, packing materials, and

disposal of scraps. In general, hundreds and thousands tons of materials are handled

daily requiring the use of large amount of manpower along with manual, semi-

automated and automated equipment. The materials move within the confines of a

10
building, between building and a transport vehicle, from one place to another place, one

plant to another plant, from one processing area to another or from one department to

another department of the plant. The cost of material handling is very important as it

contributes significantly to the total cost of manufacturing. In some industries, the ratio

of handling cost to processing cost is very high. In such industries, material handling is

a very important function. If our material handling system is properly designed,

integrated and automated then it provides remarkable cost saving opportunities. It is

also helpful in providing magnificent and great customer services.

Objectives of Material Handling

The primary objective of a properly designed, integrated and automated material

handling system is to reduce the cost of production. The other objectives are:

 The material handling is helpful to lower unit materials handling cost.

 It provides better control of the flow of materials in the organisation.

 It reduces the manufacturing cycle time.

 It reduces delays and damage of raw materials/parts/semi-finished or finished

goods.

 It increases storage capacity.

 It promotes safety and improves working conditions in the organisation.

 It is helpful to maintain or improve product quality.

 It provides contribution for better quality by avoiding damages to products.

 It provides higher productivity at lower manufacturing costs.

Value Analysis

11
Value analysis consists of many activities which determine the quality of materials and

parts purchased. It is an organized creative approach aimed at identifying unnecessary

costs and eliminating the same from the product without affecting the quality of the

product. While eliminating the unnecessary costs of the product, due care must be given

that there is not loss of functional utility/guarantee/safety performance. There is no

compromise regarding the functional utility or safety performance of the product. The

concept of value analysis or value engineering works before the actual production

starts. This process involves the right substitution of materials/parts/components of the

product to be manufactured at the lowest cost. It is an approach of providing the

required function of the product at the desired time and place at the lowest cost. This

approach is a perfect blend of right quality, right design specification, right standards,

right methods of manufacture, etc. and involves the substitution of

materials/parts/components at a lesser price or better quality. The application of the

value analysis/value engineering ideas during design and engineering stage of the

product before its actual production is known as Value Engineering.

Supplier Evaluation and Supplier Selection Process

Supplier evaluation and supplier selection process consists of many activities which

determine the quality of materials and parts purchased. It is very important factor in the

determination of quality of materials to be purchased. This process covers evaluating

and analysing the suppliers’ performance and seeks suppliers who support or meet

buyers’ strategic goals while continually looking for ways to manage cost, quality and

other evaluation parameters. The supplier evolution and selection process consists of

steps like indentifying the need of the supplier evaluation, identifying criteria for

12
supplier evaluation, determine sourcing strategy, determine method of supplier

evaluation and selection and select supplier and reach agreement.

 Identifying the Need of Supplier Evaluation

At this stage, the buyer organisations identify a need to evaluate and select a supplier.

The supplier evaluation may be requested by purchase officers, production manager,

quality manager or design managers.

 Identifying Criteria for Supplier Evaluation

At this stage the criteria for supplier evaluation is fixed. It can be on-time

delivery/delivery commitments, quality of raw materials/parts, technical performance,

production capabilities, design verification, evaluation of product samples, innovation

and management expertise, meeting specific requirements/standards, suppliers’

financial viability, customer service, reliability and responsiveness, records of past

achievement etc. These are the parameters on which the evaluation of the supplier(s) is

decided.

 Determine Sourcing Strategy

The sourcing will differ from requirement to requirement of the buyer organisations. It

can be like dependency on single supplier or multiple suppliers, short-term or long-term

contracts and domestic suppliers or foreign supplier. According to sourcing strategy, the

supplier(s) are identified. Various internal as well as external sources of information are

used to identify the supplier(s). The buyer organisation may get a long list of suppliers.

The list must be narrowed down on the basis of some criteria like financial risk analysis

evaluation of previous performance of the suppliers, evaluation of information provided

by suppliers etc.

13
 Determine Method of Supplier Evaluation and Selection

After reducing the number of suppliers, the method is to be determined regarding

suppliers’ evaluation and selection. The evaluation process often includes use of

questionnaire tools, interviews and supplier’s site visit. The possible areas to evaluate

during a supplier visit are workforce capability, production capability, quality

parameters, supplier agility and flexibility, supplier’s supply chain management

capabilities, production scheduling and control systems, statistical quality control

methods etc.

 Select Supplier and Reach Agreement

In the last stage, the supplier(s) is finalised and negotiated for certain stipulated terms

and conditions.

Vendor Rating

Vendor rating consists of many activities which determine the quality of materials and

parts purchased. A vendor is any person or company that supplies raw materials/parts,

goods or services to the buyer organisations. The effectiveness of the purchasing

department is judged by the quality and reliability of its suppliers. Good suppliers need

to be cultivated to meet current and future demand of the buyer organisations. The

buyer organisations want to work with the suppliers that give them value. Therefore, the

suppliers’ performance matters a lot. Vendors or suppliers are rated on the basis of their

performance, consistency in delivery, lead time, quality products and services, price or

some combination of these variables. Rating evaluation is done on a periodic basis and

it may take the form of a hierarchical ranking from poor to excellent.

14
 Objectives of Vendor Rating

Assessment of vendor’s performance on certain criteria is called vendor rating. Vendor

rating is the result of a formal vendor evaluation system.

The key objectives of vendor rating are as under:

 Selection of Right Suppliers

It helps the buyer organisations in the selection of right suppliers.

 Rating Assessment of Suppliers

It rates the entire performance of the suppliers and gives a clear-cut vision about the

quality, cost, reliability of the products and services to be provided by the suppliers.

 Negotiation with Suppliers

It provides buyer organisations with the information helpful in subsequent

negotiation with suppliers.

 Proper Feedback

It gives a feedback to suppliers to further improve their performances.

 Useful Information

It provides the buyer organisations with the important information which is helpful

in the development of the suppliers.

 Reward

It recognizes and rewards outstanding suppliers.

 Standardised Practices

It generates suppliers’ standard practices.

Warehouse Management

15
Warehouse management consists of many activities which determine the quality of

materials and parts purchased. The organisations need a variety of items, raw materials

and parts of different uses for different purposes at different time. Some

items/materials/ parts are required instantly and some are required after some time.

Some are required throughout the year without any break. Some are required in high

amount in a particular season. So, storage is very important concern. Storage involves

proper arrangement for preserving items/materials/parts from the time of their

production or purchase till the actual use. The role of storage is very important in

smooth production. When the storage is done on a large scale and in a specified manner

it is called ‘warehousing’. The place where goods are kept is called ‘warehouse’. It is a

planned space for the storage and handling of goods and material. Warehouses provide

a very essential function in the operations of many organisations. The warehouses are

for storage, distribution, consolidation and transition of different types of cargos.

Warehousing refers to the activities involving storage of raw materials/parts and

finished goods on a large-scale in a systematic and orderly manner and making them

available conveniently when needed. Warehousing is one of the important auxiliaries to

trade. It creates time utility by bridging the gap between requirements of materials/parts

and production.

Summary

The quality of purchased materials is determined by many factors like Materials

Management, Purchasing Management, Purchasing Process, Materials Requirement

Planning (MRP), Just-in-time (JIT), Quality Inspection, Material Handling, Value

Analysis, Supplier Evaluation and Selection Process, Vendor Rating, Warehouse

Management, etc.

16
Materials management is defined as the planning, acquiring, storing, moving and

controlling of materials as per the requirement of the organisation. The key material

activities are: Purchasing Activities, Procurement Activities, Inventory Management,

and Supply Management.

Supply chain management (SCM) is the flow of materials, information, products and

finances as they move in a process from supplier to manufacturer to wholesaler to

retailer to consumer. In fact, the purchasing is the key and integral part of the supply

chain management.

Quality purchasing describes the effective process of buying. It is the learning of the

right requirement, identifying & selecting a right supplier, and settlement of price

through negotiation. Quality purchasing is an element of the wider function of

procurement and it includes many activities such as ordering, expediting, receipt and

payment. Quality purchasing is responsible for obtaining the right materials, parts,

supplies and services needed to produce of right product or service.

Purchasing process/cycle consists of many activities which determine the quality of

materials and parts purchased. The purchasing process begins with a genuine request

generated from within the organization to purchase materials, parts, equipment,

supplies, or other items from outside the organization with the right description. Next,

the important step in the quality purchasing is the right selection of the supplier. Then,

the order is placed after the bargaining of terms, conditions and price and the order is

monitored & followed. The purchase department is notified about the satisfactory

arrival of shipment and the process ends with the approval of the payment to the

supplier.

17
Materials requirement planning is a computerized inventory control system. It helps

in knowing the need of raw materials and helps to calculate the demand for a particular

item. It takes into account the lead time required to order automatically with the help of

software. It helps in tracking the records of the raw materials especially when the

materials like raw materials or components parts are required.

Just-in-time is a philosophy which means purchasing only what is needed, when it is

needed, not early, not late; not less, not more. JIT purchasing involves fewer suppliers

dependency and developing long-term relationships with the suppliers. According to

this philosophy, anything which is not generating value is called waste. JIT advocates

minimising all types of wastes. The success of JIT philosophy lies in the commitment

of the employees. Applications of JIT are as follows: Inventory Reduction as a Tool for

Improvement, Waste Reduction, Supplier Relationships, Minimum batch sizes,

Minimum Movements, Total Quality Assurance, and Preventive Maintenance.

Quality inspection consists of checking, measuring and testing of all the purchased raw

materials and parts received from the suppliers. It is must before the materials and parts

are taken into stock. It aims at regular checking, measuring and testing of the incoming

materials and parts. Quality inspection of incoming materials and parts is also called

receiving inspection. It is checking, measuring and testing of incoming materials and

parts that are supplied before they are taken to store or inventory. Incoming inspection

can be conducted either at supplier’s end or at manufacturer’s gate. If the incoming

materials are bulky or large in quantity and involve huge transportation cost, it is

economical to inspect them at the place of vendor or supplier.

Materials handling is the movement, protection, storage and control of raw materials,

parts and products in the plant. Wide ranges of manual, semi-automated and

18
automated equipment are incorporated in it. Material handling means providing the

right amount of the right raw materials/parts/products, in the right condition, at the right

place, in right sequence, at the right time, in the right position, and for the right cost, by

using the right method. It is simply picking up, moving, and lying down of raw

materials/parts/products in the organisation at various places. The primary objective of

a properly designed, integrated and automated material handling system is to reduce the

cost of production.

Value analysis is an organized creative approach aimed at identifying unnecessary

costs and eliminating the same from the product without affecting the quality of the

product. While eliminating the unnecessary costs of the product, due care must be given

that there is not loss of functional utility/guarantee/safety performance. There is no

compromise regarding the functional utility or safety performance of the product. The

concept of value analysis or value engineering works before the actual production

starts. This process involves the right substitution of materials/parts/components of the

product to be manufactured at the lowest cost.

Supplier evaluation and supplier selection process is very important factor in the

determination of quality of materials to be purchased. This process covers evaluating

and analysing the suppliers’ performance and seeks suppliers who support or meet

buyers’ strategic goals while continually looking for ways to manage cost, quality and

other evaluation parameters. The supplier evolution and selection process consists of

steps like indentifying the need of the supplier evaluation, identifying criteria for

supplier evaluation, determine sourcing strategy, determine method of supplier

evaluation and selection and select supplier and reach agreement.

19
Vendor rating consists of many activities which determine the quality of materials and

parts purchased. A vendor is any person or company that supplies raw materials/parts,

goods or services to the buyer organisations. The effectiveness of the purchasing

department is judged by the quality and reliability of its suppliers. Good suppliers need

to be cultivated to meet current and future demand of the buyer organisations. Vendors

or suppliers are rated on the basis of their performance, consistency in delivery, lead

time, quality products and services, price or some combination of these variables.

Rating evaluation is done on a periodic basis and it may take the form of a hierarchical

ranking from poor to excellent. The key objectives of vendor rating are as following:

Selection of Right Suppliers, Rating Assessment of Suppliers, Negotiation with

Suppliers, Proper Feedback, Useful Information, Reward, and Standardised Practices.

Warehouse management consists of many activities which determine the quality of

materials and parts purchased. Storage involves proper arrangement for preserving

items/materials/parts from the time of their production or purchase till the actual use.

The role of storage is very important in smooth production. It is a planned space for the

storage and handling of goods and material. Warehousing refers to the activities

involving storage of raw materials/parts and finished goods on a large-scale in a

systematic and orderly manner and making them available conveniently when needed.

Keywords

Materials Management

Materials management is defined as the planning, acquiring, storing, moving and

controlling of materials as per the requirement of the organisation.

Supply Chain Management (SCM)

20
Supply chain management is the flow of materials, information, products and finances

as they move in a process from supplier to manufacturer to wholesaler to retailer to

consumer.

Warehousing and Warehouse

When the storage is done on a large scale and in a specified manner it is called

‘warehousing’. The place where goods are kept is called ‘warehouse’.

Vendor

A vendor is any person or company that supplies raw materials/parts, goods or services

to the buyer organisations.

Quality Inspection

Quality inspection is the checking, measuring and testing of incoming materials and

parts that are supplied before they are taken to store or inventory.

Just-in-time

Just-in-time is a philosophy which means purchasing only what is needed, when it is

needed, not early, not late; not less, not more.

21
Quality of Manufacturing Process

Structure

Objectives
Process: An Introduction
Manufacturing Process: An Introduction
Improving Quality of Manufacturing Process
Process Improvement Methodologies
Kaizen: A Continuous Improvement Tool
Benchmarking
5 S Approach
Quality Control through Statistical Techniques
Stages of Quality Inspection
Methods of Inspection
Statistical Process Control (SPC)
Benefits of Statistical Quality Control
Managing Quality through Modernisation of Manufacturing Process
Automation and Robotics
Advantages of Automation
Benefits of Quality Control in Manufacturing Process
Summary

1
 Keywords
Self Assessment Questions
References / Suggested Readings

Objectives

After going through this lesson, you will be able to:

 Understand the basic concept of process, manufacturing process and

quality of manufacturing process.

 Know the importance of process improvement methodologies.

 Understand the process of statistical process control.

 Know the benefits of modernisation and quality control of production

process.

Process: An Introduction

A process is a sequence of activities that is required to achieve the desired results. A

typical process requires inputs and unique combination of elements, conditions, and

environment to produce a given set of results. Process can be product design,

manufacturing, supply chain management, materials handling, supplier, customer care

support etc. The quality management gurus namely Dr. W. E. Deming and Dr. Joseph

Juran have emphasised that maximum of the problems are process driven and a few are

caused by workers themselves. Process management involves planning and

administering the activities necessary to achieve standard performance in the process.

2
 Manufacturing Process: An Introduction

Manufacturing is the production of goods or services using valuable resources like

manpower/labour, materials, money, machine tools, chemical and biological

processing, or formulation for the purpose of sale or use. It is the creation and assembly

of components and finished products or services. Manufacturing processes are the steps

through which raw materials are transformed into final product/services. It begins with

the planning phase of the production process. Next phase is the development of the

product or service design and the requirement of the materials for the same. These

materials are then modified through manufacturing processes to become the required

part. The transformation process can include treating such as heating, melting, coating,

machining, spraying or reshaping the materials. The manufacturing process also

includes inspection, tests and checks for quality assurance during or after the

manufacturing.

Manufacturing process includes the mechanical or chemical steps used

to create an object, usually repeated to create multiple units of the same item. Generally

involves the use of raw materials, machinery and manpower to create a product.

Figure 1.1: Production Process

Simply, we can say that manufacturing is the process of transforming the raw materials

into finished goods and services with the help of wide range of human activities,

3
energy, time and with the use of technology. Such finished goods or services may be

used by the customers or may be used for manufacturing of other goods and services.

The goods or services may be sold through wholesalers and retailers. The products or

goods can be simple or can be highly technical products. The complex products

are aircraft, x-ray machines, automobiles etc. The simple products can be household

appliances or the products of day-to-day use. In a free market economy, manufacturing

is usually directed toward the mass production of products or services for sale

to consumers at a profit.

The production of process goods usually requires the raw materials to go under the

thermal or chemical process, such as heat, boiling, time, pressure etc. The product

typically cannot be disassembled to its constituent parts. It is very difficult to break

down the products into its ingredients. For example, it is very difficult to convert soap,

detergents back into its ingredients. The term contrasts with discrete manufacturing

refers to such products or services which involves products or services that can be

counted and labelled on an individual basis. For example, the industries like

automobiles, equipment, appliances, apparel, toys and electronics items such as LED,

processor, hard disk, washing machine etc.

Improving Quality of Manufacturing Process

The organisations can improve the manufacturing process in the following manner:

 The first step is to understand the existing production process

 Improve design of products with the features that meet customers’ needs

4
  Introducing production process changes to achieve organisational objectives

which are usually focused on quality improvement, cost reduction and schedule

acceleration

 Try to reduce manufacturing defects (defect reduction) and cycle time

 Try to eliminate the over-inventory or under-inventory problem, materials

handling and transportation problems

 Eliminating scrap, rework problems and focusing on consistent improvements

Process Improvement Methodologies

Process improvement methodologies are used to identify,

analyze and improve existing processes within an organization to meet new goals and

objectives. There are various tools and techniques like Kaizen, Benchmarking, 5S

approach, DRIVE approach, Inspection, Statistical Quality Control etc.

Kaizen: A Continuous Improvement Tool

Kaizen is a Japanese word and the meaning is continuous improvement. It's made up of

two words in Japanese: kai, which means 'change,' and 'zen,' which means 'good.'

‘Kaizen’ word was used by Masaaki Imai in his book entitled ‘The Key to Japan’s

Competitive Success’ first time in 1986. Kaizen is the practice of continuous

improvement. It is considered a slow but it is an ongoing process of improvement. It

illustrates an organisational culture where everyone from the top to the bottom is

involved in the regular evaluation of his or her work and sense the ways to improve it.

The concept is that small improvements on a regular basis will head towards the large

5
improvements over time. One of the most notable features of kaizen is that big results

come from many small changes accumulated with the passage of time. However, this

has been misunderstood to mean that kaizen equals small changes. Today Kaizen is

acknowledged worldwide as an important part of an organization’s long-term

competitive strategy. Kaizen means involvement for improvements. It is continuous

improvement that is based on certain guiding principles like no process is thought to be

perfect and it should be improved continuously. Everything can and should be

improved. Further, Kaizen is teamwork and it is everybody’s business. It is possible

with the change in the mindset of employees.

Benchmarking

Benchmarking is the process of comparing one's business processes and performance to

industry bests or with the best-in-class company. In it products, services, and processes

are measured against those of organizations known to be leaders in one or more aspects

of their operations. The management identifies and select the best organisation only

where similar processes exist and compare processes. It helps the organisation to

discover its strengths and weaknesses as well as those of industry leaders. The typical

benchmarking methodology includes the following steps:

 Step I: To understand the company’s current process performance gaps

 Step II: To identify the industry that has similar processes

 Step III: To identify the organizations that are leaders in the industry

 Step IV: To survey companies for measures and practices

6
  Step V: To identify the gap between the company’s processes & practices and

leader company

 Step VI: is to implement new and improved business practices

Benchmarking practices are classified into two categories:

Technical Benchmarking

It is the comparison of organisation’s products or services with the leader organisation

by experts or products/services design staff.

Competitive Benchmarking

It is the comparison of the organisation’s important attributes, functions, or values with

the leader organization.

5 S Approach

5 S is a simple methodology to create an orderly environment. It is creating a clean,

safe, hygienic, sterile, unpolluted, sterile and orderly high performance work

environment. This type of environment helps to increase performance efficiency and

productivity. 5S includes sort, set in order, shine, standardise and sustain.

 Sort

It is very simple but important concept. It means sort out or classify the needed

items from unneeded and eliminate the latter. It will straightforward and simplify

the system. As for example, eliminate the unnecessary data, files, furniture,

7
 materials etc. from the shop floor. It will create more noticeable and visible shop

floor.

 Set In Order/Straighten

It is the concept of right place for right thing. It is the recognition of specific spot

for every materials and parts and to put in order the same. It is to keep needed items

in the correct place to allow for easy and immediate use. This exercise helps the

employees to eliminate time wasted in locating items.

 Shine

Keep the workplace and shop floor neat and clean. A dirt-free, spotless, sterile and

organized environment can boost employee morale and create a sense of ownership

and belonging. It helps to lower down the accidents at the shop floor.

 Standardize

Standardise means some set rules and regulations. It enhances the organizational

performance and will eliminate the variability. It encourages consistency in the

production process.

 Sustain

It is the maintaining of the standards and procedures. The final S involves the

effective, ongoing application of 5S in order to improve organizational

performance.

Quality Control through Statistical Techniques

Quality control is concerned with the uniform quality of the production. It is a process

that measures output relative to standard, and acts when the variation is noticed. The

purpose of quality control is to assure that processes are performing as per the stated

8
standards. The quality of the manufacturing process is controlled by the monitoring

process and using statistical techniques like Inspection and Statistical Process Control.

Inspection

Inspection is an appraisal activity that compares goods or services to a standard.

Quality inspection aims at regular checking, measuring and testing of the following: (i)

incoming materials and parts (before production); (ii) one or more processes (during

production); and (iii) finished goods (after production). Quality inspection is very much

helpful in improving the quality, minimising the manufacturing cost and eliminating the

scrap losses. It is the most common method used to attain the standardisation and

conformance to quality.

Stages of Quality Inspection

There are three stages of Quality Inspection:

i) Inspection of incoming materials and parts;

ii) Inspection of production process/processes; and

iii) Inspection of the finished goods.

i) Inspection of incoming materials and parts:

It is also called receiving inspection. It is checking, measuring and testing of incoming

materials and parts that are supplied before they are taken to store or inventory.

Incoming inspection can be conducted either at supplier’s end or at manufacturer’s gate.

If the incoming materials are bulky or large in quantity and involve huge transportation

cost, it is economical to inspect them at the place of vendor or supplier.

9
ii) Inspection of production process/processes:

This work of inspection is done while the production process is in progress. Inspection

at production house is very important to maintain the quality of products. Inspection at

this point is very helpful in preventing wastage of resources like materials, parts, time

and money. It prevents defective goods and minimizes the wastage.

iii) Inspection of the finished goods:

This is the last stage when finished goods are inspected before delivery to the

customers. At this point, the poor quality products are rejected or sent back for further

improvement.

Methods of Inspection

The decision of acceptance or rejection of depends upon the methods of inspection.

There are two methods of inspection. These are (i) 100% inspection/Census method;

and (ii) Sampling inspection methods.

(i) 100% Inspection/Census Method

Census means that the data are to be obtained from each and every unit of the

population. This type involves careful inspection of quality in detail as every piece is

separately inspected. The effort, money and time are required to carry out complete

inspection. Even more number of inspectors is required and hence it is a costly method.

There is no chance of sampling error as each item has gone through the process of

inspection. However, inspection errors arising out of fatigue, negligence, difficulty of

supervision etc. cannot be neglected in this case. It is suitable only when a small

10
number of pieces require inspection or a very high degree of quality is required. This

method is suitable for the organisations dealing in the business of jet engines, aircraft,

medical and scientific equipment etc.

(ii) Sampling Inspection

Sampling is the process of learning about the population on the basis of a sample drawn

from it. In sampling inspection, money and time is saved. Here, less number of

inspectors is required in comparison to census method. In this method randomly

selected samples are inspected instead of every receiving raw materials and parts.

Samples taken from different batches of products are representatives and the

conclusions are drawn on that basis for the entire receiving. If the sample proves

defective, the entire concerned is to be rejected. Sampling inspection is cheaper and

quicker. In this process, how you draw the sample matters a lot. This method is very

suitable and frequently used in the organisations making CFL tubes, fans, A.C., music

systems, washing machine etc.

Statistical Process Control (SPC)

Statistical Process Control is a statistical tool for reducing the variability in processes

which are the cause of most quality problems. In it, the output of the process is

evaluated to determine if it is statistically acceptable or not. It is helpful in monitoring

and controlling a process to ensure it is optimized. Its most common application is

quality control in manufacturing. SPC is based upon the Central Limit Theorem which

tells us, in effect, that the samples will follow a normal distribution regardless of the

shape of the parent distribution.

11
SPC tool is used with the help of Control Chart. The purpose of control chart is to study

the variation in the process. All control charts are based on the periodic sampling and

measurement of items. With the help of control chart the process output can be

monitored to see if it is random (in control) or not (out of control). Control chart is a

graphical presentation obtained from the representative sample means taken at regular

time interval. The data collected will allow the calculation of a centerline, and upper

and lower control limits. The upper and lower control limits define the range of

acceptable variation. The centerline is the mean of all samples, whereas the control

limits are, conceptually, the mean +/- three standard deviations. There are two types of

variations Common Cause Variation and Special / Assignable Cause Variation.

Benefits of Statistical Quality Control

 It controls variation in the processes and hence controls quality.

 It provides a means of detecting error during production.

 It helps to have standardised quality of production.

 It is helpful in the production of uniformity of the quality of output.

 It reduces inspection costs.

 It is used to identify abnormal condition and trouble spot in the process.

 It provides a means of determining the capability of the manufacturing process.

Managing Quality through Modernisation of Manufacturing Process

12
Integrating quality into manufacturing process is a challenging task. A typical

manufacturing process includes the following phases: planning & development phase,

design phase, production phase, assembling phase and then inspection phase. Every

production manager wants to minimise the labour cost and lower down the production

cost. But the quality production is the prime function for them. In this competitive

world, the best companies are using latest software for products designing, robots &

latest sensor technology like 3D sensors and adopting automatic controlling of the

environmental conditions like temperature at the shop floor. For these companies

quality is the making and using batch quality inspection for the final approvals is must.

Automation and Robotics

Automation is the use of computers to control a particular process in order

to increase reliability and efficiency, often through the replacement of employees. For a

manufacturer, this could entail using robotic assembly lines to manufacture a product.

Automation or automatic control is the use of various control systems for operating

equipment with minimal or no human intervention. Automation has been achieved by

various means including mechanical, hydraulic, pneumatic, electrical, electronic

devices, computers, and robots usually in combination. One of the most important

application areas for automation technology is manufacturing. Robots are used in

manufacturing to create efficiencies all the way from raw material handling to finished

product packing. Robots can be programmed to operate 24/7 in the situation of

continuous production. Complicated systems, such as modern factories, airplanes and

ships typically use all these combined techniques of automation. The industries using

13
automation are Food and Beverages, Retail Stores, Mining, Pharmaceutical, Cement,

Chemical, Aerospace, etc.

Advantages of Automation

The main advantages of automation are:

 It increases productivity by reducing the cycle time.

 It reduces operation time and work handling time significantly.

 It replaces hard physical or monotonous work.

 It improves quality or increased predictability of quality as automation provides

high level of accuracy, better quality without variation.

 It improves strength of processes and generates consistency in the output.

 It reduces direct human labor costs and expenses as automation is helpful in the

tasks especially very hard work or monotonous work.

 It is helpful in the conditions of hazardous environment like high

temperature/heat, radioactive rays, toxic chemicals etc.

 It is helpful in faster mass production.

 It can be maintaining the production with simple quality checks regularly.

 It is beneficial in the optimum utilisation of the floor space.

Benefits of Quality Control in Manufacturing Process

Some of the importance or benefits of quality control are as under:

 Encourages the Quality Culture

14
The quality control programme run by management to control the quality is very much

helpful for the employees. It creates a quality culture in the organisation and makes

them conscious for the quality issues and helps them to give their optimum

contribution.

 Increase in Consumers Satisfaction

Quality control ensures production of quality products which is immensely helpful in

attracting more customers for the product or service thereby generating positive word of

mouth. The consumers are greatly benefited as they get better quality products on

account of quality control. It gives them satisfaction and generates loyalty.

 Reduction in Production Cost

The effective inspection and control programme is helpful in the reduction of the

production cost. The production processes and operations run smoothly and production

costs are considerably reduced. Quality control further ensures the optimum utilisation

of resources and checks the wastage, scrap and inferior products or services. It is

helpful to lower down the overall production cost.

 Reduction in Inspection Costs

Implementation of quality control programmes in the production process leads to

reduction in the inspection activities. The overall cost of inspection is reduced

drastically.

 Higher Morale of Employees

15
An effective system of quality management is greatly helpful in increasing the morale

of employees as they feel proud of being the part of such a qualitative environment.

They feel that they are working in the organisation producing high quality products and

services. Such environment leads to cordial employer-employee relations.

Summary

A process is a sequence of activities that is required to achieve the desired results.

Process management involves planning and administering the activities necessary to

achieve standard performance in the process. Manufacturing is the production of goods

or services using valuable resources like manpower/labour, materials, money,

machine tools, chemical and biological processing, or formulation for the purpose of sale

or use. The manufacturing is the process of transforming the raw materials into finished

goods and services with the help of wide range of human activities and with the use of

technology. Process improvement methodologies are used to identify,

analyze and improve existing processes within an organization to meet new goals and

objectives. There are various tools and techniques like Kaizen, Benchmarking, 5S

approach, DRIVE approach, Inspection, Statistical Quality Control etc. Kaizen is the

practice of continuous improvement. It is considered a slow but it is an ongoing process

of improvement. It illustrates an organisational culture where everyone from the top to

the bottom is involved in the regular evaluation of his or her work and sense the ways to

improve it. The concept is that small improvements on a regular basis will head towards

the large improvements over time. One of the most notable features of kaizen is that big

results come from many small changes accumulated with the passage of time. Kaizen is

16
teamwork and it is everybody’s business. It is possible with the change in the mindset of

employees. Benchmarking is the process of comparing one's business processes

and performance to industry bests or with the best-in-class company. The management

identifies and select the best organisation only where similar processes exist and compare

processes. It helps the organisation to discover its strengths and weaknesses as well as

those of industry leaders. Benchmarking practices are classified into two categories:

Technical Benchmarking and Competitive Benchmarking. 5S is a simple methodology to

create an orderly environment. It is creating a clean, safe, hygienic, sterile, unpolluted,

sterile and orderly high performance work environment. This type of environment helps

to increase performance efficiency and productivity. 5S includes sort, set in order, shine,

standardise and sustain. Quality control is concerned with the uniform quality of the

production. It is a process that measures output relative to standard, and acts when the

variation is noticed. The purpose of quality control is to assure that processes are

performing as per the stated standards. There are three stages of Quality Inspection: (i)

Inspection of incoming materials and parts; (ii) Inspection of production

process/processes; and (iii) Inspection of the finished goods. The decision of acceptance

or rejection of depends upon the methods of inspection. There are two methods of

inspection. These are (i) 100% inspection/Census method; and (ii) Sampling inspection

methods. Statistical Process Control is a statistical tool for reducing the variability in

processes which are the cause of most quality problems. It is helpful in monitoring and

controlling a process to ensure it is optimized. SPC tool is used with the help of Control

Chart. The purpose of control chart is to study the variation in the process. With the help

of control chart the process output can be monitored to see if it is random (in control) or

not (out of control). Control chart is a graphical presentation obtained from the

17
representative sample means taken at regular time interval. The upper and lower control

limits define the range of acceptable variation. There are two types of variations random

variation and assignable variation. Automation or automatic control is the use of

various control systems for operating equipment with minimal or no human intervention.

One of the most important application areas for automation technology is manufacturing.

Some of the importance or benefits of quality control are: Encourages the Quality

Culture, Increase in Consumers Satisfaction, Reduction in Production Cost, Reduction in

Inspection Costs, and Higher Morale of Employees.

Keywords

Process

A process is a sequence of activities that is required to achieve the desired results.

Process can be product design, manufacturing, supply chain management, materials

handling, supplier, customer care support etc.

Manufacturing

Manufacturing is the process through which raw materials are transformed into final

product/services.

Kaizen

Kaizen is the practice of continuous improvement. The guiding principle is that no

process is thought to be perfect and it should be improved continuously. It is teamwork

and it is everybody’s business.

18
Benchmarking

Benchmarking is the process of comparing one's business processes and performance to

industry bests or with the best-in-class company.

Quality Inspection

Quality inspection is the regular checking, measuring and testing of incoming materials/

parts/one more processes/finished goods.

Statistical Process Control

Statistical Process Control is a statistical tool for reducing the variability in processes

which are the cause of most quality problems.

Automation

Automatic is the use of various control systems for operating equipment with minimal or

no human intervention.

19
Quality Control & Control Charts

Structure

Objectives

Introduction

Definition of Quality Control

Benefits of Quality Control

Statistical Process Control

Control Chart

Graphical Representation of Control Chart

Basic Procedure to Draw Control Chart

Conditions to Use a Control Chart

Benefits of Statistical Quality Control

Summary

Keywords

Self Assessment Questions

References / Suggested Readings

Objectives

After going through this lesson, you will be able to:

1
  Understand the basic concepts and importance of Quality Control.

 Know the concepts and importance of Statistical Quality Control and

Control Chart.

 Understand the process plotting the quality control charts.

Introduction

In this era of growing competition, it is necessary for the management to keep a

continuous control over the quality of the goods/services produced. Good quality

products/services generate goodwill and satisfaction which leads to increase in sales.

However, if the consumers are unsatisfied with the quality of product/service and

complaints are not addressed properly, it will be impossible for the manufacturer to

continue in the market. The need for maintaining and improving quality standard is

growing day-by-day with increasing cut-throat competition. The concept of quality

control is not a new one. For the purpose of quality control, the organisations use

statistical techniques which are helpful in controlling the quality standards. The

importance of statistical quality control is very high for maintaining and improving the

quality.

The term ‘quality’ in statistical quality control is usually related to some measurement

made on the items produced and good quality items are one which conform a standard

specified for the measurement. Quality of product means the product must be within the

acceptable limits of acceptance and rejection. The benefits from quality and process

improvements to organization are in terms of improved quality; less rework, fewer

mistakes and hence cost decreased; capture the market with better quality and lower

price; improved business; and improved productivity.

2
 Definition of Quality Control

There are various definitions of quality control as under:

Quality control is a process through which a business seeks to ensure that product

quality is maintained or improved and manufacturing errors are reduced or eliminated.

Quality control requires the business to create an environment in which both

management and employees strive for perfection. This is done by training personnel,

creating benchmarks for product quality, and testing products to check for statistically

significant variations.

Quality control refers to that quality related activities which are associated with the

creation of project deliverables. Quality control is used to ensure that deliverables are

complete, correct and within the acceptable quality. Examples of quality control

activities include inspection, deliverable peer reviews and the testing process.

The need of quality control arises whenever it is found that the even after specifying the

quality standards, some variation in quality is recorded. For example, a machine is

producing 1,00,000 wedges per day of 4 cm. length. It is very unlikely that all screws

are exactly 4 cm. in length. If the measuring instrument is sufficiently precise we can

detect some screws which are slightly less than 4 cm. and some which are slightly more

than 4 cm. It means that the further examination of the existence of variation in the

product specification/quality is required. There are mainly two methods used in quality

control:

 Statistical process control (SPC)

 Acceptance sampling (AS)

3
The first method is statistical process control and it uses a graphical display known as

Control Chart to monitor production process. The goal of this method is to find whether

the process can be continued or whether it should be adjusted to achieve a desired

standard quality level. The second method is acceptance sampling which is used in

situations where a decision to accept or reject a group/lot of products is be dependent on

the quality found in sample.

Benefits of Quality Control

There are various benefits of quality control as under:

 It is helpful to monitor production process.

 It provides a means of detecting error through quality tools.

 It is helpful in maintaining the uniform/standardised quality of production.

 It increases satisfaction of customers.

 It reduces inspection costs.

 It reduces the number of rejects and saves the cost of material.

 It provides a basis for attainable standards.

 It is helpful in the optimum utilisation of resources.

 It reduces wastes, scrap and points out the bottlenecks and trouble spots.

 It provides a means of enhancing the capability of the manufacturing process.

Statistical Process Control

This technique was developed by W. A. Shewart while working for the Bell Telephone

Co, USA. He applied statistical process control for solving the problem of inconsistency

of a very large number of components during the manufacturing. Statistical quality

4
control involves the statistical analysis of the data collected through inspection. The

data is collected through random sampling and sample should follow a normal

distribution curve. SPC is based upon the Central Limit Theorem which tells us, in

effect, that the samples will follow a normal distribution regardless of the shape of the

parent distribution.

Meaning of Statistical Process Control

“Statistical process control (SPC) as a subset of statistical quality control traditionally

consists of tools and methods to monitor, control, and improve the quality of

manufactured products. Monitoring a manufacturing process is required to ensure it

operates properly.” (Ahangar & Chimka, 2015)

“Statistical Process Control (SPC) is a collection of statistical techniques providing a

rational management of a manufacturing process, which allows high quality final

products to be produced.” (Wu, Castagliola, & Khoo, 2016)

“Statistical process control is a powerful collection of problem solving tools useful in

capability through the reduction of variability. SPC can be applied to any process. The

eventual goal of SPC is the elimination of variability in the process.” (Saravanan &

Nagarajan, 2013)

SPC tool is used with the help of Control Chart. “One of the most important tools used

in SPC is the control chart. There are always variations in production due to common

and special causes, and the control chart is an effective tool to continually monitor the

production process.” (Ahangar & Chimka, 2015). “Charts are undeniably the most

widely used for identifying changes in processes.” (Wu, Castagliola, & Khoo, 2016)

5
There are two types of variations namely Common Cause Variation and

Special/Assignable Cause Variation:

 Common Cause Variation

It is the common natural variations in the output of a process. The reasons of this type

of variation can be many minor factors which are negligible. A process is said to be in

statistical control when only common cause variation exists.

 Special or Assignable Cause Variation

This type of variation is because of some specific reasons. The process is said to be out

of control when a special cause variation occurs.

We can conclude from the above definitions and discussions that:

 Statistical Process Control is a statistical tool for reducing the variability in

processes which are the cause of most quality problems.

 The major objective of SPC is to quickly detect the occurrence of assignable

causes of process variability so that examination of the process and corrective

action can be taken to avoid nonconforming units to be manufactured.

 In it, the output of the process is evaluated through Control Charts to determine

if it is statistically acceptable or not.

 It is helpful in monitoring and controlling a process to ensure it is optimized. Its

most common application is quality control in manufacturing.

 SPC is based upon the Central Limit Theorem.

Control Chart

6
Control Chart is a statistical tool consists of three horizontal lines called; Upper Control

Limit (UCL), Center Line (CL) and Lower Control Limit (LCL). The center line in a

control chart denotes the average value of the quality characteristic under study. It is

used to measure how a process changes over time called variability. Its purpose is to

study the variation in the process. Simply, variability means whether the process is

consistent/under control/stable or unpredictable/out of control/unstable. It is a graphic

representation of the process stability or instability over time. So, the variability of a

process can be determined by plotting data regarding the pre-defined upper and lower

control limits. The reasons for variation in any process can be Common Causes or

Special Causes. The control chart is used for a process to distinguish between variations

resulting from common causes and special causes.

Conditions to Use a Control Chart

Control chart can be used in the following conditions:

 To control the process by finding and correcting the variations as they occur.

 To predict the expected range of outcomes from a process.

 To determine whether the process is within control or out of control.

 To explore the patterns of a process.

 To examine causes of the variation i.e. whether the variation is from the special

causes (non-routine events) or common causes (built into the process).

 To support the management’s quality improvement programme. Control chart is

a very good tool to be used prevents specific problems or to make fundamental

changes to the process and helpful in making the quality improvement

programmes successful.

7
 Graphical Representation of Control Chart

Figure 1.1: Control Chart

All control charts are based on the periodic sampling and measurement of items. With

the help of control chart the process output can be monitored to see if it is within

control or out of control. It is obtained from the representative (random) sample means

taken at regular time interval. The data collected is helpful in the calculation of a center

line, upper control limit and lower control limit. The upper and lower control limit

identifies the range of acceptable variation. The center line is the mean of all samples,

whereas the control limits are, conceptually, the mean +/- three standard deviations. A

control chart has following components:

Center line: Center line in control chart is the indication of desired ideal capability of a

process. Center line is the calculated mean of all the samples.

Control Limits: Upper and lower control limits define the variation range. Data points

of a process are plotted to perform trend analysis toward either of control limits and

with respect to centre line.

Basic Procedure to Draw Control Chart

8
 The basic procedure to draw and analyse the control chart is as follows:

 Collect the sample data from the actual process.

 Determine the appropriate time period for collecting and plotting data.

 Plot Control Chart for the sampled data.

 Analyse the Chart.

 Follow the golden rules to identify the ‘out-of-control signals’ on the control chart.

When one is identified, mark it on the chart and investigate the cause. Document

how you investigated, what you learned, the cause and how it was corrected.

Sub Sub
Group Group
Data Data
1 15 26 -5
2 7 27 12
3 -2 28 -6
4 -5 29 -9
5 -10 30 -8
6 7 31 19
7 2 32 11
8 -8 33 6
9 -7 34 0
10 -10 35 4
11 -2 36 24
12 -7 37 6
13 -11 38 6
14 -15 39 1
15 -20 40 -6
16 -3 41 6
17 -8 42 -4
18 -12 43 -5
19 -18 44 -10
20 -19 45 -12
21 4 46 23
22 -3 47 17
23 -8 48 11
24 -14 49 9
25 -19 50 -5

Figure 1.1: Data for Control Chart

9
 Figure 1.2 (i): Individual Chart

Three Sigma
Limit A single point outside the control
limits
Two Sigma Two of three pts outside the two
Limit sigma limit
One Sigma Four of Five pts outside the one
sigma limit
Limit Eight in a row on the same side of
Average centerline

Figure 1.2(ii): Moving Range Chart

(Showing a single point outside the control limits)

10
 Three Sigma A single point outside the control
Limit limits
Two of three pts outside the two
Two Sigma sigma limit
Limit Four of Five pts outside the one
One Sigma sigma limit
Limit Eight in a row on the same side of
Average centreline

Figure 1.2(iii): Moving Range Chart

(Showing two of three points outside the two sigma limit)

The above figure nos. 1.2 (i), 1.2(ii) and 1.2 (iii) are the examples of Control Chart.

These control charts are plotted after getting the sample data from the real process. The

Control Charts are predictable on the basis of the golden rules of control charts given at

heading no. 1.10. The control chart predicts variation in the process if it follows the

pattern according to any of the golden rule. As for example one of the golden rules is

“Two of three consecutive points fall in zone C in one-half of the chart”, then it is said

that the process is out of control. Now, see figure no. 1.2(iii), two of three consecutive

points fall in zone C in one-half of the chart. It clearly shows that there is a problem in

the process.

Golden Rules of Control Charts

11
“If a point lies within UCL and LCL, then the process is deemed to be under control.

Otherwise, a point plotted outside the control limits can be regarded as evidence

representing that the process is out of control and, hence preventive or corrective

actions are necessary in order to find and eliminate the assignable cause or causes.”

(Saravanan & Nagarajan, 2013) There are some golden rules to find special cause

variation. There is a variation (in the production process) if outcome/pattern of the

process is following any one of the rule stated under:

Rule No. 1: Any point falls outside the control limits.

Rule No. 2: Two of three consecutive points fall in zone C in one-half of the chart.

Rule No. 3: Four of five consecutive points fall in zone B in one-half of the chart.

Rule No. 4: Six consecutive observations are increasing (or decreasing.)

Rule No. 5: Eight consecutive points outside of the A zones.

Rule No. 6: Nine consecutive observations fall on one side of the mean.

Rule No. 7: 14 observations alternate above and below the mean.

Rule No. 8: 15 consecutive observations in the A zones.

Benefits of Statistical Quality Control

The benefits of the Statistical Quality Control are as follows:

 It controls variation in the processes and hence controls quality.

 It provides a means of detecting error during production.

 It is used to monitor the process stability which ensures the predictability of the

process.

 It helps to have standardised quality of production.

12
  It is helpful in the production of uniformity of the quality of output.

 It is helpful in the consistency of the quality of products/services which

improves the customer satisfaction.

 It reduces inspection costs.

 It reduces the nonconforming units which help to reduce the production cost.

 It provides a basis for attainable specifications.

 It is used to identify abnormal condition and trouble spot in the process.

 It provides a means of determining the capability of the manufacturing process.

Summary

Quality control is a process through which a business seeks to ensure that product

quality is maintained or improved and manufacturing errors are reduced or eliminated.

It refers to that quality related activities which are associated with the creation of

project deliverables. There are various benefits of quality control like it is helpful in

maintaining the uniform/standardised quality of production, it provides a basis for

attainable standards. Statistical Process Control (SPC) as a subset of statistical quality

control traditionally consists of tools and methods to monitor, control, and improve the

quality of manufactured products. Monitoring a manufacturing process is required to

ensure it operates properly. SPC is based upon the Central Limit Theorem. There are

two types of variations namely Common Cause Variation and Special/Assignable Cause

Variation. Statistical Process Control is a statistical tool for reducing the variability in

processes which are the cause of most quality problems. Control Chart is a statistical

13
tool consists of three horizontal lines called; Upper Control Limit (UCL), Center Line

(CL) and Lower Control Limit (LCL). The center line in a control chart denotes the

average value of the quality characteristic under study. It is used to measure how a

process changes over time called variability. Its purpose is to study the variation in the

process. There are some golden rules to find special cause variation. There is a variation

(in the production process) if outcome/pattern of the process is following any one of the

rule.

Keywords

Statistical Process Control (SPC)

Statistical process control (SPC) as a subset of statistical quality control consists of

tools and methods to monitor, control, and improve the quality of manufactured

products. One of the most important tools used in SPC is the control chart.

Control Chart

Control Chart is a statistical tool and is used as graphic display for the

process variability over time.

14
Test of Significance
Structure

Objectives

Test of Significance

Hypothesis or Statistical Hypothesis

Type I and Type II errors

Level of Significance

Critical Region or Rejection Region

One Tailed Test and Two Tailed Test

Critical Value

A General Procedure for Hypothesis Testing

The Normal Distribution Curve

Summary

Keywords

Self Assessment Questions

References / Suggested Readings

Objectives

1
After going through this lesson, you will be able to:

 Elaborate the concept of test of significance

 Understand the types of hypothesis and hypothesis testing

 Know the procedure of hypothesis testing and usage of normal

distribution curve

Test of Significance

The concept of statistical significance was given by Ronald Fisher in 1925. He

developed statistical hypothesis testing which he described as ‘tests of significance’.

Fisher suggested a probability of one in twenty (0.05) as a convenient cut off level to

reject the null hypothesis. It was further recommended that the significance level (e.g.

0.05) be set ahead of time prior to any data collection.

Usually, in the organisation the decision about the population is taken on the basis of

information drawn from the sample. As for example, on the basis of sample data the

production manager has to determine whether a process is working properly according

to the standard set or not by checking the quality of the product. The product is selected

through sampling technique. This type of decision is called statistical decision. The

theory of testing hypothesis or test of significance employs various statistical

techniques to arrive such decision on the basis of sample study.

Once sample data has been gathered through an observational study or experiment,

statistical inference allows analysts to consider some evidence or some claim about the

population from which the sample has been drawn. The methods of inference used to

support or reject claims based on sample data are known as tests of significance.

2
Test of Significance is required to check two important aspects:

 Checking the difference between sample estimate and population values and

finding whether it is significant or not?

 Checking the differences between different sample estimates and finding

whether it is significant or not?

The Basic Concepts of the Test of Significance

The basic concepts of the test of significance are:

 Hypothesis or Statistical Hypothesis

 Type I Errors and Type II Errors
 Level of Significance
 Critical Region or Rejection Region
 One Tailed Test and Two Tailed Test
 Critical Value

Hypothesis or Statistical Hypothesis

There are two types of hypotheses in a statistical test, normally called Null hypothesis

and Alternative hypothesis. The null hypothesis simply asserts that there is no real

difference in the sample and the population.

 Null Hypothesis

Null hypothesis is denoted by H0. It represents a theory that has been put forward, either

because it is believed to be true or because it is to be used as a basis for argument, but

has not been proved. For example, regarding the training of the employees the null

hypothesis is ‘H0: Training has not benefitted the employees’. A null hypothesis usually

states that there is no relationship between the two variables.

3
 Alternative Hypothesis

The alternative hypothesis is denoted by Ha. It is a statement of what a statistical

hypothesis test is set up to establish. For example, regarding the training of the

employees, the alternative hypothesis is ‘Ha: Training has benefitted the employees’.

Type I and Type II errors

There can be two types of errors whenever we draw an inference about a population,

Type –I and Type-II error.

 Type I error: When Ho is true but it is rejected.

 Type II error: When Ho is false but it is accepted.

Both Type I and Type II errors are very dangerous. Type I error is committed by

rejecting the true Ho and Type II error is committed by accepting when H o is false. Type

I error is the incorrect rejection of the null hypothesis and Type II error is the incorrect

acceptance of the null hypothesis.

Condition Decision
Accept Ho Reject Ho
Ho is True Correct Decision Type I Error

Ho is False Type II Error Correct Decision

Table 1.1: Type I and Type II errors

Level of Significance

4
In hypothesis testing, the significance level is the criterion used for rejecting the null

hypothesis. If the probability is less than or equal to the significance level, then the null

hypothesis is rejected and the outcome is said to be statistically significant. Significance

levels indicate how likely a pattern in data is due to chance. In the maximum

experiments two levels are in practice either 0.05 level (5% level) or the 0.01 level (1%

level). The choice of levels is largely subjective. 5 % level means that the finding has a

95% chance of being true. Therefore, the 0.01 level is more conservative than the 0.05

level. The lower the significance level, the more the data must diverge from the null

hypothesis to be significant. The Greek letter alpha (α) is used to indicate the

significance level. The decision of the significance level for the test has to be decided

before going for hypothesis test. The use of significance level gives judgement whether

the test results are statistically significant or not. The significance level also determines

the probability of error that is inherent in the test. Usually, a significance level of 0.05 is

selected.

Critical Region or Rejection Region

Values of the test statistic that do not fall within the specified range are said to be in the

critical region and H0 will be rejected for such values. Values of the test statistic that fall

within the specified range are in the acceptance region. Typically, α (often referred to as

the “level of significance”) is set equal to .05 or .01. If, for example, α = .05, we would

erroneously reject H0 when H0 is true 5% of the time. Rejecting H0 when H0 is true is

referred to as a Type I error, and α = probability of a Type I error. Accepting H0 when

H0 is false is referred to as a Type II error, and ß = probability of a Type II error.

One Tailed Test and Two Tailed Test

5
Single-tail hypothesis test is used when the direction of the results is anticipated or we

are only interested in one direction of the results. For example, a single-tail hypothesis

test may be used when evaluating whether or not to adopt a new textbook. We would

only decide to adopt the textbook if it improved student achievement relative to the old

textbook.

In hypothesis testing, the hypotheses are always statements about a population

parameter which partitions the set of possible values that the parameters may take. For

example, letting μ be the parameter for which the hypothesis test is performed, a null

hypothesis, referred to as H0 , may be defined as H0 : μ = μ and its two-sided alternative

hypothesis, referred to as H1 , is defined as H1 : μ ≠ μ0 The alternative hypothesis H1

does not make a statement about whether μ is greater than μ0 or less than μ0 , which

makes this a two-sided test. The difference between a one sided test and a two-sided test

lies solely in the specification of the alternative hypothesis. As a consequence, while a

one-sided test specifies in its alternative hypothesis that the parameter is either greater

than or less than the value specified in the null hypothesis ( H1 is either μ > μ 0 or μ < μ

0 ), in a two-sided test the direction of the alternative hypothesis is left unspecified.

• One tailed tests are directional:

H0: µ1 - µ2 ≤ 0

HA: µ 1 - µ 2 > 0

• Two tailed tests are not directional:

H0: µ1 - µ2 = 0

HA: µ 1 - µ 2 ≠ 0

6
 Figure 1.1 : A Two-tailed Test (The Normal Distribution)

Critical Value

The critical value of the standard normal variate (z) for both the two-tailed and one

tailed test at different level of significance varies often required in hypothesis testing.

For example when level of significance α = 0.05 then critical value of Z (for on tailed

test) -1.645 or + 1.645 and critical value of Z (for two tailed test) -1.96 or +1.96.

Application of Test of Hypothesis/Test of Significance/Sampling Test

The applications of test of hypothesis or test of significance or sampling tests are

conducted for large samples and small samples.

A General Procedure for Hypothesis Testing

The general procedure for hypothesis testing is as follows:

Step 1: Formulate the hypotheses

Step 2: Choose level of significance

Step 3: Select an appropriate test

Step 4: Collect data and calculate test statistic

Step 5: Determine the probability (or critical value)

Step 6: Compare the probability and take the decision

The Normal Distribution Curve

7
When random variation conforms to a particular bell shaped probability distribution is

known as the normal distribution. It is the most commonly observed probability

distribution. The shape of the normal distribution resembles that of a bell, so it

sometimes is referred to as the ‘bell curve’.

Figure 1.2: Normal Distribution

The normal distribution can be precisely explained by two parameters namely mean and

standard deviation. If the mean and standard deviation are known, then one essentially

knows as much as if one had access to every point in the data set. The empirical rule is

a handy quick estimate of the spread of the data given the mean and standard deviation

of a data set that follows the normal distribution. The empirical rule states that for a

normal distribution: 68% of the data will fall within 1 standard deviation of the mean,

95% of the data will fall within 2 standard deviations of the mean, and almost all 99.7%

of the data will fall within 3 standard deviations of the mean.

Example of Testing of Hypothesis

Question: The mean values of the practices of 25 small scale exporters, 25 middle

scales exporters and 25 large scale exporters regarding ‘the measures taken to improve

sales appeal of garments abroad’ is given below. Prove that there is a significance

8
difference among small, middle and large scale RMG exporters’ practices regarding

‘the measures taken to improve sales appeal of garments abroad’.

Small scale (25) 2.00 2.68 1.60 2.12 2.80

Middle scale (32) 2.72 3.03 2.69 2.72 3.06

Large scale (17) 4.24 4.65 4.71 4.59 4.76

Null Hypothesis:

H0 = There is no difference among small, middle and large scale RMG exporters’

practices with respect of ‘Sales Appeal’

Calculations for Analysis of Variance (ANOVA):

X1 (X1)2 X2 (X2)2 X3 (X3)2

2.00 4.00 2.72 7.40 4.24 17.98

2.68 7.18 3.03 9.18 4.65 21.62

1.60 2.56 2.69 7.24 4.71 22.07

2.12 4.49 2.72 7.40 4.59 22.66

2.80 7.84 3.06 9.36 4.76

Σ X1 = 11.20 Σ (X1)2 = 26.07 Σ X2=14.22 Σ(X2)2 =40.58 Σ X3 = 22.95 Σ(X3)2= 105.51

N1 =5 N2=5 N3=5

T= 11.20 + 14.22 + 22.95 = 48.37

9
c.f. = (48.37)2/ 15 = 2339.66/15 = 155.98

SST = Total sum of Squares

(X1)2 + Σ(X2)2 + Σ(X3)2 – C.F.

= 26.07 + 40.58 + 105.51 – 155.98 = 172.16 – 155.98 = 16.18

SSB = Sum of Squares between sample

= [ (11.20)2/5 + (14.22)2/ 5 + (22.95)2 / 5] – 155.98

= 125.44/5 +202.21/5 + 526.70/5 = 170.87 – 155.98 = 14.89

SSW = SST – SSB

= 16.18 – 14.89 = 1.29

Degree of Freedom F
Between 14.89 2 2.01/ 2 = 1.005 1.005 /0.11 = 9.14
samples (SSB)
Within samples 1.29 (SSW) 12 1.29/ 12 = 0.11
Total 16.18 14
(SST)

For v1 = 2, v2 = 12, the table value of F at 5 % level of significance is 3.89. The

calculated value (9.14) is greater than the table value (3.89). Hence the null hypothesis

is rejected and concluded that there is a significance difference among, small, middle

and large scale RMG exporters’ practices with respect of ‘the measures taken to

improve sales appeal of garments abroad’.

Summary

Once sample data has been gathered through an observational study or experiment,

statistical inference allows analysts to consider some evidence or some claim about the

population from which the sample has been drawn. The methods of inference used to

support or reject claims based on sample data are known as tests of significance. There

10
are two types of hypotheses in a statistical test, normally called Null hypothesis and

Alternative hypothesis. The null hypothesis simply asserts that there is no real

difference in the sample and the population. There can be two types of errors whenever

we draw an inference about a population, Type –I and Type-II error. Traditionally, two

levels are used: either the 0.05 level (sometimes called the 5% level of significance) or

the 0.01 level (1% level of significance). Values of the test statistic that do not fall

within the specified range are said to be in the critical region and H 0 will be rejected for

such values. Values of the test statistic that fall within the specified range are in the

acceptance region. When random variation conforms to a particular bell shaped

probability distribution is known as the normal distribution. It is the most commonly

observed probability distribution.

Keywords

Test of Significance

Test of Significance is checking the difference between sample estimate and population

values and finding whether it is significant or not.

Normal Distribution Curve

When random variation conforms to a particular probability distribution known as

the normal distribution, which is the most commonly observed probability distribution.

11
Business Process Reengineering

Structure

Objectives

Business Process and Business Process Reengineering: Introduction

Applications of Business Process Reengineering

Objectives of Business Process Reengineering

Requirement of Business Process Reengineering

BPR Implementation Procedure

Difference between TQM & BPR

Difference among Automation, Rationalization of Procedures, Paradigm Shift,

& BPR

Strategic Sense in BPR

Reasons of BPR Failure

Summary

Keywords

Self Assessment Questions

References / Suggested Readings

Objectives
After going through this lesson, you will be able to:

1
  Understand the basic concept and importance of business process

reengineering.

 Know how business process reengineering works.

 Understand the difference among TQM, Automation, Rationalization of

Procedures, Paradigm Shift, & BPR

 Get you familiar with the reasons of BPR failure.

Business Process and Business Process Reengineering: Introduction

Business process is a set of related work activities that are performed by employees to

achieve business goals. Business process is the way we perform our work. Business

Process Reengineering (BPR) is redesigning business processes in the organisation. It is

the analysis and redesign of workflows within and between enterprises in order to

optimize end-to-end processes and automate non-value-added tasks.

Business process re-engineering (BPR) is defined as an integrated set of management

policies, project management procedures, and modeling, analysis, design and testing

techniques for analyzing existing business processes and systems; designing new

processes and systems; testing, simulating and prototyping new designs prior to

implementation; and managing the implementation process.

BPR is the process of changing the way we do our work. We do it better after the

implementation of BPR. The basic idea behind BPR is to make organisations more

flexible, responsive, efficient and effective for all stakeholders including customers,

employees, shareholders, suppliers and owners. Its main objective is to break away

from old ways of working, and brings radical changes. It is the redesign of processes

2
to achieve dramatic improvements in critical areas such as cost, quality, service,

and response time through the in-depth use of information technology. Companies

reduce organizational layers and eliminate unproductive activities in two key areas.

First, they redesign functional organizations into cross-functional teams. Second, they

use technology to improve data dissemination and decision making. BPR is

also called business process redesign.

Applications of Business Process Reengineering

Business Process Reengineering could be applied to companies that confront problems

such as the following:

 The operational costs are very high and unbearable and consequently the

organisation is unable to compete in the market.

 The organisation is losing its market share and the customer complaints are

increasing. Low quality to customers can be great concern.

 There is high level of ‘blockage’ in the key processes particularly in peak

seasons.

 The performance of middle level managers is poor.

 There is inappropriate distribution of resources and jobs in order to achieve

maximum performance, etc.

Objectives of Business Process Reengineering

The following objectives should be focused while applying the BPR to a business

organization:

3
 i. Customer Focus:

Customer satisfaction is the top priority. There should be a change from

management focus to customer focus. The organisation should adopt customer

service oriented processes. The customer oriented processes eliminate customer

complaints.

ii. Reducing Average Cycle Time

The organisation has to focus on key business processes and try to reduce average

cycle time. For instance, if process before BPR had an average cycle time 5 hours,

after BPR the average cycle time should be cut down to half an hour.

iii. Empower Employees

The management should empower the employees involved in decision making in

the processes. This will generate a sense of responsibility among employees.

iv. Emphasis for Managing Activities

The management must change its vision of focusing on results only. It should

emphasis on managing activities. The approach must be how we can get the results

by managing activities effectively and efficiently.

v. Flexibility

The organisation must be ready to change its processes and structures according to

the changing conditions and competition. The organisation must develop the

awareness mechanism to remain very close to the customers so that it can rapidly

4
 spot the requirement of change in the process and adapt to new requirements of the

market quickly.

vi. Obsession for Quality

The organisation should have obsession to deliver the superior service and value to

the customers. The level of quality should always be controlled and monitored by

the processes.

vii. Innovation

The management must have leadership through imagination to provide competitive

advantage to the organisation.

viii. Adopt Simple Processes

The organisation wants to get rid of very complex processes and wants to have

simple and streamlined processes. It will improve productivity drastically.

Requirement of Business Process Reengineering

Business Process Reengineering is the radical redesign of processes. Its objective is to

achieve dramatic improvements in productivity, cycle times and quality. In business

process reengineering, companies start from beginning or scratch, identify the goals and

purposes, analyse the current process and commit action to bring radical changes. The

customer is the focus and to deliver more values to the customers the companies refocus

on the existing processes. They typically adopt a new value system that places increased

emphasis on customer needs. It is the redesign of processes

to achieve dramatic improvements in critical areas such as cost, quality, service,

5
and response time through the in-depth use of information technology. BPR is

also called business process redesign. Companies use business process reengineering to

improve performance substantially on key processes that impact customers. Business

process reengineering is required for the following purposes:

 Reduce Costs and Cycle Time

Business process reengineering improves productivity, reduces costs and cycle times by

eliminating unproductive activities and the employees who perform them. Business

process reengineering accelerates information flows, and eliminates wastes and errors.

 Improve Product/Service Quality

Business process reengineering improves quality by reducing the fragmentation of work

and establishing clear ownership of processes. Employees gain responsibility for their

output and can measure their performance based on prompt feedback.

BPR Implementation Procedure

Business process reengineering is a dramatic change initiative that contains the

following four major steps:

i) Start from Beginning / Scratch

At this stage, the organisation must refocus the customer needs and then refocus the

company values according to the requirements. It is the time to refocus about the

customers’ satisfaction level, the existing distribution system, development of

innovative products, present production system etc. Listen to your customers

6
cautiously. It is the time to rethink organisational and customers’ grievances,

complaints and issues.

ii) Identification of Goals and Purposes

Identifying the goals and purposes is important. What we can achieve with the change

in the process? Is it going to increase customer satisfaction? Is it going to make the

distribution system more efficient? Is it going to make our production system more

efficient? Is the changed process will boost the development of innovation process? If

yes, then it means the goals and purposes of BPR are identified correctly.

iii) Analysis of Current Processes

There is always scope for improvement in current processes. Compare your existing

processes with the desired processes. Concentrate on the filling of the gap between

existing and desired processes, if any.

iv) Action Time

At this stage, improve those processes that bring value to the customers and change or

eliminate those do not contribute. Be committed to have radical changes on the

processes, if required. Use the information technology to redesign core processes.

Improve the business processes across the organisation to enable improvements.

Difference between TQM & BPR

Parameter TQM BPR

Change Incremental Radical

Focus Current Practice Start again

Primary Enabler Statistical Control High Role of IT

7
Frequency Continuous One attempt

Participation Bottom-up Top-down

Risk & Rewards Low & Moderate High

Type of Change Work design Structure, culture roles

Difference among Automation, Rationalization of Procedures,

Paradigm Shift, & BPR

Automation

Automation refers to computerizing processes to speed up the existing tasks to improve

efficiency and effectiveness.

Rationalization of Procedures

It refers to streamlining of standard operating procedures, eliminating obvious

bottlenecks, so that automation makes operating procedures more efficient.

Business Process Reengineering

It refers to radical redesign of business processes. It aims at eliminating repetitive,

paper-intensive, bureaucratic tasks, reducing costs significantly and improving

product/service quality.

Paradigm Shift

It refers to a more radical form of change where the nature of business and the nature of

the organization are questioned. It is a part of strategic decision making of the

organization.

8
 Strategic Sense in Business Process Reengineering

Business Process Reengineering is very important strategically because:

 It lowers cost.

 It increases customers’ satisfaction.

 It helps organisation to face competitiveness.

 It generates excellent capability advantages.

 It helps to improve efficiency.

Reasons of Business Process Reengineering Failure

BPR brings radical changes in the processes those generate value to the customers. It

makes the employees to be more productive for their customers not their bosses. It

generates empowered employees who work in process teams rather in functional

departments. The controlled employees are empowered employees who are read to

perform multidimensional work. BPR helps to understand and measure the existing

processes. It helps to develop a vision and sense of belonging among employees. It

helps to develop solution and make new processes operational. But sometimes, BPR

fails. There are many reasons of the failure as mentioned below:

i. If organisation fails to focus on the customers’ actual needs and satisfaction level.

ii. BPR is required to take the help of information technology to redesign core

processes. The organisation may fail to integrate information technology.

iii. Sometimes, the management underestimates the actions required by employees.

Managers may get confused and assume that the change will bring insecurity. It can

cause employees to shed their functional mind-sets and will forge them instantly

9
 into a team aiming to achieve common goals. To get the desired results, there is

requirement to guide the employees and take the employees in confidence. To make

new processes operational, it is required to develop vision and a sense of belonging

among employees.

Summary

Business process reengineering (BPR) is redesigning business processes in the

organisation. BPR brings radical changes in the processes those generate value to the

customers. Business process reengineering is a dramatic change initiative which is

processed in four steps: (i) Start from beginning / scratch; (ii) Identification of goals and

purposes; (iii) Analysis of current processes; and (iv) Action time. It makes the

employees to be more productive for their customers not their bosses. It generates

empowered employees who work in process teams rather in functional departments.

The controlled employees are empowered employees who are read to perform

multidimensional work. BPR helps to understand and measure the existing processes. It

helps to develop a vision and sense of belonging among employees. It lowers cost and

increases customers’ satisfaction. It helps organisation to face competitiveness and

generates excellent capability advantages. It helps to improve efficiency. It helps to

develop solution and make new processes operational. But sometimes, BPR fails

because the organisation is failed to focus on the customers’ needs and satisfaction

level. The organisation may fail to integrate information technology. Sometimes, the

managers get confused and assumed that the change will bring insecurity.

Keywords

10
Business Process

Business process is a set of related work activities that are performed by employees to

achieve business goals. Business process is the way we perform our work. As for

example accounting, production, marketing, sales, information technology, product

design, etc.

Business Process Reengineering (BPR)

BPR is the process of changing the way we do our work. The BPR is to make

organisations more flexible, responsive, efficient and effective for all stakeholders.

11
Total Productivity Management

Structure

Objectives

Total Productivity Management

Check Sheet

Pareto Chart

Histogram

Benefits of Histogram

Control Chart

Benefits of Control Chart

Cause-and-Effect Diagram

Uses of Cause-and-Effect Diagram

Flowchart

Benefits of Flowchart

Scatter Diagram

Summary

1
 Keywords

Self Assessment Questions

References / Suggested Readings

Objectives

After going through this lesson, you will be able to:

 Understand the basic concept of the tools used for total productivity

management.

 Know the steps to draw Check Sheet, Pareto Chart and

Histogram diagrams.

 Understand the uses and construction of Control Chart.

 Know the benefits and usage of Flow chart, Cause and Effect Chart and

Scatter diagram.

Total Productivity Management

The total productivity management is to improve the overall productivity. The

management consistently make efforts and takes pain to increase it. There are many

quality tools to improve the productivity of the processes namely: Check Sheet, Pareto

chart, Histogram, Control Chart, Cause-and-Effect diagram (also known as the

‘Fishbone’ or Ishikawa Diagram), Scatter diagram, Stratification (alternately, flow

chart or run chart) etc. The manufacturers can choose from these varieties of tools.

These are called basic tools because they are suitable for employees with little formal

2
training in statistics. These tools can be used to solve the vast majority of quality-

related issues The quality tools can make the process proceed more quickly and

systematically. The quality tools for total productivity management are problem solving

tools. These are helpful:

 To identify and prioritise problems quickly and more effectively.

 To help in the basic problem-solving and quality improvement process.

 To assist in the decision making process. Hence, helps to increase the productivity.

 To provide very simple but powerful tools for use in continuous

improvement activity.

 To provide a way of extracting information from the data collected.

Check Sheet

A check sheet is a simple and effective method of gathering information. It is a non-

statistical, relatively simple and can be created easily. It is used to capture data in a

manual, reliable, formalized way so that decisions can be made based on facts. It

ensures consistency of data collected and simplifies the data collection and analysis. It

highlights trends and spots problems directly from the check sheet. In the following

chart, the check sheet shows a list of defects on a production line covering a week's

time. One can easily depicts where to set priorities based on results shown on the check

sheet. It is assumed that the production flow is the same on each day and the part with

the largest number of defects carries the highest priority for correction. The chart shows

the weekly chart of the occurrence of defects from 1 to 10 in the production process. It

clearly depicts that the defect no. 3 is occurring most frequently i.e. 16 times.

3
Project Name: .............................................................

Data Recorder Name:..................................................

Place: ...........................................................................

Date: .................................................... ......................

Defect Dates
Types/
Event
Occurrence Monday Tuesday Wednesday Thursday Friday Saturday Sunday TOTAL

Defect 1 3 3 4 2 0 1 1 14

Defect 2 1 4 2 3 2 1 2 15

Defect 3 3 2 2 1 2 4 2 16

Defect 4 1 2 1 2 1 2 1 10

Defect 5 2 2 2 3 1 1 1 12

Defect 6 1 2 1 2 1 1 2 10

Defect 7 2 1 2 1 1 2 2 11

Defect 8 1 1 2 2 1 2 3 12

Defect 9 2 1 1 3 1 3 1 12

Defect 10 1 1 1 3 1 1 1 9

TOTAL 17 19 18 22 11 18 16 121

Figure 1.1: Check Sheet

Pareto Chart
The Pareto diagram is named after Vilfredo Pareto (a 19th-century Italian economist)

who postulated that a large share of wealth is owned by a small percentage of the

population. This basic principle translates well into quality problems—most quality

problems result from a small number of causes. Pareto Chart is an effective on-going

4
improvement tool. It is commonly known as ‘the 80:20 rule’ which means 80% of

problems are attributed to 20% of the causes. It identifies the most significant problem

to be worked first. This tool distinguishes between the vital few and the trivial many. A

Pareto Chart organizes and displays information in order to show the relative

importance of various problems or causes of problems. In it data categories are

arranged in order of frequency - starting with the most frequent. It is one of the most

effective yet simple tools available. It is represented with a vertical bar chart with items

organized in order from the highest to the lowest, relative to a measurable effect: i.e.

frequency, cost, time. The following chart shows the occurrence of defects from 1 to 10

in order from the highest to the lowest occurrence in the production process. The graph

clearly depicts that the defect no. 3 is occurring most frequently i.e. 17 times. It means

the defect no. 3 is the problem is the main problem and to be corrected or eradicated

first of all.

Pareto Chart: Most Frequent Defects

18 17
16
16 15
14
14 13
12
12 11
10
10 9
Counts

8 7

0
Defect 3 Defect 2 Defect 9 Defect 1 Defect 7 Defect 5 Defect 6 Defect 4 Defect Defect 8
10

Figure 1.2: Pareto Chart

5
 Histogram

Histogram is a form of bar chart. It is a visual way of representing data. It is easier to

display and interpret data with the help of histogram. It is used to measure the

frequency distribution of data that is commonly grouped together. In fact, it depicts a

picture of the process behaviour at a given process of time. It has much in common with

the Pareto Diagram. It can be vertical or horizontal of data than using tables.

Histograms work best with small amounts of data that vary considerably.

Defects Over Time

25
23
21
20 19
18
17

15
13 13
Counts

10

0
Sunday Monday Tuesday Wednesday Thursday Friday Saturday

Figure 1.3: Histogram

Benefits of Histogram

 It depicts clearly to make sense of data.

 It shows patterns clearly that are difficult to see in tables of numbers.

 It is very simple to construct and helpful in taking decision.

6
 Control Chart

Control Chart is a graphic display of the process stability or instability over time. It is a

statistical tool used to measure how a process changes over time called variability.

Simply, variability is whether the process is consistent/under control or

unpredictable/out of control. The variability of a process can be determined by plotting

data against pre-defined upper and lower control limits. The reasons for variation in a

process are from two causes namely: Common Causes and Special Causes. The control

chart is a statistical tool used for a process to distinguish between variations resulting

from common causes and variation resulting from special causes.

Benefits of Control Charts

 It is used to make judgements of the process performance over a certain period

of time.

 It provides a means of detecting error during production.

 It is used to monitor the process stability which ensures the predictability of the

process.

 It helps to have standardised quality of production.

 It is helpful in the consistency of the quality of products/services which

improves the customer satisfaction.

 It reduces inspection costs and reduces the nonconforming units.

Cause-and-Effect Diagram
7
Kaoru Ishikawa invented ‘Cause-and-Effect Diagram’ in 1968 which is also known as

‘fishbone diagram’ or ‘Ishikawa Diagram’. It is a visualization tool for categorizing the

potential causes of a problem in order to identify its root causes. It shows the causes of

a specific event. The Ishikawa diagram is used to identify potential factors causing an

overall effect. Each cause or reason causes variability in the output. The causes are

grouped into major categories to identify the real source of variation. The categories can

be people, methods/process, machines, materials, measurements, environment,

equipment etc.

Fig 1.4: Fishbone Diagrams/Cause-and-Effect Diagrams

The Cause-and-Effect diagram has a fishbone shape and the diagram resemble the

skeleton of a fish. The main causes are the categories drawn as ‘bones’ attached to the

spine of the fish. The broad causes in the form of categories are people,

methods/process, machines, materials, measurements, environment, equipment etc.

Cause-and-effect diagram gives a view of key relationships among various causes and

the possible causes provide additional insight into process behaviour. These causes can

8
be derived from brainstorming sessions. Then, these groups are to be labelled as

categories of the fishbone.

Uses of Cause-and-Effect Diagram

Using the Cause and Effect Diagram to identify the root cause(s) of a problem provides

several benefits to the quality improvement team like:

 It illustrates the relationship between the outcome and the factors that influence

it.

 It is helpful to identify potential causes of the problem.

 It is helpful to summarize major causes under categories.

 It is a visual tool for organizing critical thinking and gives an overall view of the

problems to the whole team.

 It also helps to analyse the situation at one go and take corrective actions.

Flowchart

A flow chart is a visual representation of a process. It describes a process in such a

manner that it is possible to have an overview of the process and the sequence of

process step by step in proper manner. Flow chart can be drawn for any process such as

flow of materials, sequence of operations, etc. Although it is not statistical, but is used

to piece together the actual process as it is carried out. A good flowchart shows all the

steps of the process to the expert team and identifies critical process points for control.

It should suggest areas for further improvement and should be self-explanatory. The

flow chart is helpful in identifying both inefficiencies and potential improvements

easily.

9
Figure 1.5: A basic production process flowchart displays several paths a part can
travel from the time it hits the receiving dock to final shipping.
(Source: www.mddionline.com)

Benefits of Flowchart

 It provides a clear-cut overview of the process at a glance.

 It clearly depicts the relationships of one process with the others.

 It provides insight for data collection and control points.

 It is helpful in identifying the improvements in the process.

Scatter Diagram

Scatter Diagram is a graphical tool allowing the identification of possible relationships

between two different sets of variables. It is also called Scatter Plot or X-Y graph. It is a

highly effective tool to be used to identify whether there is a relationship between two

10
variables or not. In the following example, table 1.6(iii) depicts the results from table

1.6(ii) that there is no relationship between both X and Y variables.

Input Output
(X) (Y)
1 63 98.9
2 60 98.8
3 49 98.53
4 40 98.35
5 45 98.55
6 45 98.95
7 30 98.75
8 34 98.65
9 32 98.8
10 21 98.75
11 40 99.55
12 34 99.5
13 30 99.5
14 24 99.75
15 23 99.65
16 13 98.85
17 30 98.75
18 34 98.65
19 40 99.95
20 34 99.5
Figure 1.6 (i): Data for Scatter Diagram

11
 Scatter Diagram
100 4 points 4 points

99.8

99.6

99.4

99.2
Output (y)

99

98.8

98.6

98.4

98.2 4 points
4 points
98
0 20 40 60 80
Input (x)

Figure1.6 (ii): Scatter Diagram

Sr. No. Output Results

1. # in 1st Q 4
2. # in 2nd Q 4
3. # in 3rd Q 4
4. # in 4th Q 4
5. A=4+4 8
6. B=4+4 8
7. Q = min 8
8. N = # pts 16
9. Trend test limit 3
10. Q < Limit? No
11 Correlated? No

Figure 1.6(iii): Results of the Scatter Diagram from table 1.6(ii)

Summary

The quality tools are used as the basis for problem solving, to investigate a process and to

identify areas for improvement in the production process. However, it is not important

12
just to use any tool, it is important to know how and when to use them. There are many

quality tools to improve the productivity of the processes namely: Check Sheet, Pareto

chart, Histogram, Control Chart , Cause-and-Effect diagram (also known as the "fishbone"

or Ishikawa diagram), Scatter diagram, Stratification (alternately, flow chart or run chart)

etc. A check sheet is used to capture data in a manual, reliable, formalized way so that

decisions can be made based on facts. It ensures consistency of data collected and

simplifies the data collection and analysis. In the check sheet, one can easily depicts

where to set priorities based on results shown on the check sheet. The Pareto diagram is

is commonly known as ‘the 80:20 rule’ which means 80% of problems are attributed to

20% of the causes. The basic principle translates well into quality problems—most

quality problems result from a small number of causes. Pareto Chart is an effective on-

going improvement tool. It identifies the most significant problem to be worked first.

Histograms are a form of bar chart. With the help of this tool, it is easier to display and

interpret the data. It is used to measure the frequency distribution of data that is

commonly grouped together. Histograms work best with small amounts of data that vary

considerably. Control Chart is a graphic display of the

process stability or instability over time. It is a statistical tool used to measure how a

process changes over time called variability. The variability can be determined whether

the process is under control or out of control by plotting this data. There are two reasons

of variation in a process namely: Common Causes and Special Causes. Cause-and-

Effect diagram is a visualization tool for categorizing the potential causes of a problem

in order to identify its root causes. It shows the causes of a specific event. It is used to

identify potential factors causing an overall effect. Causes are grouped into major

categories to identify the real source of variation. The categories are people,

13
methods/process, machines, materials, measurements, environment, equipment etc. A

flow chart is a visual representation of a process to describe a process to have an

overview of the process and the sequence of process step by step in proper manner. It

suggests areas for further improvement. It is helpful in identifying both inefficiencies and

potential improvements easily. Scatter Diagram is a graphical tool allowing the

identification of possible relationships between two different sets of variables.

Keywords

Check Sheet

A check sheet is a non-statistical, simple and effective method of gathering information

used to capture data in a manual, reliable, formalized way so that decisions can be made

based on facts.

Pareto Rule

Pareto Rule is commonly known as ‘the 80:20 rule’ which means 80% of problems are

attributed to 20% of the causes.

Histogram

Histogram is a form of bar chart used to measure the frequency distribution of data that is

commonly grouped together.

Control Chart

Control Chart is a graphic display used to measure how a process changes over time by

14
plotting data against pre-defined upper and lower control limits.

Cause-and-Effect Diagram

Cause-and-Effect Diagram is a tool and helps to identify, sort and display possible causes

of a specific problem used along with brainstorming.

15
JIT, ISO-9000 & Quality Audit

Structure

Objectives

Just-in-time (JIT): Introduction

Definitions of JIT

Pre-requisites of JIT Implementation

Just-in-time Uses/Application

ISO-9000: Introduction

Meaning of Standard

Standard Format

Eight Principles of Quality Management

Process for Getting ISO Certificate

Benefits of ISO-9000

Quality Audit: Introduction

Objectives of Quality Audit

Types of Quality Audit

Quality Audit Process

Significance of Quality Audit

Summary

1
 Key words

Self-assessment questions

References/Suggested readings

Objectives

After going through this lesson, you will be able to:

 Elaborate the concept of JIT, pre-requisites of JIT Implementation and

benefits of JIT system.

 Understand the concept, meaning, importance of IS0-9000.

 Know the importance, significance and process of Quality Audit.

Just In Time (JIT): Introduction

Just-in-time was invented by Taiichi Ohno of Toyota Motor Company in Japan shortly

after World War II. It is a management philosophy which involves providing the right

items of the right quality and quantity at the right place and at the right time. JIT is not

merely an inventory reduction programme, but is much broader in effect so that the

organization operates more efficiently and with minimum resources. (Mukhopadhyay,

1995) JIT is an inventory strategy in which companies increase efficiency and decrease

waste by receiving materials only as they are needed in the production process, thereby

reducing inventory costs. JIT is an all-encompassing philosophy found on eliminating

waste. Anything that does not add value to process is called waste.

The success of just-in-time (JIT) on the production floor in reducing costs, improving

quality and enhancing responsiveness has led many firms to attempt to extend the

2
philosophy to the entire supply chain. The application of JIT to the sourcing arena has

become more important in the past few years because the value of purchased inputs, as a

percentage of costs of goods sold, has increased steadily in many production

environments. Research has indicated that a firm will source outside its home borders if it

expects to achieve dramatic and immediate improvement in four critical areas:

(Humphreys, Yeung, 1998)

 Cost reduction

 Quality improvement

 Increased exposure to technology

 Delivery and reliability improvements

Definitions of JIT

Just-in-time is a philosophy which means producing only what is needed, when it is

needed, not early, not late; not less, not more. The key target is achieving high volume

production using minimal inventories. It is an integrated but simplified system. The JIT

mandate is the elimination of all types of waste in the organisation. According to this

philosophy, anything which is not generating value is called waste.

Just-in-time (JIT) is a highly coordinated processing system in which goods move

through the system, and services are performed, just as they are needed. Supplies and

components are ‘pulled’ through the system to arrive where they are needed when they

are needed.

Just-in-time is defined as the production of the minimum number of units in the smallest

possible quantities at the latest possible time, which eliminates the need for inventory. It

does not mean to produce on time but to produce “just in time”.

3
JIT is defined as an approach for providing smoother production flows and making

continual improvements in processes and products. (Svensson, 2001)

The fundamental aim of JIT purchasing is to ensure that production is as close as possible

to a continuous process from receipt of raw materials/components through to the

shipment of finished goods. The success and resulting performance of purchasing system

is based upon cooperation between the purchaser and supplier. Some of the elements of

this system are as follows: (i) smoothed flow of materials between suppliers and buyers;

(ii) order cost reduction; (iii) stock reduction; (iv) quality; and (v) product simplification

(Gunasekaran, 1999).

JIT is more than an inventory system. It is an operational philosophy which includes:

 Short lead time

 A maintenance improvement system

 A quality improvement system

 A productivity improvement system

 Minimum inventory-level

 Closely coupled flow-lines

Pre-requisites of JIT Implementation

Top management is responsible for change in the organisation. For that sake, it has to

create an environment in the organisation. The management has to develop a culture in

the organisation. In order for JIT implementation to be successful, the organisation must

frame these policies regarding JIT and must get commitment from the employees to

follow the guidelines lead down in the policies by words and means. The implementation

4
of JIT is not just for the sake of change. Most of the organisations implement JIT just for

the sake to beat the competitors. In this way they miss the true essence of the philosophy

and the results are like half-hearted. The success of JIT philosophy lies in the

commitment of the employees. This philosophy covers the whole organisation under one

umbrella. All the departments have to work with coordination and follow the guidelines

with full spirit. The top executives have to be the leaders involved in JIT and they must be

the guiding light for all the employees. So, the success of JIT philosophy depends upon

the strategic planning that runs deep in the commitment of all the departments and all the

employees. Getting everyone involved and committed is the first step to successful

implementation of JIT and the first step to an increase in continuous improvement.

A properly implemented JIT system must have:

 Visible goals

 Produce products as per the customers’ requirements

 Continuous improvement of all the processes

 Doing right at first time

 Producing at the rate customers want them

 Delivering right quality and quality at first time

 Produce instantly with zero unnecessary lead time

 Advocating zero waste of labor, material or equipment

 Following zero-defect policy

Just-in-time Uses/Application

5
JIT has an enormous impact on a company’s profitability, especially in a competitive

environment characterized by small profit margins. Furthermore, the application of JIT

technologies such as small lot size, lead time reduction and quality improvement play a

significant role in achieving JIT purchasing. (Yang & Pan, 2007) The benefits are as

follows:

 Part Costs – Low scrap costs; low inventory carrying costs

 Quality – fast detection and correction of unsatisfactory quality, and ultimately

higher quality purchased parts

 Capital requirements – reduced rework inventories of purchased parts, raw

materials, work-in-progress and finished goods.

 Administrative efficiency – fewer suppliers; minimal expediting and order release

work; simplified communications and receiving activities. (Chung & Bakar, 2001)

Other financial benefits of JIT include:

 Lower investments in factory space for inventories and production;

 Less obsolescence risk in inventories;

 Reduction in scarp and rework;

 Decline in paperwork;

 Reduction in direct material costs through quantity purchases. (Kootanaee, Babu,

Talari, 2013)

Benefits of JIT implementation include:

 Reductions in lead-time ;

 Inventory-levels reduction;

6
  Consistent quality improvement culture;

 Zero wastage in the organisation;

 Involvement of employees;

 Stabilize production schedules;

 Increased equipment utilization; and

 Reduction in customer-related problems

Applications of JIT are as follows:

 Inventory Reduction as a Tool for Improvement

Inventory reduction is directly related with cost. Costs are reduced greatly if

inventory is reduced.

 Waste Reduction

If any activity that increases cost but does not add value to any process in an

organisation is called waste. Eliminate waste of labor, material or equipment. JIT

advocates zero waste in organisation.

 Supplier Relationships

There must be good relationship with suppliers. Its helps in getting raw material

supply exactly when required.

 Minimum batch sizes

The batch sizes must be kept as small as possible. The defects can be observed

easily in small batches.

 Minimum Movements
7
 The movements must be kept low in production plants. The computerized

equipments are very much helpful in minimising the movements in the plants.

 Total Quality Assurance

The production department must control all the processes time to time to control

the variation in the production output in terms of quality. Proper training is very

much in the total quality assurance.

 Preventive Maintenance

The inspection after the accident is useless. Preventive maintenance is needed to

reduce variation in the process. This requires a regular and complete examination

of all the processes on a regular basis.

ISO-9000: Introduction (International Organisation for Standardisation)

Today is the world of competition and the industries require quality tools to compete and

improve the quality of their products and services. It’s a very simple to take decision by

any organisation to implement ISO-9000. However, without a set of standards it is very

difficult to say from where to start and how to start this quality improvement programme?

They need standardisation of all the processes to deliver consistent quality to their

customers. Generally, the organisations develop standards and guidelines for quality

management and quality control purposes. For the same purpose, i.e., to standardise

quality requirements, the delegates from 25 countries met at the Institute of Civil

Engineers in London in 1946. They decided to create a new international organization for

unification of industrial standards all over the world. The new organisation, ISO,

officially began operations from the very next year. ISO stands for International

8
Organisation for Standardisation. It has members from 163 countries. The organisation

has formed 3,368 technical bodies for standard development. ISO’s headquarter is in

Geneva, Switzerland with more than 150 official staff to facilitate the international

coordination. ISO-9000 is helpful to show the customers that the organisation have

adopted quality procedures, quality processes and quality standards. It helps external

auditors to show that all the internal processes are in place and well documented.

ISO is a nongovernmental, worldwide organisation that encompasses the international

standards. ISO is derived from the Greek word ‘isos’, meaning ‘equal’. ISO is the world’s

largest developer of International Quality Standards. The organisations certified with

ISO-9000 are assured to have International Quality Standards. The ISO-9000 was

developed to effectively design and implement efficient quality systems. The quality

standards given by ISO have some specifications for standardisation of products, services

and good practice. These standards are developed to help organisation work effectively.

The ISO-9000 standards provide a framework that can provide guidance for the processes

to be made auditable. These standard practices help the organisations to be more efficient

and effective. ISO has published more than 19,500 International Quality Standards

covering almost all the areas of technology, manufacturing and business. To follow ISO

standards is voluntary. It is not legally to require these standards. But, ISO standards are

recognised internationally as these are made by experts and market driven. The ISO

quality standards are frequently followed for food safety, data security, agriculture,

healthcare industry, information technology, textile, food processing industry education &

training etc. Quality Standards developed by ISO impact our lives by giving consistent &

confirmed quality and standard products. In fact, it is helpful in raising our standard of

living.

9
 Meaning of Standard

A standard is a document that provides requirements, specifications, guidelines or

characteristics. It can be used consistently to ensure that materials, products, processes

and services are fit for their purpose. More than 19500 International Standards can be

purchased from the ISO store. Originally ISO-9000 standard was published in 1987. It has

undergone revisions in 1994, 2000 and 2005. It covers definitions, requirements and

continual improvements. The standards are revised at least once in a five year. It can be

maintained, modified, or withdrawn.

Standard Format

⚫ International standards format is:

ISO[/IEC] [/ASTM] [IS] nnnnn[-p]:[yyyy] Title, where nnnnn is the number of

the standard, p is an optional part number, yyyy is the year published, and Title

describes the subject.

⚫ IEC for International Electro-technical Commission is included if the standard

results from the work of ISO/IEC JTC1 (the ISO/IEC Joint Technical Committee).

Examples:

i) ISO/IEC TR 17799:2000 Code of Practice for Information Security Management

ii) ISO/TS 16952-1:2006 Technical product documentation — Reference designation

system

10
 iii) ISO/IEC Guide 2:2004 Standardization and related activities — General

vocabulary

Eight Principles of Quality Management

ISO standards are based on eight principles of quality management that can be applied by

senior managers to improve their organisation:

i) Customer Focus

Customers are the backbone of the organisation. The organisations must have clear

understanding of the customers’ needs and do their best to meet the needs. Through

regular survey the customers’ dissatisfaction can be known.

ii) Leadership

Leaders should be ready to take the front positions at the time of problems. Only best

leaders can guide their employees the right vision.

iii) Involvement

At the time of requirement or problem, the employees can be involved and their talent

as well as skills be utilised.

iv) Process Approach

Companies’ activities are managed in the form of processes. The input, transformation

and output are managed as a process.

v) System Approach to Management

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 At this step, all the processes of the organisation are examined thoroughly.

vi) Continuous Improvements

At this step, the management should try to find the long-term and consistent solutions

of the problems.

vii) Right Approach of Decision Making

The decision making must be based on the relevant data and information

subsequently.

viii) Long Term Relationships with Suppliers

Long term relationships with the suppliers create value.

If, the company has problem(s) like high customer complains, dissatisfaction, poor

employees turnover, increased absenteeism, shrinking market share etc. these

problems can be managed with the help of having customer focus, leadership,

employees’ involvement and with right process approach.

Process for Getting ISO Certificate

Organizations willing to achieve ISO-9000 certification require the following steps:

Step I: The first step is to think and decide at top management about why the

organisation should get the ISO-9000 certification, the benefits of the ISO-9000 and the

quality culture required in the organisation

12
Step II: Go through the requirements mentioned in the ISO-9000 standards. Compare the

existing work practices being followed in the company with the standards and identify

gaps against requirements mentioned in ISO-9000 standards.

Step III: Prepare action plan describing work to be done to fulfil the gap.

Step IV: Arrange trainings to all employees of organization about how to fulfil the gap

and achieve ISO-9000 certificate requirements.

Step V: Complete necessary documentation like manual, procedures preparations.

Step VI: Follow the requirements defined in the ISO-9000 standards in routine and

overcome difficulties in following the standards.

Step VII: Conduct internal audit.

Step VIII: Contact ISO certification agencies and sign a 3 years contract with them.

Step IX: After ensuring adequate preparations for audit, call certification agency for stage

1 audit.

Step X: Fulfil the gap/shortcomings given by certification agencies during stage 1 audit.

Step XI: Call certification agency for stage 2 (final) certification audit.

Step XII: Fulfil the gap/shortcomings given by certification agency during stage 2

certification audit.

Step XIII: You will receive ISO-9000 certificate after 4-6 weeks of successful

completion of stage 2 certification audit.

13
Step XIV: The organisation can use ISO-9000 logo as per recommendation of

certification agency.

Benefits of ISO-9000

There are many benefits of ISO-9000 as followings:

 Standardisation Process

ISO-9000 standards are recognised internationally. It assures all the processes are

standardised. These standards help organisations to work effectively. These standards

bring technological uniformity. They help to standardise the processes of

manufacturing of products and services.

 Quality Purpose

ISO certification assures customers that the organisation has designed and managed

its process according to the standards led down by ISO to assure delivery of a quality

product. Conformity to ISO-9000 assures consumers that products and services are

safe, reliable, efficient and meeting all the quality parameters.

 Waste Reduction

ISO certification is helpful in setting standard processes which lead to reduction in

scraps, wastes etc.

 Accessibilities of New Markets

The standards help companies to access new markets. It facilitates free and fair global

trade.
14
  Cost Reduction

The ISO-9000 is beneficial for the organisations because it is helpful in cost savings

as the operations are standardised and wastes, errors are lowered drastically.

 Customers’ Satisfaction

Ultimately the customers get quality products and services which generate customer

satisfaction. Increase in customer satisfaction and increase in sales means the market

size of the organisation is increasing. ISO-9000 standards on road safety, toy safety

and secure medical packaging help to make the world a safer place for happy living.

The organisations are required to complete the necessary documentation like manual,

procedures preparations. Let’s take an example of education industry where if an

institution / university want to get ISO-9000 certificate then they have to maintain proper

record of different activities conducted in the different departments in the standard

proformas. The following is a proforma for quality maintenance in labs and workshops:

Quality Audit: Introduction

Firstly, the customer is the focus for all the organisations. Everybody wants to lower

down the complaints and increase the customer satisfaction level. For that sake, the

organisations are running various quality improvement programmes. These types of

programmes require constant monitoring/examination to product quality products and

services and to remain competitive in the market. Secondly, when the size of the

organisation increases, its operations and internal as well as external processes require

consistent improvement in terms of quality. This is possible only when a consistent

15
quality monitoring programme is going to take place. Hence the organisations require

quality audit programme for consistent quality mentoring.

Quality Audit: Definition

16
Quality audit is defined as a systematic and independent monitoring to determine whether

activities and related results comply with planned manuals and whether these manuals are

implemented effectively and are suitable to achieve objectives.

A quality audit is a process by which the management reviews and evaluates an element

of the business to ensure that it is meeting certain standards.

A quality audit can be applied to various aspects of a business, like it can be applied on

inventory or service, employees, management, or databases.

A quality audit is a regular monitoring of all or part of quality system with specific aim of

improving the operations and processes to maintain the quality. A quality audit compares

what the quality is and what quality is supposed to be. There it cannot be conducted

unless all the activities are properly documented. It is usually conducted by outside

experts or team appointed by management. Quality standards are used for audit purposes.

These standards can be the standards set by a company itself or by the International

Organization for Standards (ISO) or American National Standards Institute (ANSI) or six

sigma quality standards or Indian Standards Institute (ISI). All these standards provide

framework and guidelines about how to conduct proper documentation about the

activities conducted in the organisation which are supposed to be audited.

Quality audit is the process of systematic monitoring of a quality system carried out by an

internal or external quality auditor or by an audit team with the aim of improving the

operations and processes. For quality audit, quality manual is required and quality manual

is describes what the quality is supposed to be. A quality audit is a process by which the

management reviews and evaluates an element of the business to ensure that it is meeting

certain standards. It is an important part of organization's quality management system and

17
is a key element in the ISO quality system standard, ISO 9001. Quality audits are

typically performed at predefined time intervals and ensure that the institution has clearly

defined internal system monitoring procedures linked to effective action. This can help

determine if the organization complies with the defined quality system processes and can

involve procedural or results-based assessment criteria. Audits are an essential

management tool to be used for verifying objective evidence of processes, to assess how

successfully processes have been implemented, for judging the effectiveness of achieving

any defined target levels, to provide evidence concerning reduction and elimination of

problem areas. For the benefit of the organisation, quality auditing should not only report

non-conformances and corrective actions, but also highlight areas of good practice. In this

way other departments may share information and amend their working practices as a

result, also contributing to continual improvement.

Objectives of Quality Audit

The objectives of the quality audit are as followings:

 Quality audit monitors and drives continuous improvement in quality.

 It ensures quality of the product and determines the required improvement.

 It assesses effectiveness of quality assurance system.

 The management knows problems or potential problems by quality audit.

 It ensures timely correction of problems.

 It shows management support of the quality program and establishes high degree

of confidence, trust, understanding and communication among internal employees.

18
  It ensures that a company or product meets quality standards.

 It is helpful to promote understanding, confidence and communication with

external customers like suppliers.

Types of Quality Audit

There are three types of quality audits, namely, first party (internal), second party

(external) and third party (extrinsic) audits.

i) First party quality audit (Internal audit)

When an organization conducts an audit on its own quality system with the help of its

own staff / external consultants, the audit is known as first part quality audit or internal

quality audit. It is used to measure its own strengths and weaknesses against the

requirements. Internal audits examine that an organization is meeting its own quality

standards. There are two problems in internal audit. One, the auditing staff may not be

trained and efficient to conduct quality audit and second, there are maximum chances of

biasness.

ii) Second party quality audit (external quality audit):

One organisation auditing another with which it has or going to have a contract or

agreement for the supply of goods or services is called second party quality audit. Let’s

take an example of the purchasing organization and supplier organization. Here, the

second party quality audit is performed by purchasing organisation on supplier

organisation. The motive of quality audit here is to have an assessment of the supplier’s

processes in order to have confidence that the supplier would be able to supply goods or

services of an agreed quality level on a sustained basis. The supplier audit will include the
19
quality management system involved in the production of goods and service provided.

Purchasing organization give this task to their trained and experienced employees or an

outside agency is hired by them.

iii) Third party quality audit (extrinsic audit):

The third party quality audit is conducted by an independent agency like ISO registered

bodies. As for example, USFDA (United States Food and Drugs Administration)

regularly conducts quality audit in Indian pharmaceutical companies like Dr. Reddy,

Cipla, Lupin etc. regularly and time to time give guidelines and generates notices after the

quality audit. As our companies are selling medicines in USA, so USFDA conducts

quality audits to raise the standards of the manufacturing of medicines in India companies

and quality drugs can be produced. Third party audits normally results in the disruption of

day-to-day activities of the organization being audited during the duration of the audit.

Apart from the registered certification bodies, the third part audit may also be conducted

by some government departments dealing with environment and pollution, health and

safety, atomic energy etc. A third party external audit can be done to attain or maintain

certification in a quality standard.

Quality Audit Process

QUALITY AUDITING

Preparation Performance Report Follow up

Figure 12.1: Quality Audit Process

20
Quality Audit process follows the following four stages:

Stage 1: Planning Quality Audit

 It determines the quality audit focus in the organisation.

 The team(s) is selected.

 The quality manual or standards are published at this stage.

 Quality schedules are prepared.

Stage 2: Conducting Quality Audit

 The quality audit is conducted at this stage.

 The main task is to evaluate the actual performance with the standard

performance.

Stage 3: Report Writing

 In this stage, the gap(s) are reported in performance, if any.

 The corrective action is determined.

Stage 4: Follow Up

 It is the time to take correction action.

 The findings are updated in the report when actions are completed.

 Last step is to follow up.

Significance of Quality Audit

Performing quality audits are important for key reasons. The most important is that it is

helpful in detecting the potential problems and helpful in minimising the business risk.

21
The quality programmes running in the organisation are effectively evaluated with the

help of quality audit. The knowledge of the current status of these types of programmes is

must for smooth running of the organisation.

Quality audit ensures that the business is offering a value to the customers through high-

quality product or services. It can increase future sales. It gives information to the

customers that the company is committed to quality standards and performs regular audits

programmes. It helps to increase consumer confidence in the business. Finally, regular

quality audits help protect the business from issues that could arise from selling a poor

quality product.

Summary

Just-in-time is a philosophy which means producing only what is needed, when it is

needed, not early, not late; not less, not more. The key target is achieving high volume

production using minimal inventories. It is an integrated but simplified system. According

to this philosophy, anything which is not generating value is called waste. JIT advocates

minimising all types of wastes. Top management is responsible for change in the

organisation. For that sake, it has to create an environment in the organisation. The

management has to develop a culture in the organisation. In order for JIT implementation

to be successful, the organisation must frame these policies regarding JIT and must get

commitment from the employees to follow the guidelines lead down in the policies by

words and means. The implementation of JIT is not just for the sake of change. Most of

the organisations implement JIT just for the sake to beat the competitors. In this way they

miss the true essence of the philosophy and the results are like half-hearted. The success

of JIT philosophy lies in the commitment of the employees. This philosophy covers the

22
whole organisation under one umbrella. All the departments have to work with

coordination and follow the guidelines with full spirit. The top executives have to be the

leaders involved in JIT and they must be the guiding light for all the employees. Getting

everyone involved and committed is the first step to successful implementation of JIT and

the first step to an increase in continuous improvement. The ISO-9000 standard was

published in 1987 by International Organisation for Standardisation, had undergone

revision in 2000 and 2005. It covers definitions, requirements, and continual

improvements. To follow ISO standards is voluntary. It is not legally to require standards.

But, the standards are recognised internationally. ISO-9000 standards are developed to

effectively design and implement efficient quality systems. These provide a framework

that can provide guidance for the processes to be made auditable. These standards help

organisations to work effectively. ISO-9000 standards are market driven designed by

experts. These standards are reviewed once in five years to decide whether to modify,

maintained or withdrawn. ISO-9000 is helpful to show the customers that the organisation

have adopted quality procedures, quality processes and quality standards. It helps external

auditors to show that all the internal processes are in place and well documented. ISO-

9000 standards implementation shows that all the processes used for manufacturing

products are audited internally and well documented. The ISO quality standards are

frequently followed for food safety, data security in computers, agriculture, healthcare

industry, education institutions etc. In fact, Quality Standards developed by ISO impact

our lives by giving quality and standard products and raising standard of living. Quality

audit is defined as a systematic and independent monitoring to determine whether

activities and related results comply with planned manuals and whether these manuals are

implemented effectively and are suitable to achieve objectives. A quality audit is a

process by which the management reviews and evaluates an element of the business to
23
ensure that it is meeting certain standards. A quality audit can be applied to various

aspects of a business, like it can be applied on inventory or service, employees,

management, or databases. The objectives of the quality audit are to monitor and drives

continuous improvement in quality. It ensures quality of the product and determines the

required improvement. It assesses effectiveness of quality assurance system. The

management knows problems or potential problems by quality audit. It ensures timely

correction of problems. It shows management support of the quality program and

establishes high degree of confidence, trust, understanding and communication among

internal employees. There are three types of quality audits, namely, first party (internal),

second party (external) and third party (extrinsic) audits. Quality audit ensures that the

business is offering a value to the customers through high-quality product or services. It

gives information to the customers that the company is committed to quality standards

and performs regular audits programmes. It helps to increase consumer confidence in the

business. Finally, regular quality audits help protect the business from issues that could

arise from selling a poor quality product.

Keywords

Just-in-time

It is defined as the production of the minimum number of units in the smallest possible

quantities at the latest possible time, which eliminates the need for inventory.

Standard

24
A standard is a document that provides requirements, specifications, guidelines or
characteristics. It can be used consistently to ensure that materials, products, processes
and services are fit for their purpose.

Quality Audit

It is the process of systematic examination of a quality system carried out by an internal

or external quality auditor or by an audit team with specific aim of improving the

operations and processes.

25