Assignment 2

TOTAL QUALITY
MANAGEMENT
(5575)
MBA Executive

TOPIC:

“How Quality Control gets in the

way of Quality”

ZAHID NAZIR
Roll # AB523655
Semester: Autumn 2009

ALLAMA IQBAL OPEN UNIVERSITY,

ISLAMABAD.
TOTAL QUALITY MANAGEMENT

INTRODUCTION

Quality is the most important aspect in every day’s life. The figure below is
self explanatory emphasizing the importance of quality.

Everyone has had experiences of poor quality when dealing with business
organizations. These experiences might involve an airline that has lost a
passenger’s luggage, a dry cleaner that has left clothes wrinkled or stained,
poor course offerings and scheduling at your college, a purchased product
that is damaged or broken, or a pizza delivery service that is often late or
delivers the wrong order. The experience of poor quality is exacerbated when
employees of the company either are not empowered to correct quality
inadequacies or do not seem willing to do so. We have all encountered

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service employees who do not seem to care. The consequences of such an

attitude are lost customers and opportunities for competitors to take
advantage of the market need.
Successful companies understand the powerful impact customer-defined
quality can have on business. For this reason many competitive firms
continually increase their quality standards. For example, both the Ford
Motor Company and the Honda Motor Company have recently announced
that they are making customer satisfaction their number one priority. The
slow economy of 2003 impacted sales in the auto industry. Both firms believe
that the way to rebound is through improvements in quality, and each has
outlined specific changes to their operations. Ford is focusing on tightening
already strict standards in their production process and implementing a
quality program called Six-Sigma. Honda, on the other hand, is focused on
improving customer-driven product design. Although both firms have been
leaders in implementing high quality standards, they believe that customer
satisfaction is still what matters most.
To understand the role of quality control in maintaining the quality, it is
necessary to understand the quality concepts.

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DEFINING QUALITY

Quality Concepts

The definition of quality depends on the role of the people defining it. Most
consumers have a difficult time defining quality, but they know it when they
see it. For example, although you probably have an opinion as to which
manufacturer of athletic shoes provides the highest quality; it would
probably be difficult for you to define your quality standard in precise terms.
Also, your friends may have different opinions regarding which athletic
shoes are of highest quality. The difficulty in defining quality exists
regardless of product, and this is true for both manufacturing and service
organizations. Think about how difficult it may be to define quality for

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products such as airline services, child day-care facilities, college classes, or

even textbooks. Further complicating the issue is that the meaning of quality
has changed over time.
People define quality in many ways. Some think of quality as superiority or
excellence, others view it as a lack of manufacturing and service defects, still
others think of quality as related to product features or price. A study that
asked managers of 86 firms in the eastern United States to define quality
produced several dozen different responses including

Perfection
Consistency
Eliminating wastes
Speed of delivery
Compliance with policies and procedures
Providing a good, usable product
Doing it right the first time
Delighting or pleasing customers
Total customer service and satisfaction

Today, there is no single universal definition of quality. Some people view

quality as “performance to standards.”Others view it as “meeting the
customer’s needs” or “satisfying the customer.” Let’s look at some of the
more common definitions of quality.

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Conformance to specifications measures how well the

product or service meets the targets and tolerances
determined by its designers. For example, the dimensions of
 Conformance to a machine part may be specified by its design engineers as 3
specifications
How well a + .05 inches. This would mean that the target dimension is 3
product or service inches but the dimensions can vary between 2.95 and 3.05
meets the targets inches. Similarly, the wait for hotel room service may be
and tolerances specified as 20 minutes, but there may be an acceptable
determined by its delay of an additional 10 minutes. Also, consider the
designers.
amount of light delivered by a 60 watt light bulb. If the bulb
delivers 50 watts it does not conform to specifications. As
these examples illustrate, conformance to specification is
directly measurable, though it may not be directly related to
the consumer’s idea of quality.

Fitness for use focuses on how well the product performs

 Fitness for use A its intended function or use. For example, a Mercedes Benz
definition of and a Jeep Cherokee both meet a fitness for use definition if
quality that one considers transportation as the intended function.
evaluates how well
the product
However, if the definition becomes more specific and
performs for its assumes that the intended use is for transportation on
intended use. mountain roads and carrying fishing gear, the Jeep
Cherokee has a greater fitness for use. You can also see that
fitness for use is a user-based definition in that it is
intended to meet the needs of a specific user group.

 Value for price paid Value for price paid is a definition of quality that
Quality defined in consumers often use for product or service usefulness. This
terms of product is the only definition that combines economics with
or service
consumer criteria; it assumes that the definition of quality is
usefulness for the
price paid. price sensitive. For example, suppose that you wish to sign
up for a personal finance seminar and discover that the
same class is being taught at two different colleges at
significantly different tuition rates. If you take the less
expensive seminar, you will feel that you have received
greater value for the price.

Support services provided are often how the quality of a

 Support services product or service is judged. Quality does not apply only to
Quality defined in
the product or service itself; it also applies to the people,
terms of the
support provided processes, and organizational environment associated with
after the product it. For example, the quality of a university is judged not only
or service is by the quality of staff and course offerings, but also by the
purchased.

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efficiency and accuracy of processing paperwork.

Psychological criteria is a subjective definition that

 Psychological focuses on the judgmental evaluation of what constitutes
criteria A way of product or service quality. Different factors contribute to
defining quality the evaluation, such as the atmosphere of the environment
that focuses on or the perceived prestige of the product. For example, a
judgmental
hospital patient may receive average health care, but a very
evaluations of
what constitutes friendly staff may leave the impression of high quality.
product or service Similarly, we commonly associate certain products with
excellence. excellence because of their reputation; Rolex watches and
Mercedes-Benz automobiles are examples.

IMPORTANCE OF QUALITY

Quality is important because it has the certain benefits. The benefits can be
external and the internal benefits.
Internal Benefits External Benefits
Improved cost effectiveness Customers get the correct product
Better control in the process and services
Reduction of wastages Correct specification
Improved productivity Appropriate intangibles
Better relations, employees job Customer satisfaction
satisfaction and participation Customer retention
Increased customer retention
Standardization of work routine
Increase sales and market share
Improved competitiveness
Better profitability

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COST OF QUALITY

The reason quality has gained such prominence is that organizations have
gained an understanding of the high cost of poor quality. Quality affects all
aspects of the organization and has dramatic cost implications. The most
obvious consequence occurs when poor quality creates dissatisfied
customers and eventually leads to loss of business. However, quality has
many other costs, which can be divided into two categories. The first
category consists of costs necessary for achieving high quality, which are
called quality control costs. These are of two types: prevention costs and
appraisal costs. The second category consists of the cost consequences of
poor quality, which are called quality failure costs. These include external
failure costs and internal failure costs. These costs of quality are shown in
Figure below. The first two costs are incurred in the hope of preventing the
second two.

Cost of Quality

Prevention Costs

Prevention costs are all costs incurred in the process of preventing poor
quality from occurring. They include quality planning costs, such as the costs

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of developing and implementing a quality plan. Also included are the costs
of product and process design, from collecting customer information to
designing processes that achieve conformance to specifications. Employee
training in quality measurement is included as part of this cost, as well as the
costs of maintaining records of information and data related to quality.

Appraisal Costs

Appraisal costs are incurred in the process of uncovering defects. They

include the cost of quality inspections, product testing, and performing
audits to make sure that quality standards are being met. Also included in
this category are the costs of worker time spent measuring quality and the
cost of equipment used for quality appraisal.

Internal Failure Costs

Internal failure costs are associated with discovering poor product quality
before the product reaches the customer site. One type of internal failure
cost is rework, which is the cost of correcting the defective item. Sometimes
the item is so defective that it cannot be corrected and must be thrown
away. This is called scrap, and its costs include all the material, labor, and
machine cost spent in producing the defective product.
Other types of internal failure costs include the cost of machine downtime
due to failures in the process and the costs of discounting defective items for
salvage value.

External Failure Costs

External failure costs are associated with quality problems that occur at the
customer site. These costs can be particularly damaging because customer
faith and loyalty can be difficult to regain. They include everything from
customer complaints, product returns, and repairs, to warranty claims,
recalls, and even litigation costs resulting from product liability issues. A

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final component of this cost is lost sales and lost customers. For example,
manufacturers of lunch meats and hot dogs whose products have been
recalled due to bacterial contamination have had to struggle to regain
consumer confidence. Other examples include auto manufacturers whose
products have been recalled due to major malfunctions such as problematic
braking systems and airlines that have experienced a crash with many
fatalities. External failure can sometimes put a company out of business
almost overnight.
Companies that consider quality important invest heavily in prevention and
appraisal costs in order to prevent internal and external failure costs. The
earlier defects are found, the less costly they are to correct. For example,
detecting and correcting defects during product design and product
production is considerably less expensive than when the defects are found at
the customer site. This is shown in Figure below.

Cost of Defects
External failure costs tend to be particularly high for service organizations.
The reason is that with a service the customer spends much time in the
service delivery system, and there are fewer opportunities to correct defects
than there are in manufacturing. Examples of external failure in services

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include an airline that has overbooked flights, long delays in airline service,
and lost luggage.

THE EVOLUTION OF TOTAL QUALITY MANAGEMENT (TQM)

The concept of quality has existed for many years, though its meaning has
changed and evolved over time. In the early twentieth century, quality
management meant inspecting products to ensure that they met
specifications. In the 1940s, during World War II, quality became more
statistical in nature. Statistical sampling techniques were used to evaluate
quality, and quality control charts were used to monitor the production
process. In the 1960s, with the help of so-called “quality gurus,” the concept
took on a broader meaning. Quality began to be viewed as something that
encompassed the entire organization, not only the production process. Since
all functions were responsible for product quality and all shared the costs of
poor quality, quality was seen as a concept that affected the entire
organization.

The meaning of quality for businesses changed dramatically in the late 1970s.
Before then quality was still viewed as something that needed to be
inspected and corrected. However, in the 1970s and 1980s many U.S.
industries lost market share to foreign competition. In the auto industry,
manufacturers such as Toyota and Honda became major players. In the
consumer goods market, companies such as Toshiba and Sony led the way.
These foreign competitors were producing lower-priced products with
considerably higher quality.

To survive, companies had to make major changes in their quality programs.

Many hired consultants and instituted quality training programs for their
employees. A new concept of quality was emerging. One result is that quality

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began to have a strategic meaning. Today, successful companies understand

that quality provides a competitive advantage. They put the customer first
and define quality as meeting or exceeding customer expectations.

Since the 1970s, competition based on quality has grown in importance and
has generated tremendous interest, concern, and enthusiasm. Companies in
every line of business are focusing on improving quality in order to be more
competitive. In many industries quality excellence has become a standard for
doing business. Companies that do not meet this standard simply will not
survive.

The term used for today’s new concept of quality is total quality management
or TQM. Figure BELOW presents a timeline of the old and new concepts of
quality. You can see that the old concept is reactive, designed to correct
quality problems after they occur. The new concept is proactive, designed to
build quality into the product and process design. Next, we look at the
individuals who have shaped our understanding of quality.

Timeline showing the differences between old and new concepts of quality

Quality Gurus

To fully understand the TQM movement, look at the philosophies of notable

individuals who have shaped the evolution of TQM. Their philosophies and

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teachings have contributed to our knowledge and understanding of quality

today. Their individual contributions are summarized in Table below.

Quality Gurus and Their Contributions

HIERARCHY OF QUALITY

As principles of quality developed, is was understood to be part of a

hierarchical process which saw inspection develop through to quality
control, within the context of systems of quality assurance under the wider
management approach of total quality management.

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INSPECTION

QUALITY CONTROL

QUALITY ASSURANCE

TOTAL QUALITY MANAGEMENT

Fig: Hierarchy of Quality

INSPECTION

Quality inspection involves using or deploying people to inspect in order to

achieve a basic level of quality. However, this is an expensive way of
monitoring quality and adds to the cost of products or services being
provided. Inspection processes do however, ensure that standards are met.
Through inspection it is possible to identify areas that do not conform to
standards and take corrective action.

QUALITY CONTROL

Quality control is a stage above inspection. This is a process that uses quality
planning and procedures as well as basic statistics and performance data.
Quality control involves monitoring the performance of processes and then
using statistical techniques such as sampling and control charts to make

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decisions. QC is therefore the use of the techniques to achieve. Maintain and

try to improve on quality standards of products and services. It coordinates
the links between the following activities:

Specifications of what is required.

Designing the products/services required.
Production/installation/assembly of the parts, components,
elements of the service, product package.
Inspection of the product/service package to determine
conformance to customer specification.
Monitoring usage/consumption of product/service to feed back the
information for improvements wherever possible.

QUALITY ASSURANCE

Quality Assurance involves developing quality systems and quality planning

to ensure that a process or product will fulfill quality requirements. Quality
assurance is aimed at developing procedures that avoid mistakes. Quality
Assurance means that the process of checking, correcting and controlling is
conducted in such a manner that the manufacture/service provider are
aware that all stages of the process are being conducted correctly (with the
set quality standards in operation) and that what is planned is what is
expected to result in terms of the output. The notion of a ‘total’ approach to
quality and, in particular, total quality control, was at the heart of Armand
Feignenbaum’s book in 1951. TQC is a business philosophy which groups
together manufacturing, engineering, marketing and sales amongst others
linked together by a two way of flow of information. TQC should be
considered as a mind set to approve only criteria which lead to better than

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acceptable quality (via the use of the continuous improvement). TQC

provides reliability and consistency in the delivered product/services as a
check and balance system.

TOTAL QUALITY MANAGEMENT

Total Quality Management is that aspect of the overall management

function that determines and implements the quality policy. Since it has
been established that the quality management is a managerial responsibility,
one has therefore got it to the destiny of business. It is not therefore just a
question of achieving standards but one of survival and being strong all the
time. Furthermore managerial responsibilities are not just concerned with
focusing on one particular aspect of the business but in being fully aware and
in control of all the various activities no matter how small they are. This
leads to the argument therefore that TQM is an organizational concern and
not the domain of any specialists or specific functions. (Zairi, 1992). Total
quality management (TQM) is defined in ISO 8402 as the: “Management
approach of an organization, centered on quality, based on the participation
of all its members and aiming at long term success through customer
satisfaction, and benefits to all members of the organization and society.” In
this sense TQM is holistic. It is because it assumes that quality is the
responsibility of everybody within an organization and not just managers.
TQM involves employee involvement and teamwork in order to develop a
system that meets the needs of product quality, process quality and
organizational quality. With TQM everybody within an organization works
towards and strives for customer satisfaction.

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•PRACTICAL
STUDY
.

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GALXOSMITHKLINE PAKISTAN LIMITED

Overview:

GlaxoSmithKline Pakistan Limited was created on January 1st 2002 through

the merger of SmithKline and French of Pakistan Limited, Beecham Pakistan
(Private) Limited and Glaxo Wellcome (Pakistan) Limited- standing today as
the largest pharmaceutical company in Pakistan.

As a leading international pharmaceutical company we make a real

difference to global healthcare and specifically to the developing world. We
believe this is both an ethical imperative and key to business success.
Companies that respond sensitively and with commitment by changing their
business practices to address such challenges will be the leaders of the
future. GSK Pakistan operates mainly in two industry segments:
Pharmaceuticals (prescription drugs and vaccines) and consumer healthcare
(over-the-counter- medicines, oral care and nutritional care).

GSK leads the industry in value, volume and prescription market shares. We
are proud of our consistency and stability in sales, profits and growth. Some
of our key brands include Augmentin, Panadol, Seretide, Betnovate, Zantac
and Calpol in medicine and renowned consumer healthcare brands include
Horlicks, Aquafresh, Macleans and ENO.

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In addition, we are also deeply involved with our communities and

undertake various Corporate Social Responsibility initiatives including
working with the National Commission for Human Development (NCHD)
for whom we were one of the largest corporate donors. We consider it our
responsibility to nurture the environment we operate in and persevere to
extend our support to our community in every possible way. GSK
participates in year round charitable activities which include organizing
medical camps, supporting welfare organizations and donating
to/sponsoring various developmental concerns and hospitals. Furthermore,
GSK maintains strong partnerships with non-government organizations such
as Concern for Children, which is also extremely involved in the design,
implementation and replication of models for the sustainable development
of children with specific emphasis on primary healthcare and education.

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MISSION STATEMENT
Excited by the constant search for
innovation, we at GSK undertake our
quest with the enthusiasm of
entrepreneurs. We value performance
achieved with integrity. We will attain
success as a world class global leader with
each and every one of our people
contributing with passion and an
unmatched sense of urgency.
Our mission is to improve the quality of
human life by enabling people to do more,
feel better and live longer.
Quality is at the heart of everything we do-
from the discovery of a molecule to the
development of a medicine.
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THE ROLE OF QUALITY CONTROL

In the pharmaceutical industry in general, the quality department carries out
three important functions: quality control and quality assurance.

Quality control

Quality control is of crucial importance to the pharmaceutical industry, and

for this reason numerous checks are made at every stage of production to
ensure that quality is not compromised and that the Code of Good
Manufacturing Process is adhered to. Quality control procedures include:

Sampling of raw materials. All incoming raw materials are initially

quarantined, and samples are taken and tested to ensure that the
material meets strict purity guidelines. This testing involves both
microbiological and chemical testing, as is laid out in the relevant
Pharmacopeia (a reference book on the preparation of
pharmaceuticals. Three are published - the British, United States and
European Pharmacopeia).

In-process checks. The manufacturing staff carries out checks on

such things as tablet weight and size at frequent intervals. At hourly
intervals the quality control staff takes samples to check for
contamination and to ensure that composition is as expected.

Final product checking. Checking similar parameters to those

measured during production.

Monitoring cleaning. When a batch of a certain drug has been made,

all equipment that has been used must be cleaned. When the next
pharmaceutical to be made on that line is going to be different, this

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cleaning must be particularly thorough to prevent contamination. In

this instance, after cleaning the quality control staff takes swabs off
each piece of equipment, and tests them to see if they can detect the
presence of the active previously used. Only when the equipment is so
clean that the previous active is undetectable can the production of the
next pharmaceutical commence.

The results of all of these tests are recorded on the batch records for the
pharmaceutical, as well as the name and batch number of the
pharmaceutical made immediately prior on the same production line.
In terms of laboratory testing, over the past 10 years there has been a major
change in the equipment that is used. Ten years ago the laboratory was
normally equipped with a visible- UV spectrophotometer, analytical balance,
tablet disintegrator and analytical glassware. Nowadays pharmaceutical
laboratories will also include high pressure liquid chromatography, gas
liquid chromatography, infra-red spectrophotometers, and dissolution
testing apparatus as standard items.

CONCLUSION:

Quality is some prescribed or desired characteristics present in raw material,

sent finished or finished items. In every manufacturing organization there
are always some standard specifications (Quality) laid down either by the
producer or the consumer & it is important that the finished product meets
established specification. Quality characteristics can be divided in two main
categories, namely Qualitative & Quantitative.

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In case of Qualitative characteristics direct quantitative measurement is not

possible, e.g cracks, breakage, color etc. These can be determined by
inspection only and be classified as defective or non defective.

In a business activity, producers & consumers are two main components.

Producer is responsible for the production and marketing of his product. His
fundamental objective is to manufacture the product of desired quality in
the most economical manner with minimum risk of being rejected by the
consumer. Similarly, consumer always wants to purchase the goods of
desired quality. When consumer knows that he is getting goods of desired
specifications, he buys the product with confidence and the market for the
product expands.

But every manufacturing process is a repetitive process depending both on

controllable & uncontrollable factors. Due to this, there is bound to be some
deviation in the capacity in the quality of the product.

Thus, there is always a necessity that the deviations in the quality of the
product should be discovered and corrected. Thus, quality control is of great
value both to the producer and consumer. It helps in solving many
manufacturing problems which could not be solved otherwise.

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