1.introduction To Quality & Quality Management

1.
Introduction to Quality &

Quality Management
1.1 Concept of quality
1.2 Dimensions of quality
1.3 Importance of quality
1.4 Concept and Principles of Quality Management
1.5 Strategic Quality Management
1.6 Bench Marking
1.7 Cost of Quality
Er.Sumit Kumar Karn 1
Concept Of Quality
DEFINING QUALITY
ISO definition;
“the totality of features and characteristics of a
product and service that bear on its ability to
satisfy given needs.”
Oxford Dictionary;
“a distinctive feature”
• Quality can be quantified as follows
• Q=P/E
• Where
• Q = Quality
• P = Performance
• E = Expectation

Concept Of Quality
• Qualitiy is related to subjective feelings or
objective facts.
• Subjectively, something might be good because it
is useful, because it is beautiful, or simply
because it exists.
• Commonly, quality can mean degree of
excellence,
• Subjective quality results from the combination
of perception and expectation

Concept Of Quality

1.2 Dimension Of Quality
Dimension 1: Performance
• Does the product or service do what it is supposed to do, within its
defined tolerances?
• Performance is often a source of contention between customers and suppliers,
particularly when deliverables are not adequately defined within specifications.
• The performance of a product often influences profitability or reputation of the
end-user. As such, many contracts or specifications include damages related to
inadequate performance.
Dimension 2: Features
• Does the product or services possess all of the features specified, or required for
its intended purpose?
• While this dimension may seem obvious, performance specifications rarely define
the features required in a product. Thus, it’s important that suppliers designing
product or services from performance specifications are familiar with its intended
uses, and maintain close relationships with the end-users.

Dimension 3: Reliability
• Will the product consistently perform within specifications?
• Reliability may be closely related to performance. For instance, a
product specification may define parameters for up-time, or
acceptable failure rates.
• Reliability is a major contributor to brand or company image, and is
considered a fundamental dimension of quality by most end-users.
Dimension 4: Conformance
• Does the product or service conform to the specification?
• If it’s developed based on a performance specification, does it
perform as specified? If it’s developed based on a design
specification, does it possess all of the features defined?

Dimension 5: Durability
• How long will the product perform or last, and under what
conditions?
• Durability is closely related to warranty. Requirements for product
durability are often included within procurement contracts and
specifications.
• For instance, fighter aircraft procured to operate from aircraft
carriers include design criteria intended to improve their durability
in the demanding naval environment.
Dimension 6: Serviceability
• Is the product relatively easy to maintain and repair?
• As end users become more focused on Total Cost of Ownership
than simple procurement costs, serviceability (as well as reliability)
is becoming an increasingly important dimension of quality and
criteria for product selection.

Dimension 7: Aesthetics
• The way a product looks is important to end-users. The aesthetic
properties of a product contribute to a company’s or brand’s
identity. Faults or defects in a product that diminish its aesthetic
properties, even those that do not reduce or alter other dimensions
of quality, are often cause for rejection.
Dimension 8: Perception
• Perception is reality. The product or service may possess adequate
or even superior dimensions of quality, but still fall victim to
negative customer or public perceptions.
• As an example, a high quality product may get the reputation for
being low quality based on poor service by installation or field
technicians. If the product is not installed or maintained properly,
and fails as a result, the failure is often associated with the
product’s quality rather than the quality of the service it receives.

1.3 Importance of Quality
* Relationship among Quality, Market share and
Profitability,
* Quality drives growth,
* Quality reduces cost,
* It affects following organizational benefit;
- Greater customer loyalty,
- Market share improvement,
- Higher stock price,
- Reduced service call,
- Higher prices,
- Greater productivity.

• More Consistent Products and Increased Efficiency
Quality management value lies in its ability to help
companies improve their products' reliability, durability
and performance. These factors help differentiate a
business from its competitors. Better products equal
happier customers and higher revenue. Besides
product quality, quality management systems, such as
ISO 9001, ensure clear communication structures,
responsibilities and tasks across all departments. This
results in higher employee morale, improved
performance and increased efficiency.

• More Consistent Products and Increased
Efficiency. Quality management value lies in its ability to
help companies...
• Greater Customer Satisfaction. Your business cannot ignore
the cost of bad customer relations. It takes 12 positive...
• Lower Costs, Increased Profits. When applied consistently
over time, these processes can reduce your costs and
increase...
• Reduced Risks. Risk mitigation goes beyond choosing
adequate business insurance coverage and investing in
cutting-edge...

1.4 Concept & principle of Quality
Management
Principle of quality management
1.Customer focus
Statement :The primary focus of quality management is to meet customer
requirements and to strive to exceed customer expectations. Rationale
Sustained success is achieved when an organization attracts and retains
the confidence of customers and other interested parties. Every aspect of
customer interaction provides an opportunity to create more value for the
customer. Understanding current and future needs of customers and other
interested parties contributes to sustained success of the organization.
Key benefits
• Increased customer value
• Increased customer satisfaction
• Improved customer loyalty
• Enhanced repeat business • Enhanced reputation of the organization
• Expanded customer base
• Increased revenue and market share

Management
2Leadership
Statement: Leaders at all levels establish unity of purpose and direction and
create conditions in which people are engaged in achieving the
organization’s quality objectives.
Rationale: Creation of unity of purpose and direction and engagement of
people enable an organization to align its strategies, policies, processes
and resources to achieve its objectives.
Key benefits
• Increased effectiveness and efficiency in meeting the organization’s quality
objectives
• Better coordination of the organization’s processes
• Improved communication between levels and functions of the organization
Development and improvement of the capability of the organization and its
people to deliver desired results

Management
3.Engagement of people
Statement :
Competent, empowered and engaged people at all levels
throughout the organization are essential to enhance
its capability to create and deliver value.
Rationale :
To manage an organization effectively and efficiently, it is
important to involve all people at all levels and to
respect them as individuals. Recognition,
empowerment and enhancement of competence
facilitate the engagement of people in achieving the
organization’s quality objectives.

Key benefits :
• Improved understanding of the organization’s quality
objectives by people in the organization and increased
motivation to achieve them
• Enhanced involvement of people in improvement
Enhanced personal development, initiatives and creativity
• Enhanced people satisfaction
• Enhanced trust and collaboration throughout the
organization
• Increased attention to shared values and culture
throughout the organization

Management
5.Improvement
Statement: Successful organizations have an ongoing focus on improvement.
Rationale :
Improvement is essential for an organization to maintain current levels of
performance, to react to changes in its internal and external conditions and to
create new opportunities.
Key benefits:
• Improved process performance, organizational capabilities and customer
satisfaction
• Enhanced focus on root-cause investigation and determination, followed by
prevention and corrective actions
• Enhanced ability to anticipate and react to internal and external risks and
opportunities
• Enhanced consideration of both incremental and breakthrough improvement
• Improved use of learning for improvement
• Enhanced drive for innovation

6. Evidence-based decision making
Statement:
Decisions based on the analysis and evaluation of data and information are
more likely to produce desired results.
Rationale :Decision making can be a complex process, and it always involves
some uncertainty. It often involves multiple types and sources of inputs, as
well as their interpretation, which can be subjective. It is important to
understand cause-and-effect relationships and potential unintended
consequences. Facts, evidence and data analysis lead to greater objectivity
and confidence in decision making.
Key benefits :
• Improved decision-making processes
• Improved operational effectiveness and efficiency
• Increased ability to review, challenge and change opinions and decisions
• Increased ability to demonstrate the effectiveness of past decision

Management
4.Process approach
Statement:
Consistent and predictable results are achieved more effectively and efficiently when
activities are understood and managed as interrelated processes that function as a
coherent system.
Rationale :
The quality management system consists of interrelated processes. Understanding
how results are produced by this system enables an organization to optimize the
system and its performance.
Key benefits :
• Enhanced ability to focus effort on key processes and opportunities for improvement
• Consistent and predictable outcomes through a system of aligned processes
• Optimized performance through effective process management, efficient use of
resources, and reduced cross-functional barriers
• Enabling the organization to provide confidence to interested parties as to its
consistency, effectiveness and efficiency

1.5 Strategic Quality Management
What is Strategic Quality Management?
It refers to the successful development,
deployment, and execution of strategic plans.
Furthermore, it involves the development of
the organizational mission, vision, values, and
goals of the development of policies and
plans, in addition to the execution and
evaluation of those plans.

What is Strategic Quality
Management?
In other words, to put the development of
organizational mission, vision, values, policies,
and plans, followed by their successful
execution and evaluation, is Strategic Quality
Management.

Elements of Strategic Quality
Management
Following are some distinctive elements of SQM:
• Mission: Mission is the short term goal, which basically
revolves around the completion of the present project, by
following strategic execution and evaluation plans.
• Vision: Vision is essentially a tone-setting idea, designed to
align and inspire the stakeholders in an organization.
• Values: Also, values are the key regulations an organization
operates on, wouldn’t compromise on, and make sure that
they’re meeting those values in each project.
• Goals: Lastly, goals are the long-term potential
achievement of an organization. For example, being a
proactive software development house in the market
followed by entrepreneur ideas.

1.6 Bench Marking
• Benchmarking is the process of comparing the cost, cycle time,
productivity, or quality of a specific process or method to another
that is widely considered to be an industry standard or best
practice. Essentially, benchmarking provides a snapshot of the
performance of your business and helps you understand where you
are in relation to a particular standard. The result is often a business
case for making changes in order to make improvements. The term
benchmarking was first used by cobblers to measure ones feet for
shoes. They would place the foot on a "bench" and mark to make
the pattern for the shoes. Benchmarking is most used to measure
performance using a specific indicator (cost per unit of measure,
productivity per unit of measure, cycle time of x per unit of
measure or defects per unit of measure) resulting in a metric of
performance that is then compared to others.

Bench Marking
• Also referred to as "best practice benchmarking" or
"process benchmarking", it is a process used in
management and particularly strategic management,
in which organizations evaluate various aspects of their
processes in relation to best practice, usually within a
peer group defined for the purposes of comparison.
This then allows organizations to develop plans on how
to make improvements or adopt best practice, usually
with the aim of increasing some aspect of
performance. Benchmarking may be a one-off event,
but is often treated as a continuous process in which
organizations continually seek to challenge their
practices.

Types of benchmarking
1) Process benchmarking
The initiating firm focuses its observation and investigation of business
processes with a goal of identifying and observing the best practices from one or
more benchmark firms. Activity analysis will be required where the objective is to
benchmark cost and efficiency; increasingly applied to back-office processes where
outsourcing may be a consideration.
2) Financial benchmarking
Performing a financial analysis and comparing the results in an effort to assess
your overall competitiveness.
3)Performance benchmarking
Allows the initiator firm to assess their competitive position by comparing
products and services with those of target firms.

4) Product benchmarking
The process of designing new products or upgrades to current ones. This
process can sometimes involve reverse engineering which is taking apart
competitors products to find strengths and weaknesses.
5)Strategic benchmarking
Involves observing how others compete. This type is usually not industry
specific meaning it is best to look at other industries.
6)Functional benchmarking
A company will focus its benchmarking on a single function in order to improve
the operation of that particular function. Complex functions such as Human
Resources, Finance and Accounting and Information and Communication
Technology are unlikely to be directly comparable in cost and efficiency terms and
may need to be disaggregated into processes to make valid comparison.

1.7 Cost of Quaity
1. Prevention costs
2. Appraisal costs
3. Internal failure costs
4. External failure costs
5. Opportunity costs

1.7 Cost of Quaity
Prevention Appraisal Costs of Defects Opportu-
Cost Cost Internal External Cost nity Cost
Cost
* Planning * Testing * Scrap * Returns * Utility of
product
* Developing * Inspection * Rework * Adjustments
procedures * Market
* Audits * Retest * Warranty demand
* Training work
* Downtime * Competa-
* Designing * Allowances ncy in the
system * Yield loss market
* Goodwill
* Reporting * Evaluation loss
of defects
* Lost sales
1.7 Cost of Quaity
• Cost of quality = PC+AC+IFC+EFC
1 – Prevention Costs
The prevention costs can be regarded as the costs that
the business incurs to reduce and minimize defects.
The prevention costs are determined at the start of
every new process step. The prevention costs are
highly regarded as it saves the organization labor costs
and manufacturing costs. If the business does not
undertake the prevention costs, then it could result in
high defect costs at a very later stage, which could
prove to be expensive for the business.

1.7 Cost of Quaity
2 – Appraisal Costs
• The appraisal costs can be regarded as the
costs that the business incurs when it works
towards the identification of defective items.
It is done before any product has to be
shipped to the end consumer. The quality
checks professional generally inspect finished
goods, in the process inventory and raw
materials.

1.7 Cost of Quaity
3 – Internal Failure
• Internal failure costs are termed as the cost
that the business or corporate entity has to
bear once the defective items are identified
before proceeding with the shipment. These
costs signify the direct material,
manufacturing overhead, and direct labor
consumed by each defective item.

1.7 Cost of Quaity
4 – External Failure
• The external failure costs are costs that the
business has to bear on account of defective
items that are shipped to the customers.
These costs are often regarded as expensive as
they would cause the business to incur high
warranty and return costs along with already
incurred manufacturing overheads.

Why Measure the Cost of Quality?
• The determination of the cost of quality
remains to be critical and varies for different
organizations. If this cost is not measured and
quantified, the organizations working in the
competitive industries would never gain the
upper hand and survive the ever-changing
dynamic environment. Therefore, it becomes
necessary to measure it as it helps the
business in the maintenance of the healthy
and positive bottom line.
Why Quality become
Inferior?
1. Lack of commitment from top.
2. Prevailing corruption practices.
3. Lack of quality system, & enforcement of
standard.
4. Lack of training on quality, better
workmanship.
5. Degraded norms & values.

Supplementaryslide

Quality
• Quality often means different things to

different people that may create
considerable confusion &
misunderstandings.
• Quality is a sense of appreciation that
something is better than something else.
• Quality is doing things right first time,
rather than making & correcting mistake.

Quality Definition
• Degree of goodness.
• Conformance to requirements or specification.
• Zero defects.
• Fitness for use.
• Consistent conformance to expectation.
• Doing things right first time.
• Doing the right things.
• Quality is totality of all attributes & characteristics
of product or service as specified, required &
expected

Quality Definition
• Some people define quality as consisting of
conformance to some standard, e.g. conformance
to specifications, procedures, or requirements.
• Such definitions can be helpful in clarifying quality
responsibilities of workers & supervisors.
• Workers & supervisors need clear definitions of
their responsibilities with respect to quality.

• However, none of these
conformance definitions adequately
defines quality responsibility of
company.
• For company, definition should be
stated in terms of:
1. Meeting customer needs, &
2. Freedom from deficiencies.
• The word “quality” has multiple meanings.
• Quality may be defined as “The totality of
features & characteristics of a product or
services which bear on its ability to satisfy
stated or implied need”.
• Quality is totality of all attributes &
characteristics of product or service as
specified, required & expected

Quality Misconception
(Facts about quality)
• Quality is not grade.

• We should not compare plastic tap with
brass tap.
• Both taps may be of excellent quality if
they don’t leak.
• Quality costs more, but lack of quality
costs even more.

Quality Misconception
(Facts about quality)
• Cheaper product or service may reduce
initial investment but at last total cost will
be high due to higher operating &
maintenance cost.
• Quality should be achieved at low cost,
not high quality at high cost.
• Process quality is more than product
quality.

Cost of Quality
• Different people define “costs of quality”
differently.
• Costs of quality refer to all costs that are
incurred to prevent defects or that result
from defects in products.
• Costs incurred to prevent, detect and
dealing with defects are called costs of
quality
Cost of Quality
. Quality Costs
Direct cost Indirect cost
Failure costs Prevention costs Appraisal costs
Internal External
Figure: Breakdown ofEr.Sumit

Cost of Quality
Kumar Karn
Types of quality costs are:
1. Prevention costs.
2. Appraisal costs.
3. Internal failure costs.
4. Internal failure costs.
1. Prevention costs
• Prevention costs involves in activities
to ensure right first time performance,
and to keep failure and appraisal
costs to a minimum
1. Prevention costs
Examples of prevention costs are:
i. Quality planning.
ii. Process planning.
iii. Process control.
iv. Quality audits.
v. Supplier quality evaluation.
vi. Training.

2. Appraisal Costs
• Appraisal costs involves to check whether right
first time is achieved.
• Appraisal costs are the costs incurred to
determine degree of conformance to quality
requirements.
• Appraisal costs (sometimes called inspection
costs) are incurred to identify defective products
prior to shipment of products to customers
2. Appraisal Costs
Examples of appraisal costs are:
i. Test and inspection of incoming materials.
ii. In-process inspection and test of activity.
iii. Quality audits.
iv. Final inspection and test.

3. Failure Costs
• Failure costs occur due to poor quality so
these costs are also known as costs of
poor quality.
• Failure costs are incurred when product
or activity fails to conform to its design
specifications.

3. Failure Costs
• Failure costs involves in the activities
which result from not conforming to right
first time.
• Failure costs include internal failure cost
and external failure cost that impair
goodwill of company.

3. Failure Costs
i. Internal Failure Costs
• Internal failure costs result from
identification of defects in construction.
• Internal failure costs are associated with
defects that are found prior to shipment of
product to customer.

3. Failure Costs
i. Internal Failure Costs
Example of internal failure costs are:
a. Net cost of scrap.
b. Net cost of rework.
c. Analysis of cause of defects.
d. Remedy of defective activity.
e. Re-inspection and retest
3. Failure Costs
ii. External Failure Costs
• When defective product is delivered to
customer, some cost incurs to rectify defect
is called external failure costs.
• External failure costs includes warranty,
repairs and replacements, liability arising
from legal actions against company, and lost
sales arising from reputation for poor quality.

3. Failure Costs
ii. External Failure Costs
• External failure costs are associated with defects
found after handover of construction project within
defect liability period.
• External failure costs can reduce profits.
Examples of external failure costs are:
a. Cost of remedying defects and replacements.
b. Cost of field servicing and handling complaints.

Cost of Quality
• Some managers may have attitude like
“Let’s go ahead and ship everything to
customers, and we will take care of any
problems under the warranty.”
• Such attitude generally results in high
external failure costs, customer ill will, and
declining market share and profits.

• Unsatisfactory quality leads to inefficient
utilization of resources, waste of
resources such as labor, material,
equipment, time, and consequently
results higher cost.
• If life-cycle-cost of project is considered, it
is true to say that quality costs less.

• In the words of Deming - “As quality
increases productivity increases, this fact
is well known, but only to a selected few”.
• Crosby’s approach focuses regarding cost
of quality on two components - price of
conformance and price of non-
conformance.

• In construction, quality cost is mainly non-
conformance cost.
• Most of the non-conformance can be
avoided by timely inspection, by use of
more experienced and skilled labor, by
furnishing project teams with accurate
data and managing change instruction in
timely manner.

Cost of non-conformance can be minimized
by:
1. Establish acceptable criteria for selection of
subcontractor and suppliers.
2. Provide training to employees regarding
project management techniques including
planning, coordinating skills, and
communication.

Cost of non-conformance can be minimized
by:
3. Motivate site personnel to do right thing first
time.
4. Insist that site personnel check accuracy of
any setting out work.
5. Monitor, advice, and control performance of
subcontractors and suppliers.

• Cost of non-conformance is a valuable
source of information for contractors,
designers, and clients in avoiding similar
failures in future projects.
• Non-conformance cost is simple and
useful, for both site management and
head office.

• Due to limited funds, client is compelled to
economize in aspects of design and
construction, and thus client sacrifices
quality.
• Project managers or client’s advisors
should advise how quality can be
maintained at highest level possible.

• In USA, it is estimated that cost of
producing required quality constitutes
15% of total cost of industrial
construction.
• In UK, Building Research Establishment
found that 50% of errors in buildings had
their origin in design stage and 40% of
errors arose from construction stage.

• About 90% of total failure events in
building works were due to design and
poor workmanship.
• Poor quality in construction needs
rectification of most defective works,
which demands considerable time and
cost.

• Deming has identified two major causes of
quality problems - caused by the system,
and caused by individual workers.
• In general, 85% of quality related problems
are inherent in system over which individual
worker has no control, and remaining 15%
problems are controlled through operator’s
action.

Benchmarking Quality
• “Benchmark” is a point of reference, or
standard that can be used for reference.
• “Benchmarking” is a continuous process of
identifying, understanding best practice and
processes of best-in-class organizations in
order to learn how they achieved excellence,
and adapting specific best practice and
processes in terms of quality improvement
that will lead to superior performance.

• Benchmarking is a continuous process in
which organizations continually seek to
improve their practices in terms of quality
improvement.
• Benchmarking is used to measure and
compare performance using a specific
indicator (cost per unit, productivity per
unit, defects per unit).

• In benchmarking process, organizations
evaluate various aspects of their
processes in relation to best practice
company’s processes for comparison and
to develop plans on how to make
improvements or adapt specific best
practices.

• By benchmarking many leading
companies have experienced success in
upgrading their organizational capabilities.
• It is argued that benchmarking project
management can create significant
improvements in project performance.

• Benchmarking from investor perspective includes
comparison to peer companies that can be
considered alternative investment opportunities.
• Benchmarking in public sector functions as a tool
for improvement in public administration, where
state organizations invest efforts and resources to
achieve quality, efficiency and effectiveness of
services.

Benefits of conducting benchmarking are:
1. Creating better understanding of current position.
2. Increasing awareness of changing customer needs.
3. Encouraging innovation.
4. Developing realistic stretching goals.
5. Establishing realistic action plans.
• Benchmarking software packages can be used to
organize large and complex amounts of information,
such tool reduces costs significantly.

Benchmarking Methodology
• There is no single benchmarking process
that has been universally adopted.
• Wide appeal and acceptance of
benchmarking has led to emergence of
benchmarking methodologies.

1. Identify problem areas
• Identify problem areas include informal
conversations with customers, employees, or
suppliers; research techniques such as focus
groups; in-depth marketing research, quantitative
research, surveys, questionnaires, re-engineering
analysis, process mapping, quality control
variance reports, financial ratio analysis etc.

2. Identify leading organizations: Consult
customers, suppliers, financial analysts,
trade associations, and magazines to
identify which companies are worthy of study
the very best in any industry and in any
country.
3. Identify other industries that have similar
processes.

4. Survey companies for measures and
practices.
5. Visit "best practice" companies to identify
leading superiority practices.
6. Implement new and improved business
practices.

Methodology for conducting Benchmarking
. Stakeholders
Executive champions
Trigger
for
Process sponsor
Benchmarking team change
Functional experts
Research resource
Benchmarking partners
Step 1 Step 4
Plan Adapt
Step 2 Step 3
the
Collect Analyse
study
data data
From Quality Time
To Excellence www.dti.govuk/quality/benchmarking

• Benchmarking can be internal (comparing
performance between different groups within
organization) or external (comparing performance
with companies in specific industry or across
industries).
Types of benchmarking are:
1. Process benchmarking.
2. Performance benchmarking.
3. Strategic benchmarking.

1. Process benchmarking
• Initiating firm focuses its observation and
investigation of business processes to
identify best practices from benchmark
firms.
• Activity analysis will be required where
objective is to benchmark cost and
efficiency.

1. Process benchmarking
• Process benchmarking includes financial
benchmarking, benchmarking from investor’s
perspective, and benchmarking in public
sector.
• Financial benchmarking includes performing
financial analysis and comparing results to
assess overall competitiveness and
productivity.

2. Performance benchmarking
• Performance benchmarking allows initiator firm to
assess their competitive position by comparing products
and services with those of target firms.
• Process of product benchmarking is designing new
products or upgrades to current ones.
• Process can sometimes involve reverse engineering to
find strengths and weaknesses among competitors
products.

3. Strategic benchmarking
• Strategic benchmarking involves process of
observation how other industries compete.
• Strategic benchmarking includes functional
benchmarking, best-in-class benchmarking,
operational benchmarking, and energy
benchmarking.

• Functional benchmarking focuses on single
function to improve operation of that
particular function of a company.
• Best-in-class benchmarking involve studying
leading competitor or company that best
carries out specific function.

• Operational benchmarking embraces everything
from staffing, productivity and analysis of
procedures performed.
• Energy benchmarking is a process of collecting,
analyzing, and relating energy performance data
of comparable activities with the aim of evaluating
and comparing performance between or within
companies.


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1.

Introduction to Quality &

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• Quality often means different things to

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• Quality is not grade.

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Direct cost Indirect cost

Failure costs Prevention costs Appraisal costs

Figure: Breakdown ofEr.Sumit

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