Production/Operations
Management
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Block

1
ISSUES IN PRODUCTION/OPERATIONS
MANAGEMENT
UNIT1
Production and Operations Management: An Overview 5

UNIT2
Production System: Issues and Environment 13

UNIT3
Total Quality Management (TOM) 25

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BLOCK 1 ISSUES IN PRODUCTION/

OPERATIONS MANAGEMENT
Block 1 on issues in production/operations management consists of three units.

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Unit 1 discusses the scope of production/operations management. After inclusion of service
sections, this functional area has been renamed as operations management instead of production
management on manufacturing management. The unit also gives emphasis of operation systems
study, factor of production and concern for productive use of resources. It explains further the
multidesciplinary nature of operations management.

Unit 2 explains the issues and environment of production systems. A production systems model
has been elaborated along with some basic characteristics. The unit deals with productivity-
improvement and some upcoming issues in operations management. Information technology
plays an important role in operations management. This unit discusses the synergestic role of IT
with operations management.

Unit 3 is on Total Quality Management (TQM). It discusses on TQM with its historical
perspectives. It explains how TQM has gained importance in operations management. It has been
emphasized that the need for orienting the processes to be in line with the quality requirements of
customers. TQM implementation is successful only through employee participation and
impowerment. The unit has highlighted the importance of ISO 9000 as an internaional systems
standard meant for assuring quality.

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UNIT1 PRODUCTION AND OPERATIONS

MANAGEMENT: AN OVERVIEW
Objectives

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Perusal of this unit will impart to the students an understanding of the.
• scope and significance of the specialist function of operations management
impact of encompassing management of services operations which are expanding in
terms of potential employment
• paradigm shift as operations management became more focussed as the vital link in
delighting and surprising the customer
• appreciation that operations management capabilities can be significantly enhanced by
building long-term relationship with the suppliers
• role of manufacturing and service operations as a responsible corporate citizen in
combating pollution
• social issues involved and the need to reorient social values in favour of the profession of
operations management if it has to provide the cutting edge in competitive strategies
Structure
1.1 Scope and Significance
1.2 Systemic View of Operations Management
1.3 Factors of Production
1.4 Productive Use of Resources
1.5 Environmental Concerns of Operations
1.6 Social Concerns of Operations
1.7 Multidisciplinery Nature of Operations
1.8 Whither Operations Management in India
1.9 Summary
1.10 Self Assessment-Exercises
1.11 Further Readings

1.1 SCOPE AND SIGNIFICANCE

The study of this functional area, originally known as production or manufacturing management,
was changed when it was re-christened as operations management arising from the compelling
need to encompass the rapidly expanding service sector. If the entire economy of the nation is
divided into agriculture and agriculture based industry, manufacturing of tangible goods and
service industry, service sector is growing at much faster rate. In USA it has already emerged as
the largest employer. During the recent recession in USA (1989-1993), the employment level in

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the manufacturing industries shrank. However, number of persons working in service sector
increased, although at a lower rate. In India also, entrepreneurs with new, innovative and untried
ideas, are entering the service sector to cater to the unmet needs of the population. It is therefore,
more appropriate to describe it as "Management of Manufacturing and Service Operations"
distinct from other functional areas of marketing, finance, human resources, information &
systems, public relations, corporate communications, legal etc.. but more basic because a lot of
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learning has originated from it and transcended into other functional areas. Some of the
functional sub areas have achieved such eminence that they are being explored as full-fledged
subjects of study, viz. quality management, technology management, project management,
purchasing and materials management, productivity management and ergonomics, safety, health
and environment management.

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1.2 SYSTEMIC VIEW OF OPERATIONS
There has been a sea-change in the scenario of operations management. Manufacturing facilities
of producing tangible goods were far removed from the customer; this impacted adversely on the
customer - orientation of production personnel. Thanks to the primacy given to the customer
focus, operations managers had to re-orient their thinking and learning the true meaning of
customizing their work processes. Conversion of raw materials into finished products and
delivering services to transform an unsatisfied customer into a satisfied one. Has been identified
as the vital link in the primary value chain of an enterprise. The new focus is illustrated below:

In a generic way, conversion process adds value to raw materials by changing its shape size or
weight and transformation process entails changes inform, location or time

1.3 FACTORS OF PRODUCTION

In economics theory we are told about the following four factors of production viz.
• Land
• Labour
•
•
Capital
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Enterprise or Entrepreneurship.
With the increasing fluidity of money, land has become interchangeable with money. Industrial
managers are also engaged in effective and efficient utilization of a large variety of resources as
below:
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1) Men
2) Money
3) Machines
4) Materials
5)
6)
7)
Methods
Management
Measurement
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8) Message (information and communication)
9) Motive power (energy).
Excepting perhaps men (workmen) and money, all other resources are knowledge-based and
technology-oriented. In the knowledge society we have already entered (Peter Drucker). we are
witnessing increasing ingress of knowledge inputs in every work process. Already; the whole
world is busy unraveling the possibilities of integrating information technology with every' work
process of homo sapien society.

1.4 PRODUCTIVE USE OF RESOURCES

Operations personnel usually have a large volume and variety of resources at their command -
they should endeavour to make effective and efficient use of these resources to achieve the target
outputs. In general
Input = Output + Waste Dividing both sides by input, we obtain
Input Output Waste
= +
Input Input Input

= Pr oductivity + Wastivity
There are two approaches for enhancing utilization of resources viz.
a) Increasing Productivity
Productivity like efficiency is the ratio of output to input
Output
Pr oductivity =
Input
This ratio can be increased/improved in the following ways:
i) Increasing output while keeping inputs constant
ii) Decreasing inputs while keeping output constant
iii) Increasing output in greater proportion than the increase in input.
b) Decreasing Wastivity

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Reduction of waste or scrap is another way of enhancing productivity. If we work out the
material balance of a work process, we become aware of this intimate relationship. One surest
and best way to reduce wastivity is to minimize generation of waste at the source itself. This is a
whole new and latest concept in combating waste and pollution, i.e., going in for "cleaner
technologies". The emphasis is shifting to tackling the problems at the source of generation of
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pollution rather than doing fire fighting, control and management subsequently. For example,
emissions from automobiles are adding to the atmospheric pollution at such alarming rate that
most large cities are becoming "asthemic". Although there is an urgent need in cities like Delhi
of combating and, controlling air pollution, the need of a long-term policy of switching over to
automobiles with cleaner technologies, where emissions are way below the permissible norms
cannot be fault. It must appear to be the only sustainable solution to this menacing problem on a
long term basis.
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1.5 ENVIRONMENTAL CONCERNS OF OPERATIONS
Although there is much to commend for operations management which has served rather well as
the main vehicle of material progress of mankind, we have, in the process administered a severe
blow to the environments and ecology. In our pursuit of insatiable thrust of "getting and
begetting", we have damaged our environment to such an extent that we are now facing the grim
prospects of ozone layer puncture, green house effect of carbon-di-oxide emissions leading to
global warming and suffocating level of atmospheric pollution over populated cities, like Delhi
and Calcutta. In response to societal concerns for the alarming rise in pollution, most countries in
the world have formulated statutes and legislated on the following types of pollutants:
1) Solid Waste
2) Liquid Waste
3) Atmospheric Pollution
4) Noise Pollution
Government of India has also enacted the following laws:
• The Hazard Wastes (Management & Handling) Rules, 1989 framed under the
Environment Protection Act 1986 for solid wastes
• The Water (Prevention and Control) Act of 1974, amended in 1978,1988 etc. for liquid
wastes
• The Air (Prevention and Control of Pollution) Act of 1981 relating to air pollution
There is no law at the national level on noise pollution. Local civic and police authorities are
empowered to ban use of loudspeakers but the regularity with which these bans are flouted by
religious organizations in particular and for so called religious festivals in general is very
annoying.
Also, there is no legislation on population explosion and alleviation of poverty nor our national
planners have succeeded in combating this problem. Perhaps, the only salvation is to seek and
secure a technological solution to the baffling problems of population explosion and poverty
eradication, the two biggest polluters of the world.

1.6 SOCIAL CONCERNS OF OPERATIONS

Operations management can rightly pride itself for being in the vanguard of material progress in
the entire world. New technologies have contributed to a large number of products and services
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being made available at affordable prices. It has made life more comfortable and enjoyable,
which has been the very purpose of industrialization as an engine to development.
Industrialization has created the need and awareness of knowledge and information and has
motivated a large proportion of population to become literate. In a country like India, it has
contributed significantly to developing national integration. A large number of cities started as
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nodal points for setting up industry and have grown rapidly to become large cities, accelerating
urbanization and reducing pressure on agriculture and agriculture related industries.

1.7 OPERATIONS MANAGEMENT IS MULTIDISCIPLINARY

No job, thanks to increasing complexity of business, is pure, unalloyed, single functional; all jobs

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are multi-disciplinary. A young person starting his career should not be upset that the job that
he/she is assigned is not pure or single functional - in fact, richness of the job is measured by the
multidisclplinary tapestry of the functions involved.
Today it is commonplace to hear, "Business is people; dealing with people is marketing". In
another context we say, "People management is not one department in the company, it is the
function of every employee of the company". Another experienced person would suggest that,
"finance is the common denominator for all activities performed in the company," or "What is
the organization without communication; communication is the life blood of organizations."
Similarly, operations management is no exception; on the contrary, it encompasses a vast and
diverse array of bodies of knowledge as below:
1) Product design, development and management
2) Process design, development and management
3) Methods and manufacturing engineering
4) Material handling systems and layout studies
5) Capacity and manning studies
6) Site selection and facilities planning
7) Project management establishing or expanding a facility.
8) Purchasing, warehousing and materials management
9) Operations planning, scheduling and control
10) Material and resource planning for production and manufacturing
11) Maintenance and upkeep of machines
12) Productivity management and designing effective man, machine and environment
systems.
13) Quality control and management
14) Safety, health and environment management Besides a good operations person must have
good grounding in
15) Finance and cost-accounting
16) Human resource and people management
17) Legal provisions for running an operations facility etc.
There is, therefore, an urgent need to inject persons with multi-disciplinary knowledge in the
functional area of operations management.

1.8 WHITHER OPERATIONS MANAGER IN INDIA

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Whereas there is an urgent need to transform operations management by recruiting and
positioning more and more of multi-disciplinery freshers, the scene is not encouraging. There is
an over abundance of technical specialties or graduates of the University of-experience. As a
result, their mindsets and culture is deeply embedded with the conventional wisdom - a deep
seated paradigm which helps them to reinforce, "this is the way things are done here''.
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Most operations facilities are located in small town, away from the residential area. Even in large
cities, industrial areas are usually scattered around the fringes. Working hours are longer (48
hours a week as against the general norm of 40 hours approximately in commercial offices),
commuting time and distances are longer and there is more regimentation
There is a higher premium on conformance, congruence and convergence. As a result, although
there is an urgent need to change in favour of qualified engineers with MBA degree, the

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profession does not seem to attract them. Armed with a postgraduate qualification in
management, engineers are joining marketing, finance, personnel, information, administrative
services etc in large number. It may not be wrong to say that the top layer of engineering
graduates are seeking pastures in functional areas other than operations management or even
migrating to other countries.
Until and unless the society is able to attract and retain their best human assets in operations
management, creativity suffers.
We have two models available in the current global scenario - Japanese who gave a very high
primacy to operations management and have innovated numerous management systems to
support and sustain excellence in all other functional areas and we have the USA Model which
always reinforced marketing oriented approach to business. A case can be easily made in favour
of a synthesis for India as this would ensure the best of both worlds. However, in no case should
we copy and adopt blindly; we have to derive and develop our own processes of management
based on Indian ethos and values.

1.9 SUMMARY
The so called production or manufacturing management has been renamed as operations
management. The system study of operations management encompases the input-process-output,
where the convension process adds value to raw, materials by changing its shape, size or weight.
Industrial managers are engaged in effective and efficient utilisation of large variety of resources
like men, machine, material, methods, management and so on. Operations management includes
a vast and diverse array of bodies of knowledge there by signifying that it is a multidesciplinary
by nature.

1.10 SELF-ASSESSMENT EXERCISES

1) Why have we changed the name from production to operations management?
2) Take any service organization and draw up a schematic of its overall process of inputs
and outputs?
3) Take a typical agriculture, poultry or dairy farm, draw up their schematics of the overall
process. What are the common features?
4) We have entered the age of technology; henceforth everything will be knowledge based."
Discuss the above in the context of increasing use of technology - based resources for
achieving tasks.
5)

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resources. AIOU
Explain the complementary role of productivity and wastivity in effective utilization of

Can 'space' be construed as a resource? If so how would you measure its productivity?
7) What is proactive management of environmental pollution?
8) What are social issues involved in operations management?
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9) What are the beneficial effects of industrial operations?

10) Justify that operations management is a multi-disciplinary function

1.11 FURTHER READINGS

1) T. Hill, Production/Operations Management, Prentice Hall. London.
2) R.H. Hayes and S.C. Wheelbright, Restoring our Competitive Edge Through

3)
4)
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Manufacturing, John Wiley.
W. Skinner, Manufacturing: The Formidable Competitive Weapon, John Wiley.
T. Hill, Manufacturing Strategy, Macmillan

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UNIT2 PRODUCTION SYSTEM: ISSUES AND

ENVIRONMENT
Objectives

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Upon completion of this unit you should be able to:
• Appreciate the role of Production Management in the organisational setting
Understand the systems approach to production
• Have a brief idea about the characteristics of a production system and types of production
control systems
• Comprehend the procedure of designing a production system
• Appreciate why productivity improvement should be emphasised in a production system
• Take stock of the upcoming issues of production system viz. Group Technology (GT) and
Optimised Production Technology (OPT)
• Assess the impact of changes in the field of Information Technology (IT) on production
Systems
Structure
2.1 Introduction
2.2 Role of Production Management
2.3 Production/Operation Management: A Systems View Point
2.4 Production System Design
2.5 Productivity Improvement
2.6 Upcoming Issues of Production Systems
2.7 Production Systems and Information Technology
2.8 Summary
2.9 Key Words
2.10 Self-Assessment Exercises
2.11 Further Readings

2.1 INTRODUCTION
In this unit we will be able to learn about various aspects of production/operation systems. The
collection of all interrelated activities involved in producing goods and services is called a
Production system. A production system consists of five principal components: Inputs,
Conversion/Creation process, outputs, Feedback and Managers. The inputs to a production
system consist of the resources that are transformed into the desired outputs (goods and services)
as well as the resources needed to support the overall production process. The major output of a
service system is customer satisfaction. Conversion process in the production system typically
changes the shape and/or composition of raw material and other inputs. In a service organisation
the service is created.

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One of the important aspect of managing a production system is to determine the relative roles of
people and machines. With rapid changes in technology, now a days machines are capable of
performing more tasks as compared to the people. Robots for example can performed more
menial and dangerous tasks. The biggest challenge before a production operations manager is to
manage this Human-Machine Interface.
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In this unit we will be dealing with such important issues as: What role and especially reactive
role is being played by production system in the context of organisational setting? Why it is
essential to view the production system from the systems view point? What is the procedure of
designing a production system? Why it is important to achieve productivity improvement in
order for production system? Why it is important to achieve productivity improvement in order
for production system to be both efficient and effective? What contributions are made by

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upcoming issues of production system such as GT and OPT to the overall cost effectiveness of
the production system. In what, ways the recent developments in the field of IT are influencing
the production systems and what resultant economic benefits can be reaped?
Comprehension of these aspects shall puts you in good stead when confronted with such issues
in your working situations.

2.2 ROLE OF PRODUCTION MANAGEMENT

Production Operations Management is concerned with proper management and utilisation of
those enterprise resources which are required to produce goods and/or services. With the growth
of service industries the term Operations Management has come to be used which emphasises
production of both goods and services. In the wake of increased competition the business
organisations are compelled to develop their overall corporate strategies to remain viable. For
achieving this the functional level strategies should contribute to the coherent strategy of the
organisation. It is often seen that individual functions dominate the corporate strategies. The
following table (2.1) shows the relative dominance of one or the other functional area in the
corporate strategy.
Table 2.1: Changes in the dominant role of functions incorporate strategy formulation
Period Typical function Reasons
1945 to 1965 Production/Operations During this period, in most industrial sectors
"world demand was greater than world capacity.
Companies could typically therefore, sell all they
could make and hence the production/operations
function tended to hold way in strategic debate.
1965 to early 1980s Marketing In about the mid- 1960s, the imbalance between
available world capacity and world demand had
begun to be redressed. The outcome was that in
most markets selling products became increasingly
difficult. Hence the advent of marketing's strategic
role which came to the fore from this time onwards.
Early 1980s to Marketing and/or The recession which occurred ln the late 1 970s
present day finance and early 1 980s resulted in many companies
experiencing financial difficulties and witnessed
a spate of corporate failures. Already gaining
ground, these events stimulated the emergence of
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Hill, Terry, 1992, The Essence of Operations Management PHI. New Delhi, p. 10.

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2.2.1 The reactive role of Production/Operations Management

Many companies do not find it necessary to incorporate the functional area perspectives while
formulating corporate strategies. Most companies embrace the marketing and financial
constraints in their strategic response but fail to incorporate the critical aspects of
Production/Operations Management. One reason for this is the typical characteristics traits of

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Production/Operations Manager. A Production/Operations Manager should have the ability to
handle the strategic aspects of Production/Operations Management consistently. The second trait
of Production/Operations Manager is their disdain for the written word, because they rely more
on verbal communication. The need of the hour is to document all the activities so that it may be
possible to systematically review the Production/Operations Problems and to incorporate them
into the strategies. Even the Production/Operations Mangers also have a tendency to view
themselves as holding a reactive corporate brief and rarely do they feel the need to take part in
strategic debates. Companies also view the role of Production/Operations Management as a short
term and. reactive and do not stress the long term nature of this task.

2.3 PRODUCTION/OPERATIONS MANAGEMENT A

SYSTEMS VIEW POINT
Production operations management is greatly influenced by the rapid economic change and the
technological advancements. The classical management cycle of planning implementation and
control is very much applicable in the production management. According to Ogawa "Production
of management may be defined as the planning, implementation and control of production
activities conducted by an organisational entity with define performance objectives subject to
modifications according to ambient conditions."
Today's production management is not confined to the plant level manufacturing activities only.
But it encompasses all other preceding activities such as preparation, product planning and
design, as well as R & D. It takes into consideration, socio-economic changes. Forecasts about
future technologies are the fountain head activities, which are followed by market surveys and
technology assessment (for example in terms of pollution control studies). The socio-economic
factors provide the foundations to R & D activity of an organisation which yields product
planning and design. It is followed by the preparation stage which includes planning, sequencing,
scheduling, equipment selection, materials procurement, personnel mobilisation etc, -Hence
Production Management calls for integrated actions which cover the whole spectrum as depicted
in figure 2.1.

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Fig. 2.3: Areas of Production Management

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Ogawa, E, 1984, Modern Production Management: A Japanese Experience,

Asian Productivity Organization, Tokyo P3
The production systems which are responsive to rapid changes in the market place are capable of
reducing the lead time between product development and manufacturing which is also known as
the startup period between product design and actual production.
2.3.1 Production System Model
A production process consists of 1) objective, 2) input, 3) processing, 4) output, and 5) control
and adjustment (the word "control" is; used hereafter to mean both control and adjustment).
1) A clear-cut objective should be established for any production activity.
Characteristics of the finished product should be defined together with applicable
Production techniques. For example, in the case of canned crab meat, the can should not
be defective and should contain a specified volume/weight of crab meat, not tuna or beef.
2) "Input" refers to resources used in the production of canned crab meat, such as crab meat,
wrapping paper, can, human labour, utilities, and data.
3) "Processing" means the transformation of the resources into a product which in this case
is canned crab meat. Production equipment is utilized for processing.
4) "Output" is the product itself.
5) "control" refers to the evaluation of the output with reference to the objective and to the
subsequent adjustment or modification when required. All these principal elements and

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their interrelationships are depicted in the following figure (2.2).

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Fig 2.2 Production System

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For smooth production it is essential that proper coordination should be achieved between the
production function and preparation stage.
A favourable relationship should be maintained between input and output throughout the entire
production process. This relationship should realise the fixed objectives with the use of minimum
resources.
2.3.2 Characteristics of Production Systems
A production system is characterised by the following:
a) System discrimination
b) Interrelationship among systems
c) Stratum formulations
d) Specialisation of functions
e) Increase of entropy
f) Isofinality

a) System Discrimination: A production system consisting primarily of input and output

does not have the wider connotations involving all phases from technology forecasting to
manufacturing all these other phases are considered as part of the production
environment. This definition process is called system discrimination.
b) Interrelationship Among System: The closed relationships that exist between
production and pre-production arrangements is known as the interrelationships between
systems. Similarly the relationships among production systems and other systems also
exist.
c) Stratum Formulation: A production system consisting of various strata of corporate

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hierarchy wherein each stratum has a role to play depending on the size of the firm. It
enjoys benefits as a result of the stratum performance. Examples of strata are:
headquarters, administrative departments, factory and production field.
d) Specialisation of Functions: As the production system expands it trends to have large
number of hierarchical strata each performing specialised functions. According to Adam

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Smith the integration of specialised functions produces maximum results.

e) Increase of Entropy: According to Ogawa entropy is a measure of the degradation of the
matter and the energy in the universe to an ultimate state of inert uniformity. To check
this deterioration process fresh blood must be infused in every production system e.g. old
employees should be replaced by new once and old machines should be replaced by new
machines employing new technologies. Otherwise the organisation and equipments may

f)
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become obsolete. To cope up with rapid changes of technological innovation the
organistion as well as production system needs to be rejuvenated.
Isofinality: Isofmality is the process of reaching the same goals by different routes.
There are different approaches to converting the inputs to outputs. For example some
organisations may heavily rely on buying required parts from outside suppliers while
others may insist on in-house production of parts. Although both the organisations have
an identical objective of efficient production.
2.3.3 Production Systems-Two Types of Control
Control is the basis for production management. The 'input-process-output' relationship should
be controlled irrespective of size of the production system. There are two types of production
system controls: a) Feedback control b) Feedforward control
a) Feedback Control: In this type of control mechanism first the output is obtained as a
result of input and processing. Then it is measured using some measuring instruments.
The result of the measurement is seldom in agreement with the goal. Therefore
specifications normally have tolerances. Adjustments are made in processing and/or
inputs if statistically significant number of products fall outside the tolerance range. In
common parlance of production management it is called "the principle of exception". In
these situations control charts which are based on the Statistical Quality Control (SQC)
are used as a control tool.
b) Feedforward Control: In this type of control mechanism, input is checked against pre-
specified standards, prior to processing as well as output phases. For example at Toyota
Production System, every work station is equipped with 'Bakayoke' which detects and
physically removes defects in an automated fashion. Preventive maintenance of machines
is another example of feedforward control, wherein the life of each critical machine
component is determined first and it is replaced just before it breaks down. The
feedforward control system collects measurement data, compares them against the
specifications and initiates modifications on input if and when the need arises.
For attaining economic efficiency, both types of control must be simultaneously used in a
production system. The role of production management is two folds:
1) First is to ensure that the performance satisfies the production goal
2) The second one is to modify the production goal to suite the changes in technology and
demand in the market place.
A production system can acquire its competitiveness through the simultaneous application of
these two types of production control system.

2.4 PRODUCTION SYSTEM DESIGN AIOU

Various machines and processes in the factory must be organised to make the most effective use
of their capabilities. A production system consist of three elements of 'input-transformation-
output'. Design of a production system aims to achieve the right mix of varying proportions of

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these elements. The production system design must be effective in its overall context, e.g. a
production system may be very efficient and effective but there may not be adequate demand in
the market place for its products. Such holistic approach requires that both internal and external
factors must be identified and their impact on the organisational effectiveness is assessed, some
of the external factors are: Competition, supply, demand, trade unions, financial institutions and
government policies. The corporate strategy has to be formulated which should take into account

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the functional level policies including that of output and input policy from production system.
Some of the internal factors which are relevant at the transformation stage are: Customer
specifications, delivery dates, complexity of products and technical factors such as selection of
equipment, material handling equipments etc. Some of the operations decisions regarding the
organisational structure, quality control, capacity planning, product control mechanism,
personnel decisions (viz. number of operators required, shift working, form of payment etc.) la
some of these personnel decisions trade unions also influence the technical decisions like the
extent of automation, shift working, payment of wages and incentive etc.
All these factors have bearing on the design of production system. The process of production
system design has been diagrammatically shown in the following figure (2.3).
Fig. 2.3 System Design Procedure

Clews, G. and Leonard, R. 1991, Technology and Production. Heritae Publisher, New Delhi, p.89

2.5 PRODUCTIVITY IMPROVEMENT

Productivity is one of the major performance criteria for evaluating a production system.
Productivity is a function of the relationship between production, input and output. Productivity
improvement results when a given output is achieved with less input or a given output is

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achieved with less input. Productivity improvement is equally useful for service industries. In
recent times productivity has improved through extensive use of computers and sophisticated
machines. Both input and output can be expressed in terms of energy units. Material energy
represents raw material and equipment, and mental energy represents brain work. Productivity
improves when waste is either decreased or eliminated, materially or mentally so that a larger

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percentage of energy input is obtained as the output.

Productivity is a summary measure of the quantity and quality of work performance with optimal
utilisation of scarce resources. It identifies success or failure in producing goods in right quantity,
of good quality and with good use of resources. Productivity involves doing a job in the best
possible way all the times. In figure 2 A the productivity is shown as a criteria of work
achievement that applies to individuals, groups and organisations. Manager should be able to

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influence the productivity of their subordinates. The manager should also be able to integrate these
performance contributions to achieve the high levels of productivity at the organisational levels.
Researchers are rigorously trying to study the applications of operations management to achieve
the productivity improvement in the service industry. In order to maximise the output and
minimise the input it is necessary to control the whole of production system. It results in
effective utilisation of human and other resources. Japanese industrial organisations have
followed this philosophy in their productivity improvement drives.
Fig 2.4 Levels pf Productivity Accomplishment in Organization

Scheremerhorn Jr., J.R. 1989 Management for Productivity, John Wiley and sons, New York p-18

2.6 UPCOMING ISSUES OF PRODUCTION SYSTEMS

Some new concepts such as Group Technology (GT) and Optimised production Technology
(OPT) have increasingly gained recognition in the production management discipline. These
concepts provide economies in production and add efficiency to the production system.
2.6.1 Group Technology (GT)
GT is the relatively new concept in production operations management. The objective of GT is to
take advantage of mass production systems in smaller batch production systems. The idea of GT
is to classify parts into families so that efficient mass plant layouts can be designed for these
families of parts. To illustrate the concept of GT following example is given:
A production facility produces two families of parts A and B. The first family of parts requires

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operations on a lathe, milling machine and drilling machine. The second family of parts require
shearing, milling and drilling operations to be performed. The traditional process is shown in the
following figure (2.5). In this layout shears/lathe, milling machines and drilling machines have
been grouped in separate departments. As parts from each family pass through milling and
drilling departments in batches, new setups on machines must be performed. On the other hand,

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the group concept shown in the figure below establishes a separate machine grouping of milling
drilling machines for each part family. In this system the number of setups are reduced and the
system operates as a mass production line.
Fig 2.5 Group Layout

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Evan, J.R. et al., 1984 Applied Production and Operations Management west Publishing Company, New York, 9.18
In a group layout system the different machines are grouped together which are necessary for the
production of families of parts. Many benefits can accrue from the GT:
i) The design of new products can be greatly assisted by examining the design of related
parts
ii) With GT in place, production control becomes easier as scheduling becomes less
complex and material handling costs can be reduced
iii) The savings in setup times and increased production potentials also results from the GT.
iv) In essence, GT provides for inherent advantages of mass production system in a batch process.
Students are required to go through unit 18 to read more on Group Technology.
2.6.2 Optimised Production Technology (OPT)
In recent times OPT has received a lot of attention of the management thinkers and Production
Operations Management Practioners. OPT comprises two parts:
i) The conceptual base of the system
ii) The software package (OPT/SERVE) which support the system.
OPT is a sophisticated control system based on finite loading procedures by
concentrating on bottle necking work centres. It is concerned with shop floor control.
Some of the fundamental insights of the OPT are as follows:
i) In any production system the capacity of all the parts are not the same. There are some
bottle necking work centres which have capacity constraints. The important task of
Production Operations manager is to load the system in such a way to optimise the output
without violating any of the capacity constraints.
ii) The bottle necks govern both throughout and inventory levels in the system.
iii) It is essential to reduce the bottle necks by increasing available capacity which in turn

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will increase the total flow of the system thereby realising hitherto unused some of the
existing capacities of other processes. No advantage can be gained by increasing capacity
of non bottle neck processes. The principles of OPT philosphy have universal
applicability consequently they help in enhancing existing control systems and the
effective management of the Production Operations Manager.
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2.7 PRODUCTION SYSTEMS AND INFORMATION

TECHNOLOGY
IT/Information System (IS) are having major impact on this functional area. A large number of
tools are provided by the IT such as Computer Aided Designing (CAD), Computer Aided
Manufacturing (CAM). Flexible Manufacturing System (FMS), Computer Integrated

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Manufacturing (CIM). The IT system have contributed immensely to the MIS of an organisation.
In an efficient IT systems the information flows electronically. The extent of automation is also
increasing as various versions of automated equipment such as Directed Numerically Controlled
(DNC), Numerically Controlled (NC) and Computerised Numerically Controlled (CNC)
machines are available for use in the POM area. These machines are designed and developed in
accordance with the latest IT principles. For controlling the operations of CNC machines a
computer programme is written in APT (Automatically Programmed Tools) and Compact II
language. IT has come to be used to control a physical process also. The collection and analysis
of data for Statistical Process" Control (SPC) is done through analog device. Data is analyzed
with the help of a digital computer which in turn gives signal to take the corrective actions if
process goes out of control.
The increasing use of Robotics is another manifestation of the impact of it on POM. A Robot is a
mechanical device which has the flexibility and ability to grab hold and move the items on the
shop floor. A Robot is a cost-effective substitute of human efforts. Another area in which IT/IS is
facilitating the manufacturing operations is the Decision Support System (DSS). A DSS is
logical extension of MIS and it aids in decision making. It enables managers to perform a "what -
if type of analysis. Expert Systems (ES) are computer programmes that mimic human logic and
solve problems like a human expert. The knowledge and skills of an a given field are captured in
a computer programme which should be periodically updated to include new facts of knowledge.
The use of ES in scheduling programmes is wide spread. Odyssey is a business oriented expert
system which is used for solving the computer scheduling problems. The following table gives
an idea of the areas in which ES have been developed.
Table 2.2 Expert System IN P/OM
Name Use Explanation
Xeon (expert Configurer), Configuration Checks sales orders and then specifies
Digital Equipment Corp. the components needed to configure
the computer system
Authorized Assistant Credit Helps determine the appropriate level
American Express of credit, based on a variety of criteria
Consultant, IBM Bids Helps field service representatives
prepare bids by analyzing elements in
the request for quotation
PROPLAN Scheduling Schedules machine parts based on

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capability, and geometric features of
the parts.
SPC (Statistical Process Process control Data are DELTA (Diesel Electric Locomotive
Control), Automatix, Inc. statistically analyzed to Trouble-shooting), General Electric

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guide modifications to the Maintenance Assists maintenance

manufacturing process to Personnel in isolating and repairing
anticipate malfunctions various faults in diesel electric
locomotives
FADES (Facilities Design Layout Develops a good facility design in
Expert System) situation where quantitative tools and

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H. Rughav Rao and 13.P. Lingaraj, "'Expert Systems in Production and Operations Management:
Classification and Prospects," Interfaces, 18(November-December 1988): 80-91.

2.8 SUMMARY
This unit has attened to provide a broad (framework) of Production Operations System. The
production Operations management plays a crucial role in the context of a business organisation.
It plays a domminant role in the process of corporate strategy formulation. A system's view point
has been offered in this unit which takes into consideration the linkage between production and
pre production stages. Various characteristics of production system such as discrimination, inter-
relationships among systems, stratum formulation. Specifications of functions, increase of
entropy and isofinality have been explained. Two types of production control system viz.
feedback control system and feedforward control system have been described. In the next
section, procedure of design of the production system has been outlined. Productivity is one of
the major performance criteria for evaluating a production system. Two important concepts of
Group Technology (GT) and Optimised Production Technology (OPT) have gained in popularity
in the recent times. The underlying concepts and resultant economic benefits which can be
derived from both of them have also been discussed. Rapid advancements in the field of
Information Technology (IT) leaves one awe-struck. It is having major impact on the way the
business organisations work. The impact of IT on Production systems has been outlined with
particular emphasis on CAD/CAM, FMS and Robotics.

2.9 KEY WORDS

Decision Support Systems (DSS)
Entropy
Expert Systems
Feedback Control System
Feedforward Control System
Flexible Manufacturing System (FMS)
Group Technology (GT)
Isofinality
Optimised Production Technology (OPT)
Production System Model
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Production System Design

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Productivity Improvement
Robotics
Stratum Formulation
System Discrimination

1.
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2.10 SELF-ASSESSMENT EXERCISES
"A production system is characterised by its inputs, transformation process and outputs."
Identify for the following production systems the inputs, conversion/ creation process and
major outputs:
a) Automobiles manufacturing
b) Architecture consultant
c) Private nursing home
d) Thermal power plant
2. The discussions given in the unit regarding design of a production system are useful only
for a large organisation. In your opinion whether this statement is true or false. Give
logical justification of your answer.
3. From your own knowledge and experience describe the working of production systems
like FMS, GT and OPT in different organisational settings.
4. Distinguish between feedback and feed forward control systems. Whether the
implementation of any one type of production control system is sufficient?
5. With a sound IT system in place, the information flows electronically in an organisation.
How the MIS of an organisation can be benefited by it?

2.11 FURTHER READINGS

Adam Jr., E.E. and R. J. Ebert, 1987. Production and Operations Management Concepts Models
and Behaviour, Prentice-Hall Inc: Englewood-Cliffs.
Buffa, E.S. 1983, Modern Production/Operations Management (7lh edition), John Wiley &
Sons: New York.
Clews, G. and Leonard, R., 1985, Technology and Production, Heritage Publishers, New Delhi.
Evans, J.R., Anderson, D.R., Sweeney, D.J. and Williams, T.A., 1984, Applied Production and
Operations Management, West Publishing Company, New York.
Heizer, Jay and Render, Barry. 1993, Production and Operations Management, Allyn and
Bacon, Boston.
Ogawa, E. 1984, Modern Production Management: A Japanese Experience, Asian Productivity
Organisation, Tokyo,

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Schermerhorn Jr., J.R., 1989, Management for Productivity, John Wiley & Sons, New York.

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UNIT3 TOTAL QUALITY MANAGEMENT

Objectives
After going through this unit, you should be able to understand:
• Quality is a qualifier
•
•
How TQM emerged Copyrights
Difference between QC, QA, TQC and TQM
• The various terms and their relationships
• Voice of the customer
• Quality function deployment (QFD)
• House of quality (HOQ)
• Identifying the process
• Measuring processes
• Cost of quality
• Organized problem solving
• Improving the process
• Process capability studies
• Importance of employee participation and empowered decision making in TQM
• What a quality systems standard means
Structure
3.1 Introduction
3.2 TQM: A Historical Perspective
3.3 Quality Terminology
3.4 Understanding the Customer
3.5 Understanding and Improving the Process
3.6 Employee Involvement and Empowerment
3.7 ISO 9000: The International Quality System Standard
3.8 Summary
3.9 Self-Assessment Exercises
3.10 Further Reading
3.11 Appendix: ISO 9000 Quality System Standards

3.1 INTRODUCTION
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Total Quality Management (TQM) is a systems approach to ensuring quality in an organization.
TQM is not just quality control or quality assurance. Nor is it limited to the boundaries of a Total
Quality Control system. It is a dynamic process with a strong philosophical base which
incorporates many of the concepts upon which Total Quality Control Systems are based. The

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emphasis is on involving every one in the organization in activities which provide for continuous
never-ending improvements. Quality activities are planned and managed into the system and are
oriented towards the achievement of complete customer satisfaction. The liberalized economy is
forcing Indian companies to establish Total Quality Management Systems. It is a struggle which
has just begun and Indian companies will continue to do so just to be in the race - lest they
perish. Quality will be just a qualifier, not a competitive advantage anymore.

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TQM efforts are led by top management by involving everyone in the company with the prime
objective of satisfying the external customer. This focuses the organizational efforts towards
satisfying the internal customer with the help of a quality management system for doing things
right the first time. The traditional approach of post-production detection of defects is
discouraged and a prevention philosophy is adopted to bring down the nonconfonnances. The
organization seeks continuous never-ending improvements which are tracked with the help of
appropriate measurement systems.
In this chapter the focus will be on understanding the customer and the process and then
satisfying the customer by improving the process through total involvement of employees, After
a brief historical perspective on TQM and its relevance to Indian organizations (Section 3.2), we
will define the various terms relevant to quality management (Section 3.3).
TQM organizations focus on understanding and responding to the needs of the customer. The
voice of the customer is clearly identified and then deployed throughout the organization with
minimum of distortions. In section 3,4, we will discuss the techniques used to identify customer
satisfaction and their expectations. We will understand what Quality Function Deployment
(QFD) means and what is a house of quality.
In most organizations there are different functions which are geared towards supporting the core
manufacturing (or service) process. Functions, such as, design, engineering, marketing, finance,
systems, R&D, administration, health care and so on. All these functions can be seen as
processes which are designed to satisfy customer needs. All processes have variations which
need to be controlled and then improved in a never ending cycle of efforts aimed at continuous
improvement. In section 3.5, we will discuss how to get into the path of continuous
improvement. Various problem solving tools will be presented. Procedures will be explained for
identifying major nonconformances and therefore the major problem areas. Since we are aiming
for continuous improvement, measurement systems for monitoring the quality performance will
be discussed. We sketch out a measurement framework for identifying nonconformances. We
will also understand what cost of quality means and how to establish a measurement system.
Even though customers are the driving force behind the process, without total employee
involvement (in terms of alignment, motivation and empowerment) and top management
leadership, the TQM efforts become futile, Methods need to be adopted to stimulate total
involvement and move toward the common goals of systematic and continuous improvement
with the ultimate aim of satisfying customers, employees and stakeholders. These aspects will be
discussed in section 3.6,

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Before concluding, in section 3.7, we. will introduce an International quality systems standard
called ISO 9000. Even though a TQM organization is beyond ISO 9000, the exercise undergone
for getting the quality systems certification brings in the discipline much needed for a
organization practicing TQM,

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3.2 TQM: A HISTORICAL PERSPECTIVE

Quality management systems have evolved through quality control (QC), quality assurance (QA)
and total quality control (TQC) systems to total quality management (TQM) systems. We will
briefly sketch out each of these systems.

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Quality control is concerned with defect detection by using post production inspection
procedures. Statistical quality control techniques are used while inspecting the finished goods.
Main focus is on the product - i.e., what is wrong with the product (orpart). Techniques such as
acceptance sampling, control charts, control by attributes and control by variables are typically
used by the QC inspectors while controlling the quality of goods manufactured. The extent of
employee involvement is minimal. Only few inspectors from the PC-department are involved in
quality control activities. It takes a real short time (within days) to install a QC system. However,
such systems do not help identify problems.
Quality assurance systems aim to produce as per design specifications and emphasize defect
prevention. Quality is built into the system (that produces the product) by using production and
operations management principles. Statistical process control techniques are used to monitor the
process by allowing random variations and eliminating non-random variations. Main focus is on
the process - i.e., what is wrong with the process which manufacturer the product. Quality
system standards (such as ISO 9000) are adopted to assure quality in the process. ISO 9000 is an
International systems standard which shows how an organization can establish, document and
maintain an effective quality system. It helps demonstrate to the customer that the organization is
committed to quality and has the ability to meet their requirements. The employee involvement
is limited within the centralized staff function of the QA department. It takes between six to
twelve months to install such a system. The main theme her is to document (with well defined
procedures) what you do and do what you document.
Total quality control systems are concerned with cost reduction efforts as a drive towards
continual improvement. Here quality is organized into the system. These systems take off once
the cost of quality is calculated. Problem areas are identified and problem solving techniques are
used extensively during the continuous improvement cycle. Performance is monitored with the
help of the COQ system. These efforts enhance the product quality. Here waste identification and
removal is an important benefit. Philip Crosby's zero defects program (Table 3.1) is a TQC
approach. So is the Taguchi methodology which emphasizes the importance of a robust design to
take care of all downstream fluctuations. In TQC systems we have more involvement in the form
of various quality circles working towards improving the processes. Time to install is between
one to three years. It may be noted that QA standards form the basis for a TQC or TQM
approach.
Total quality management systems manage quality in. They have a strong philosophical base
that incorporates several important concepts of TQC systems. Management efforts are oriented
towards the achievement of complete customer satisfaction. Here we find an organization wide

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responsibility for quality. Time to install is three to five years. The evolution shows a culture
change in the organization which achieves customer orientation through various stages of
development that progress through a systems oriented to an improvement oriented to a
prevention oriented state.

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Table 3.1: Emergence of Total Quality Management

(World War I) 1920s Shewhart Statistical methods applied to
manufacturing
(World War II) 1940s (Deming, Juran) Increased emphasis on process
improvement
1950s Deming assists General Douglas
MacArthur in Japan Emerging forces:
• Japanese revolution in quality
• Prominence of product quality in public
mind
1960s (Deming, Juran, Feigenbaum) TQC emerges in United States
1960s 1970s (Deming, Ishikawa, Japan emerges as world quality leader
Taguchi)
1960s- 1970s (Crosby) Zero defects movement in US
1980s - 1990s (Deming, Juran, Taguchi,
Crosby) TQM emerges in the developed nations.
1990s We are in the process of "understanding"
these philosophies. We need to understand

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them successfully.
Figure 3.1 and Table 3.1 show how TQM emerged over the century and who were the quality
gurus who were responsible for the status this philosophy commands today. The progress from
quality control to quality assurance to total quality control to total quality management took
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almost a century of concerted efforts from quality gurus, such as, Walter Shewhart, W. Edwards
Deming, Joseph Juran, Kaoru Ishikawa, Genichi Taguchi, Armand Feigenbaum, and Philip
Crosby. The quality movement was initiated in Japan by Deming and Juran. It was later picked
up by the Japanese who have made the quality movement a big success story. Around the 80s
Japanese companies, on a continuous cycle of never-ending improvements, surpassed the west.
They captured the markets with their consistent quality products and have now shifted their

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priorities on to satisfying customers with products having high quality at low price.
We will take a brief look into the Indian scenario. According to the World Competitiveness
Report (1994) Indian companies lag far behind their global competitors in terms of customer
orientation, time to innovate, time to market and, in general, in terms of TQM practices. Under
the liberalized scenario, it is more of a concern because the global players are now entering the
Indian market. We may be having global capacities in some cases but we fail in terms of global
quality. For us it is a Catch 22 with a difference - if we don't practice TQM we die; if we practice
TQM we struggle to survive (we may not surpass but we do survive and may be succeed). I used
the word survive because our competitors are already much superior to us in terms of quality
practices. For example global players may be having component rejection rates of 1 in 10,000
while Indian companies are struggling with rejection rates of 1 in 100. A case in point is the US
based company Motorola, which has made the slogan six sigma quite famous by targeting
99.99997% defect free manufacturing. According to a 1995 Business Today survey, Indian
plants have trouble achieving even 95% defect free manufacturing. In most cases the burden of
high rejection is passed on to the customer. But with liberalization becoming a reality the
customer has a choice. And companies have to listen to the voice of the customer to drive their
quality initiatives. With mass customization becoming a goal of most quality programs, there is a
lot of pressure on the Indian companies. There is a need, in most sectors, for instant translation of
new designs into finished products with no defects.

3.3 QUALITY TERMINOLOGY

In this section we will define some of the terms which are normally used in TQM classes. We
will try to understand the meaning of quality, customer, product, quality of design and
quality of conformance (relationship between product and customer through quality) quality cost,
quality measurement (relationship between quality and cost), value addition, small q, big Q, non-
conformances and rework (relationship between quality and productivity).
Quality: There are several definitions of this word. For example:
"Quality is customer satisfaction"
"Quality means meeting customer requirements"
"Quality means fitness for use"
"Quality is conformance to specifications"

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"Totality of features and characteristics of a product or service that bear on its
ability to satisfy stated or implied needs"
Customer: "Anyone who is impacted by the product or service". By this definition we find that
there are several customers waiting down the line when a product is being processed through
several stages in an organization before it reaches the final consumer. Thus we have people who
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are impacted within the organization and also people impacted outside the organization. Thus we
have two type of customers - the internal customers and the external customers.
External customer: One who purchases a commodity or service. External customers are the
driving forces behind an organizations business. Figure 3.2 below shows the external customer.

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Fig 3.2 The external and Internal customers

Internal customer: Any individual (or group or organization) who receives and uses what an
individual (or group or organization) provides (see Figure 3.2). Should section 1 meet the needs
of section 2? What happens to section 2, if the section 2 requirements (in terms of quality
specifications) are not met by section 1? What if section 1 is not capable of meeting section 2
needs? Should the section 1 work in that case be outsourced? That would mean making section 1
redundant. Taking another example, manufacturing departments are internal customers of
product design and development departments. If the design department supplies engineering
designs that are not producible by the manufacturing department then the internal supplier
customer relationship suffers. The supplier here is unable to satisfy its internal customer. Should
manufacturing somehow produce it over-riding the design specifications? How would it affect
the overall quality of the product in that case? Or should design sensitize itself to manufacturing
capabilities before developing products intended for satisfying the external customer?
Hence, almost everyone in an organization has a customer. Satisfying the customer (either
external or internal) involves defining their needs and expectations and also meeting them.
Dissatisfied customers are lost opportunities. Studies have indicated that dissatisfied customers
express their dissatisfaction to other potential customers. Moreover, developing new customers
to replace dissatisfied ones is costlier than retaining satisfied customers. Hence organizations
must try their best to satisfy customers by listening to their dissatisfaction and deploying their
voice through the organization so that the situations causing the dissatisfaction are remedied. A
proactive stance is necessary in identifying sources of dissatisfaction because when there are no

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complaints it does not necessarily mean that there are no dissatisfactions. Typical methods used
are surveys, questionnaires, follow-up phone calls and so on.
Product: Output of any process. Classified into goods, software and services.
Quality and Customer Satisfaction: We achieve customer satisfaction with the help of several
product features. Or through products that are free from deficiencies. Products having good

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features meant to attract customers are said to have good quality of design. The various
dimensions of design quality could be performance, reliability, durability, ease-of-use,
serviceability, aesthetics, availability of options (additional features and expandability), and
reputation. In a service setup the dimensions are accuracy, timeliness, completeness, friendliness,
anticipating customer needs, knowledge of server, aesthetics and reputation. Hence they have the
capabilities of commanding high price and share and therefore earning higher revenue. On the

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other hand products having less deficiencies are said to have good quality of conformance.
Lower deficiencies are achieved through waste reduction leading to lower costs thereby yielding
higher profits. Freedom from deficiencies or conformance to standards are necessary at delivery,
during use and during servicing. In addition, other supporting business processes such as sales
and billing should be free from errors. Higher conformance means fewer complaints which
implies greater customer satisfaction. The net effect of improved quality of design and
conformance is increased profits (Figure 3.3).

Quality and Productivity: The focus of productivity is now shifting. The old factory-oriented
definition of productivity is "product (or service) output per unit of resource input". The new
market-oriented concept is salable, good quality product (or service) output per unit of resource
input'' The higher the value the better is the productivity. Figure 3 uses the new definition of
productivity.
Quality and Profitability: Profitability is driven by quality.
We know, profit = revenue - cost
and revenue = price quantity sold
=> Profit increases if revenue increases or cost decreases.
=> Revenue increases if price increases (quantity sold remaining constant)
or if quantity sold increases (price remaining fixed)
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Quality and Cost: There are two debatable viewpoints regarding this relationship. Both the
views are justified depending on the frame of reference. Viewpoint 1: Improved quality requires
more expensive materials, additional labor, more precise machines and therefore lead to higher
costs. Viewpoint 2: Improved quality is possible through savings in rework, scrap and warranty
expenses leading to decrease in costs.
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Fig 3.4: Definition of value

Value Addition: When raw material is processed in an organization, at each stage there is a
value addition taking place until it comes out as finished product (see Fig 3.2). In TQM
organizations the value addition does not stop here. Rather it continues right up to the customer.
Figure 3.4 shows the definition of value.
Small q vs Big Q: The above discussions indicate a need for broadening the scope of the quality
function. The traditional approach which used to be product oriented was based on the post-
production defect detection philosophy. It used to serve well under monopolistic situations where
both the organization and the market were treated as black boxes. But the big Q focus has a
much larger scope with a strong customer orientation that enhances the product quality by
improving the process. The customer is the driving force which provides the feedback for error
free product development and production. Error prevention philosophy is adopted and there is a
high degree of organizational learning which helps the organization to satisfy customers in a
highly competitive market.
Total Quality Management: Like quality there are several definitions of TQM. A couple of
them collected from different texts are stated below. These definitions summarize most of what
we have been discussing so far.
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"TQM is the system of activities directed at achieving delighted customers, empowered
employees, higher revenues and lower costs".

"Total quality is performance superiority directed at delighting the customers. The means
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used are people, committed to employing organizational resources to provide value to

customers, by doing the right things right the first time, every time"
Note: user-based definitions ought to be translated into product-based definitions which are to
be supported by manufacturing-based definitions.
Activity A
your organisations. Copyrights
Describe how increased market share and profitability might result from improved quality in

………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
Activity B
Select one staff department (e.g. accounting, finance, marketing services, human resources) and
describe how this department can deliver quality services to its internal customers.
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
Activity C
How would an organisation's commitment to quality facilitate or improve the following:
— The planning Process
— Organisation
— Control
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………

3.4 UNDERSTANDING THE CUSTOMER

We have seen how customers are the driving force behind big Q efforts. We also noted that
virtually everyone has a customer. Understanding the stated and implied needs of the customer is
vital for any organization practicing TQM. We have to translate the user based definitions of
quality into product-based definitions. One method of translating the voice of the customer into
design specifications of a product is quality function deployment (QFD). In this section we try
to understand what QFD is and how it is used by TQM organizations,
Quality Function Deployment
QFD is a method used to identify critical customer attributes and to create a specific link
between customer attributes and design parameters. It helps marketing and design to answer
three primary questions:
1.
2.
3.
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What Attributes are critical to our customers?
What design parameters are important in driving those attributes?
What should the design parameter targets be for the new design?
Market driven companies having a sharp customer focus produce designs that are responsive to

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customer needs and expectations. Most importantly these designs must be producible with
minimum of inter-departmental conflicts. We therefore need procedures for listening to the
customer and translating them into finished product realities. QFD provides a cross functional
approach which uses a planning tool called “House of Quality” for organizing and linking the
customer survey information with the product design attributes and later deploying it in stages
throughout the organization. Customer feedback is used by the QFD team to make engineering,

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marketing and design decisions. Each step in the QFD process involves building up a section in
the house of quality matrix thereby simplifying the presentation of a large amount of data. The
steps involved in building the house of quality are: (i) identifying customer needs through market
survey, (ii) identifying customer counterpart product characteristics, (iii) relating the __ customer
attributes to product characteristics, (iv) evaluating product characteristics and developing
targets, (v) evaluating products of competitors by performing internal as well as external
comparisons, and (vi) determining which product features to deploy throughout the production
process. The matrix comprises of the following sections (see Figure3.5):
• A WHAT section
• A HOW section
• A WHAT - HOW relationship section
• A HOW MUCH section
• A CORRELATION section (roof of the matrix)
• IMPORTANCE RATINGS section
• A CUSTOMER ASSESSMENT section
• An ENGINEERING ASSESSMENT section

Fig 3.5: House of Quality Matrix

a)
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The process of developing the House of Quality involves:
Establishing critical customer attributes for the product based on their expectations and
give them weights according to their importance (i.e., filling the what section along with
the importance rating column). This specifies the voice of the customer. The importance

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to customer is shown alongside each what in a scale of 1 to 10.

b) Establishing critical design parameters that drive system performance (i.e., filling the how
section). Here product features are defined in measurable terms. These are the operating
characteristics that are likely to affect the customer attributes. The how much section is
also filled up to give the target values and other technical specifications for each design
attribute which are believed to fulfil the desired customer attributes.
c)
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Establishing the relationship between the customer wants and the design parameters (i.e.,
filling the body of the central relationship matrix). Each cell in this matrix shows a
relationship (either strong/weak or positive/negative) between the customer attributes and
design parameters. These relationships are shown in the form of symbols. Importance
weighting section shows the significance of each design attribute as it is linked with the
customer attributes through the relationship matrix.
d) Identifying the inter-relationships between the various design parameters to establish
trade-offs (i.e., filling the roof matrix). There may be either strong/weak or
positive/negative correlationships between the design features. If there are strong
negative correlations between features, we redesign the product to eliminate such trade-
offs.
e) Focusing on customer perceptions of the company's existing product compared to its
competitors here we fill in the customer assessment section. It corresponds to the what
column. These comparisons help in identifying our strengths and weaknesses and can
focus our attention to areas where we can get a competitive advantage. This is external
benchmarking which helps us study the customers perception.
f) Focusing on the internal assessment by filling in the engineering assessment section. It
corresponds to the how column. Here we benchmark ourselves with our competitors.
g) Analyzing the matrix and choosing priority items. For example, if there is a mismatch
between the engineering assessment and the customer assessment, we follow it up by
revising the design requirements to meet the true customer requirements. A mismatch
may occur in situations where the internal assessment puts us in a superior position (as
compared to our competitor), while the customer assessments have rated us inferior on
that particular requirement.

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Fig. 3.6: The deployment process
Several houses of quality are required in deploying the voice of the customer. Figure 3.6 shows
an example of how the voice of the customer can be deployed. QFD will be most effective if we
take a systems-approach to implementing quality practices in the organization. Thus early
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involvement in the product development process with the help of cross-functional teams is an
absolute necessity to prevent problems downstream.

3.5 UNDERSTANDING AND IMPROVING THE PROCESS

In the previous sections we discussed who is a customer and what the voice of the customer
means to the company. In this section we will try to understand and identify processes that can
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be aligned to satisfy the customer needs. We will establish a system to measure the performance
of the process. We will present the seven QC tools that will help us in identifying and solving
major problems. We will understand what process, variability means and how to strive for
continuous improvement by reducing variability. We will then define the voice of the process by
undertaking process capability studies.
Identifying the Process
In Section 3.3 we saw how organizational inputs are transformed through a series of stages
involving man, machine, method, materials and other resources into value added outputs that are
meant to satisfy customer needs. Figure 3.2 shows an organized series of sequential stages
representing a process that can convert a certain measurable input into measurable outputs. The
concept of a process is further defined in the Appendix (see Fig Al and Fig A2). An important
element here is the feedback that is essential for process monitoring and improvement. These
figures also identify the various groups that are involved in the process, namely, customers,
suppliers and process owners. All of them are responsible for the quality performance of the
process.
In TQM we try to identify the key processes on which the success of the organization depends.
Key processes could be (a) processes that produce the most important products wanted by
customers, (b) processes having high visibility with customers, or (c) processes having well
defined problem areas indicating a high potential for improvement. Once the processes have
been identified the ownership has to be assigned to fix authority and responsibility for
maintaining, operating and improving the process. Quality improvement is achieved through
systematic and continuous improvement of these key processes.

A framework for measuring the process

To know whether a system is improving or not we need to have a measurement framework to
monitor the system performance. Performance monitoring can be done by recording cost of
quality summaries. Quality costs include costs of assuring and ensuring quality together with the
losses incurred through failures within and outside the organization. Cost of quality can be
broadly classified into cost of conformance and cost of nonconformance. Cost of conformance
includes costs of prevention and appraisal while cost of nonconformance includes costs of
internal and external failures. Appraisal costs are costs of inspection, testing, verification and
control at any stage in the process meant to ensure acceptance of the product or process.
Prevention costs involve costs of activities undertaken to prevent or reduce the risk of
nonconformity. Prevention activities include identification of nonconformities, identification of

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their causes and also actions taken to remove such causes. Thus prevention costs are incurred in
getting things done right the first time. Internal failure costs are due to defects and
nonconformities that are identified within the organization. They include costs due to scrap,
rework, repair, and re-test. External failure costs are due to defects passing out of the
organization. They include costs such as warranty claims, loss of customer goodwill,

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replacement costs and so on. Refer the recommended texts at the end of this chapter to get an
exhaustive list of these quality related costs. It has been estimated that quality costs account for
20 to 30 percent of a company's revenue. Cutting down the cost of quality is the goal of TQM
organizations. In organizations implementing TQM prevention costs rise in the initial stages
because of investments in systems, processes, planning and training. Appraisal costs gradually
reduce because post production inspection activities are no longer necessary. As prevention

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measures start taking effect the failure costs and the total quality costs start decreasing. This is in
contrast to the traditional quality measurements processes where quality products were supposed
to be delivered at high costs/Figure 3.7 shows the difference between traditional quality and total
quality concepts. Thus having a cost of quality system in place can help a company track
improvements over time.

Fig. 3.7: Traditional Quality versus Total Quality

We can also measure and monitor a systems quality improvement program by identifying
nonconformances. A nonconformance is any deviation from measurable quality specifications
that need to be satisfied. Quality improvement programs are most effective if we identify
nonconformances in terms of quantity and cost, and systematically strive to eliminate dominant
nonconformances. Nonconformances could be in one of the following several forms:
Defects (i.e., work not to specification)
Rework (i.e., work requiring correction)
Scrap (i.e., work thrown away)
Backlogs (i.e., work behind schedule)
Late deliveries (i.e., work after due date)
Surplus items or over-production (i.e., work not required)
We need a well defined measurement system to capture nonconformances in a database, Next we
sort the data and identify dominant nonconformances (in different sections of the organization)
to prioritize quality improvement actions appropriately. We generate summaries of: (a)
nonconformance quantities and costs, (b) scrap, rework and repair actions, (c) supplier
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performance, (d) product performance in the field and (e) cost of quality. Then we undertake
improvement activities to eliminate the nonconformances as far as possible in a continuous cycle
using various problem solving tools.

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Activity D
Choose a manufacturing company and a service company. Identify a key activity for improving
quality in each.
………………………………………………………………………………………………………
………………………………………………………………………………………………………
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Activity E
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Describe the elements of the TQM infrastructure.
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
Organized problem solving
Problems have several viewpoint perspectives. Solving the problems in an organized manner
helps realize the maximum benefits. Organized problem solving assists solvers to analyze the
causes thoroughly before jumping into conclusions. It helps generate maximum ideas from
members in a team.
The problem solving process involves understanding the existing processes and collecting facts,
figures and information to help define the problem. A problem well defined is half solved. Data
analyses is done and the assumptions are reexamined. Techniques are used to generate ideas for
developing potential solutions. All the alternative solutions are evaluated and the best ones are
selected and implemented. Table 3.2 shows the steps involved in creative problem solving along
with the corresponding seven quality control tools.
Table 3.2: Creative Problem Solving and Seven QC Tools

Source: The Management and Control of Quality by J. R. Evans and W. M. Lindsay

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Fig 3.8: Stratified Data Collection
Apart from these tools we have other basic tools, such as, brainstorming, grouping and
stratification to help guide the problem solving process. Brainstorming is a group process in
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which group members express their ideas in a creative atmosphere. All ideas are acceptable. The
objective is to generate a lot of ideas which can be further refined in stages to identify the root
causes of problems Grouping helps in focusing the problem solving efforts. Sometime problems
can be stated in several different forms by different individuals. These can be grouped under one
key topic. This helps in summarizing rather long lists of problems into short general categories
on which problem solving efforts can be focused. Stratification helps in breaking down data into

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levels (for example, data collection by time, shifts, machines, stages etc.). Sometimes it is more
meaningful to analyze stratified data. Figure 3.8 shows an example where we have a certain
process consisting of three machines that are necessary for processing a product.
Suppose the final output has a wide variation in the quality characteristic that is being measured.
To identify the cause of this problem we collect data at different stages in the production process
and analyze them for variations.
Figure 3.9 shows simplified versions of the seven QC tools which can be applied to almost any
practical problem. Flowcharts are used to understand the larger process and how each stage
affects the other. They help identify all customers, activities, problem areas and redundant
operations (if any). Critical quality characteristics that need to be controlled at the appropriate
stages are also identified. Thus flowcharts help in identifying quality problems and areas of
productivity improvement. Checksheets help collect and report data in a systematic manner. We
use special data collection forms and use tally marks to collect the frequency of occurrences of
characteristics that affect quality. Figure 3.9 shows a portion of a checksheet where the
frequency data is being collected for a certain quality dimension of a product. Histograms are
graphical representations of the variation in a set of data. In processes they help identify
variations and their patterns. The tally marks in the checksheet are arranged in the form of a
histogram to show the distribution of the data.

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While drawing histograms samples have to be designers carefully so that they are representative
of the process (or the population). Pareto diagram is a histogram of data (e.g. the various types
of nonconformances) arranged according to their descending order of frequencies. Pareto
diagrams help segregate the major few problem areas from the trivial many thereby short-listing
potential projects for improvement. When tracked over time they show the results of
improvement programs taking effect. Cause-and-effect diagrams help identify causes for a
certain problem (the effect). There could be various categories of causes, such as, man, machine,
material,, environment, method and so on. Through brainstorming problem causes are listed
under the various categories. Once the various causes have been collected, those having the

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biggest impact on the problem are identified. Scatter diagrams help identify the nature of the
various cause-effect relationships. Causes having strong positive and negative correlation with
the problems are identified for the improvement program. Control charts are graphical tools
representing the state of control of a process. Samples coming out of a process are collected at
frequent intervals, their quality characteristics measured and then plotted on the appropriate chart

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for analysis. If the process is in control there is a high probability the sample will fall between
the statistically calculated upper and lower control limits. Walter Shewhart, in the 1920s at Bell
Laboratories, was the first to propose control charts for distinguishing between common causes
(or random variations) and special causes (or non-random variations). We have control charts
both for variable and attribute measures.
Thus organized problem solving involves defining the problem, identifying the root cause of the
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problem, identifying the various solutions, selecting the best solution, and recommending
corrective action procedures for either controlling, reducing, or eliminating problems.

Fig. 3.10: Improvement versus Control

Improving the process

Control means maintaining a certain level of performance while improvement means achieving a
higher level of performance. Figure 3.10 shows the difference between control and improvement.
To monitor the performance, processes must be measurable. We use statistical process control
(SPC) techniques to measure and analyze variations in a process. In any process, the process-
performance measures fluctuate randomly, due to common causes, around a certain target value
(or average value known as process mean). However, due to some special causes we also have
non-random variations taking place. We use control charts to identify these non-random
deviations in a process caused by the sporadic problems. We get rid of these underlying causes to
bring the process under control. On the other hand, to improve the process we need to achieve
higher performance levels by reducing the random chronic problems (or the common causes of
fluctuation) around new and superior target levels.
Thus we use SPC to detect special causes of process variation from common causes. A process is
said to be in a state of statistical control when the process variations are due to the inherent
common causes only. Such processes are considered to be stable and predictable within
appropriate limits. A stable process, which also meets the product specifications, can produce
acceptable products. However, attaining stability is not an end in itself. Rather continuously
striving to reduce the random (or natural) variations in the process is the main objective of any
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continuous improvement program. SPC is implemented on the key processes where the sources
of variability have been identified. The operators are trained to gather preliminary data and
prepare and use control charts.

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Process Capability Studies

Continuous improvement leads to process improvement which means variability reduction
through enhancement of process capability. We will try to understand what process capability
means.
TQM organizations that depend on outside suppliers often expect their suppliers to provide

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process capability data along with the parts that are supplied. Process capability quantifies the
amount of variation inherent in the processes producing these parts thereby helping the customer
organization to determine the quality of the parts supplied. If there is excessive variability in the
process, it will have difficulty in meeting the specifications. Thus the process capability will be
low and consequently there would be lot of defectives in the goods supplied. Similarly within the
organization itself, process capability data of the core processes are necessary upstream for the
designers in determining the design specifications and tolerances. Designers should not specify
tight tolerances if the products are to be manufactured in processes having excessive variability
(i.e., low capability). On the other hand highly capable processes should not be underutilized (or
wrongly utilized) by specifying loose tolerances.

Figure 3.11 shows processes having certain natural tolerances (or variations) and how they are
performing in relation to the design tolerances (or specifications). Process A is a highly capable
one because it is well within the design limits. Process B, however, has excessive variability and
hence is less capable of producing consistent quality products. For process B the natural
tolerance is equal to the design tolerance. This can be translated into.27 defects in 100 parts that
are manufactured. These are the defectives that lie outside the three sigma limits. Does not seem
that bad. But what if we are producing a million parts? It translates into having 2700 defects per
million. This is not an insignificant number if the loss per defect is very high. As some articles
report, it could mean 20,000 wrong drug prescriptions a year, or 15000 babies accidentally.
dropped by nurses each year, or 500 incorrect surgical operations each week and so on. Hence
having a design tolerance equal to the process tolerance is not a good idea when we consider the
three sigma limits. Now if six sigma limits correspond with the design limits, then there is a lot of
reduction in the variability of the process. Under such situations we have a highly capable
process which, if centered on the mean, translates into having defectives of only 2 parts per
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billion. Motorola has made six sigma famous by focusing on product design and process
capability improvements. Motorola's design limit of six sigma with a slight shift in the process
achieved defectives up to 3.4 parts per million (ppm). Both the processes in Figure 3.11 are
centered around the mean value.

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Thus, we can improve the process capability either by reducing variations in the process (thereby
changing its natural limits) or by revising the design tolerances (thereby making changes to the
design). To measure the quality of a process (and thereby its products) we need to know two
things: (a) how capable is the process (measured by Cp index) and (b) how well centered it is
(measured by Cpk index). Cp determines what the process is capable of based on the process
standard deviation and the total design tolerance.

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where, tolerance = upper specification limit - lower specification limit
Cpk determines how well the process is centered by comparing the process mean with the
nearest specification limit (NSL).

Note that when the process is centered, Cp = Cpk. For a six sigma company Cp = Cpk = 2.
Figure 12 shows Process X having a shift in the process average. Even though it is as
capable as Process Y, it has a greater chance of not meeting the USL. Both the processes
are, however, more capable than Process Z. If process Y has a standard deviation equal to
7 units, and if the design tolerance is specified as 8 units, then the process capability Cp=

8 ÷ 4.2=1.9andCpk=4 ÷ (3*.7) = 1.9: However, for process X (having same standard deviation)
the C. value will be lower than 1.9 and the Cp will be equal to 1.9.
Before discontinuing our discussion on specification limits and process performance, let
us briefly look at a traditional approach. According to this approach all products meeting design
specifications are equally good and those just missing the design specifications are equally bad
(see Figure 3.13). This is also known as the goalpost syndrome. However, according to Taguchi
the target or the nominal specification is more important than the tolerance specifications (or the
goal-posts). Hence, the farther away we are from the target value the greater is the loss in the
quality of the part. He has represented this loss in the form of a quadratic function. This is known
as the Taguchi loss function.
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Fig: 3.13 Taguchi approach versus the traditional approach
In summary, the voice of the customer if translated properly provides the tolerance specifications
needed in satisfying customer requirements. The process control limits for any stable process,
provide the limits to the natural variation of a process. This is the voice of the process (or the
characteristic of that particular process). These natural variations are due to common (or random)
causes. The capability of this process in meeting the customer requirements can be quantified in
the form of a process capability index (Cp).

Note that higher the index the better is the process capability. It means that the natural variations
are too small and the specified tolerance is large enough for the process to meet the customer
requirements consistently. TQM organizations aim to improve the process capability index by
managing both the numerator and the denominator of the above ratio (i.e., by making it an
organization wide approach).

3.6 EMPLOYEE INVOLVEMENT AND EMPOWERMENT

Processes cannot be improved if employees are either not fully involved or fully empowered.
Employee involvement means each employee contributes toward achieving the organizational
goals. These contributions are valued by the management and they both recognize that the
organization's success depends on total employee involvement. Employee empowerment means
authorization of employees to identify and solve problems hindering quality efforts. Process
owners need to be empowered by the management to recognize and solve problems. We
discussed how non-random variations in the process lead to root cause identification of the
underlying problem. For effective TQM implementation, the process owners must be empowered
to use organizational resources for eliminating such problems. Similarly without employee
involvement we cannot have process control tools being effectively used for quality
improvement.

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To facilitate employee involvement we need to recognize the potential value of each individual,
assign work where they can be successful, understand their motivation and listen to them. TQM
organizations can initiate formal suggestion schemes which can help them in listening to their
employees. These schemes can be used for collecting quality improvement suggestions. Some
companies give cash awards and incentives for suggestions which get approved. Some ideas may
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not find approval for implementation. However, it is important for the management to get back
to the employee with the appropriate feedback so that he knows why his ideas got turned down.
Listening to the employee suggestions and getting back to them with a feedback is a must for
ensuring employee involvement.
Employee involvement also requires management's willingness to empower subordinates. At the
same time empowered employees who are not sensitized to the organizational goals cannot apply

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their empowerment effectively. It is the management's responsibility to define the common
vision for the organization so that empowered employees know what their roles are in achieving
these objectives. Empowered employees must be trained properly to take up organized problem
solving initiatives. Organizational resources, if necessary for implementing the suggestions, must
be provided to help them perform better. There could be improvement concepts that cannot be
approved by the management. In such cases the management must give reasons as to why it
cannot be implemented.
Thus employee involvement and empowerment are essential to tap the full potential of the
workforce in attaining organizational objectives. Discretionary efforts of empowered employees
are recognized and tapped for ensuring the success of continuous improvement programs. Top
management must be committed and involved in setting up systems to support TQM activities.
Mechanisms must be in place so that their subordinates can take up greater responsibility.
Activity F
What effect does employee involvement have on motivation? Explain the effect in terms of
motivational theory.
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
Activity G
Assume that a company has just committed to change from a traditional style of management to
one based on TQM. What topics would you include for
— Shop floor employee
— Front-line supervisors
— Middle-level managers
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
Activity H
Decribe how training in problem solving would improve
— Process control
— Employee motivation
………………………………………………………………………………………………………

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3.7 ISO 9000: THE INTERNATIONAL QUALITY SYSTEM

STANDARD
ISO 9000 is a series of standards agreed upon by the Geneva based International Organization
for Standardization (ISO). It was adopted in 1987. It is a set of written standards laying down a

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quality system. The basic elements of the system are defined through documentation. The
guidelines ensure universally recognized and uniform quality systems that are rooted in the
customer's requirements. ISO 9000 creates a discipline required for a TQM organization.
Here are some highlights:
• ISO 9000 CERTIFICATION IS ISSUED BY INDEPENDENT ISO-CERTIFIED
AUDITORS.
• REGISTRATION WILL BE INCREASINGLY DRIVEN BY CUSTOMER
REQUIREMENTS & COMPETITIVE PRESSURES, NOT VIA OFFICIAL OR
STATUTORY MANDATE.
• CERTIFICATION ONLY VERIFIES THAT YOUR FACTORY, YOUR
LABORATORY, OR YOUR OFFICE MEETS A SET OF PREDETERMINED (by ISO)
QUALITY MANAGEMENT REQUIREMENTS.
• DOCUMENTATION IS CENTRAL TO ISO 9000 REQUIREMENTS, FOR THE
PURPOSES OF PLANNING, CONTROLLING, TRAINING & PROVIDING
OBJECTIVE EVIDENCE OF COMPLIANCE.
• ISO 9000 IS NOT A PRODUCT STANDARD BUT A QUALITY SYSTEM
STANDARD. IT IS DESIGNED & INTENDED TO APPLY TO VIRTUALLY ANY
PRODUCT OR SERVICE MADE BY ANY PROCESS ANYWHERE IN THE
WORLD.
• ISO 9000 REQUIRES THAT THE QUALITY SYSTEM MONITOR CONFORMANCE
TO REQUIREMENTS.
• OBLIGATES MANAGEMENT TO IMPLEMENT STATISTICAL TECHNIQUES
WHEN & AS APPROPRIATE.
ISO 9000 helps companies that market their products in the European markets. It is essential for
companies (or vendors) supplying to other companies that demand ISO 9000 certification. It is
also necessary for companies whose competitors are certified or are seeking ISO 9000
certification. Companies with geographically scattered facilities & global operations find it easier
to convince customers about their quality standards, if they have ISO 9000 certification. It is also
meant for companies whose transnational parents are seeking ISO 9000 certification.
ISO 9000 originated from the U.S. Department of Defense (quality) standards. The British
Standards Institute adopted these standards in 1979 for business processes and used them as its
national standard under the name of British Standard 5750. BS5750 was adopted by ISO in 1987
and called it ISO 9000 series. These series have undergone revision in 1994.

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Here are some harmonized versions of ISO 9000.

HARMONIZED VERSIONS OF ISO 9000
NATION STANDARD
AUSTRALIA AS3900
BELGIUM NBNX50

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CANADA
DENMARK
CSAZ299
DS/EN 29000
GERMANY DIN ISO 9000
INDIA IS 14000
SWEDEN SS ISO 9000
UK BS5750
COMPONENTS OF THE ISO 9000 STANDARD
• ISO 9000 is a misnomer. Companies do not get an ISO 9000 certification. Instead they
get either an ISO 9001, ISO 9002 or ISO 9003 certification.
• Quality System Models:
ISO 9001
ISO 9002
ISO 9003
for facilities seeking ISO 9000 registration for "contractual" purposes.
• Quality Management Guidelines:
ISO 9004
ISO 9004-2
ISO 9000-3
facilities do not register to these guidelines. These are mainly guidelines for facilities
wishing to implement ISO 9000.
• Guidelines for Auditing:
Audits (or Assessments) to obtain evidence about the performance of the system against
specified requirements.
INTERNAL ASSESSMENTS (by OWN FACILITY PERSONNEL)
SECOND-PARTY ASSESSMENTS (by CUSTOMER)
THIRD-PARTY ASSESSMENTS (by an ACCREDITED THIRD PARTY)
ISO 10011 SERIES (GUIDELINES FOR AUDITING QUALITY SYSTEMS)
ISO 10011-1 (1990) "AUDITING"
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ISO 10011-2 (1990) "QUALIFICATION CRITERIA FOR QUALITY
SYSTEMS AUDITING"
ISO 10011-3 (1990) "MGMNT OF AUDIT PROGRAMS"

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• Guidelines for Measuring Equipment:

For many facilities monitoring means taking measurements.
ISO 10012-1(1992) "QUALITY ASSURANCE REQUIREMENTS FOR
ME ASURING EQUIPMENT" (guidance docu)
• Supporting Documents:
ISO 9000
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"QUALITY MANGMNT& QUALITY ASSURANCE
STANDARDS:
GUIDELINES FOR SELECTION & USE"
ISO 8402 "QUALITY VOCABULARY"
ISO 9000-2 generic guidelines for the application of the contractual models
• ISO 9000 for Quality Management Purposes:
The Guidance Documents
ISO 9004 and ISO 9004-2 provide a clearer & more graphic illustration of an integrated
quality system than do the contractual models.
ISO 9004 for MANUFACTURING & SERVICE SECTOR
ISO 9004-2 for SERVICE SECTOR
ISO 9000-3 A SPECIALIZED SET OF GUIDELINES FOR
APPLYING ISO 9001 TO FACILITIES WHICH
DEVELOP AND MAINTAIN COMPUTER SOFTWARE
• ISO 9000 for Contractual Pureposes:
The Quality System Models
The following are generic models. They apply to virtually any facility producing any
product or service for virtually any market. They mostly encourage the use of good
business practices and time proven quality methods, (see Table 3.3)
ISO 9001 — most comprehensive
— covers facilities whose process includes
— DESIGN/DEVELOPMENT, PRODUCTION, INSTALLATION &
_ SERVICING
— contains 20 sections describing various elements of the quality
system
ISO 9002 — more limited
— applies to facilities making products which are designed and
serviced by others

ISO 9003
—
—
—
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includes 18 of the 20 sections found in ISO 9001
most limited
applies only to facilities performing final inspection & test
functions
— includes 12 of the 20 sections found in ISO 9001
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Let us summarize what we have said so far regarding ISO 9000. Stated simply ISO 9000 guides
you to "document what you do and then do what you documented" It creates an awareness and
brings in the discipline much needed for continuous improvement and TQM. ISO 9000 specifies
the way a company operates along with its quality standards, service levels, delivery
performances and so on. It helps a company to be in a customer company's short-list of supplier
firms. The best certification for a company is through a accredited third party. Certification can

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take from six to twelve months or more depending on the companies existing standards,
organization culture and top management commitment.
Table 3.3: ISO 9001 - 9003 CROSS REFERENCE (Section numbers)
SECTION COVERAGE ISO 9001 ISO 9002 ISO 9003
1 Management Responsibility 4.1 4.1 4.1
2 Quality System 4.2 4.2 4.2
3 Contract Review 4.3 4.3 -
4 Design Control 4.4 - -
5 Document Control 4.5 4.4 4.3
6 Purchasing 4.6 4.5 -
7 Control of Customer-Supplied Product 4.7 4.6.' -
8 Product Identification & Traceability 4.8 . 4.7 4.4
9 Process Control 4.9 4.8 -
10 Inspection & Testing 4.10 4.9 4.5
11 Control of Inspection, Measuring & Test Equipment 4.11 4.10 4.6
12 Inspection & Test Status 4.12 4.11 4.7
13 Control of Nonconforming Product 4.13 4.12 4.8
14 Corrective Action 4.14 4.13 -.
15 Handling, Storage, Packaging and Delivery 4.15 4.14 4.9
16 Quality Records 4.16 4-15 4.10
17 Internal Quality Audits 4/17 4.16 -
18 Training 4.18 4.17 4.11
19 Servicing 4.19 - -
20 Statistical Techniques 4.20 4.18 4.12
Note: The appendix at the end of this chapter gives some more details on ISO 9000.
Activity I
Docs ISO 9000 contain product standards or standards for operation of a quality management
System? Explain the difference.
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
.

3.8
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SUMMARY___________________________________________________
In this unit we have discussed how TQM gained its importance over the century. How quality
systems evolved from a reactionary post-production defect detection oriented approach to a more
proactive defect prevention approach. To drive TQM efforts we realize the importance of
customers and the need for understanding and deploying their expectations through the
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organization. We discussed the need for orienting our processes to be in line with the quality
requirements of our customers. Process performance measures need to be developed for
monitoring improvements. Organized problem solving techniques were discussed to identify
major problem areas. We also discussed statistical process control techniques and process
capability studies for ensuring continuous improvement. To make TQM implementation
successful, employee participation and empowerment is essential. We also discussed the

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importance of lSO 9000 as an International systems standard meant for assuring quality.
______________________________________________________________________________
3.9 SELF-ASSESMENT EXERCISES________________________________
1. Illustrate how the TQM concept can integrate design, engineering, manufacturing and
services.
2. Explain why quality should be better by following the TQM concept them in a system
that depends on final inspection.
3. What common elements or principles can you identify among (1) the Baldridge criteria
and (2) Deming, Jurian, and Crosby?
4. List the characteristics of excellent leadership for TQM.
5. Describe how setting targets for quality improvement helps to establish a culture and climate.
6. Give an example of a company culture as reflected in a statement of basic beliefs. Would
such a statement help to institutionalise a quality culture? If so how?
7. Describe how leadership by top management is the driven of quality.
8. Choose two functions on activities (market research. R & D, design, production planning,
procurement, human resources) and show how information can serve to integrate them
across functional lines.
9. How does information technology affect organisational structure? Give an example of
how information technology can facilitate TQM?
10. Why is it important for U.S. firms to comply with ISO 9000?
11. Answer the criticisms that meeting ISO standards will add to production costs.
12. What are the benefits of ISO 9000 certification?
13. Identify the quality cost elements associated with any of the institutions listed below.
Define each of the elements, and suggest how each might be quantified in practice: (a) a
university (b) a hospital (C) the local bus line (d) a bank (e) a manufacturer of any of
these wooden furniture, cotton cloth, men's shoe, glass bottle, casting, drugs, (f) a text
book publisher.
14. Based on your own experience, give one or two examples of situations where pareto

15.
16.
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analysis might help improve quality or productivity.
What are the steps in moving from a system of final inspection to process control?
Choose a non-manufacturing (service) process and show how statistical quality control
would be-appropriate.

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3.10 FURTHER READING_________________________________________

Berk, J. and Berk, S. (1993) "Total Quality Management: Implementing Continuous
Improvement" Excel Books, New Delhi.
DeToro, I. J. and Tenner, A. R. (1992) "Total Quality Management: Three Steps to Continuous

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Improvement" Addison-Wesley Publishing Company.
Evans, J. R. and Lindsay, W. M. (1994) "The Management and Control of Quality" Jaico
Publishing House.., '
Johnson, P. L. (1993) "ISO 9000" McGraw Hill
Juran, J. M. and Gryna, F. M. (1995) "Quality Planning and Analysis" Tata-McGraw Hill
Publishing Company Limited, New Delhi
Kehoe, D. K. (1996) "The Fundamentals of Quality Management" Chapman & Hall.
J. Ross, I.E. (1999) "Total Quality Management" Kogan Page Limited, London, 2nd Edition.

3.11 APPENDIX: ISO 9000 QUALITY SYST STANDARDS_____________

• ISO 9000 FAMILY:
ALL THOSE INTERNATIONAL STANDARDS PRODUCED BY THE TECHNICAL
COMMITTEE ISO/TC 176. AT PRESENT THE FAMILY COMPRISES:
a) All International Standards numbered ISO 9000 through to ISO 9004, including
all parts of ISO 9000 and ISO 9004.
b) All International Standards numbered ISO 10001 through 10020, including all
parts; and
c) ISQ 8402
• SCOPE OF ISO 9000-1:
CLARIFIES PRINCIPAL QUALITY-RELATED CONCEPTS & THE DISTINCTIONS
& INTERRELATIONSHIPS AMONG THEM.
PROVIDES GUIDANCE FOR THE SELECTION & USE OF THE ISO 9000 FAMILY
OF INTERNATIONAL STANDARDS ON QUALITY MGMNT & QUALITY
ASSURANCE.
CONCEPT OF A PROCESS is defined.
SOME TERMS & DEFINITIONS TAKEN FROM ISO 8402: 1994
• QUALITY: Totality of characteristics of an entity that bear on its ability to satisfy stated
& implied needs.
CONTRACTUAL ENVIRONMENT
OTHER ENVIRONMENTS
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-> implied needs should be identified &
defined

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• QUALITY POLICY: Overall intentions & directions of an organization with regard to

quality, as formally expressed by top management.
• QUALITY MANAGEMENT: All activities of the overall management function that
determine the quality policy, objectives & responsibilities and implement them.
Implement by means such as QUALITY PLANNING, QUALITY CONTROL

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QUALITY ASSURANCE and QUALITY IMPROVEMENT within the quality system
QUALITY SYSTEM: Organizational structure, procedures, processes & resources
needed to implement quality management.
• QUALITY CONTROL: Operational techniques & activities that are used to fulfill
requirements for quality.
• QUALITY ASSURANCE: All the planned & systematic activities implemented within
the quality system, and demonstrated as needed, to provide adequate confidence that an
entity will fulfill requirements for quality.
INTERNAL QUALITY ASSURANCE -> provides confidence to mngmnt
EXTERNAL QUALITY ASSURANCE -> in contractual or other situations,
quality assurance provides confidence to the customers or others.
• QUALITY IMPROVEMENT: Actions taken throughout the organization to increase
the effectiveness & efficiency of activities & processes in order to provide added benefits
to both the organization & its customers.
• PRODUCT: Result of activities or processes. The general categories are
SERVICE
HARDWARE
PROCESSED MATERIALS
SOFTWARE
• CUSTOMER: Recipient of a product provided by the supplier.
In a CONTRACTUAL SITUATION, the customer is called the "purchaser". The
customer may be for example, the ultimate consumer, user, beneficiary or purchaser. The
customer can be either external or internal to the organization.
• SUPPLIER: Organization that provides a product to the customer.
In a CONTRACTUAL SITUATION, the supplier is the "contractor. The supplier may
be. for example, the producer, the distributor, importer, assembler or service
organization. Supplier can be either external or internal to the organization.
• PROCESS: Set of interrelated resources & activities which transform inputs into
outputs. Resources may include PERSONNEL, FINANCE, FACILITIES EQUIPMENT,
TECHNIQUES & METHODS.
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• CONCEPT OF A PROCESS:

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Fig. 3.A1: All work is accomplished by a process

Fig 3A2: Supply chain relationship of process

PRODUCT-RELATED & INFORMATION-RELATED FLOW
PRODUCT RELATED => Raw Matls, Intermediate Products, Final Product, Sampled Product
INFORMATION RELATED => Product Reqmnts, Product Characteristics & Status info,
Support-Function Communication, Feedback on Product Performance and Needs, Measurement
Data from Sampled Product.
EVALUATING QUALITY SYSTEMS
Three questions to be asked in relation to every process being evaluated:
a) Are the processes defined and their procedures appropriately documented?
b) Are the processes fully deployed and implemented as documented?
c) Are the processes effective in providing the expected results?
QUALITY SYSTEM SITUATIONS
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=> guidance for quality management
=> contractual between first and second parties.
=> second party approval (undesirable if there are several customers)

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=> third party certification (takes care of logistics)

NOTE: FIRST PARTY AUDIT --> "internal" audit
SECOND PARTY &
THIRD PARTY AUDIT --> "external" audit
WHY DOCUMENTATION IS REQUIRED?

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=> To provide permanent reference for
* implementation of Quality Systems
* maintenance of quality systems
=> To avoid differing descriptions
=> To ensure orderliness in operations
=> To train personnel
=> To provide for a system of audits
REGISTERING TO ISO 9000
A FACILITY REGISTERS TO ISO 9000 IN ORDER TO OBTAIN THIRD-PARTY
VERIFICATION THAT ITS QUALITY SYSTEM CONFORMS TO THE ISO 9000
STANDARD.
REASONS FOR REGISTERING
TO REINFORCE QUALITY PROGRAMS & COMMITMENT TO QUALITY
AS A PROACTIVE STEP TO COUNTER COMPETITION
TO SECURE NEW BUSINESS
IN RESPONSE TO COMPETITIVE THREAT
IN RESPONSE TO CUSTOMER REQUIREMENTS
IN RESPONSE TO REQUIREMENTS OF A PARENT ORGANIZATION
[NOTE: FACILITIES TEND TO RUSH INTO THE PROCESS OF APPLYING FOR ISO 9000
BEFORE THEY ARE READY]
PREPARATORY STEPS
HAVING A QUALITY SYSTEM IN PLACE THAT MEETS THE TECHNICAL
REQUIREMENTS OF THE PART OF ISO 9000 QUALITY SYSTEM STANDARD TO
WHICH IT SEEKS REGISTRATION (ISO 9001, 9002 or 9003)
FACILITY MUST HAVE DOCUMENTED IT WITH A QUALITY MANUAL &
SUBORDINATE PROCEDURES, WORK INSTRUCTIONS, AND OTHER MATERIALS.
FACILITY MUST HAVE OPERATED IT SUCCESSFULLY FOR 3 TO 6 MONTHS
=> ADDITIONAL STEPS:
ESTABLISH A RELATIONSHIP WITH AN ISO 9000 REGISTRAR WHOSE SCOPE OF

FILE A FORMAL APPLICATION. AIOU

ACCREDITATION COVERS THE FACILITY'S FIELD OF ACTIVITY

UNDERGO AN ASSESSMENT OF DOCUMENTATION.

UNDERGO AN ON-SITE ASSESSMENT OF QUALITY SYSTEM.

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REMEDY NON-CONFORMANCES BY COMPLETING ANY REQUIRED CORRECTIVE

ACTION REQUESTS.
REGISTRATION FOR ISO 9000
1. Obtain management commitment.
2. Begin training for some leaders.
3.
4.
5.
6.
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Set up a steering team & sub-teams.
Begin internal quality audit
Conduct in-house training.
Compile quality manual.
7. Conduct ongoing quality audits & implement corrective action.
8. Apply to third-party auditors.
9. Adequacy audit to be conducted.
10. Pre-assessment to be conducted.
11. Implement improvements.
12. Set the date for audit (a later date for real bad pre-audit).
13. Provide more training.
14. Conduct frequent checks.
15. Get plant leaders to conduct audits.
16. Share audit findings.
17. Send revised quality manual for assessment
18. Assessment to be conducted.
19. Fix minor discrepancies.
20. Registration obtained.
IN SHORT, A REGISTRAR
— IS ACCREDITED BY THE NACCB OR AN EQUIVALENT BODY
— USES ASSESSORS WHOSE CREDENTIALS ARE TRACEABLE TO RBA
ISO 9000 INTERNATIONAL STANDARDS (WITH CORRESPONDING INDIAN
STANDARDS)
INTNL CORRESPONDING INDIAN STANDARDS
STANDARDS
ISO 8402 IS 13999
QUALITY MANAGEMENT & QUALITY ASSURANCE
VOCABULARY
ISO 9000-1:1994 IS 1400()(Partl):1994
QUALITY MANAGEMENT & QUALITY ASSURANCE
STANDARDS-PART 1: GUIDELINES FOR SELECTION & USE
ISO 9000-2:1993 IS 14000(Part 2):1994

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QUALITY MANAGEMENT & QUALITY ASSURANCE
STANDARDS-PART 2: GENERIC GUIDELINES FOR THE
APPLICATION OF ISO 9001, ISO 9002 & ISO 9003
ISO 9000-3: 1991 IS14000(Part3):1991
QUALITY MANAGEMENT & QUALITY ASSURANCE
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STANDARDS-PART 3: GUIDELINES FOR THE APPLICATION

OF ISO 900 1 TO THE DEVELOPMENT SUPPLY AND
MAINTENANCE OF SOFTWARE.
ISO 9000-4: 1993 IS14000(Part4):1994
QUALITY MANAGEMENT & QUALITY ASSURANCE
STANDARDS-PART 4: GUIDE TO DEPENDABILITY

ISO 9001:1 994 Copyrights

PROGRAMME MANAGEMENT
IS 14001:1994
QUALITY SYSTEMS-MODEL FOR QUALITY ASSURANCE IN
DESIGN, DEVELOPMENT, PRODN, INSTALLATION &
SERVICING
ISO 9002: 1994 IS 4002:1994
QUALITY SYSTEMS-MODEL FOR QUALITY ASSURANCE IN
PRODUCTION & INSTAI.LATION
ISO 9003: 1994 IS 14003:1994
QUALITY SYSTEMS-MODEL FOR QUALITY ASSURANCE EN
FINAL INSPECTION & TEST
ISO 9004-1: 1994 IS14004(Part1):1994
QUALITY MANAGEMENT & QUALITY SYSTEM ELEMENTS-
PART 1: GUIDELINES
ISO 9004-2:1991 IS 14004(Part2):1992
QUALITY MANAGEMENT & QUALITY SYSTEM ELEMENTS-
PART 2: GUIDELINES FOR SERVICE
ISO 9004-3: 1993 IS 14004(Part3):1994
QUALITY MANAGEMENT & QUALITY SYSTEM ELEMENTS-
PART 3: GUIDELINES FOR PROCESSED MATERIALS
ISO 9004-4: 19 93 IS 14004(Part4):1994
QUALIT Y MANAGEMENT & QUALITY SYSTEM ELEMENTS-
PART 4: GUIDELINES FOR QUALITY IMPROVEMENT
ISO 10011-1:1990 IS14011(Part1):1991
GUIDELINES FOR AUDITING QUALITY SYSTEMS-PART 1:
AUDITING
ISO 1001 1- IS14011(Part2):1991
2:1991 GUIDELINES FOR AUDITING QUALITY SYSTEMS-PART 2:
QUALIFICATION CRITERIA FOR QUALITY" -SYSTEMS
AUDITORS
ISO 10011-3:1991 IS14011(Part3):1991

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GUIDELINES FOR AUDITING QUALITY SYSTEMS-PART 3:
MANAGEMENT OF AUDIT PROGRAMMES

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ISO 10012-1:1992 IS 14012(Part1): 1993

QUALITY ASSURANCE REQUIREMENTS FOR MEASURING
EQUIPMENT-PART 1: METROLOGICAL CONFIRMATION
SYSTEM FOR MEASURING EQUIPMENT.
ISO 10013 IS 10013

Compiled From:
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GUIDELINES FOR DEVELOPING QUALITY MANUALS (to be
published)

1. ISO 9000 by Perry L. Johnson (McGraw Hill 1993 Edition)

2. ISO 9000: Concepts, Methods & Implementation by T. P. Bagchi (Wheeler Publishing
1994 Edition)
3. 1994 BIS Standards (IS 14000 Series)

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