Module - Ii Full Note

THIAGARAJAR POLYTECHNIC COLLEGE, ALAGAPPANAGAR
PROGRAMME: ELECTRICAL AND ELECTRONICS ENGINEERING

COURSE:INDUSTRIAL MANAGEMENT & SAFETY
MODULE-WISE NOTES
FACULTY NAME COURSE CODE: MODULE
SEBI N P 5001 2
MODULE 2
QUALITY PLANING AND IT’S DEVELOPMENTS
Definitions of quality
As per ISO 9000 quality is defined as “the totality of features and characteristics of a
product or service that bear on its ability to satisfy stated or implied needs”
In general quality is defined as “Product quality is decided by the customer needs

conforming to specifications assured performance and safety. Proper packing and timely
deliver .Efficient technical service and incorporating customer feedback”
Dimensions of quality
1. Performance
2. Features
3. Reliability
4. Conformance
5. Durability
6. Service ability
7. Perceived quality
Objectives of quality planning
1. To produce quality products and services which meet customer’s need

2. To define quality standards and to prepare product specifications
3. To prepare guidelines on various elements effecting quality
4. To establish quality objectives and developing plans for achieving these objectives
5. To have quality assurance system through every individual in every functional groups
of the organisation
6. To review and evaluate product designs with a view to improve quality and reduce the
quality costs
7. To develop the quality control techniques and methods
8. To built up a basic for total quality management culture
9. To identify opportunity for excellence
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10. To create an excellent operating culture in the organization
Three prong approach to quality planning
Quality planning can be achieved by three prong approaches. These are
1. Product planning
2. Managerial and operational planning
3. Documentation
1. Product planning
Product planning may be defined as –Evaluation of the range, mix, specification and
pricing of existing and new products in competition planning of product range, mix,
specification and pricing to satisfy company objectives and specifying the research, design
and development support required. Product planning serves as an input to process design
2. Managerial and operational planning
This includes preparing the application of the quality system such as organizational structure,
procedures, process and resource needed to implement the quality management
1. Preparing organizational structure; involves responsibilities, authorities and relationship

arranged in a pattern. through which the organization performs it’s function
2. Preparing organizational structure; involves written documentation of purpose and
scope of each and every activity i.e., what shall be done and by whom, when, where and
how it shall be done. What material, equipment and documents shall be used and how it
will be controlled and recorded
3. Preparing process; involves set of inter related resources and activities which transform
input into output in the most cost effective and quality effective manner. Resource
includes man, material, machines, money and manufacturing techniques
4. Preparation of the resources needed for all activities o the overall management function
that determine the quality policy, objectives and responsibilities and prepare for
implementation such as quality control, quality assurance and quality improvement.
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3. Documentation
All the elements, requirements and provision adopted by company for its quality
management system should be documented in a systematic and orderly manner in the form of
written policies and procedures
Such documentation should ensure a common understanding of quality policies and

procedures i.e. quality programs, plans, manual, record. The quality management system
should include adequate provision for the proper identification, distribution, collection and
maintenance for all quality documents and records.
The following are the examples of the types of quality documents requiring control
• Drawing
• Specification
• Blue prints
• Inspection instruction
• Test procedures
• Work instruction
• Operation sheet
• Quality manual ‘Operational procedures
• Quality control and quality assurance procedures
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SEBI N P 5001 2
Concept and role of ISO standards
ISO is the international organisation for standardisation is founded in 1946, with the
objective of promotion and development of international standards and related activities,
including conformity assessments, such as testing, inspection, laboratory accreditation, and
certification.
ISO 9000 is a family of standards for quality management system. ISO 9000
maintained by ISO. the international organisation for standardisation, head quarters located in
Geneva and is administrated by accreditation and certification bodies. The ISO 9000 series
standards have been adopted by 45 countries and its equivalent standard in India is BIS.
ISO 9000 series
1. ISO 9000 – Quality management and quality assurance standards – guidelines for selection
and use.
2. ISO 9001 – Quality systems – Model for quality assurance in design, production,
installation and servicing
3. ISO 9002 – Quality systems – Model for quality assurance in production and installation.
4. ISO 9003 – Quality systems – Model for quality assurance in final inspection and test.
5. ISO 9004 – Quality management and quality system elements – guidelines
Elements of ISO 9000 series
1. Management responsibility
2. Quality system
3. Contract review
4. Design control
5. Document control
6. Purchase
7. Purchaser – Supplied product
8. Product identification
9. Process control
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10. Inspection and testing

11. Inspection ,measuring
12. Inspection and test status
13. Control of non-conformity product
14. Corrective action
15. Handling storage and packing
16. Quality record
17. Internal quality audit
18. Training
19. Servicing
20. Statistical technic
List the steps for ISO 9000 installation
Every organisation is interested in improving the quality of its completed work, as it

has to compete with the best in the world. Steps for installation of ISO 9000 are
1. Preparatory step
2. Implementation step
3. Registration and certification
1. Preparatory step
 Quality awareness training is conducted to the work force at different levels, to make
sure that the desired skill is available within the organisation to meet International
Quality Standards.
 Task force should be established at three levels to prepare necessary quality
documents
 Top management group – Quality Policy/Quality manual
 Departmental heads – Quality procedure
 Junior level executives – Work instructions/drawings
 Analyse the existing practices and procedures and the corrective actions or procedures
to be implemented
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SEBI N P 5001 2
 Design and develop standard procedures of manufacturing that will meet the customer
quality requirements with adequate attention to economy of manufacture.
 All the elements required and provisions adopted by a company for its quality
management systems, should be documented in a systematic and orderly manner in
the form of written policies and procedures. Such documentation should ensure a
common understanding of quality policies and procedures, ie quality manuals, quality
records, work instructions, test and calibration records, drawings, process sheets,
specifications etc.
2. Implementation step
 Implementing the documented quality system into practice in the organisation.

 All elements and aspects pertaining to a quality system should be internally audited
and evaluated on a regular basis, to determine whether these are effective in achieving
stated quality objectives.
 A third or external party audit is carried out by an independent body to establish the
extent to which an organisation meets the requirements of an applicable standards.
 Normally, third party is sure a certification of registration
 Conduct pre-registration
3. Registration and certification step
 Apply for the registration

 Certification body will conduct an adequacy audit and compliance audit
 The certification body will issue a certificate, attached to which is a definition of the
scope of activities which have been assessed.
Quality audit
Quality audit is defined as “ A systematic and independent examination, to determine

whether quality objectives are as per the plans, and whether these plans are implemented
effectively in achieving quality objectives, with the maintenance of quality standards.
List the objectives of quality audit

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1. To study the quality of the existing system

2. To suggest the corrections to be done
3. To propose and implement the method as per ISO
4. To evaluate the supplier before contract
5. To suggest best procedure
6. To reduce the loss of money due to duplication of activities
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SEBI N P 5001 2
Total Quality Management (TQM)
Total quality management (TQM) means quality in every aspects of company’s

operation. TQM involves effective decision making, problem solving, quality planning,
quality implementation and quality improvement strategies of all the departments of an
organisation. In a total quality management concept, the word quality has a wider meaning, it
means quality of output of every department every employee, cleanliness, orderliness,
punctuality, customer service, standardization of works and continuous efforts for their
improvement.
Ten ‘MANTHRAS' of TQM
1. Quality is never an accident, It is always the result of untiring and intelligent effort.
2. Quality is like a prayer to God, Which never comes out without hard work and
devotion.
3. Quality is everybody’s work
4. Take care of quality, quality will take care of everything
5. Document is dependable, but, not the memory
6. Quality begins with the cleanliness of the workplace
7. Quality is achieved through team work
8. Quality begins and ends with education
9. quality is the attribute that a customer uses to evaluate products and services
10. Make it right for first time and all times
Link between ISO and TQM
TQM is a mechanism to change the culture of the company to achieve its goals, ISO
certification or standards facilitate this change. Thus, ISO may be called as the subset of
TQM. But TQM is much more comprehensive. It looks quality in four dimensions
requirement of customer, management commitment, country wide participation and analysis
of quality problems. Thus ISO is just beginning of TQM process.
Organisation which have decided to adopt TQM, will produce quality products and
services today and in near future. TQM journey will never end. Organisations have to
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SEBI N P 5001 2
produce better quality products and services than competitors. Fig. Shows the link between
ISO 9000 and TQM.
Vision, Mission and Quality policy
Vision Statement
The vision statement describes the long-run objectives of an organisation, usually for
a time of five to ten years or longer.
Mission Statement
A mission statement states how to achieve the goals set in your vision statement. It
defines the purpose of the organisation.
Quality policy
A quality policy is a brief statement that aligns with your organization’s purpose and
strategic direction, provides a framework for quality objectives and includes a commitment to
meet applicable requirements as well as to continually improve.
MODULE-WISE NOTES
SEBI N P 5001 2
Materials and sales management
Materials Management
Material refers to all those commodities which are used in the production of goods
and services. Raw materials, components, spares, packing materials, and finished products
are included in the list of materials.
The importance of materials in an industry needs no explanation because production

is not possible in its absence and moreover it effects the efficiency of men, materials, money
and marketing divisions of the industry.
Material management is defined as the function responsible for the co ordination of

planning, sourcing, purchasing, moving, storing and coordinating materials.
Functions of materials management
1. Material planning
2. Purchasing of materials
3. Receiving and ware housing
4. Storage and store administration
5. Inventory control
6. Standardisation, simplification and value analysis
7. External transportation and materials handling
8. Disposal of scrap, surplus and obsolete materials
Objectives of purchase department
1. To main regular flow of materials

2. To purchase at a completive price the right quality, in right quantity and at a right
time from a right source.
3. To ensure higher productivity
4. To ensure the production of a better quality production at a competitive cost.
5. To act for standardisation, variety reduction and value analysis.
6. To ensure a better margin of profit.
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SEBI N P 5001 2
Methods of purchasing or buying techniques
1. Purchasing by requirement
2. Purchasing for a specific future period
3. Market Purchasing
4. Speculative Purchasing
5. Contract Purchasing
6. Central purchase organisation
7. Through directorate general of supplies and disposal
1. Purchasing by requirement
In this method the required quantity of materials for any particulate job are purchased.
When the job is in hand. This method is suitable for industries having, less working capital.
2. Purchasing for a specific future period
In this method the materials are purchased in bulk for specific future period to
maintain the flow of production. The standard items which are in regular use are purchased
by this method.
3. Market Purchasing
This type of purchasing is generally made to take advantage of price fluctuations.

Raw materials are generally purchased on this basis. When the raw materials are available at
low price, they are produced in bulk quantities, to get greater margin of profit in finished
goods.
4. Speculative Purchasing
In this method the purchase are made not according to requirement but they are made
with a view that there will be greater demand for the product in future. Purchases are made in
excess of actual requirements.
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SEBI N P 5001 2
5. Contract Purchasing
Contracts are given to supplies for large amounts of future requirements, for a certain
period (say 2, 3 years), subject to review and cancellation with an appropriate period of
notice. While calling quotations the approximate quantity and time are specified.
6. Central purchase organisation
Large industries or certain big government industries may have section wise stores at
different places and each section may have a separate store. In such case there arises a
problem as to whether each store should made its own purchases or whether purchases should
be made by the central stores.
7. Through directorate general of supplies and disposal
The directorate general supplies and disposal provides supply of different products at
relatively cheaper rates for different govt. organisations. This department enters into contract
with various organisations for supply of certain materials to various govt. organisations.
Purchase procedure
The main objective of purchased department is to procure the materials of specified

quality and quantity at lowest price.
The purchase procedure consists of following seven stages:
1. Receipt and analysis of requirements and processing of request

2. Choice and location of potential supplier
3. Request, receipt and analysis of quotation
4. Placing of order
5. Follow up and purchase order
6. Verification of suppliers invoice for payment
7. Closing completed order and maintenance of record
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SEBI N P 5001 2
Inventory
It is a detailed list of movable goods such as raw material, material in process,

finished products and equipments. Every business organisation however big or small has to
maintain inventory and it is an integral part of working capital
Inventory control may be defined as the systematic location, storage and recording of
goods in such a way that desired degree of service can be made to the operating shop at
minimum ultimate cost. The importance of inventory control is to maintain a store of goods
that will ensure manufacturing according to the production based on sales requirement and at
the lowest possible ultimate cost
Classification of inventory
Inventories can be classified in different ways depending on their function or

convention
1. According to function or material flow
a) Production inventory – Items going into final product such as raw materials, finished
parts or subassemblies procured from market or outside source.
b) Work in process inventory – Items in semi finished stage or products required at

different stages of manufacturing of the product.
c) Finished good inventory – are finished goods or final products ready for dispatch to users
or to distributors.
d) Operating and maintenance inventory – Items which do not form the part of the final
product but are either consumables used during the manufacturing process or required for
repair and maintenance functions.
e) Miscellaneous inventory – Items such as obsolete and unsaleable products or scrap

arising from production process, stationery items used in office, other items required by
office, factory and sales department.
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2. Conventional classification
a) Direct inventories – Include materials in any form which becomes an integral part of the
final product to be dispatched.
b) Indirect inventories – Materials which are not processed and do not become an integral
part of the final product.
c) Finished product inventory – Products ready for dispatch to the market.
d) Purchased part inventory – Materials which are semi-finished finished parts purchased
from the market for utilisation at the time of assembly of the final product.
Inventory models such as EOQ and ABC
EOQ (economic order quantity)
While placing orders in an economic way fundamentally it is to be decided how much

minimum quantity can be ordered at a time and when to place such orders without causing
any interruption to the production. The inventory control technique which finds when to place
new orders is the system of recording.
1. Maximum stock - It is the maximum quantity of material that is allowed to keep in

store at any time
2 Minimum stock - It is the lowest quantity of store below which of the stock is not
allowed to fall in normal condition
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SEBI N P 5001 2
3. Standard order - It is the difference between maximum and minimum quantity and this
is known as EOQ
4. Reorder point - The level of material at which a new order for the requirement of EOQ
is placed.
5. Lead or procurement time - it is the time taken by the material after placing the order
and receiving the material
6. Buffer or safety stock - It is the stock which is not usually consumed in normal
circumstances.
7. Cycle time - It is the time between two successive orders
ABC analysis
As size of industry increase the number of items to be purchased and then to be take care
of also increases. It becomes difficult and costly to give equal attention to all the items of the
industry. ABC analysis also known as always better control, it means maximum attention can
be given to the items which consumes more money and fair attention can be given to medium
value items low value items can be given low attention.
According to ABC analysis method of inventory control, all the items of the industry are
divided into three groups, based on the percent of items and percent of value of items.
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SEBI N P 5001 2
A – Class items – These are high valued but are limited or few in number. They constitute
10% of items but account for 70% of total inventory cost.
B – Class items - These are medium valued and their number lies in between A and C. They
constitute 20% of total inventory cost and 20% of the total items.
C – Class items - These are low valued but maximum numbered items. They constitute 10%
of total inventory cost and 70% of the total items.
Stores and stores management
Un-worked material is known as stores and the place where it is housed is called store
room. Finished products ready for sale are called stock and the place where they are kept
called stock room.
Objectives of stores management

1 To receive handle and issue goods economically and efficiently
2 To see that the stock should not fall below the minimum and goes above the maximum
3 To arrange for systematic and efficient storage of materials
4 To maintain records of movement of stock
5 To ensure right delivery to customers
6 To level out irregularities in purchasing
7 To have uninterrupted flow of materials
8 To prevent any theft, wastage, deterioration of stock
9 To utilise available space and labour effectively
Functions of stores Department and the duties of store keeper
1 To identify all items and plan the store for optimum utilisation of the cubic space
2 To receive all types of materials, goods and equipment including manufactured products
in the factory and record them with their cost.
3 Correct positioning of all materials and supplies
4 To maintain stocks safely and in food condition by taking all precautions to ensure that
they do not suffer from damage, theft and deterioration.
5 To issue items to the users only on the receipt of authorised stores requisitions
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SEBI N P 5001 2
6 To record and updates and issue materials

7 To check the bin card balances with the physical quantities in the bin.
8 To make sure that stores are kept clean and in good order
9 To prevent unauthorised persons from entering the stores
10 To inform the purchase department, whenever the existing stock of any item is likely to
be exhausted, for its purchase.
11 To co-ordinate and co-operate with the purchasing, manufacturing inspection and PPC
departments.
Store records
1. Inward and outward register
A separate register is maintained by store keeper in which Dailey entries received to

the store it is in ward. In the same way some material goes out from the store it is registered
in outward register.
2. Stock register
These are 2 types –non consumable and consumable registers
Non consumable register – In which entries of non consumable articles such as all
machinery, equipment, furniture etc are made
Consumable register – In this, records consumable items such as coke, diesel, oil, kerosene,
petrol, lubricants, cotton waste, paints etc.
3. Daily receipt register - whenever any material comes to the store, it is entered date wise
in the daily receipt register.
4. Issue register - All store issued are entered date wise in the issue register.
5. Store ledger - It is a detail record of the receipt and issue of materials with respect of
quality, quantity and value of all the items kept in store.
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6. Surplus stock register - Sometime some materials are purchased, which do not come in
use for a long time such materials are known as surplus materials and are entered in surplus
stock register.
7. Suspense register - The defective items are entered in this register.
8. loan register - Sometimes non-consumable materials are issued from the store on loan for
a temporary period, Which are recorded in this register.
9. Empty container and package register - The record of empty containers and packages is
kept in this in the register by the storekeeper
10. Bin card – This is a card which is attached to each bin, rack, shelf or other container for
store. A record of all materials entering or leaving the bin and balance of material in hand.
Stores layout
After deciding on the degree of centralisation of storage areas, blocking out sub-
groupings of materials, and carefully determining the relative locations of each area, there
remains the detailed layout of store room space. The internal arrangement of a stores depot is
known as a layout. A good layout aims the following
1. Maximum utilization of available space

2. Greater efficiency of store depot
3. Easier accessibility to all the materials
4. Maximum security for all the materials carried and records maintained
5. Greater economy and use of lesser time in receipt, movement, placement and issue of
materials
6. Minimisation of spoilage, damage and other kinds of losses.
Stores location
While locating the stores the size of the industry to which it is attached is taken into
account, and the other factors considered are the bulk of material that arrives to the stores and
the amount of material to be handled during issues to the various shops daily. Stores may be
located as
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1. Centralised stores
2. Decentralised stores
1. Centralised stores:
In small factories, it is desirable to centralise the materials so that these may be

brought under the control of one store-keeper and the store –room should be near to the place,
where material is to be used. If there are several manufacturing departments, the store room
will be most conveniently situated, her it is near to all the departments. This will reduce
handling and a lot of manual work is eliminated. It’s called centralised stores.
2. Decentralised stores:
In large factories, where there are several departments, each using a different type of
materials, it becomes beneficial to separate the stores.
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SEBI N P 5001 2
Importance of sales department
The major problem of today’s business is not that of production but it is that of sale.
In small organisation, selling activities are looked by marketing manager himself. While in a
large organisation, where there is more intricate division of functions there will be a
marketing manager as well as sales manager. The sales management can be defined as the
planning, directing and control of the personal, selling activities of business selecting,
training, equipping, assigning, routing, supervising, paying and motivating the sales
personnel or salesmen.
Functions of sales department
1. Studying consumer’s Psychology and demand

2. Studying the conditions existing in competitive firms
3. Studying the market fluctuations
4. Preparing market, sales and other relevant business forecasts
5. Preparing the sales budgets from the marketing plan
6. Deciding on the distribution policy, methods and network
7. Planning of the advertising campaign
8. Ensuring suitable packing of the products
9. Creating communications network for the department
10. Providing technical advisory and other services to the customers
11. To explore newer markets for selling the company products.
12. Determining sales staff requirements and handling the recruitment, training, and
compensation of sales staff
Sales forecasting
The management of a firm is required to prepare its forecast of share of the market
that it can hope to capture over the period of forecasting. In other words sales forecast is an
estimate of the sales potential of the firm in future. All plants are based on the sales forecasts.
This forecasts help the management in determining as to how much revenue can be expected
to be realised how much to manufacture and what shall be the requirement of men, machinery
and money.
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SEBI N P 5001 2
Importance of sales forecasting
1. It helps to determine production volumes considering availability of facilities, like

equipment, capital, manpower, space etc.
2. It forms a basis of sales budget, production budget etc.
3. It helps in taking decision about the plant expansion and changes in production mix or
should it diverts its resources for manufacturing other products
4. It helps in deciding policies
5. It facilities in deciding the extent of advertising
6. Sales forecast helps in preparing production and purchasing schedules.
7. It helps in guiding marketing, production and other business activities for achieving
these targets.

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THIAGARAJAR POLYTECHNIC COLLEGE, ALAGAPPANAGAR

PROGRAMME: ELECTRICAL AND ELECTRONICS ENGINEERING

In general quality is defined as “Product quality is decided by the customer needs

Objectives of quality planning

1. To produce quality products and services which meet customer’s need

10. To create an excellent operating culture in the organization

Three prong approach to quality planning

Quality planning can be achieved by three prong approaches. These are

2. Managerial and operational planning

1. Preparing organizational structure; involves responsibilities, authorities and relationship

Such documentation should ensure a common understanding of quality policies and

Concept and role of ISO standards

ISO 9000 series

5. ISO 9004 – Quality management and quality system elements – guidelines

Elements of ISO 9000 series

10. Inspection and testing

List the steps for ISO 9000 installation

Every organisation is interested in improving the quality of its completed work, as it

 Implementing the documented quality system into practice in the organisation.

3. Registration and certification step

 Apply for the registration

Quality audit is defined as “ A systematic and independent examination, to determine

List the objectives of quality audit

1. To study the quality of the existing system

Total Quality Management (TQM)

Total quality management (TQM) means quality in every aspects of company’s

Ten ‘MANTHRAS' of TQM

Link between ISO and TQM

Vision, Mission and Quality policy

Materials and sales management

The importance of materials in an industry needs no explanation because production

Material management is defined as the function responsible for the co ordination of

Functions of materials management

Objectives of purchase department

1. To main regular flow of materials

Methods of purchasing or buying techniques

2. Purchasing for a specific future period

This type of purchasing is generally made to take advantage of price fluctuations.

6. Central purchase organisation

7. Through directorate general of supplies and disposal

The main objective of purchased department is to procure the materials of specified

The purchase procedure consists of following seven stages:

1. Receipt and analysis of requirements and processing of request

It is a detailed list of movable goods such as raw material, material in process,

Inventories can be classified in different ways depending on their function or

1. According to function or material flow

b) Work in process inventory – Items in semi finished stage or products required at

e) Miscellaneous inventory – Items such as obsolete and unsaleable products or scrap

Inventory models such as EOQ and ABC

EOQ (economic order quantity)

While placing orders in an economic way fundamentally it is to be decided how much

1. Maximum stock - It is the maximum quantity of material that is allowed to keep in

Stores and stores management

Objectives of stores management

Functions of stores Department and the duties of store keeper

6 To record and updates and issue materials

1. Inward and outward register

A separate register is maintained by store keeper in which Dailey entries received to