Chapter 5

Supplier Quality
 Agenda
1. Supplier Quality
2. The Cost of Quality
3. Supply Quality Management Tools and Techniques
 3.1 Total Quality Management
 3.2 Kaizen – Continuous Improvement
 3.3 Statistical Process Control (SPC)
 3.4 Six Sigma
 3.5 LEAN
 3.6 QA/QC System
 3.7 ISO/MBNAQ
 1. What Is Quality?
Quality: the ability of the supplier to provide goods
and services in conformance with specifications.
Quality: the item performs in actual use to the
expectations of the original requirement
Keys to supplier quality: The ability to meet or exceed
current and future customer expectations or
requirements within critical performance areas on a
consistent basis

3
 Dimensions of Quality
 1. Performance - primary characteristics of the product/service
 2. Aesthetics - appearance, feel, smell, taste, sound
 3. Features - extra characteristics
 4. Safety: Risk of injury
 5. Reliability - consistency of performance, probability of failure
during a specified time period
 6. Durability - useful life of the product/service
 7. Perceived Quality – image in the eyes of customer (reputation)
 8.Serviceability: the maintainability and ease of fixing. - handling of
customer complaints or checking on customer satisfaction

(Prof. David Garvin – Havard Busineness School)

 Examples
Dimension Product: Automobile Service: Auto Repair
1. Performance Everything works, fit & finish All work done, at agreed price,
Ride, handling, grade of materials Friendliness, courtesy,
used Competency, quickness
2. Aesthetics Interior design, soft touch Clean work/waiting area
3. Special features Gauge/control placement Cellular Location, call when ready
Convenience High tech phone, CD player Computer diagnostics

4. Safety Antilock brakes, airbags Separate waiting area

5. Reliability Infrequency of breakdowns Work done correctly, ready
when promised
6. Durability Useful life in miles, resistance to rust & Work holds up over time
corrosion
7. Perceived quality Top-rated car Award-winning service
department
8. Service after sale Handling of complaints and/or Handling of complaints
requests for information
 Quality Concepts
 Grade is a category assigned to products/services
having the same functional use but different technical
characteristics (features)

 Quality is “the degree to which a set of inherent

characteristics fulfill requirements”
Toyota Various Models (2005 to 2010): Removable floor mats were
identified as the cause of Toyota’s recall of 9 million cars in the U.S.
The floor mats were found to move and wedge the accelerator in
position, causing it to stick and lead to a potential crash.

Low Grade => Problem

Low Quality => Problem
 Quality Concepts
QUALITY MEANS:
 Customer Satisfaction: Customer
driven
 Conformance to requirements
 Fit for use
 Prevention (plan, design and build in) over
inspection -> Costs reduction Customer Competitive Customer
Satisfaction Advantage focus
 Continuous improvement (Kaizen): e.g Plan-
Do-Check-Ack, Lean, Six Sigma….
 Management Responsibility:
 Customer defines Quality !
Customer
feedback &
Involvement
 Quality Concepts
Precision vs. Accuracy
 Accuracy is an assessment of correctness.
 Precision is a measure of exactness.
Accuracy refers to how far you are from the true value;
Precision refers to how close you get to the same value if
you repeated the exercise several times.

8
 Cost of Quality
.. should be less then..

<

A Guide to the Project Management Body of Knowledge, Fifth Edition (PMBOK® Guide) ©2013 Project Management
Institute, Inc. All Rights Reserved. Figure 8-5 Page 235.
 2. Cost of Quality
Prevention costs
 Prevent defects from occurring
Appraisal costs
 Direct costs of measuring quality
Failure costs
 Internal – occur before product or service is provided to
customer
 External – occur following production or after customer takes
possession

10
 Cost Examples
Appraisal
 Laboratory testing of samples
 Inspection activities during production
 Supplier quality audits
 Incoming material inspections
 Other forms of monitoring

11
 Cost Examples
Internal Failure:
 Troubleshooting
 Re-inspection following detection of defects
 Production downtime caused by defects
 Scrap
 Process waste

External Failure
 Warranty costs
 Replacement of defective products
 Product liability lawsuits
 Loss of customers
12
 Cost Examples
Prevention
 Quality planning
 Equipment calibration
 Quality training
 Maintenance of a quality management system

Morale cost
 The morale cost of producing (or having to use)
defective products or services
 Effects:
 Productivity ↓
 Continuous improvement ↓

 The motivation to work hard and well may be replaced

by a “don’t care” attitude. 13
 Quality Role in Supply Management
 The ability of a supplier to affect a buyer’s total quality
 The resources available to support supplier quality improvement
 Ability of a buying firm to practice world-class quality
==Procurement to identify & select The Best Buy Suppliers who
can deliver the expected quality to products or services:
 A supplier’s current quality levels
 A buyer’s ability to collect and analyze quality-related data
 A supplier’s willingness to work jointly with the buyer to improve
quality

14
Typical Quality Evaluation Process
Process Flow

Both pre-qualification and award

considerations
Safety Safety
Total Cost
Financial Position Personnel/Project Team Schedule
Quality System/Processes
Cost
Experience
Location Quality
Capability/Size/Capacity
Management Systems/Responsiveness
Past Performance

Pre-qualification Final Selection / Award Performance on projects

Performance Feedback into Qualification Process

 Project Triangle

Scope of
Work

Scope
AFFORDABILITY

NEED DATE

Sc

et
dg
he

Bu
du
Schedule le Estimate

Scope, Budget and Schedule Summary

Team Synergy

16
 Basic Quality Tools
"As much as 95% of quality related problems in the factory
can be solved with seven fundamental quantitative tools." -
Kaoru Ishikawa

A Guide to the Project Management Body of Knowledge, Fifth Edition (PMBOK® Guide) ©2013 Project Management
Institute, Inc. All Rights Reserved. Figure 8-7 Page 239.
 Cause and Effect
Diagram(*)
 Is also called Fishbone Diagram or Ishikawa Diagram
 Used to find the root cause of a defect. The causes are found by looking at the
problem statement and asking “why” until the actionable root cause has been
identified or until the reasonable possibilities on each fishbone have been
exhausted
 Can be used in quality planning, as well as quality control

STEVBROS - Global PMI R.E.P

18
Example of Cause-and-Effect Diagram
 5-WHY’s
Counter-
measure: We
need to find a
supplier who
(5) Why? can deliver
(4) Why? We didn't ink at very
The ink was have short notice.
(3) Why? We all used up enough in Probable
ran out of on a big, stock, and root cause
printer ink. last-minute we couldn't
Problem: (2) Why? order it in
The job order.
Your client is quickly
took longer enough.
refusing to
pay for the (1) Why? than we
The anticipated.
leaflets you delivery
printed for was late,
them. – Why so the
does it occur leaflets
or exit? couldn't
be used.
 Control Charts
 Upper specification limit (USL). The USL is the maximum
acceptable level of output.
 Lower specification limit (LSL). The LSL is the minimum
acceptable level of output.
 The common control charts are the 𝑥ҧ chart to monitor the
centering of the process (means) and the R-chart to monitor the
variation in the process (Dispersion). It determines if the process
is within the acceptance limit.
 Example
Design engineering writes a specification for a
rod to have a diameter of 2 inches with a
tolerance of .005 inches.
The LSL is 1.995 inches
USL is 2.005 inches.
Any rods produced within this range are within
tolerance
Steps to develop and use control charts
1. Preparation
 Choose the variable or attribute to be measured
 Determine the basis, size, and frequency of sampling
 Setup the control chart
2. Data collection
 Record the data
 Calculate relevant statistics: averages, ranges, proportions, and so on.
 plot the statistics on the chart
3. Determination of trial control limits
 draw the center line (process average) on the chart
 compute the upper and lower control limits
4. Analysis and interpretation
 Investigate the chart for lack of control
 Eliminate out-of-control points
 re-compute control limits if necessary
5. Use as a problem solving tool
 Continue data collection and plotting
 Identify out-of-control situations and take the corrective action
6. Determination of process capability using the control chart data
 SPC Applications
 To establish a state of statistical control (steps 1-4)
 To monitor a process and signal when the process goes out of control
(step 5)
 To determine process capability (step 6)
Shift
Outside

Trend
Cycle
 Flow Chart
 The Flow Chart is a graphic representation of a process.
 It identifies the potential improvement opportunity.
 Check sheet
 Also called tally sheets are useful as checklists while gathering data.
 Especially useful during inspections. For example, data about the
frequencies or consequences of defects collected in check-sheets are
often displayed using Pareto diagrams.
 Histogram
 Is a special form of bar chart to show frequencies of causes of problems to
understand preventive or corrective action.
 Unlike the control chart, the histogram does not consider the influence of time on
the variation that exists within a distribution.
 Pareto Diagram(*)
 The Pareto diagram will
be organized into
categories that measure
either frequencies or
consequences, prioritizes
potential causes of the
problem
• Pareto’s Law (80/20
principle) : 80% of the
problems are due to 20%
of cause => helps focus
attention on the most
critical issues
 Scatter diagram(*)
 Plots ordered pairs (X, Y) and are
sometimes called correlation charts.
 The direction of correlation may be
proportional (positive correlation),
inverse (negative correlation), or a
pattern of correlation may not exist
(zero correlation).

Copyright@STEVBROS STEVBROS - Global PMI R.E.P

29
3. Supply Quality Management
Tools and Techniques
 3.1. Total Quality Management
 Total quality refers not only to the product but also to the way the
product is made as well as presented to the customer.
 TQM: A philosophy that involves everyone in an organization in a
continual effort to improve quality and achieve customer
satisfaction
 Continuous improving
 Involvement of everyone
 Customer satisfaction
 TQM is an improvement in all levels of functioning. Total quality
management can guarantee not only greater amount of production
or improved service but also the conformance to specific standards
without fail.
31
 TQM Features
1. Quality must be integrated throughout the
organization’s activities.
2. There must be employee commitment to
continuous improvement.
3. The goal of customer satisfaction, and the
systematic and continuous research process
related to customer satisfaction, drives TQM
systems.
4. Suppliers are partners in the TQM process.
32
 3.2. Kaizen – Continuous Improvement
 Plan: Collect data and set
performance target.
 Do: Implement
countermeasures.
 Check: Measure and
evaluate the results of
countermeasures.
 Act: Standardize and
apply improvement to
other parts of the
organization.
 DEMING CycIe - PCDA

Act

Plan
Plan

Check

Do
34
 3.3. Statistical Process Control
 Statistical Process Control (SPC) – Quality at the source - is a
technique that involves testing a random sample of output from a
process in order to detect if nonrandom, assignable changes in the
process are occurring.
 The basic steps in quality assurance from Buyer’s perspective:
1. Buyer establishes required quality specifications.
2. Supplier determines process capability.
a. Identify common or chance causes of variation.
b. Identify special or assignable causes of variation.
c. Eliminate special causes.
3. Compare buyer’s quality requirements to supplier’s process capability.
4. Make adjustments, if necessary.
a. Negotiate with supplier for process improvements.
b. Seek an alternate supplier. 35
Statistical Process Control
Procedures
 Key Focuses of SPC
 Focus on prevention of nonconformance:
 Need for process consistency
 Reduce process variation
 Reduce reliance on appraisal, inspection, and detection activities
 Supplier certification program
 Focus on process, not on output:
 Quality processes  quality output
 Supplier must provide evidence of process capability
 Structured, companywide supplier evaluation and selection system
 Focus on sample inspections:
 How many parts did the supplier produce to get an acceptable sample?
 Are the samples representative of the process under normal conditions?
 Did the supplier actually produce the sample or use a subcontractor?
 Do the samples show evidence of capacity or process capability?
37
 Process Capability
(a) (b)

Specification Specification

Natural Variation Natural Variation

(c) (d)

Specification Specification

Natural Variation Natural Variation

Source:
MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008
Evans and Lindsay - Thomson South-Western 38
 Process Capability
 Process capability is the ability of a process to generate outputs that
meet engineering specifications or customer requirements
 Outputs must fall between pre-established upper and lower
specification limits
 No special causes of variation exist in the process
 99.7% of all output fall between ± 3 standard deviations of the
process mean
 A stable process and in statistical control can be expected to produce
virtually all of its output within these natural tolerance limits
 A process’s natural limits must fall within specification limits to be
capable

39
 Process Capability Analysis
 Process analysis follows the steps outlined in the process
improvement plan to identify needed improvements.
 This analysis also examines problems experienced,
constraints experienced, and non-value-added activities
identified during process operation.
 Process analysis includes root cause analysis—a specific
technique used to identify a problem, discover the
underlying causes that lead to it, and develop preventive
actions.
 Process Capability Index
 Process Capability Index (Cp): combines process spread and tolerance
into one index and indicates whether process variation is satisfactory.
UTL  LTL
Cp 
6
Where: UTL = upper tolerance limit
LTL = upper tolerance limit
σ = standard deviation of the process
 A process with a Cp of less than 1.0 is generally considered not capable.
If the capability index is greater than 1.0 the process is capable of
producing 99.7 percent of parts within tolerance (~6 sigma).
 A Cp of 1.33 has become a standard of process capability. Purchasers
can specify process capability expectations. Some organizations require
a higher value of 2.0. A higher value means fewer defects and greater
quality.
 Process Capability Index (cont.)
 Cpk Index: This index adjusts the Cp for the effect of non-centered
distribution.
UTL     LTL
C pu  ; C pl  ; C pk  minC pu , C pl 
3 3
 Process mean  - Process spread (3 σ)
 Cpk:
 Less than 1.0—unacceptable because part of the process distribution
is out of specification.
 Between 1 and 1.33 marginal because the process distribution is
barely within specification.
 Greater than 1.33 acceptable because the process distribution is well
within the specification.
 Example

If the tolerance is 2.000 inches ± 0.0005 inches

and the standard deviation of the process ()
was 0.0016 inch.
 3.4. Six Sigma Quality
 A Six Sigma approach to quality focuses on preventing defects by using
data to reduce variation and waste.
 Expressed as 3.4 errors (or defects) per million opportunities (DPMO)
 DIMAC model - Processes require inputs (x) and produce outputs (y). If
you control the inputs, you will control the outputs.
 It is a set of tools, including statistical process control (SPC), control
charts, failure mode and effects analysis, and flowcharting. These are
qualitative and quantitative techniques to drive process improvement.
 Benefits of Six Sigma Quality:
 A management environment that supports the initiatives as business strategy. Organizational
support is provided by designated executives and champions who set the direction for project
selection and deployment.
 Well-defined projects with bottom-line impact.
 Each level has specific roles and project responsibilities.
 Teams whose members have statistical training.
44
 The DMAIC Model
Define

Control Measure

Improve Analyze

45
 3.5 LEAN
Lean goals are:
 Eliminate waste and non-value-added activity
 Improve quality: understand customers' wants and
needs and design processes to meet their
expectations and requirements.
 Reduce time: most effective way to finish an activity
 MOST COMMON WASTES
D.O.W.N.T.I.M.E
Defect • Error or mistake lead to rework, scrap
• Incorrect information,

Overproduction • Too much products/information those are more than needed

or far ahead of schedule

Waiting • Waiting for the next production step/information

• Interruptions of production during shift change

Non-utilized skills • Underutilization of people’s knowledge, talents and skills

Transportation • Unnecessary travel or movement of material/goods

Inventory • Materials, Parts, Goods

• Excessive Multitasking

Motion • Needless moving or walking of people or equipment

• Unnecessary action

Excess processing • Overshooting requirements

3.6. Quality Assurance & Quality Control
 Functions:
 to establish and maintain effective controls for monitoring processes and equipment
and supporting efforts to help suppliers and their suppliers to design, implement,
and monitor continuous quality improvement programs.
 inspecting incoming material or monitoring in-house production.
 plays a key role in supplier certification; initiates materials studies; and inspects
samples provided by suppliers.
 investigate claims and errors, related both to incoming items and to outgoing or
finished products.
 Structure and location:
 the inspection of incoming materials,
 the inspection of materials in the process of manufacturing,
 the inspection of the finished product.
 Quality Assurance (QA)
 The process of auditing the quality requirements and the results from quality
control measurements to ensure that appropriate quality standards and
operational definitions are used.
 The process of auditing the Standard Operating Procedure (SOP) that is aligned
with Quality Manual of the organization & revise as needed

Quality Assurance is performed throughout the project/product life
cycle for Commitment and Improvement of quality processes

A Guide to the Project Management Body of Knowledge, Fifth Edition (PMBOK® Guide) ©2013 Project Management
Institute, Inc. All Rights Reserved. Figure 3-8 Page 404.
 Quality Management System

Level 1
Quality
Manual

Policy Level 2
SOP

Work instruction Level 3

Record
Level 4
Proof of achievement of the required quality and
effective application of the Quality System
50
 Quality Management System
Level 1: Quality Manuals
Document specifying the quality management system of
an organization
Level 2: Policy/Standard operating Procedure
Documents that provide information about how to perform
activities and processes consistently
Level 3: Work Instruction
Documents that provide details guidelines from on HOWs
Level 4: Records
Documents that provide objective evidence of activities
performed or results achieved for continuous improvement
51
 Quality Control (QC)
 The process of monitoring and recording results of executing the quality
activities to assess performance and recommend necessary changes.
 identifying the causes of poor process or product quality and recommending and/or taking
action to eliminate them
 validating that project deliverables and work meet the requirements specified by key
stakeholders necessary for final acceptance.
 Control Quality process
Approved Validated
CR
CR CR
Perform Integrated Change Monitor and
Control Control Quality Control Project
Work

Verified Accepted
Deliverables
deliverables deliverables
Direct and Manage Control Validate Close Project
Project Execution
Quality Scope
 Quality Audit
A quality audit is a structured, independent
process to determine if project activities comply
with organizational and project policies,
processes, and procedures.
 Objectives:
 Identifying Good/Best practices; Shortcomings/Gaps;
 Sharing good practices, Support for implementation
 Documenting lesson learned
 Can be scheduled or random and performed by Internal
or External auditors
 Sampling, Inspection, and Testing
The cost of sampling, testing, and inspection><the
risk of either accepting a lot with more than an
acceptable level of defects or of rejecting a good lot.
Sampling, testing, and inspection are quality
management tools that may be used at three different
stages in the acquisition process:
 Before a purchase commitment is made to a supplier.
 During the commitment to a supplier.
 After a purchase commitment has been made.
 Sampling
 The goal is to secure a sample that is representative of the total
population being tested.
 A random sample is one in which every element in the population has an
equal chance of being selected.
 Example: if a shipment of 1,000 balls of supposedly identical
characteristics is thoroughly mixed together and a random sample of 50
balls is picked from the lot and inspected and five are found to be
defective, it is probable that 10 percent of the shipment is defective.
 Sequential sampling may be used to reduce the number of items
inspected in accept–reject decisions without loss of accuracy.
 Example: In a simple version of sequential sampling, 10 percent of the
lot is inspected, and the whole lot is accepted if the sample is
acceptable. If the sample is not acceptable, an additional 10 percent
may be inspected if the decision to reject cannot be made on the basis
of the first sample.
 Testing and Inspection
 100% inspection or screening:
 Expensive
 Depending on the severity of a mistake, an error of discarding a
perfectly good part may be more acceptable than passing a faulty
part
 Testing:
 Testing products may be necessary before a commitment is made to
purchase.
 Use and Laboratory Tests.
 Commercial Testing Labs and Services: complicated and expensive
 new processes or materials
 Inspection upon Receipt: to assure the buyer that the supplier has
delivered an item that corresponds to the description furnished.
 Adjustments and Returns
 Nonconforming material can be rejected and returned at the supplier’s
expense or held for disposition instructions  options: replace, down
grade, rework,…
 The costs incurred when materials are rejected:
 transportation costs
 testing cost,
 contingent expense.
 Long-term solution: buyer–supplier partnership or a joint quality
program.
Assuring the Quality of Purchased Services
 Selected the Best Buy Supplier
 Manager supplier performance: Before-During-After the Purchase Order
 Post-service evaluation is an essential for service acquisition.
 Informal Evaluation: issue, problem solving, expectations of quality, timeliness,
cost, professionalism, service orientation…
 Formal Evaluation: Reliability, Responsiveness, Assurance, Empathy, Tangibles
 Values of the Service:
 Degree of Repetitiveness
 Degree of Tangibility
 Direction of the Service
 Production of the Service
 Nature of the Demand
 Nature of Service Delivery
 Degree of Standardization
 Skills Required for the Service
 3.7. ISO & MBNQA Criteria
Widely accepted quality management frameworks
 ISO: International Standardization Organization in Geneva
 ISO 9000:2000 --9001:2008
 ISO 14000 - 14001/2004 & 14004/2004
 Malcolm Baldrige National Quality Award (USA)
 Criteria are often used as the basis for supplier certification
programs.

60
 Principles of ISO 9000:2000
Originally developed in the European Common Market in 1987
Updated in 1994 and 2000, 2008
Internationally accepted and recognized quality process standards

 Customer focus  Continual improvement

 Leadership
 Involvement of people
 Process approach
 System approach to
management
 Factual approach to decision-
making
 Mutually beneficial supplier
relationships

61
 ISO 14000
 To promote environmental protection and pollution prevention –
14001:2004 & 14004:2004
 Used to analyze a supplier’s ability to proactively manage its
environmental impact. Range from environmental management systems
to addressing auditing, labeling, and product standards
 Classifications
 Process-oriented standards
 Product-oriented standards
 ISO 14000 Benefits:
 Fewer pollutants generated -Reduced liability risk
 Improved regulatory compliance -Better public and community relations
 Lowered insurance premiums--Enhanced profitability through:
 Improved resource management
 Reduced waste generation
62
 The MBNQA
 Originally from US – intended to recognize US company and being
applied internationally. “Doing the right thing at the first time”
philosophy.
 Implies that an organization excels not only in quality management
but also in quality achievement – Both process & results oriented
 More comprehensive set of quality-related criteria than ISO
 Customer satisfaction via products & services quality
 Continuous quality improvement
 Total involvement
 May take 8 – 10 years to adequately prepare a competitive quality
system

63
 MBNQA – Total involvement
 Leadership
 Organizational leadership
 Public responsibility and citizenship
 Strategic planning
 Strategy development
 Strategy deployment
 Customer and market focus
 Customer and market knowledge
 Customer satisfaction and relationships
 Information and analysis
 Measurement of organizational performance
 Analysis of organizational performance
 Human resource focus
 Work systems
 Employee education, training, and development
64
 Employee well-being and satisfaction
 MBNQA – Process & Result
 Process management
 Product and service processes
 Support processes
 Supplier and partnering processes
 Business results
 Customer focused results
 Financial and market results
 Human resource results
 Supplier and partner results
 Organizational effectiveness results

65
BACK UP
 Homeworks

Case 1: The Power Line Poles

Case 2: Air Quality Systems, Inc.
 Answer the Questions

1. Which of the following tools and techniques

is most likely to be used in Quality Assurance?
A. Fishbone diagram
B. Flowchart
C. Inspection
D. Process analysis
2. The management wants to be sure that a
project is following defined quality standards.
Which one would they use?
A. Risk Management Plan
B. Work Breakdown Structure
C. Statement of Work
D. Quality Audit
3. As a project manager, what would you give the
highest priority: quality, cost, or schedule?
A. It would depend upon the prevailing circumstances
of the project
B. Quality is most important. Everything else comes
afterwards
C. Cost is most important. Everything else comes
afterwards
D. Completing the project as on schedule is most
important
4. A project manager is encountering numerous
problems on his project. He wants to identify the
root causes of the problems, so he can focus his
attention on those causes. Which of the following
tools should he use?
A. Fishbone diagram
B. Control chart
C. Pareto chart
D. Histogram
5. As a project manager, you are ensuring that
quality standards are followed on your project.
In which process are the quality standards that
need to be followed identified?
A. Develop Project Charter
B. Collect Requirements
C. Plan Quality Management
D. Perform Quality Assurance
6. Which of the following is an example of cost
of conformance?
A. Quality training
B. Cost of rework
C. Warranty cost
D. Scrap
 Example: The Toast Maker’s Story
 A toast maker started a wayside shop to sell toasts. He used a toaster to
make fifty toasts in a couple of hours in the evening, all of which got sold.
He regretted having to disappoint customers who asked for more. So, he
bought one more toaster and hired an assistant. While all the fifty toasts
that the toast maker made were of good quality, his assistant could make
only forty five, with the remaining five getting burnt. Yet, to cope with the
increasing demand more assistants had to be appointed. However,
though the sales increased, most of the assistants would burn five to ten
toasts on an average everyday. So, he appointed an inspector who could
monitor five of them. From the wayside shop, he moved on to a factory,
with several units of assistants as well as inspectors. He found the need
for a supervisor for every five or six units. Still, some of the toasts
continued to get burnt.
The Toast maker - Empowering the
Grassroots Worker
 The Toast Maker’s Story (cont.)
 As the factory grew, with greater amount of production
and more number of toast makers and more number of
inspectors as well as supervisors, he appointed a
manager to look after the supervisors, thereafter a
general manager and ultimately, a Managing Director.
Yet, at the ground
 Level as the number of toasts being sold increased, the
number of toasts getting burnt also increased. As he
was making profits he consoled himself by convincing
himself that burning toasts was a part of toast making.
 The Toast Maker’s Story (cont.)
 A Total Quality Manager would not accept this. Instead of appointing
an inspector he would ask the toast makers to find out why they
burnt five toasts when they could make forty five good ones. They
would have to improve quality and they would have to discover it for
themselves. The total quality manager would also be willing to share
a part of the profits when the number of toasts sold would equal the
number of toasts made.
 Leadership with an orientation of the processes and orientation
towards the customer through management of the people (that
becomes a continuous process) certainly guarantees total quality.
 SPC Example
Problem: Cowl side reinforcement panel I/O
variation
SPC Example (cont.)
SPC Example (Cont.)
 Deming’s 14 Points
1. Create constancy of purpose for improving products and services.
2. Adopt the new philosophy.
3. Cease dependence on inspection to achieve quality.
4. End the practice of awarding business on price alone; instead, minimize total cost by
working with a single supplier.
5. Improve constantly and forever every process for planning, production, and service.
6. Institute training on the job.
7. Adopt and institute leadership.
8. Drive out fear.
9. Break down barriers between staff areas.
10. Eliminate slogans, exhortations, and targets for the workforce.
11. Eliminate numerical quotas for the workforce and numerical goals for management.
12. Remove barriers that rob people of pride of workmanship, and eliminate the annual
rating or merit system.
13. Institute a vigorous program of education and self-improvement for everyone.
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14. Put everybody in the company to work accomplishing the transformation.