Total Quality Management: Self Learning Material

Self Learning Material
Total Quality Management

(MBA-942)
Course: Master Business Administration

Semester-III
Distance Education Programme

I.K. Gujral Punjab Technical University
Jalandhar
Syllabus
Total Quality Management (MBA 942)
Objective: The course is designed to develop a sound understanding of how the application of
TQM assists the pursuit of business excellence and provide skills and strategies in human
dimensions of quality and in the tools and techniques applicable to TQM and business
excellence.
UNIT I
Introduction to TQM: History, aims, objectives, benefits, gurus and their principles, TQM
reasons for use of TQM, proven examples and benefits, methods to assist the progress of TQM,
introduction to tools and techniques: brainstorming, affinity diagram, benchmarking, fishbone
diagram, check sheet, flow chart, line graph, run chart, histogram, Pareto diagram, FMEA,
scatter diagram, control chart, QFD, tree diagram, force field analysis, seven w. and is/is-not
questions, why-why diagrams
UNIT II
Customer focus: External and internal customers, Measuring customer satisfaction, Continuous
improvement process, Role of TQM’s control and improvement process, designing for quality,
workforce teams: team work for quality, types of teams and tasks involved, characteristics of
successful and unsuccessful teams, barriers to team work, Benchmarking, JIT
UNIT III
TQM for Marketing Function: Quality in marketing and sales, factors for excellence, BPR and
IT: business process management, quality control SQC/SPC: statistical process control, change
management, Quality in after sales services. Organization for quality: quality circles, self
managing teams, quality director, reliability of quality characteristics, quality leadership:
developing a quality culture.
UNIT IV
Total employee involvement: Awareness of quality, recognition and rewards, empowerment and
self development, Education and training, cost of quality: cost of poor quality, categories of
quality cost, analysis of quality costs, benefits of costs of quality control, supporting
technologies: overview of supplier quality assurance system, TQM implementations & barriers
to implementation, Six sigma, Introduction to ISO 9000, ISO 9001: 2000 series of standards
Note : Relevant Case Studies should be discussed in class.

Suggested Readings:
1. Hurbert K. Rampersad, Managing Total Quality, Tata McGraw Hill Publishing Company Ltd.,
2. Mukherjee ‘Total Quality Management’ PHI Learning
3. Singhal & singhal ‘Implementing ISO 9001:2008 Quality Management Systems: A Reference
Guide’ PHI Learning
4. Bhat ‘Total Quality Management’ Himalaya Publications.
Table of Contents
Lesson Title Page No.
No.
1 Total Quality Management 1
2 19
TQM: Introduction to Tools and Techniques
3 38
TQM: Tools and Techniques
4 Customer Focus 59
5 78
Workforce Teams-I
6 91
Team Building
7 110
Total Quality Management for Marketing Function
8 129
Quality Control
9 Organisation For Quality 147
10 Total Employee Involvement 164
11 Quality Cost 180

12 199
Supporting Technologies: Overview Of Supplier Quality Assurance
System
13 TQM Implementation 217
14 248
Introduction to ISO 9000
Written by:
Dr. Monika Aggarwal, Director
Skill Sigma, Sec- 48 A Chandigarh
Reviwed by:
Dr. Vikas Singla, Assistant Prof.
School of Management Studies,
Punjabi University, Patiala
© IK Gujral Punjab Technical University Jalandhar

All rights reserved with IK Gujral Punjab Technical University Jalandhar
Lesson-1
Total Quality Management
Structure
1.1 Objectives
1.2 Introduction
1.3 Basic Approach
1.4 History of TQM
1.5 Benefits of TQM
1.6 Objectives of TQM
1.7 Gurus of TQM
1.8 Examples
1.9 Check Your Progress
1.10 Summary
1.11 Glossary
1.12 Answers to Check Your Progress
1.13 References
1.14 Suggested Readings
1.15 Terminal and Model Questions
1.1 OBJECTIVES
After reading this lesson, you should be able to:
• Understand the significance of TQM

• Define the term TQM, its aims and objectives
• Understand the contributions of Quality Gurus
Page 1 of 267
• Trace the history of TQM
1.2 INTRODUCTION
"Quality is everyone's responsibility." ~ Edward Deming
TQM refers to an integrated approach by management to focus all functions and levels of an
organization on quality and continuous improvement. Over the years TQM has become very
important for improving a firm's process capabilities in order to achieve a fit and sustain
competitive advantages. TQM focuses on encouraging a continuous flow of incremental
improvements from the bottom of the organization's hierarchy. TQM is not a complete
solution formula as viewed by many – formulas cannot solve managerial problems, but a
lasting commitment to the process of continuous improvement. The main driving force of
TQM is customer satisfaction.
Total Quality Management (TQM) is an enhancement to the traditional way of doing

business. This can be elaborated further as discussed below:
Total - Made up of the whole

Management - Art of handling, controlling, directing etc.
Quality - Degree of Excellence a Product or Service provides.
Let us focus on Quality. According to Deming, “Quality may be defined as an excellent

product or services that fulfills or exceeds our expectations”.
Quality can be quantified as follows
Q=P/E
where,
Q = Quality
P = Performance
E = Expectation
An organization will not begin the transformation to TQM until it is aware that the quality of
the product or service must be improved. Awareness comes about when an organization
loses market share or realizes that quality and productivity go hand-in-hand. It’s also occurs
if TQM is mandated TQM is better way to run a business and compete in domestic and world
markets.
Page 2 of 267
Dimenstions of Quality
Following are the dimensions of Quality:
Performance: Primary product characteristics, such as the brightness of the picture.

Features: Secondary characteristics, added features, such as remote control.
Conformance: Meeting specifications or industry standards, workmanship.
Reliability: Consistency of performance over time, average time for the unit to fail.
Durability: Useful life includes repair.
Service: Resolution of problems and complaint, ease of repair
Reputation: Human-to-human interface, such as the courtesy of the dealer.
Aesthetics: Sensory characteristics, such as exterior finish.
Response: Past performance and other intangibles, such as being ranked first.
Therefore, quality products can be determined by using a few of the dimensions of quality
and these are different for manufacturing and service industry as stated in table below:
MANUFACTURING INDUSTRIES SERVICE INDUSTRIES
Product features Performance Reliability Accuracy Timeliness Completeness

Durability Friendliness Courtesy
Ease of use Serviceability Aesthetic Anticipating customer needs
Availability Reputation Knowledge of server
Aesthetic
Reputation
Following table shows the dimension of Quality as perceived earlier and as per the new
version of TQM
Page 3 of 267
QUALITY ELEMENT PREVIOUS STATE TQM
Definition Product oriented Customer oriented
Priorities Second to service and First among equals of

cost cost
Decisions Short term Service.
Long term
Emphasis Detection Prevention
Errors Operations System
Responsibility Quality control Everyone
Problem solving Managers Teams
Procurement Price Lifecycle costs,

partnership
Managers role Plan, assign ,control and Delegate, coach,
enforce facilitate and
Mentor
TQM is the application of quantitative methods and human resources to improve all the
processes within an Organization and exceed CUSTOMER NEEDS now and in the future.
Total quality Management is defined as both as philosophy and a set of guiding principles
that represent the foundation of a continuously improving organization.
1.3 BASIC APPROACH
TQM requires six basic concepts:
1. A commitment and involved management to provide long-term top-to-bottom

organizational support.
2. an unwavering focuses on the customer, both internally and externally.
3. Effective involvement and utilization of the entire work force.
4. Continuous improvement of the business and production process.
5. Treating suppliers as partners.
6. Establish performance measures such as uptime, percent nonconforming, absenteeism
and customer satisfaction should be determined for the process. Quantitative data are
necessary to measure the continuous quality improvement activity.
1.4 HISTORY OF TQM
Quality in Daily Life: Quality has been an age-old concern. The discerning customer in
shops and market places has applied “quality techniques,” prodding and turning fruits and
vegetables testing for firmness, freshness and fitness for the purpose of consumption. If the
Page 4 of 267
products were not adequate, the purchase would not take place. In the hustle and bustle of
cattle markets farmers argued and bartered over the fitness of animals for breeding, dairy
farming or consumption, providing evidence for their case by inspection against criteria
learned from their forefathers. Those shoppers and farmers passed on their knowledge to
their children and similarly it was passed on to their children’s children. The issue of
quality of goods and services is not new. Throughout history, society has demanded that
providers of goods and services should meet their obligations. As long ago as 1700 BC King
Hammurabi of Babylon introduced the concept of product quality and liability into the
building industry of the time by declaring: If a building falls into pieces and the owner is
killed then the builder shall be put to death. If the owner’s children are killed then the
builders’ children shall be put to death.
Quality in the middle Ages: The maintenance of quality was one of the key functions of the
craft guilds of the middle ages with only those workers who could achieve acceptable
quality standards being admitted to membership. Until the advent of mass production,
building quality into a product was the job of a craftsman, what Feigenbaum referred to as
“operator quality control.” Skilled craftsmen produced high quality products and had pride
in their work. Tradesmen gained a reputation for quality products through skilled
craftsmanship that was maintained over time by enforcing lengthy apprenticeship of
newcomers to masters-of-the-trade. Tradesmen worked in small tightly knit and controlled
firms. Monopolistic guilds were organized to ensure achievement of a high level skill and
quality throughout its membership and the trade.
Quality during the Industrial Revolution: The industrial revolution revolutionized the
manufacturing of products. Mass production set in large factories employing armies of
people gave rise to new management ways. There were workers, supervisors and foremen,
and managers. The establishment of factories and of this new organizational structure led to
the withering of many small business trades and the removal of apprentices and masters
from positions. Frederick Taylor’s scientific management brought in efficient operations to
increase output through mass production by breaking down jobs into parts with each part
carried out by individual specialized workers. Practical use of Taylor’s “scientific
management,” built around specialization and the division of labor, reached a high point
with the advent of the mass production line with the workers performing repetitious tasks
on a mammoth scale.
Mass Production and Scientific Management: Mass production techniques reaped

impressive early dividends. Henry Ford (1863-1947) built on the increased productivity
brought by mass production. There was, however, more to Ford than flow lines and workers
doing mindlessly repetitive tasks. Instead of controlling costs, to produce lower prices, Ford
set the price and challenged the organization to ensure costs were low enough to meet the
figure. The trouble was that when other manufacturers add extras, Ford lost touch with the
aspirations of customers. Compare this with the approach of Ford’s predecessors. The first
carmakers, such as France’s Panhard et Levassor, employed a small number of skilled
craftsmen. The cars they produced were unique-- almost prototypes-- with parts being filed
and cut to make them fit. As the parts were of varying sizes, craftsmanship was required.
Ford bought in uniform and interchangeable parts. Skill departed and instead production
was based round strict functional divides, i.e. demarcations. At the center of Ford’s thinking
Page 5 of 267
was the aim of standardization—something continually emphasized by the carmakers of
today though they talk in terms of quality and Ford in quantity. Scientific management
emphasized the divorce of conception from execution and the substitutability of labor. The
craftsmen concept disappeared with Taylorism and so did quality achieved through skilled
craftsmanship. Inspection, thus, remained the sole guarantor of quality. Quality was no
longer built into the product.
Quality between the World Wars: The effort of the First World War demanded yet more
mass production. Quality became a pressing issue with forces requiring reliable products to
arrive on time. With this came the recognition that quality had been central to the allies’
success in the war. This led to the formation of associations and institutes, and to the
publication of formalized ideas in quality. For example, in Britain, the Technical Inspection
Association was formed in 1919, becoming incorporated as the Institution of Engineering
Inspection in 1922.
Quality of Manufactured Product. This gave the Taylorian discipline a much sounder
“scientific footing.” It converted statistical methods into a manufacturing discipline. A
precise and measurable definition of manufacturing control was worked out. Stringent
techniques for monitoring and evaluating day-to-day production and improving quality
were dictated. In 1932, Shewhart visited the University of London to lecture and to discuss
his and others’ research ideas. This visit attracted significant interest which led to the
formation of the Industrial and Agricultural Section of the Royal Statistical Society and the
publication by the British Standards Institute (BSI) of the first standard on quality control.
Japanese businessman Konosuke Matsushita-- the founder of one of the world’s largest
electronics groups-- was greatly influenced by the work of Henry Ford. From Ford,
Matsushita was inspired by the prospect of mass production and also the concept of using
price reductions to generate more sales. Matsushita followed the Ford-like objective of
producing “an inexhaustible supply of goods.” But to this, he added “thus creating peace and
prosperity throughout the land.” Ford was obsessed with production and forgot the broader
view. Matsushita saw the company as having a role in society.
The broader view of Matsushita was as follows:
a. Employees are important – not mere functionaries ensuring a steady stream of products
are produced.
b. Customers are of course important.
c. Suppliers are also important - Matsushita was visiting the factories of his suppliers in the
1930s and giving them advice on how to produce their products more effectively.
d. If there is an effective partnership, all sides win and society benefits from the prosperity
generated.
Matsushita was not alone. Other Japanese managers and their organizations seized the
initiative. After the war, they were guided by two Americans-- W. Edwards Deming (1900-
93) and Joseph Juran (1904 )
Quality after the Second World War: The Second World War again knocked industry off-
balance. Priority was given to meeting delivery dates at the expense of standards in the
product. In the UK the SR 17 statistical advisory unit of the ministry of supply was
established. This unit made an important contribution to the industrial war effort, but
quality was to have lean years in the UK after the war was over. In North America the
Page 6 of 267
wartime effort had a more profound and longer lasting effect. Thousands of quality
specialists that had been trained mostly by the War Production Board formed the American
Society for Quality Control (ASQC). ASQC expanded its membership to about 50000 in 29
specialist divisions. However, the real success story for quality thinking emerged in one of
the defeated nations. The Japanese launched a new nationalistic drive for expansion,
pursuing economic rather than military goals. Following the Second World War Japan’s
industry was devastated and the goods it produced were known for their indifferent quality.
For example, in the 50s and 60s Japanese cars were virtually impossible to sell in the United
States or Europe. A major thrust in Japanese manufacturing was to tackle these difficulties
by employing and developing quality approaches. After the war many top industrialists
were sacked and their successors subsequently promoted from operational areas. Foreign
lecturers were invited to present their quality initiatives and to offer courses and training
for Japanese managers. A famous guru who played a major role in this process of
improvement was W. Edwards Deming, but there were others from the United States such
as J. M. Juran . They had the benefit of an intimate involvement in working out sound quality
techniques during the war and in the post-war period. The two had also worked in the mid-
1920s in Western Electric Co. were both influenced by Shewhart.
The American Approach to Quality: The failure of American corporations to listen to

Deming and Juran has often been commented on. In retrospect it appears to be one of the
century’s most profound errors. At the time, however, it was understandable. In terms of
quality, American products were as good as European ones and far better than those
produced in Japan. The American preoccupation was on lowering prices and the vehicle for
achieving this was generally recognized to be lowering labor costs. The innovation strategy
favored by the United States in the post-war years was the only strategy in a period of low-
cost resources, expanding markets and low international competition. At that time, quantity
was more important than quality and management was more concerned with increasing
sales than with reducing costs. Western industry believed this would last forever and
ignored the quality-based teachings of experts such as W. E. Deming and Joseph Juran, who,
consequently, decided to turn their attention to the East. In Harvard Business Review article
(1993), Juran also made much of the fact that his Japanese audiences in the early 1950s
were the chief executives of major corporations, whereas his North American listeners were
primarily engineers and quality inspectors. Juran’s message was not, he admitted, new or
revolutionary. Making things to a specific design and then inspecting them for defects was
something the Egyptians had mastered 5000 years previously when building the pyramids.
The American engineers weren’t ready for history lessons. Deming was similarly well
received in Japan. In 1951, the first award ceremony for the now prestigious Deming Prize
was held
Japan’s Approach to Quality: Japan, having been burned to the ground during the war,
encouraged a climate of change from the start. Japanese managers took seriously the
warnings about forthcoming changes in the customer’s perception of quality and about the
future demands for faster development of customer-oriented products and services. So they
successfully combined the strategy of innovation with that of continuous quality
improvement. This brought a reduction in costs, faster development times, prompt
deliveries, customer satisfaction and enormous competitive advantage internationally. The
Western approach was always based on the belief that innovation alone was enough for
survival and growth. This has already been proved wrong on many occasions. The timing of
Page 7 of 267
Juran and Deming in Japan was impeccable. But, it was not only a question of arriving at a
time when the Japanese were striving to rebuild their economy. Their ideas struck a chord
in the East. Their emphasis on groups rather than individuals was attractive to the Japanese,
while it simply failed to ignite a spark in the United States. Western preoccupation with
individual achievement meant that sublimating individual aspirations to group
consciousness was a quantum leap rather than a logical progression. Japanese industry was
particularly receptive to the quality message for a number of reasons. Some of them are as
includes the long-established Japanese tradition of fine craftsmanship and attention to
detail through miniaturization struck a chord with these concepts, the strongly statistical
flavor of the early work with its emphasis on quantifying variation in quality fitted well with
the Japanese penchant for numbers, Quality was seen as a national “survival” strategy. It
was felt that the only way Japan would be able to afford the food and materials that it
needed, being poor in natural resources, was to export goods of high quality at low prices.
Quality was thus a key objective.
The British Approach to Quality: Meanwhile, the British approach was slow and backward
compared to the establishment of quality as an important managerial issue in North
America and the tidal wave sweeping over Japan. Belatedly, in 1961, the National Council for
Quality Reliability was set up as part of the British Productivity Council. The Council became
defunct when the British Ministry of Technology withdrew financial support. Quality in
Britain then found its home in the British Quality Association.
Development of the Importance of Quality Management
Up till now we have seen different country’s approach to quality, now we will see about the
development of the importance of quality management.
The success of Japanese manufacturers during the 1960s and 1970s changed the emphasis
from a quality control approach to a quality assurance approach requiring more of the
business functions to be involved in the management of quality and requiring longer
implementation timescales. By the 1970s the Japanese had become “masters” at achieving
quality in their manufacturing sector. But they did not sit back on this achievement. They
built on the technology transfer that had happened from the West to Japan. Even today, the
Japanese remain hungry for new innovative ideas sending their senior academicians to
leading research groups in the West. They have not given up their quest for superior
production by continuous improvement in knowledge, methods and techniques.
The Japanese were well adept in switching commercial interests from competition in
productivity to competitiveness in quality. In winning the quality challenge, the Japanese
were able to achieve a massive increase in their export levels that rocked Western
economies. Negative trade balances with Japan hit many Western countries. The Japanese
quality revolution enabled them to achieve immense economic power, dominating world
trade. The Japanese success story urged some managers in Western and other countries to
wake up to the quality issue. People recognized that Japanese success was not only due to
national, cultural and social differences but also reflected strongly a new attitude and desire
of Japanese management to ensure that consumers receive what is promised. By the 1980s
Japan’s huge success made evident the direct link between quality and viability of
organizations and economies. The 1980s, therefore, became an era of competitive challenge
Page 8 of 267
with increasing number of companies adopting quality management. Many consultancy
companies latched on to quality training and intervention as main services they can offer.
This added significantly to the general awareness of quality management. The development
of International Quality Assurance Management System Standards in the 1980s also acted
as a catalyst in many countries, setting off joint management and quality thinking. The
Japanese rapidly went beyond quality in production, recognizing the importance of quality
in management. They devised several strategies that formed the basis of much of today’s
international efforts.
These are summarized below:

i) Senior managers should personally take charge of quality management implementation
ii) Personnel from all levels and functions of an organization should undergo training in
quality management.
iii)Quality improvement should be continuous
iv)The workforce should participate in quality improvement Culture is the key to
understanding and implementing the lessons preached by both Deming and Juran. Deming
appreciated that no matter how powerful the tool of mathematical statistics might be it
would be ineffective unless used in the correct cultural context. This combination of culture
and measurement eventually evolved into what is now labeled Total Quality Management.
In Total Quality Management everyone in the organization is involved in developing an
improvement and prevention orientation which focuses upon the customer through
teamwork. The 1990s has seen quality management become the international management
philosophy continuing into the new millennium today.
1.5 BENEFITS TO TQM
The advantages of total quality management (TQM) include:
 Cost reduction. When applied consistently over time, TQM can reduce costs
throughout an organization, especially in the areas of scrap, rework, field service, and
warranty cost reduction. Since these cost reductions flow straight through to bottom-line
profits without any additional costs being incurred, there can be a startling increase in
profitability.
 Customer satisfaction. Since the company has better products and services, and its
interactions with customers are relatively error-free, there should be fewer customer
complaints. Fewer complaints may also mean that the resources devoted to customer
service can be reduced. A higher level of customer satisfaction may also lead to increased
market share, as existing customers act on the company's behalf to bring in more customers.
 Defect reduction. TQM has a strong emphasis on improving quality within a process,
rather than inspecting quality into a process. This not only reduces the time needed to fix
errors, but makes it less necessary to employ a team of quality assurance personnel.
 Morale. The ongoing and proven success of TQM, and in particular the participation
of employees in that success can lead to a noticeable improvement in employee morale,
which in turn reduces employee turnover, and therefore reduces the cost of hiring and
training new employees.
Page 9 of 267
However, TQM also requires a significant training period for those employees involved in it.
Since the training can take people away from their regular work, this can actually have a
negative short-term effect on costs. Also, since TQM tends to result in a continuing series of
incremental changes, it can generate an adverse reaction from those employees who prefer
the current system, or who feel that they may lose their jobs because of it. TQM works best
in an environment where it is strongly supported by management, it is implemented by
employee teams, and there is a continual focus on process improvement that prevents
errors from occurring.
1.6 OBJECTIVES OF TQM
Following are the objectives of TQM:
 Process improvement
 Defect prevention
 Priority of effort
 Developing cause-effect relationships
 Measuring system capacity
 Developing improvement checklist and check forms
 Helping teams make better decisions
 Developing operational definitions
 Separating trivial from significant needs
 Observing behavior changes over a period of time
1.7 GURUS OF TQM/ PRINCIPLES AND PHILOSOPHIES OF QUALITY MANAGEMENT
Over the past few decades, quality gurus such as Deming (1986), Juran (Juran and Gryna,
1993), Crosby (1979), Feigenbaum (1991), and Ishikawa (1985), the primary authorities of
total quality management (TQM), have developed certain propositions in the field of TQM,
which have gained significant acceptance throughout the world. The contributions of all
these quality Gurus are discussed below:
Contribution of W. Edwards Deming
Deming has given 14 principles as stated below:

1. Create and publish the aims and purposes of the organization.
2. Learn the new philosophy.
3. Understand the purpose of inspection.
4. Stop awarding business based on price alone.
5. Improve constantly and forever.
6. Institute training.
7. Teach and institute leadership.
8. Drive out fear, create trust and create a climate for innovation.
Page 10 of 267
9. Optimize the efforts of teams, groups and staff areas.
10. Eliminate exhortations for the work force.
11. (a) Eliminate numerical quotas for the work force.
(b) Eliminate Management by Objective.
12. Remove barriers that rob people of pride of workmanship.
13. Encourage education and self-improvement of everyone.
14. Take action to accomplish the transformation
Deming’s cycle or PDCA cycle
P – PLAN (Process the improvement)

D – DO (Implement the plan)
C – CHECK (See how closely result meets goals)
A – ACT (Use the improved process as standard practice
Joseph M Juran Contribution
Following is Juran’s Quality Trilogy
Quality Planning Identify who are the customers. Determine the needs
of those customers. Translate those needs into our
language.
Develop a product that can respond to those needs.
Optimize the product features so as to meet our
needs and customer needs.
Quality improvement Develop a process which is able to produce the

product. Optimize the process.
Page 11 of 267
Quality control Prove that the process can produce the product
under operating conditions with minimal inspection.
Transfer the process to operations.
Juran has given following 10 steps for quality improvement. According to him, Quality
means – Fitness for use
1. Build awareness for the need and opportunity for improvement.

2. Set goals for improvement.
3. Organize people to reach the goals.
4. Provide training throughout the organization.
5. Carry out projects to solve the problems.
6. Report progress.
7. Give recognition.
8. Communicate results.
9. Keep score.
10. Maintain momentum by making annual improvement part of the regular system.
Contribution to Philip B Crosby
Crosby worked to significantly advance the cause of the world wide quality movement
through his many personal contributions over the past four decades. He developed four
absolutes of quality management.
Quality means conformance to requirements, not goodness.

Quality is achieved by prevention, not appraisal.
Quality has a performance standard of Zero Defects. Not acceptable quality levels.
Quality is measured by the Price of nonconformance, not indexes.
Masaki Imai
Imai was the founder and President of Kaizen Institute threw the word “Kaizen”.
Kaizen refers to “continuous or On-going improvement” in Japanese, is an inseparable
aspect of Total Quality Management is required in all activities of the organization. Kaizen
has to basically do with small, step-by-step continuous improvement, smaller and
continuous improvements are more realizable, predictable, controllable, and acceptable.
Kaizen philosophy believes that people at all levels, including the lowermost levels in the
organizational hierarchy, can contribute to improvements, possible because Kaizen asks for
only small improvements. To survive in an increasingly competitive world, top management
must adopt a just-in-time(JIT) approach and drive change down the hierarchy without
yielding to resistance. The key ideas associated with JIT were developed at the Toyota
Motor Company under the leadership of founder EIJI TOYOTO whose father had founded the
Page 12 of 267
successful Toyota Spinning and weaving company. JIT is the management philosophy that
strives to eliminate sources of manufacturing waste producing the right part in the right
place at the right time.
Contribution of Armand V Feigenbaum
Feigenbaum defined quality as “total quality control is an effective system for integrating
the quality development, quality maintenance, and quality improvement efforts of the
various groups in an organization so as to enable production and service at the most
economical levels which allow full customer satisfaction. He gave following crucial elements
of Total Quality that enables organization to be totally customer focused:
1. Quality is the customers perception of what quality is, not what company think it is.
2. Quality and cost are the same no different.
3. Quality is an individual and team commitment.
4. Quality and innovation are interrelated and mutually beneficial.
5. Managing Quality is managing the business.
6. Quality is a principal.
7. Quality is not a temporary or quick fix but a continuous process of improvement.
8. Productivity gained by cost effective demonstrably beneficial Quality investment.
9. Implementing Quality by encompassing suppliers and customers in the system.
Contribution of Kaoru Ishikawa
Ishikawa’s biggest contribution is in simplifying statistical techniques for quality control in

an industry. Ishikawa sees the Cause-and-effect diagram or Ishikawa Diagram, like other
tools, as a device to assist groups or quality circles in quality improvement. Other than
technical contributions to quality, Ishikawa is associated with the Company-wide Quality
control (CWQC) movement as implies that quality does not only mean the quality of
product, but also of after sales service, quality of management, the company itself and the
human life. The outcomes of such an approach are(Company-Wide Quality benefits):
o Product quality is improved and becomes uniform. Defects are reduced.
o Reliability of goods is improved.
o Cost is reduced.
o Quantity of production is increased.
o Wasteful work and rework are reduced.
o Technique is established and improved.
o Expenses for inspection and testing are reduced.
o Contracts between vendor and vendee are rationalized.
o The sales market is enlarged.
o Better relationships are established between departments.
o False data and reports are reduced.
o Discussions are carried out more freely and democratically.
Page 13 of 267
o Meetings are operated more smoothly.
o Repairs and installation of equipment and facilities are done more rationally.
o Human relations are improved.
Ishikawa’ s PDCA Model
Plan
Determine goals and targets

Determine methods of reaching goals.
Do
Engage in education and training

Implement work
Check
Check the effects of implementation
Act
Take appropriate action.
1. 8 EXAMPLES
Since the 1980s, several important quality management systems, or programs, such as ISO
9000, TQM, Six-Sigma program, Reengineering, and Toyota production system (or lean
production), has been launched. Most of these qualities essential have been extensively
accepted by industries around the world. All the firms anticipate good results from the
implementation of these quality programs.
Today’s consumers claim and expect high quality of product. Business organizations that do
not work towards achieving good quality risk their survival in the market in the long run.
World-class organizations such as, General Electric, Motorola, Toyota, Amul its attribute
their success to having one of the best quality management programs in the world.
General Electric
Armand Feigenbaum has joined General Electric since 1944. He used the statistical
techniques to improve the product quality while he was working in the jet engine factory.
But Feigenbaum also used the concept of cost-of-quality and adopted a user-based approach
to quality. He devised the concept of Total Quality Control, later known as Total Quality
Management (TQM). He thought that this approach requires the management and
employees to have an understanding of what quality means and its relation to the
Page 14 of 267
company’s benefits. He emphasized that quality assurance cannot be achieved by the control
just on the production process. Thus he propounded the concept of Total Quality Control in
1956. Based on the corporate philosophy of 'customer first' and 'quality first' since its
founding, Toyota Motor Co., Ltd. won the Deming Application Prize in 1965 and the Japan
Quality Control Award in 1970, following the introduction of statistical quality control (SQC)
in 1949, and has conducted Total Quality Management (TQM) based on the unchanging
principles of 'customer first', Kaizen (continuous improvement), and 'total participation'. As a
result, the basic concepts of TQM and problem solving as well as Kaizen (continuous
improvement) through creative innovation spread throughout the company and took root,
contributing to higher product quality and work quality at all levels and ranks and
improving the vitality of individuals and organizations.
Amul
The enthused and dedicated workforce of AMUL- who are committed to produce
wholesome and safe foods of excellent quality to remain market leader through the use of
quality management systems, state-of-art-technology, innovation and eco-friendly
operations to achieve satisfaction of customers and betterment of milk producers. The
beginning of Total Quality Management (TQM) way back in 1994 was to work with the well
known quality management initiatives which had proven to be successful elsewhere to
create a culture of transparency, openness and leadership in the organization. Realizing that
with emerging competition, doing business would become more exciting yet extremely
competitive which would require at a time not only a whole set of new skills and
competencies but quick flexibility to change without much pressure or turbulence. As a very
unique measure Amul extended all the TQM initiatives to its business partners, whether it
was the former producer in the
village or a wholesale distributor in a metro town or its most sophisticated production unit.
From the strength of Total Quality Management initiative Amul went on to implement a
Quality Management System of International Standard. Amul has been the first dairy in
India to get accredited with certification of ISO 2200:2005 & ISO 9001 for its operations and
plants. Further Amul has set an example that village Dairy Co-operative Societies could also
achieve this milestone as these societies are accredited with ISO 9001:2000 – a remarkable
achievement in the history of India.
Motorola
"Quality is a way of life in a business, not an advertising term."-- Robert W. Galvin, President,
Motorola Inc., October 1962, Quality Assurance magazine.
In 1980, Motorola took the first step by establishing the position of Corporate Quality
Officer. In 1981, the Motorola Training and Education Center (MTEC) was established,
providing employees with instruction and coaching in quality process and participative
management skills. In 1989, MTEC became Motorola University, an institution that remains
Page 15 of 267
an integral component of the Motorola culture today. By the end of the 1980s, Motorola had
grown into a worldwide supplier of cellular telephones. But, the Japanese were still
considered the undisputed leaders in the electronics market. A 1986 benchmarking study
revealed that while we had made significant strides in quality, we needed to prove that we
could compete with the Japanese by creating products that were of equal and higher quality.
It was out of this realization that the Six Sigma quality initiative was born in 1987. The
investment in Six Sigma paid off, and in 1988, Motorola was the first large companywide
winner of the Malcolm Baldrige National Quality Award, awarded by the U.S. Congress to
recognize and inspire the pursuit of quality in American business.
These companies have had a chief goal to achieve total consumer satisfaction. To this end,
the efforts of these organizations have included eliminating almost all defects from
products, processes, and transactions. Both companies consider quality to be the critical
factor that has resulted in significant increases in sales and market share, as well as cost
savings in the range of millions of dollars.
1.9 CHECK YOUR PROGRESS
1. TQM is a complete solution formula as viewed by many – formulas cannot solve

managerial problems, but a lasting commitment to the process of continuous improvement.
(true or false)
2. The main driving force of TQM is________________________.
3. Juran’s Quality Trilogy includes Quality planning, quality improvement and ____________________.
4. PDCA model is given by
(a) Masaki Imai (b) Juran (c) Philip B Crosby (d) Kaoru Ishikawa
1.10 SUMMARY
It can be concluded that in the present competitive environment, survival of the

organizations depends on their ability to continuously improve as per the expectations of
the customers. It has been proved by now that the Quality is significant in achieving
competitiveness at national and internationallevels, since quality is a requirement to have
satisfied customers. Quality by identifying eight dimensions including performance,
features, reliability, conformance, durability, serviceability, aesthetics and perceived quality.
On the one hand where Gitlow and Gitlow defined quality as surpassing customer needs and
expectations throughout the life of a product Crosby defines quality as conformance to
requirements, Juran perceived it as fitness for use, others have defined it as meeting and/or
exceeding customers’ expectations etc. Though all researchers and Gurus have taken
different versions to define quality, but all of them have agreed upon one fact that quality is
one of the crutial “critical success factors” to achieve competitiveness in organizations.
Page 16 of 267
1.11 GLOSSARY
Quality Circles: QC's are small groups, ranging from 4 to 15 members. Eight members are
considered to be the norm. In the QC philosophy, the circle members identify the work area
problems, analyses them and recover answers. It aims to achieve the objectives through the
development of people, the most important asset of an organization.
Quality Control: Quality Control is the chronic process of assessing performance,
comparing the performance with the laid down criteria and requiring disciplinary action
when necessary.
Quality audit: A quality audit is a systematic and independent examination and evaluation
to determine whether quality activities and solutions comply with planned arrangements
and whether these agreements are implemented effectively and are suited to accomplish.
Quality Planning: The ability to identify all functional needs of the product ahead of time
and incorporate this information into each stage in the product development lifecycle is key
to assuring product quality.
1.12 ANSWERS TO CHECK YOUR PROGRESS
1. True 2. Customer Satisfaction 3. Quality Control 4 (d)
1.13 REFERENCES
Aized, T. (2012 ). Total Quality Management and Six Sigma. intech.

Cost of Quality :: Overview. (2015). thequalityportal .
Defect. (2010). http://softwaretestingfundamentals.com/ .
Juran.J.M, & Blanton.A, G. (1979). Juran's Quality Handbook. McGraw-Hill.
Keller, P., & Pyzdek, T. (2013). The Handbook for Quality Management. McGraw-Hill.
Ltd., E. W. (2013). Quality Movement. http://www.amuldairy.com/ .
Quality Magazine. (2003, may 3). Motorola: A Tradition of Quality .
Yang, C.-C. (2012). The Integration of TQM and Six-Sigma. http://www.intechopen.com/ .
1.14 SUGGESTED READINGS

1.15 TERMINAL AND MODEL QUESTIONS
Q:1 Define Quality. Why Quality is important?
Page 17 of 267
Q:2 Trace the history of development of the concept of Total Quality Management.
Q:3 Critically examine the contribution of quality Gurus.
Q:4 Discuss Deming’s 14 principles of TQM
Q:5 Discuss the significance of TQM.
Page 18 of 267
LESSON – 2
TQM: Introduction to Tools and Techniques
Structure
2.1 Objectives
2.2 Introduction
2.3 Tools & Techniques of TQM
 Brainstorming
 Affinity Diagram
 Benchmarking
 Fishbone Diagram
 Check Sheet
 Flow Chart
 Line Graph
 Run Chart
 Histogram
2.5 Summary
2.6 Glossary
2.8 References
2.1 OBJECTIVES
After reading this lesson, you should be able:
1. Classify the different methods of TQM available to organizations.
2. Define Total Quality Management (TQM) as a management philosophy developed to
improve organizational processes and quality control.
Page 19 of 267
2.2 Introduction
"Quality" is “a degree of superiority; a distinguishing attribute.” Quality is the extent to
which a product/service lives up to its performance, endurance, maintenance, and other
benefits that a customer expects to receive from purchasing this product. In order to produce
quality product, an organization must inculcate the TQM concept in its culture as well as
product development process. The word "total" refers to all the processes/tasks/activities
undertaken in an organization. It covers every process, every task, every resource, every
input, every output and each personnel. According to the American Society for Quality
Control (ASQC), total quality management (TQM) "is a management approach to long-term
success through customer satisfaction. TQM framework is based on the participation of all
members of an organization for continuous improvement of processes, products, services, and
the culture. The methods for implementing this approach have been given by quality leaders
like Philip B. Crosby, W. Edwards Deming, Kaoru Ishikawa, and J.M. Juran." It is very
important to note that the first word Total in Total Quality Management is about:
1. Total customer satisfaction – both internal and external customers

2. Totality of all functions in an organization
3. All aspects of quality to be addressed
4. Total products and services offered by an organization
5. Quality in everything – products, services, processes, personnel and resources
6. Involving everyone in the organization for instilling the TQM framework.
There are several tools and techniques which hold significant importance in the
implementation of TQM approach. Total quality management (TQM) tools and techniques
help the organizations to identify, analyze and evaluate qualitative and quantitative data that
is significant to their business. These tools can identify procedures, ideas, cause and effect
concerns and several other issues which can be further examined and used to boost the
effectiveness and efficiency of the operating processes. It also helps in standardization and
enhancement of the overall quality of procedures, products/services and work environment in
accordance with ISO 9000 standards. TQM tools give directions and guidelines to the
organizations for the optimum utilization of resources. TQM tools and techniques help in
assimilating relevant information like –
Page 20 of 267
1) Identification of target segments of customers
2) Evaluation of customer needs
3) Assessment of market competition
4) Market analysis
5) Productivity evaluation
6) Work flow analysis
7) Financial analysis
8) Management hierarchy and business structure
2.3 Tools and Techniques of TQM

There are a number of TQM tools and techniques being used in the organizations. There is no
tool that is best for every application; knowledge of the practitioner goes a long way in
selecting the appropriate one.
1. Brainstorming – Brainstorming is one technique that has become a staple of the TQM
movement. It is a technique of inviting participants to put forward several ideas that can be
used to find out solutions to the problems arising. Each member can put forward a solution
concerning the problem being considered. The ideas are invited without any judgment of their
usefulness to the situation. All ideas are recorded and analyzed subsequently. The process
carries on until the team members are exhausted with any further. This increases the
possibility for originality and innovation.
Brainstorming is an effective way to generate multiple ideas such as possible solutions to a
given problem. It’s like a round-the-table meeting wherein the team gives suggestions that
help in solving the problems being faced. These ideas can further be used for identifying
problem areas; areas for improvement; find solutions to problems and developing suitable
courses of action. Following are the steps involved in starting a brainstorming session –
 The topic is agreed upon and written in clear terms
 The facilitator/leader asks for ideas from the group.
 Each idea is written down or recorded without discussion/analysis/criticism.
 The process continues until the flow of ideas stops.
There are four rules that act as guidelines in conducting brainstorm sessions. These rules
reduce the social inhibitions that tend to take place in a group and therefore help in the
generation of new ideas.
Page 21 of 267
1. Quantity being the focal point – This rule aims to generate maximum number of
ideas. A large number of ideas gives a greater chance of finding an effective solution.
2. No criticism – This rule aims on putting hold on criticism. It aims to create a cordial
and supportive atmosphere so that participants feel free to share their ideas. This rule
asks to reserve positive criticism for later stage of the process and never to use the
negative criticism.
3. Welcome out of the box ideas – Unusual ideas should always be welcome. Such ideas
open up the thinking process and may lead to novel and better solutions to the
problems.
4. Combine ideas – All good ideas taken together can make a single great idea. This rule
believes in 1+1 = 11. Good ideas should always be combined and improved upon to
generate even better ideas.
Brainstorming is based on the principle that discussion can not only provide solutions to
the problems but also lead to a change in attitude, commitment and develop innovative
ideas. The data (ideas) collected through brainstorming can further be analyzed using
suitable methods of data analysis like pareto analysis, cause and effect diagrams etc.
2. Affinity Diagram - The Affinity Diagram is a tool that collects all the non quantitative
information (ideas, thoughts, suggestions, opinions, issues) and categorizes this information
into groups on the basis of their relatedness. It is often used to group ideas generated by
Brainstorming. Affinity diagram is used for structuring a large complicated problem; dividing
a large complicated problem into different groups and reaching an agreement on the solution
to the problem. It may be used in situations that unorganized and are unfamiliar to a team.
For example – affinity diagram can be used in a situation when the team members have
incomplete or little knowledge of the problem area. The following steps are undertaken while
constructiong an Affinity Diagram -
• Problem Statement – The problem that needs to be explored must be clearly stated
and a particular time limit must be set for the meeting.
• Brainstorming ideas - Each participant should write, for the problem stated, his ideas
on index cards/sticky notes/ chart.
• All the cards/sticky notes having ideas written on them should be then collected and
mixed up.After mixing, spread them on a desk or wall.
• Arrange the notes/cards into related/similar groups. Identify those cards that list
similar ideas and then group them accordingly.
Page 22 of 267
• Now title each group with a suitable name. The title of the group must clearly
describe the theme of the group.
• Now move groups under their respective headings to create affinity diagram.
• Once the affinity diagram is ready, the categorized ideas are ready for further short
listing, if required.
The following two points should be taken into consideration to promote creativity among
team members:
1. The team members should not be allowed to speak with each other during the grouping of
the sticky notes. This whole process of relating one idea with another should be done in
silence.
2. The team members must be asked to use their non dominant hand to move the sticky notes
around during classification. A right-handed person should only use his or her left hand when
floating ideas around the board, wall or flip chart. This activity will therefore, promote team
members to be more purposeful and pay more attention to the decisions and moves they
make.
The following affinity diagram is a fine example of a timely pizza delivery problem. Ideas
have been categorized in their respective groups bearing titles of Kitchen, Delivery, HR and
New Initiatives.
Kitchen Delivery HR New Initiatives

Designing kitchen Having 2 wheelers in Hire more delivery Get GPRS devices
layout for faster flow good condition personnel
Keep pre baked pizza Maintaining route Provide information Get boxes that keep
of fast moving based delivery about delivery routes pizzas warm for
variants locations longer time
Keep pre folded Carry enough money
boxes change for faster bill
settlement
3. Benchmarking - Benchmarking is an instrument of self improvement for the

organizations. It is a process that helps the companies to compare their business processes
and performances with the market leaders. It also helps the organizations to spot out their
relative strengths and weaknesses and find out ways of improvement. Benchmarking helps in
Page 23 of 267
identifying and adopting the best practices prevalent. This technique of benchmarking helps
organizations to continuously measure their products/services/processes against the best
industry practices and improve accordingly. This technique is a process of comparing the
cost/productivity/quality of a specific process to another that is considered to be the best
practice.
Concept of Benchmarking
What is the organizational What are others’ performance levels?

performance? What are the performance gaps?
Take Improvement Initiatives
Enhanced Enterprise Value

through performance
breakthrough
The following steps are involved in the application of benchmarking:

• Identify the areas to be benchmarked (processes/performance etc.)
• Assess the prevalent practices to know the current performance
• Find out what needs to be measured -sales/profits etc.
• Set the standard against which/whom (leader organization or best competitor) you are
going to benchmark
• Carry out the benchmarking process
• Identify the performance gaps
• Project future performance levels on the basis of gaps identified
• Develop functional goals and action plans
• Implement action plans and monitor progress
• Recalibrate benchmarks
• Attain the leadership position
• Integrate practice into process
Page 24 of 267
The following are the benefits that can be reaped by instilling benchmarking into
organizational framework –
• It helps in incorporating the best practices into process.
• It acts as a motivating factor for creativity & innovation
• It leads to technological breakthrough and enhanced enterprise value
• It helps in meeting the customer requirements effectively
• Lastly it helps in attaining the leader/competitive position
Types of Benchmarking: Following are the several types of Benchmarking as explained
below:
1. Performance/Operational Benchmarking: Performance or operational
benchmarking, also known as competitive benchmarking, involves pricing, technical
quality, features etc. In this type of benchmarking the competitors’
performance/operational parameters are analyzed.
2. Process/Functional benchmarking: Process or functional talks about the
involvement of work processes such as billing, payrolls, order entry or employee
training. It identifies the most effective practices in companies that perform similar
functions and may come from same or different industry.
3. Product Benchmarking: This is also alternatively termed as 'Customer Satisfaction
Benchmarking' or 'Customer Value Profiling'. This refers to both engineering and
qualitative comparison of products and services among competing offerings. Many of
the manufacturing organizations have been doing several kinds of reverse
engineering to benchmark various features of their products. Recently, several
organizations especially in the service sector have shown their concern in comparing
their services with others. Product Benchmarking can also help in identifying
activities where improvement is possible. Product Benchmarking leads to the
redesign of existing products and services. This refers to comparison of different
features and attributes of competing products and services either through engineering
analysis or through analyses of perception of customers. Engineering approach of
product normally known as reverse engineering is basically a technical approach
comprising of tear-down and evaluation of technical product features. Most of the
consumer goods and capital equipment manufacturing firms have been doing reverse
engineering to finalize product specifications. Some of the Indian firms also carried
out value analysis in conjunction with reverse engineering. Value analysis facilitates
searching for cost-effective alternatives for the chosen components or sub-
Page 25 of 267
assemblies, specifications of which are found out through comparison process. An
engineering department equipped with tools of value engineering, can develop
suitable for developing product specifications that are comparable, if not better, to
competitive offerings.
4. Strategic Benchmarking: Strategic benchmarking analyses how companies decide
and try to find the winning strategies that help them achieve the competitive
advantage, leadership position and greater market share. It also helps in constructing
a key success factor by determining whether or not the company is geared up to
compete in a segment.
5. Generic Benchmarking – Generic benchmarking is used when an organization
looks forward to the performance its partners from different business sectors or
industry as a yardstick. The organization tries to find out ways of improving similar
functions/tasks/processes. This typeof benchmarking can lead to innovation and
remarkable improvements.
6. Internal Benchmarking: Internal benchmarking is a technique of drawing
comparisons between different units of an organization. It provides the advantage of
access to sensitive data and information easily. This type of becnchmarking gives an
advantage of data being readily available and less time and resources are needed.
7. External Benchmarking: External benchmarking is a technique of drawing
comparisons with outside organizations that are market leaders and are the best in
class. External benchmarking helps in identifying the practices adopted by the
companies who are at the cutting edge. The disadvantage of external benchmarking is
that the process of comparing data and information, establishing credibility of findings
and development of recommendations may take up much time and resources.
8. International Benchmarking: International benchmarking involves organizations
that are operating in other countries. These organizations are the best practitioners and
are located in a different country. Globalization and IT advancements are bringing in
greater opportunities in projects across the global. It comes with a disadvantage of
requiring much time and resources for collecting and comparing data and information.
The results may need careful analysis due to national differences.
4. Fishbone Diagram – The fishbone diagram was invented by Dr. Kaoru Ishikawa, to help
employees avoid those solutions that just address the symptoms of a much larger problem. A
fishbone diagram is a tool used for identifying and classifying the possible causes of a
Page 26 of 267
problem so as to discover its root causes. It is also known as also called a cause and effect
diagram or Ishikawa diagram.
Fishbone diagram is a technique used for encouraging thinking process in problem solving.
The effect or problem being investigated is shown at the end of a horizontal arrow; potential
causes are shownlisted as labeled arrows pointing towards the main cause arrow. Each arrow
has several other arrows joining it as the principal causes/factors are reduced to their sub-
causes. Brainstorming technique can be effectively used to create the causes and sub-causes.
A fishbone diagram is useful in brainstorming sessions. Once a team/group has brainstormed
all the possible causes for a problem, the team then rates the potential causes according to
their level of importance and a hierarchy is drawn accordingly. The design of the diagram
looks like a skeleton of a fish.
Fishbone diagrams are normally drawn right to left, depicting each large "bone" of the fish
bulging out towards smaller bones containing more detail.
These diagrams are also used in Six Sigma's DMAIC (define, measure, analyze, improve,
control) approach to problem solving. Following are the steps involved in constructing a
fishbone diagram:
1. Identify the problem (effect) to be analyzed. Define the problem in clear terms.
Then write the problem in a box/circle on the right side and draw a horizontal
arrow from left to right touching the box/circle. This creates backbone for the fish.
2. Identify the main categories (at least four) of causes that have resulted in the
problem being analyzed. These categories are selected from six key process
elements namely machinery, material, method, measurement, people and
environment. Connect these categories with arrows to the spine to create the first
bones of the fish.
3. Team brainstorms around each category to file the root causes that led to the
problem. Each cause is further broken down until the root causes have been
identified.
4. Analyze the diagram to identify the causes that require further investigation.
The causes listed in a usual fishbone diagram are generally arranged into the following
categories:
1. The 6 Ms (relating to manufacturing industry) – Men, Machinery, Methods,
Materials, Measurement, Mother Nature.
Page 27 of 267
2. The 8 Ps (relating to administration/service industry) - Price, Promotion, People,
Processes, Place / Plant, Policies, Procedures & Product (or Service)
3. The 4 Ss (relating to service industry) - Surroundings, Suppliers, Systems, Skills
5. Check Sheet - A check sheet is a well drawn document, a form prepared for collecting and
analyzing the real time data. Check sheet is a standard tool that can be adapted for a wide
range of purposes. The prepared form/document is usually a blank form that is designed for
the quick, easy, and efficient recording of the preferred information, which can be either
quantitative or qualitative. In case of quantitative information, the check sheet is called a tally
sheet. The check sheets can be broadly classified on the basis of:
 Classification: Features like a defect or failure must be classified into a category.

 Location: The physical location of a feature/attribute is indicated on a picture or
item being evaluated.
 Frequency: The presence or absence of a feature/attribute is indicated. The
number of occurrences of a trait is also indicated.
 Measurement Scale: A measurement scale is divided into intervals. The
measurements are then indicated by checking the appropriate intervals.
 Check List: The items to be performed for a task are listed so that once it has been
accomplished; it can be indicated as having been completed.
Page 28 of 267
Check sheet can be used in the following situations-
• In case of data being observed and collected repeatedly by the same person or at the
same place.
• In case of data being collected on the patterns of events/problems/defects etc.
• In case of data being collected from a production process.
Following are the steps in creating a check sheet –
• The event or problem to be observed is decided.

• It is decided that when will the data be collected and for how long.
• A form is then designed in a manner so that data can be recorded simply by making
check/tick marks or Xs.
• All the rows and columns in the form are aptly labeled.
• A test is carried out to evaluate if the check sheet helps in collecting the appropriate
data and is easy to use.
• Each time the listed event or problem takes place, the data is recorded on the check
sheet.
Below given is an example of a check sheet created to collect data on defects identified per
hour during the production process.
Hour
Defect 1 2 3 4 5 Total
X √√√√ √√ √ √ √√√ 11
Y √√ √√√ √√ √√ 9
Z √ √ √√√√ √ 7
Total 6 3 5 7 6 27
6. Flowchart - The Flow Chart is nothing but a visual demonstration of the steps involved in
a process. It is a kind of diagram that uses graphic symbols to illustrate the nature and flow of
various steps involved in a process. Flow chart helps in analyzing each step in a process by
illustrating it in a comprehensive manner. It helps in identifying areas where workflow maybe
blocked or diverted. It also helps in identifying the points where steps need to be added or
removed to enhance the work efficiency and create standardized work flow. There are several
Page 29 of 267
types of flowcharts having different types of boxes and notations but they all provide the
same result. The two basic and the most common types of boxes used in a flowchart are –
1. A rectangular box showing a processing step also known as activity.
2. A diamond box showing a decision step.
Following are the steps involved in creating a flowchart –
1. Discuss with team the process under consideration; decide the start and end of the process.
2. Decide the various activities involved in the process.
3. Arrange all the activities in a proper order.
4. Review all the activities and verify the steps that have been captured.
5. For each step, identify opportunities to make the process better in terms of cost, time or
quality.
6. Once complete, review the actions until the flow chart has been closed.
Benefits of Flow Charts : The use of flowcharts help in improving quality by analyzing the following items:
 Taking note of time taken to complete an event/task so as to reduce the cycle time.
 Listing out the benefits of Flow Chart in enhancing quality
 To check if any process gets repeated so as to preventing rework
 To identify any duplicated tasks and thus eliminate them
 To identify and remove any unnecessary tasks being performed
 To identify tasks falling in the category of Value-added andnon-value-added tasks
Following is an example quality flow chart –

Yes
Define
Define Specification
Specification
Start Collection Required?
Elements
No
Create
Collection
Plans
Collect
Quality
Results
Page 30 of 267
Report &
analyze Stop
results
Quality Flow Chart
7. Line Graph – Line graphs are a common way of presenting data in the form of a picture.
These show the direct relationship between two quantitative factors, e.g. year and sales. Line
graph is used while gathering and analyzing data, planning, testing and implementing
solutions, ensuring continuous improvement. Line graphs make it easier to interpret the
results by displaying on a graph than presenting them in tabular forms. Time series graphs are
a fine example of line graphs that show relationship between a variable and time. Frequency
polygon and an Ogive showing frequency distribution is another example of a line graph.
The line graph shown below depicts the yearly change in the sales turnover of a company.
7. Run Chart – A Run chart is a graphic representation of the given data in the order
that they occur and shows a characteristic of a process over a period of time. It is also
known as a line chart or a line graph. Run chart help to identify with the trends/shifts
in a process; variation or increase/decrease in a process over a period of time. In a run
chart, events are shown on the y-axis and time period is shown on the x-axis. For
example, a run chart in a restaurant may plot the number of customers being served
against the time of the day. The results may show that there are a higher number of
customers at noon than in the evening and more during weekend than weekday.
Taking a closer look into these trends of customer footfalls could help in finding out
Page 31 of 267
areas for improvement as to how many waiters and waitresses should be employed
during that time for better customer service. The charts are used to graphically present
the univariate data sets. It is a single line plotting a specific value over a period of
time. It helps in spotting the upward and downward trends of a process. Run charts
are easy to draft, analyze and interpret as they don’t require much technical skill. Run
charts suffer from a limitation of not having any statistical control limits. They don’t
show the upper, lower and threshold limits. The following chart shows the planned
and actual progress on monthly basis. Time period (months) are shown on horizontal
axis and the profit percentage (variable under observation) is shown on the vertical
axis.
Following are the steps involved in constructing a Run chart:
1. Deciding what to measure: Find out what needs to be measured and in what unit.
Measurements must be taken over a period of time.
2. Data Collection: The data must be collected in a chronological or sequential order.
An accurate run chart can be achieved in case a minimum of 25 or more samples (data
points) are taken.
3. Organizing data: Once the data has been collected, it is divided two sets of
variables x and y. The values for x represent time and the values for y represent the
measurements.
4. Plotting the graph: A graph can be plotted using an appropriate scale to make the
points on the x and y-axis. This can be done by hand or by computer. The data points
are plotted on the chart (the x values versus the y values) in the order in which they
became available and connect the points with lines between them. The average lines
can be drawn to evaluate the movement of the data points relative to the average.
5. Data interpretation: After plotting the data on a graph, it is interpreted and the
conclusions are drawn as to what action needs to be taken. Some of the possible
outcomes are trends in the chart or cyclical patterns in the data. The motive is to look
for trends rather than focusing on the individual plot points.
Page 32 of 267
8. Histogram – Histograms are the graphs that are mostly used for showing frequency
distributions. These are bar chart pictures of data that show different patterns that fall within
typical process conditions. The histogram is an extremely useful tool in the field of quality
evaluation, and eventual improvement. For effective use of histograms, a minimum of 50-75
data points should be gathered. The patterns made then demonstrate an analysis that helps in
understanding the variation. Histograms are used when -
• The data is quantitative.
• The need is to find out the shape of the distribution, to see if the data is normally
distributed or not.
• To see if there has been a change in the process over a period of time.
• To see if there is a difference between the outputs of two or more processes.
• To communicate the distribution of data to others as and when required.
The following histogram shows the score of participants in an English test.
Histogram graphs are easy statistical tools to understand the distribution of data visually.
Histograms can be in the following shapes –
Page 33 of 267
 Bell shaped Histogram – Bell shaped histogram is a common pattern also known as
the “normal distribution.” In a normal distribution, points lie uniformly on the both
sides of the central value.
 Skewed Histogram - The skewed distribution is asymmetrical because of certain
natural limits that contain the outcomes on one side only. The distribution’s peak is
away from the centre, more towards the limit and a tail stretches away from it.
Skewed distributions are also called right or left skewed distributions depending upon
the direction of the tail.
 Double Peaked/bimodal Histogram – This is the case of a bimodal distribution which
looks like the back of a two-humped camel. It combines the outcomes of two
processes having different distributions combined together in one set of data.
 Plateau Shaped Histogram - The plateau shaped histogram happens to exist in case of
a “multimodal distribution.” It combines several processes with normal distributions
in one set of data. Because of many peaks being close together, the top of the
distribution resembles a plateau.
2.4 Check Your Progress-Tick the correct option
1. Which method for generating ideas is a tool used to organize data into logical
categories?
a) Brainstorming
b) Affinity Diagram
c) Quality Circles
d) Interviewing
e) Benchmarking
2. Whose key contribution included the cause-and-effect diagram (fishbone diagram)?

a) Joseph M. Juran
b) Kaoru Ishikawa
c) Armand Feigenbaum
d) Walter Shewhart
e) Genichi Taguchi
3. Which quality certification pertains to set of international standard on quality

management and quality assurance?
a) ISO 14000
b) ISO 24700
Page 34 of 267
c) ISO 9000
d) ISO 27000
e) None of the above
4. Which of the following tools is used for collection of data?

a) Control charts
b) Fishbone diagram
c) Scatter diagrams
d) Flowcharts
e) Check sheets
5. Which one of these is a tool for problem solving?

a) Benchmarking
b) Cause-and-effect diagram
c) Histograms
d) Scatter diagrams
e) Control charts
6. Benchmarking uses which of the following to improve standards?

a) Larger companies
b) Smaller companies
c) Competitors
d) Suppliers
e) Industry Leaders
7. Which quality tool can be useful in getting a sense of the distribution of observed
values?
a) histogram
b) check sheet
c) scatter diagram
d) control chart
e) flow chart
8. A run chart shows performance over

a) speed
b) quantity
c) productivity
d) time
e) quality
2.5 SUMMARY
The use of TQM tools and techniques is a very signifcant element of any successful quality
enhancement process. These tools and techniques can become effectual for any organization
only after the employees have been trained properly so that they understand these tools
Page 35 of 267
effectively. The firms need a proper system in place for providing full support and
commitment towards the use of tools and techniques for quality improvement. But there also
have been the cases wherein some companies have not benefited from these tools and
techniques and there has been no significant improvement in the quality. The implementation
of these tools and techniques require a strong managerial commitment, encouraging all the
employees to use them, together with a proper planning and training process in place.
2.6 GLOSSARY
Quality - It is the ability of a product or service to consistently meet or exceed custom
expectations. It is the performance of the product as per the commitment made by the
manufacturer to the consumer.
Total Quality – It is an integrated term for achieving customer satisfaction by involving all
managers, employees, tasks, processes into the quality framework.
TQM – It is a framework that requires the involvement of all the people working in an
organization. It is a persistent effort made to improve quality and accomplish customer
satisfaction.
Quality Control – It is a measure used to monitor, control and improve processes by

eliminating variation from manufacturing, service and financial processes. QC is a key
continuous improvement tool.
Product benchmarking - A process that compares a product1 service, offered by a company

with the same marketed by the competitors.
ISO 9000 – It is a certification that an organization can receive based on the quality
processes that have been incorporated in the organizational culture. This is not a product
certification but a quality system standard.

1. B
2. B
3. C
4. E
5. B
6. E
7. A
8. D
2.8 REFERENCES
1. Evans, J.R., Total Quality Management, Cengage Learning.
Page 36 of 267
2. Kanji, Gopal, 100 Methods of TQM, Sage Publications.
3. Chary, S.N., Production and Operations Management, Mc Graw Hill Education

1. Bhat, K. Sridhara, Total Quality Management, Himalaya Publishing House
2. Wakhlu, Bharat, Total Quality, S. Chand Publishing Co.
2.10 MODEL QUESTIONS

1. What do you understand by ‘TQM’? What is the need of TQM implementation by the
organizations?
2. Can TQM implementation lead to better performance and profitability? Discuss in
detail.
3. Explain the various tools and techniques of TQM.
4. What is the difference between line graph and run chart?
5. How can be brainstorming and affinity diagram techniques used together at a single
time?
6. What are the different types of benchmarking in relation to objects being benchmarked?
Page 37 of 267
LESSON – 3
TQM: Tools and Techniques
Structure
3.1 Objectives
3.2 Introduction
3.3 Tools & Techniques of TQM
• Pareto Diagram
• FMEA
• Scatter Diagram
• Control Charts
• QFD
• Tree Diagram
• Force Field Analysis
• 5W2H
• 5 Whys’
3.5 Summary
3.6 Glossary
3.8 References
3.1 OBJECTIVES
1. Understand how TQM is deals with continuous improvement in all the tasks being
performed by an organization.
2. Define how the tools and techniques of Total Quality Management can be used to
Page 38 of 267
3.2 Introduction
Quality management is a company wide activity and all the functional departments contribute
to its successful implementation. As per American Society for Quality, Total Quality
Management is a framework that companies adopt to achieve long-term success in the course
of providing customer satisfaction. TQM includes every person working in an organization
who participates in improving processes, products, services and culture of the organization.
The Companies that have a total quality management system in place have achieved an
overall enhancement in profitability and performance, better employee relations with high
motivation levels and higher productivity, greater customer satisfaction, increased market
share. Many different kinds of organizations have benefited by adopting the total quality
management practices but at the same time these results have benn obtained over a period of
time and not immediately. It is very improtant to give sufficient time to TQM programmes
for achieving desired results. It is very important for a company to put in place certain quality
management practices if it aims at maintaining a certain level of quality in order to satisfy its
customers at the right time and price.
3.3 Tools and Techniques of TQM

There is a wide range of TQM tools and techniques. Various tools and technique for
implementing the Total Quality Management approach were given by quality leaders namely
Philip B. Crosby, W. Edwards Deming, Armand V. Feigenbaum, Kaoru Ishikawa and Joseph
M. Juran. The following is the list of widely used tools and techniques.
1. Pareto Analysis – Quality becomes an important factor if an organization wants to achieve

greater benefits in terms of overall performance and longevity of its business. It becomes
significant for any business to adopt the tools by which the quality of its processes could be
measured. There are many such tools and these are known as “quality-control” tools. Pareto
Analysis is one of the important tools of quality control. It was originally conceived by
Vilifredo Pareto while carrying out a study on the distribution of wealth. It is also known as
the 80/20 rule applied to quality-control. Vilifredo, in his study noticed that about 80% of
wealth was held by about 20% of the population. Several years later, the TQM guru Joseph
Juran applied the same principle to quality-control, and it become popular with the name
Pareto Analysis also called Pareto Charts. According to Pareto Analysis 80% of quality
Page 39 of 267
problems in the finished goods/services are caused by 20% of the problems in the production
or service processes. Practically it is beneficial to take apart “the vital few” problems from
“the trivial many,” and thus, identify the individual problems that can be fixed and can
considerably help the finished goods/services. Once these problems are identified, the 20%
that are causing 80% of the problems can be addressed and improved upon which can further
lead to greater efficiency and quality.
Pareto Analysis is a statistical technique that helps in identifying the critical few causes of
problems that have the greatest impact on the quality of the end product. A Pareto diagram
also known as Pareto Chart represents data in the form of a ranked bar chart. This chart
shows the frequency of occurrence of items in descending order. The lengths of the bars
represent frequency in terms of time or money etc, and are placed with longest bars on the
left and the shortest to the right. Pareto diagrams show that 80% of the effect is credited to
20% of the causes. Hence, it is also known as the 80/20 rule. A Pareto diagram indicates
which problem should be tackled first so as to eliminate the defects and improve the
production process. Pareto diagrams can be used when –
• Analyzing the frequency of problems/causes in a process.
• Analyzing major causes by looking at their definite components.
• There are many problems/causes and the need is to focus on the most significant.
• Presenting data.
The below shown Pareto diagram reveals the data on the problem of a restaurant
receiving complaints from its customers.
Complaint Count
small portions 621
wait time 109
no taste 65
stale food 9
costly 789
bad atmosphere 45
unclean 30
noisy 27
bad presentation 15
unfreindly staff 12
Page 40 of 267
The restaurant owner wanted to develop a strategy to reduce the customer complaints
drastically. This is where Pareto diagram comes in use. The below drawn pareto
diagram clearly highlights that the owner needs to address the pricing issue and potion
size issue as this will take care of the 80% of the customer complaints. These two
categories constitute only 20% of all the complaint categories. It is therefore evident
that by fixing only 20% of the complaint category can solve 80 of the customer
complaints. Thus Pareto diagram helped the owner is solving the right set of
problems.
In the above Pareto diagram the left side vertical axis is the frequency (the number of counts
for each category), the horizontal axis is the group names of response variable.
2. FMEA - Failure Mode Effect Analysis is an analytical technique that combines technology
and experience of people to identify foreseen failures in a product or process and planning to
eliminate the failure. FMEA is a group of activities to understand and evaluate potential
failure of product or process and its effects, and identify actions that eliminate or reduce the
potential failures. It is a forecasting tool to design quality and safety into a product/process by
eliminating the possible problems that may happen. FMEA helps in creating smooth
production processes first time, reduced development costs, increased profit margins, to gain
supplying competitiveness and long lasting product. It also helps in minimizing product
Page 41 of 267
failures, early risk identification, better evaluation and enhanced process improvement.
Following are the steps in creating FMEA-
• Review the process step by step considering every value added activity.
• Identify the potential failure modes for every process step through brainstorming.
• For each failure mode list the root causes and the effects on the output.
• Rank each failure mode as per its severity (a) on a scale of 1 to 10.
• Rank each failure mode as per the frequency of its occurrence (b) on a scale of 1 to
10.
• Rank each failure mode as to how easily it can be detected (c) by the next
external/internal customer on a scale of 1 to 10.
• Give each failure mode a Risk Priority Number (RPN) by multiplying the severity
score by occurrence score by detection score (a X b X c). This now allows the team to
focus on the highest score, higher risk problem first.
• Develop an action plan for high scoring RPN so as to eliminate the failure modes.
• Implement the corrective steps.
• Recalculate the RPNs and repeat the above steps if the RPN is still very high.
There are two types of FMEA –
1. Design FMEA - Design FMEA is used in the design process by identifying known
and foreseeable failures modes and ranking failures according to their impact on the
product.
2. Process FMEA - Process FMEA is used to identify potential process failure modes
by ranking failures and establishing priorities, and its impact on the Internal or
external customers.
3. Scatter Diagram - The scatter diagram is a type of graph that represents the numerical
data, with one variable on each axis, and tries to establish a relationship between the
variables. If the variables have some correlation then the points will lie along the line or
curve. The better the correlation, the closer the points will be towards the line. The scatter
diagrams can be used when –
• The data is numerically paired (dependent and independent variables).
Page 42 of 267
• Dependent variable (y) may have multiple values for each value of independent
variable (x).
• Determining whether the two variables are related.
The variables are plotted on axes at right angles to each other and the dispersion in the
points gives a measure of reliance in any correlation shown. Following are the different
types of correlation plotted on the scatter diagrams –
1. Strong positive correlation between x and y – the points lie close to a straight line
with y increasing as x increases.
2. Weak positive correlation – the points are not close to a straight line although y is
increasing as x increases.
3. No correlation – the points are distributed randomly on the graph.
4. Weak negative correlation – the points do not lie close to a straight line with y
decreasing as x increases.
5. Strong negative correlation – the points lie close to a straight line with y decreasing
as x increases.
Page 43 of 267
4. Control Chart – Control charts are one of the key tools of statistical process control.
These are used to monitor processes that are in control by using measures of central
tendency and ranges. These represent data like sales, volume etc., in a chronological order,
showing the change in the values over a period of time. In a control chart each point is given
individual significance and is joined to its neighbors. Above and below the central value,
the lines drawn are shown as Upper and Lower Warning and Action lines (UWL, LWL,
UAL, LAL). These act as signals or decision rules, and give operators information about the
process and its state of control. The charts are useful as a historical record of the process as
it happens, and as an aid to detecting and predicting change. There are different types of
control charts that can be used according to the type of data. The widely used two categories
are for variable data and attribute data.
Variable data are the ones that are measured on a continuous scale. For example: time,
weight, distance or temperature can be measured in fractions or decimals. The possibility of
measuring to greater precision defines variable data. For example-
• Averages and range charts - X and R chart

• Chart of individuals - X chart, X-R chart, IX-MR chart, moving range chart
• Moving average/Moving Range chart - MA–MR chart
• Target charts (also known as difference charts, deviation charts and nominal charts)
• Cumulative Sum Charts - CUSUM
• Exponentially weighted Moving Average Charts - EWMA
• Multivariate chart
Attribute data are the ones that are counted and cannot have fractions or decimals. Attribute
data arise when finding out only the presence/absence, success/failure, acceptance/rejection,
correctedness/incorrectedness of a variable. For example, a book can have two, three, ten
errors, there cannot be two and a half errors. Further types of attribute charts –
• Proportion chart - p chart
• np chart
• Count Chart - c chart
Page 44 of 267
• u chart
UAL
UWL
Mean
LWL
LAL
5. Quality Function Deployment – QFD is a technique used to carry the voice of the
customer through design and the production process. It is actually, a customer – driven
planning process to guide the design, manufacturing and marketing of goods. It tries to
eliminate the gap between: What customer want in a new product and what the product must
deliver. QFD is designed to help the planners focus on characteristics of a new or existing
product or service from the viewpoints of customer, company and technology-development
needs.
QFD was originated at Bridgestone Tyre, Kurume plant, where the quality chart was used for
the first time in 1966. Quality function deployment (QFD) was originally developed by Yoji
Akao in 1966 when the author combined his work in quality assurance and quality control
points with function deployment used in Value Engineering. Mr. Akao described QFD as a
“method to transform user demands into design quality, to deploy the functions forming
quality, and to deploy methods for achieving the design quality into subsystems and
component parts, and ultimately to specific elements of the manufacturing process.”
Following are the steps involved in QFD framework –
1. Find out what are the customer’s quality requirements – Customer voices should be obtained
through a survey of the target market using questionnaire responses and interviews. Customer
Page 45 of 267
voice then must be expressed in actionable requirements from the products or services. For
example, product should be durable, environment friendly, low priced etc.
2. Translate customer’s quality requirements into technical requirements – Some technical
requirements have relationship to more than one quality requirement. For example
temperature, pressure difference, biodegradation life, cycle life of the product etc. In order to
highlight those technical requirements that have relationship to customer’s voice, all
relationships are evaluated with a weightage of 9 or a symbol o to a strong relationship,
weightage of 3 or symbol O to a moderate one and weightage of 1 or symbol Δ to a weak
relationship. This helps in identifying the technical requirements that need special attention.
The customer requirements are placed in rows and technical requirements are placed in
columns forming a QFD matrix. Technical requirements hold much importance because
organizations do not work on customer’s requirements directly. Organizations work on
technical requirements that get translated into customer’s voice.
Customer
Requirements
9 o O O
7 o Δ
8 o o
8 o o
9 o o
3. Establishing operational targets for the technical requirements – For example 45 degrees
temperature, zero fluid loss etc targets appear at the bottom of the matrix, below the
Page 46 of 267
competitive technical evaluation.
4. Competitive Assessment through Competitive Benchmarking – This step involves further
fine tuning the customer requirements and technical requirements through benchmarking
evaluations. These appear on the right hand of the matrix. For example a company’s shampoo
is judged as number 2 and competitor’s shampoo as number 1 on customer requirement of
good lathering. Here the company must take care in decreasing the alkali content from 0.10%
to 0.05%. This is a technical requirement that needs to be satisfied to gain competitive
advantage.
5. Other concerns to be addressed – government regulations, IS specifications, BS standards,
environmental considerations are other concerns that need to be taken care of. All these are
also shown in the matrix separately from the customer’s voice,
6. Analyze and finalize the action plan - All the above mentioned concerns should be well
analyzed and on this basis a final decision regarding the design of product is taken.
A proper implementation of QFD framework can help an organization reap the following
benefits –
• Improved customer satisfaction

• Reduced implementation time
• Healthy teamwork
• Better documentation framework for structuring the available information
The organization should not stop at only product planning. It should also plan the production
processes, product components, maintenance planning, quality assurance planning, planning
for the suppliers etc. Quality function needs to be deployed at almost every level in the
organization.
QFD/House of Quality (HOQ) Table - The following diagram displays the elementary
components of the quality function deployment table or House of Quality. The diagram starts
with identifying the customer requirements. These requirements are identified through the
opinion of the customer –which can be determined by using the marketing and market
research activities. These requirements are listed into the blocks that lie on the left side of the
Page 47 of 267
central relationship matrix. A great deal of competitive analysis and market potential analysis
is required by the focus group/QFD team in order to comprehend and prioritize the customer
requirements. The most important requirements further lead to the detailed WHATs. Once the
customer requirements have been identified and listed in the table, these are evaluated on the
basis of their importance, ranks are then assigned and the rankings are further summed up.
Most commonly the paired comparison technique is used for doing this analysis. Each
customer's requirements are then examined in terms of customer rating. A group of customers
is asked as to how they rate the performance of the organization’s product or service against
those of its competitors. The results thus obtained are then entered on the right side of the
central relationship matrix. The importance and the competition rankings of the customer
requirements can be seen from left to right across the quality house. The WHAT'S are then
converted into the HOWs. These are known as the technical design requirements and can be
seen in the diagram from top to bottom in terms of customer requirements, importance ratings
and competition rankings. These act as the customers’ voice to the process.
Technical
Interactions
HOW vs. HOWs
Customer Customer
Requirements Technical Design Requirements Rating the
The WHATs the HOWs’ WHYs’
Worse Better
Prime Details Rank 1 5
Central Relationship Matrix WHAT vs. WHY
Page 48 of 267
WHAT vs. HOWs
Technical/Cost
Rankings HOW vs. HOW MUCH
“HOW MUCH”
Technical Ratings
Benchmarking
Target Values of
Technical Features
(Including costs)
Figure 1 : The House of Quality
In the diagram the technical design requirements are shown immediately above the central
relationship matrix and are shown in the higher order of prime and detailed requirements. Just
below the central relationship matrix are shown the rankings of technical difficulty,
development time/costs. This is to help the QFD team to evaluate the efficiency of the
various technical solutions. Below the technical rankings in the diagram comes the technical
rating benchmarking data. This compares the technical process of the organization against its
competitors. The central relationship matrix is the working hub of the house of quality
diagram and every other factor moves around it. Here the WHATs are matched with the
HOWs, and every customer's requirement is methodically analyzed against each of the
technical design requirements. The symbols in the matrix depict the nature of any
relationship, be it strong positive, neutral, negative or strong negative. The QFD team using
its experience and judgment tries to find out HOW the WHATs may be accomplished. Here
the team uses the method of relationship estimation. Any blank rows and columns should not
exist. Blank rows represent the customer requirements not met and blank columns represent
the redundant technical features. All the HOWs must be sufficient enough to achieve all the
WHATs. The root the house represents the interaction between the technical design
requirements. Each attribute is matched against the others and the nature of relationships is
displayed in the diagram. The entire QFD process is a lengthy and time-consuming, because
Page 49 of 267
each cell in the central and roof matrices needs be examined. It becomes very important to
establish the technical requirements that require design attention, and the respective costs are
shown in the bottom row. In case the technical costs create major issues then the priorities
may be rearranged. The central matrix itself shows if there are more ways to achieve a
particular customer requirement. The roof matrix also reveals if the technical requirements to
achieve a particular customer requirement can have a negative effect on other technical
issues. At the bottom of the house of quality diagram is the target values of the technical
characteristics expressed in physical terms. These targets are the physical output of the QFD
process.
The entire QFD process of collecting, structuring and rating the information leads to a major
advancement in the understanding of the product/service design delivery system by the QFD
team. The target values of technical characteristics may be used to generate the next level
house of quality diagram. In such cases the existing characteristics become the WHATs, and
the QFD process establishes HOW they are to be accomplished. In this way the customer
requirements are deployed all the way to the final operational stages. Figure 2 shows how the
target technical characteristics at each level become the inputs to the next level matrix.
HOWs (1)
WHATs
Page 50 of 267
(1)
Targets (1)
HOWs (2)
WHATs (2)
TARGETS
(2)
HOWs
(3)
WHATs
(3)
TARGETS
(3)
Figure 2: The Deployment of the “Voice of Customer” through quality tables
6. Tree Diagram – This tool is used to systematically map out, in increasing detail, the full
range of paths and tasks that need to be accomplished to achieve a primary goal and sub
related goals. Graphically, it resembles an organization chart. These diagrams are used to –
• To identify the various tasks involved in, and the full scope of, a project.
• To identify hierarchies, whether of personnel, business structure, or priorities.
• To identify inputs and outputs of a project, procedure, process, etc
• When probing for the root cause of a problem.
• After an affinity diagram or relations diagram has uncovered key issues
Page 51 of 267
Tree diagram helps in identifying the root causes for a factor and then list possible corrective
action. The tree diagram starts with one item that branches into two or more, each of which
branch into two or more, and so on. It looks like a tree, with trunk and multiple branches.
The Pearl River, NY School District, recipient of the Malcolm Baldrige National Quality
Award, uses a tree diagram to communicate how district-wide goals are translated into sub-
goals and individual –
6. Force Field Analysis – Force field analysis was created by Kurt Lewin in the 1940s. he
used the tool in his work as a social psychologist. Today the force field analysis is used
extensively in managerial decision making. It is a technique used for identifying the forces
that help or obstruct a change that an organization wants to make. The analysis of force field
involves looking at which driving forces may be strengthened and which restraining forces
may be eliminated, mitigated or counteracted. If it appears that the driving forces are strong
enough to move back restraining forces then the adoption of TQM will be worth pursuing.
The plan is to adopt those tactics that are designed to move the relevant forces. This
technique can be used for two purposes – To decide if to go ahead with change; To increase
chances of success, by strengthening the forces supporting change and weakening those
against the change. It is used when –
• Identifying the forces which help/prevent in achieving a change – driving and

restraining forces
• Assessing the ease/difficulty in achieving a change
• Planning to overcome the barriers to change
Page 52 of 267
While carrying out the force field analysis, following points should be taken into
consideration –
• What organizational benefit will the change deliver?

• Who supports the change and who doesn’t? Why?
• Are there enough resources and time to make the changes?
• What cost will it incur?
• What other processed will be affected by this change?
• What are the risks involved?
Some factors such as those affecting the health of people and safety do not fit well with this
technique. The organizations have to handle these separately and appropriately, irrespective
of the outcome of analysis.
Force field analysis is best carried out in a small group of about six to eight people using
flipchart paper or projectors/overhead transparencies so that everyone can see what is going
on. The following steps are involved in setting up a force field analysis framework –
• Define the problem

• Define the objective
• Prepare the force field diagram
• Indentify the positive and negative forces
• Rate the forces as per the ease of change and their impact
• Analyze and evaluate
Driving Forces Restraining Forces
Management Board asking for this Too little time for doing this
Opportunity for understanding customer Customer will be disgruntled by change
Good PR for organization SAP will override this in 2 years time
Page 53 of 267
8. 5 Whys – The 5 whys is another technique of quality control that is used in the six sigma
methodology. 5 Whys technique does not involve data segmentation, regression, correlation,
hypothesis testing, or such statistical tools. This technique is all about asking the question
“Why”. Five is a rule of thumb in 5 Whys. These why questions help to identify the root
cause of a problem. It helps in establishing the relationship between different a problem and
its root causes. It is most effective when a problem involves human factors/interactions.
Following are the steps involved in setting up the 5 whys framework –
Write down the particular problem – formalize and describe the problem.
Inquire why the problem is happening – write the answer below the problem.
Keep repeating the above steps until the root cause of the problem has been identified and the
entire team agrees with the cause identified.
There maybe a need to ask the questions fewer or more times than five before the cause is
identified.
Example of 5 whys – You are going back home from work and your car stops on the way.
1. Why did your car stop?

Because it ran out of petrol.
2. Why did it run out of petrol?

Because I didn’t get any petrol today.
3. Why didn’t you get petrol today?

Because I was not having enough money.
4. Why was I not having enough money?

Because I lost the most of it in a gambling game with friends last night.
5. Why did I lose most of it in gambling game?

Because I am not very good at playing gamble.
In the above example the why questions lead to a statement which helps in identifying the
root cause of the problem. The team can now take action upon it without further
Page 54 of 267
investigation. The 5 whys tool can be used individually or combined with fishbone diagram
which is also known as the cause and effect diagram.
9. 5W2H Approach – It is problem definition technique that works by asking seven

questions about a problem or a defect. It is often used in lean manufacturing and six sigma
processes to helps in understanding the problem in greater detail and bring clarity to the
concerns with the current process. 5W2H stands for –
1. Who – Who is associated with the problem? It can be employees, customers, suppliers etc.
2. What – What is the problem/concern/issue? Create a precise description so that everybody

understands the problem.
3. When – When did the problem first occurred.
4. Where – Location of the problem where it is occurring.
5. Why – Why is the problem occurring? It talks about the already known explanations
contributing to the problem
6. How – How is it known that there is a problem? It talks about the mode, situation, and
procedure of the problem.
7. How much – How much is the frequency/extent of the occurrence of problem?

1. Which basic quality tool is focused on resolving the most important problem?
a) Scatter diagram
b) Control chart
c) Pareto analysis
d) Cause-and-effect diagram
e) Fishbone diagram
2. Control charts have which of the following features?

a) Tabulated categories
b) Diagrams
c) Lower control limits
Page 55 of 267
d) Upper control limits
e) Both C and D
3. A Scatter diagram is useful when there is

a) One variable
b) Correlation between variables
c) Multiple variables
d) No Correlation between variables
e) Variation
4. What step comes after "develop performance measures and collect data" and before
"generate potential solutions" in the TQM problem-solving process?
a) define the problem and establish an improvement goal
b) analyze the problem
c) choose a solution
d) implement the solution
e) monitor the solution to see if it accomplishes the goal
5. A statistical chart of time-ordered values of a sample statistic is a:
a) Flowchart
b) Check sheet
c) Scatter Diagram
d) Cause-and-effect diagram
e) Control chart
6. What question is not included in the 5W2H approach?

a) Which
b) What
c) Why
d) Where
e) When
7.Which methods asks 7 questions to improve processes?

a) 5W2H
b) Affinity Diagram
c) Quality circles
d) Benchmarking
e) Brainstorming
8. What are the determinants of quality?
a) Design
b) Ease of use
c) Service after delivery
d) The wellness of product to design
e) All of the above
Page 56 of 267
3.5 SUMMARY
Quality is defined by customers’ requirements. The domain of quality improvement is the

responsibility of the top management. Only systematic analysis and effective work processes
can lead to increased quality. Quality improvement is a continuous effort and carried out
throughout the organization. TQM encourages participation amongst all the employees
(lower level management to top level management) of an organization. There is no single
theoretical formalization of total quality, but the quality philosophers have provided various
tools and techniques which can help in the overall improvement of the quality of all activities
that take place within an organization. TQM tools have been in existence for the last 50 years
and revolutionized the concept of quality and process compliance. Successful companies
have been practicising these tools and techniques for building quality into the process to gain
competitive edge.
3.6 GLOSSARY
FMEA – Failure Modes Effects Analysis is a very effective tool which can be used for
understanding potential issues and problems to processes even before they occur.
Quality Function Deployment: Quality Function Deployment is a methodical approach to

design based on well determined customer requirements, taken together with the integration
of organizational functional groups. The customer needs/desires are converted into design
specifications for each stage of the product development. For example, the ease of writing
with a pen is the customer need/requirement and specifications like pen ink viscosity,
pressure on ball-point are the design specifications.
Quality Improvement Teams: Quality improvement teams are a source of participation for
employees in the quality decision making. Such teams contribute in employee development,
leadership, problem solving skills and lead to quality awareness which is essential for
enhanced organizational performance.
Page 57 of 267
Statistical Process Control: Statistical Process Control is a set of certain tools and
techniques that are used to monitor and control the processes by eliminating the causes of
dispersion/variation taking place in the manufacturing, service and financial processes.

1. C
2. E
3. B
4. B
5. E
6. A
7. A
8. E
3.8 REFERENCES
1. Evans, J.R., Total Quality Management, Cengage Learning.
2. Kanji, Gopal, 100 Methods of TQM, Sage Publications.
1. Discuss in detail the tools and techniques of TQM
2. Write a detailed note on 5 whys technique of TQM.
3. What do you understand by FMEA? What are the steps involved in FMEA
framework?
4. Discuss in detail the QFD technique of total quality management framework.
5. Explain the 80/20 rule of Pareto analysis using a suitable example.
Page 58 of 267
LESSON – 4
Customer Focus
Structure
4.1 Objectives
4.2 Introduction
4.3 Definition of Customer - External and Internal Focus
4.4 Quality and Customer Expectation
4.5 Customer Satisfaction
• Norman’s Customer Satisfaction Model

• Teboul’s Model of Customer Satisfaction
• Customer Supplier Chain
• Internal Customer Supplier Relationship
• Customer Satisfaction Feedback
• External Customer Satisfaction
• Internal Customer Satisfaction
• Customer Care
4.6 Continuous Improvement Process
4.7 Role of TQM in Control and Improvement Process
4.8 Designing for Quality
4.10 Summary
4.11 Glossary
4.12 Answer to Check Your Progress
4.13 References
Page 59 of 267
4.1 OBJECTIVES
• Define customer focus

• Define the types of customers
• Define the role of TQM in continuous process improvement
• Understand customer satisfaction
4.2 Introduction
Total Quality Management can be defined as a framework adopted for enhancing the overall
business performance by achieving customer satisfaction by ensuring cost optimisation,
involving all the employees and framing a strategy for ensuring continuous improvement of
the products, services, processes and human capital.
The phrase Total Quality Management can be defined as “accomplishing business targets
through customer satisfaction”. A company’s customers may be the internal users, the
external customer or end-user, alongwith its shareholders, employees, suppliers and other
stakeholders. Total Quality Management framework is a management approach intends to
have a strong focus on customer satisfaction ultimately leading to overall business success.
Total Quality Management set up can only work if all members of an organization commit
and involve themselves toward the continuous improvement of processes, products, services,
and their work culture. It stresses on the management of total quality – covering every single
process/activity/task being undertaken within an organization. When one talks about Total
Quality Management, the term quality means the value being delivered to the customer
through a product/service. The term total in TQM implies the achievement of satisfying/
exceeding customers’ needs/expectations by providing quality products/services, satisfying
the needs of the shareholders, quality of work life (ensuring a balanced personal and
professional life) of all the employees of the organization. It can be said that a company’s
performance is defined by what customer needs it is aiming to satisfy, which customer group
it is targeting, what technologies it aims to use and the tasks it will perform to satisfy the
target market. The organizations need to effectively incorporate the What, Who, and How
into the scope of their businesses. Following elements hold great significance in order to
decide the business strategy:
• Customer needs/expectations - what needs to be satisfied,
Page 60 of 267
• Customer target groups – who needs to be satisfied,
• Technologies used and business processes undertaken - how customers’ needs are
being satisfied.
An organization’s business is defined in terms of what is needed to be satisfied, who needs to

be satisfied, and how the business process will create satisfaction. Knowing what
products/services a company produces is not enough. Rather a company clearly needs to
define what it does and what business it is involved in. Any product/service will become
business only when it satisfies a customer need/requirement. It is very important to identify
the types of buyers a firm is going to target, customer groups in order to determine the market
that needs to be served and the geographic areas to be covered. It is equally important to
clearly establish the kind of technology to be used and activities to be performed because
they play a critical role in helping the firm to satisfy the customers’ needs.
Quality management can be defined as doing the things right not only the first time but all the
time. This leads to greater levels of customer satisfaction and much effectively efficient
business operations.
4.3 Definition of Customer – External and Internal Focus
The customers can be broadly classified into two categories -. external and internal.
Internal customers are the ones that are found within the organization-the colleagues or
counterparts working together in same or different functional departments for delivering a
service or product to the external customer. The internal customers may or may not purchase
the products or services offered by their internal counterparts but the internal customer
relationship plays a crucial role in the success of any business. In the sales example, the
salesman who does not get along very well with customer service department may face
greater difficulty in placing orders or getting answers to his external customers’ questions.
This may further result in a poor level of service. If the relationships of internal counterparts
are strained then it can adversely affect company morale.
An external customer may be an individual or an enterprise that purchases the products or

services from another individual or enterprise in exchange of money. An external customer is
an individual or an enterprise that uses the company's products or services but is not part of
the company. For example - If you own a departmental store, an individual who comes to the
store to buy the merchandise will be known as an external customer. An internal customer is
Page 61 of 267
a member/worker of the organization. A person working in any functional department who
seeks assistance from other members/workers to fulfill her/his job duties is known as an
internal customer. For example - a sales man works in liaison with the people working in
customer service department to secure sales orders. External customers are vital to the
functioning of any business, as they provide the much needed revenue streams through their
purchases for the survival of business. It is the satisfied external customers only who make
repeat purchases and also refer the products/services to other people they know. A
dissatisfied customer, having a negative experience with an organization, will only
discourage other people not to buy the company’s products/services. For example – a
customer being treated rudely by an employee will only lead to bad word of mouth.
An organization’s customers are one of the most important factors for determining its success
or failure. A business can neither exist nor survive without its customers. In order to acquire
customers a business needs to identify what the prospective customers what, how much
quantity is desired, the kind of buying process they are looking at to capture customers and to
make sure that they get first class after sales services. As a business owner, one may have a
natural tendency to focus on the relationship with external customers, as they are the ones
who purchase your products and services. Both external and internal customers are important
to the success of a business or organization. Through their purchases, external customers
provide the revenue stream that a business needs to survive. Satisfied external customers
make repeat purchases and refer the business to other potential customers. On the other hand,
customers who suffer as a result of negative experience with a business, such as rude
treatment by an employee, can hamper a business by dissuading other people from
patronizing it. An internal customer who does not work well with other elements of the
company may have difficulty placing orders or obtaining answers to his external customers'
questions, leading to poor service.
4.4 Quality and Customer Expectation – The following are the nine aspects of quality that
can be found in products that provide customers with a satisfying buying and after sales
experience. These are –
• Product/Service Performance
• Product Features
• Conformance to set standards of quality
• Product Reliability
• Durability of product
Page 62 of 267
• Service – Buying and after sales
• Response of dealer/ manufacturer to customer
• Aesthetics (visual) of product (physical appearance)
• Goodwill of manufacturer in market
Though quality is an abstract perception, it has a quantitative measure-
Q= (P / E)
Where, Q = quality, P= performance (as measured by the manufacturer), E = expectations of

the customer.
4.5 Customer Satisfaction – Customer Satisfaction means when an organization is able to

meet or exceed the customers’ expectations. It evaluates if the customers were happy with
their experience with the firm, its products and services. It rates the company in terms of
satisfying/not being able to meet the customers’ expectations. It is a very significant measure
of company’s performance. It constitutes an important part of balanced scorecard. Satisfied
customers not only enhance a firm’s revenues and market share but it also differentiates a
firm from its competitors in the market. While framing the business strategies, customer
satisfaction hold a major point of discussion. Positive ratings of a firm in terms of customer
satisfaction can provide amazing results within the organization as well. They keep the
employees motivated and help them to focus on the significance of fulfilling customers’
expectations. On the contrary, if a firm has negative ratings in terms of customer satisfaction,
this can lead to a significant fall in sales and profitability. Loyal customers can be a great way
of marketing the products/services through word of mouth, which is always very effective
and hold no cost. Therefore, it is crucial for any business to take good care of customer
satisfaction and undertake all the necessary efforts to fulfill/exceed it.
In order to satisfy the customers, firms need to have in place certain dependable and
representative measures of satisfaction. The firms must, from time to time, survey the
existing customers if the product or service has met/exceeded their expectations.
In case a customer’s expectations have not been met then it’s likely that he will switch to
firm’s competitor. Customers’ expectations are a major deciding factor in terms of
satisfaction. To achieve the desired levels of customer satisfaction the companies must at all
times keep the following points under consideration –
• Customer is the Boss or ‘King’

• Customer dictates the market trends and direction
Page 63 of 267
• Customer not only has needs to be supplied( basic performance functions)
• Also he ‘wants what he wants!’(additional features satisfy him and influence his
purchase decision)
Therefore, the suppliers and manufacturers have to closely follow at the heel of the customer.
Quality Quality Customer

System Product/Service Satisfaction
Customer
Focus
Norman’s Customer Satisfaction model:
Quality Customer C,Q
Page 64 of 267
Teboul’s Model of Customer Satisfaction:
Customer Supplier Chain:
Inputs from Internal

Customers Output to
External
External
Customers
Inte Customers
Internal Customer – Supplier Relationship: An organization’s cost sheets shows a major

amount of financial resources being spent on raw materials, manufacturing processes and
Page 65 of 267
services. In fact, 60% of cost goods sold is consisted of purchased goods. Supplier quality
becomes very important here because it can affect the overall cost of production in a major
way. In order maintain the quality levels of products and services the firms must establish
consistent relationships with quality suppliers. Only quality suppliers can help in setting up
an atmosphere cordial to achieve the higher quality levels. A steady long term partnership
with a good supplier will ensure better quality supply and thus, it will lead to higher levels of
customer satisfaction. Internal customers and suppliers must work in tandem to satisfy the
end user and generate higher returns on investment. Dr. Kaoru Ishikawa has given ten
principles of quality management. The firms can follow these principles to ensure quality
products and services and remove substandard practices between the supplier and the end
user:
• Customer and supplier both are equally responsible for the ensuring quality control in
products/services, processes etc.
• Both the customer and supplier should be independent of each other and respect each
other’s independence.
• The customer must list his requirements very clearly so that supplier knows what is to
be delivered.
• The customer and supplier must sign a binding contract in terms of quality standards,
quantity, price/cost, mode of delivery and terms of payments.
• The supplier must commit to provide the required quality in order to satisfy the
customer needs and submitting relevant information as and when customer asks him
to.
• The customer and supplier must set the standards against which the quality levels of
products/services will be measured. The standards set must be acceptable to both the
parties.
• The customer and the supplier must clearly state in the contract the process and
authority to be followed so as to amicably settle all the disputes that may arise during
any business dealings.
• The customer and the supplier must update each other on regular basis about the
customers’ requirements and the measures undertaken to improve product/service
quality. Relevant information must be shared regularly or as the need arises.
Page 66 of 267
• The customer and the supplier must perform business activities such as procurement,
production, and inventory control and other designated tasks in a way so that a cordial
and agreeable relationship is maintained.
• While undertaking any business transactions, both the supplier and the customer must
bear in mind the best interest of each other and the end user.
Customer Satisfaction/Dissatisfaction Feedback - Customer feedback is a marketing term

that describes the process of obtaining a customer’s opinion about a business, product or
service. Customer feedback is important because it provides marketers and business owners
with insight that they can use to improve their business, products and/or overall customer
experience. Customer feedback must be taken and examined on regular basis; it must be a
continuous process and not a one-time activity. Complaints registered by customers can act as
an effective tool of identifying if there are any defects/problems. Customer feedback should
be communicated to the manufacturer. With the help of customer feedback a performance
comparison with competitors can be drawn and any gaps can also be identified. Feedbacks
also help in identifying the customers’ needs. It provides actionable insight to create a better
customer experience and can improve customer retention.
External Customer Satisfaction: An external customer is an individual or an enterprise that

is not part of the firm. He is an outsider availing at a certain price the products or services
being provided by the firm. An external customer impacts a firm’s market share in a major
way. If the external customer is happy with the kind of product or services being offered then
only then he will stick to the brand. Otherwise he may move to the products/services being
offered by the firm’s competitors. A dissatisfied external customer may lead to downfall in
firm’s market share and profitability. He can also indulge in negative advertising of the
product/service by dissuading others to purchase the same. In order to meet the customer
expectations the firm must incorporate quality in all its processes, products and services. The
companies must have a clear customer focus. Customers are very particular if analyzing if the
product or services are worth their money and if their expectations have been met. In case a
firm has exceeded the customer expectations then it is known as customer delight and it may
lead to drastic increase in a company’s revenues. To meet the levels of external customer
satisfaction the organization must;
• Set clear standards and use measures to evaluate and control the external customers’
expected quality and value.
Page 67 of 267
• Take customer feedbacks at regular intervals to maintain or improve the quality of
product/service being offered.
• Have a proper grievance redressal system in place. It must take due note of customer
complaints, resolves them in least time, and uses this data to ensure non recurrence of
these problems.
• Evaluate the overall business performance against the set standards and find out
deviations, if any.
• Benchmark its customer satisfaction ratings against that of its competitors and market
leaders.
Internal Customer Satisfaction: An internal customer is the workers or the inter

departments from within an organization. These are the cross functional teams, departments,
branches or co-workers. The external customer can be satisfied only if the relationship
between the internal customers is cordial and harmonious. The inter-departmental
relationships have a direct bearing on the external customers. The organizational set up must
be such that all the employees are motivated, team work is inculcated and internal
cooperation is enthused so to boost organizational performance. The top level management
must encourage team work and employee participation. An organization can take following
steps in order to improve Internal Customer Satisfaction -
• Employees are valuable members of an organization. They must be treated well, in

the same way as external customers are treated.
• Top management must share its mission and vision with the employees. This
inculcates in them a feeling of belongingness. This also helps in goal alignment of
employees and top managements.
• The employee motivation levels should be maintained at all the times. They can be
offered bonuses, overtime incentives etc. Informal get together, parties. Pot lunches,
team dinners etc. can be organized to encourage interactions, break the work
monotony and making employees feel rejuvenated.
• Regular feedbacks must be taken from employees with regards to organizational
policies, work environment, quality of work life etc.
• Employees performing well must be acknowledged publically and awarded duly..
The following are the several approaches to Customer Satisfaction which the firms may
adopt during regular business processes:
Page 68 of 267
• Feedback System – Regular feedbacks must be invited from the customers through
emails, suggestion boxes, surveys etc. These feedbacks go a long way in maintaining
and improving quality levels.
• Market research – Market research helps in identifying the customer requirements. It
helps the organizations in understanding their customers well. Market research can be
done through open surveys by sampling a few customers and then studying in detail
their requirements, perceptions about quality and value, their likes and dislikes.
• Existing/New Customers Survey - These surveys help in knowing why the existing
customers stay with the organization, why certain existing customers leave and what
attracts the new customers toward the organization’s products and services.
• Focus groups – In this approach a group of customers is assembled in a meeting and
their views on certain parameters are sought. This approach helps in knowing what
the customers are thinking and what else they want.
• Visits to the Customer - This approach is all about making regular visits to the
customer’s place to collect data/information. This information is then used to evaluate
the performance of the products/services.
• Front Line Workers – Front line workers are the ones who are directly in contact with
the customers. These employees are the first point of information as to what are the
customer expectations. These employees are always well trained on how to deal with
the customers and satisfy their queries.
• Critical incidents technique – It attempts to identify issues that delight the customer
and those that satisfy them.
Customer Care - Customer care is the framework wherein the customers are provided
certain pre decided services before, during and after a purchase has taken place. Customer
care plays a major role in the branding of an organization. It involves those employees who
have been trained accordingly and can adjust well to the personality of the prospective
clients. Customer care services reflect the culture of an organization and how concerned it is
towards its existing and future customers. The organizations, to provide effective customer
service, now-a-days spend major amounts of money in training the employees, getting
customer feedback and are proactive to their needs. A good customer care system plays an
important role in an organization's ability to generate income and revenue. Customer care
experiences act a method of advertising. Good experiences can bring in more new customers
and the bad ones can dissuade new ones to avail the firm’s products/services. Customer care
Page 69 of 267
must be inculcated in the organizational culture and a systematic framework must be set to
measure and evaluate the customer care services and their effects. The companies must take
into consideration the following points while providing customer care service:
• Never make false promises to customers and fulfill the ones that have been made.
• Customer calls must be answered/returned quickly
• Only trained staff be allotted to handle customer queries/problems
• Customers should always be treated with courtesy, respect and professionalism
• Customer satisfaction services must be evaluated and measured regularly
• Search for customer-related improvements continuously
• Goods and services must be delivered on time, promptly and efficiently
• Every customer must be given personal attention
• The employees, sales stores/showrooms must appear neat and clean at all the times
• Review and implement customer feedback and suggestions into current procedures
when needed
Kano Model on Conceptualization of Customer Requirements:
4.6 Continuous Process Improvement: A continual improvement process, also often called
a continuous improvement process also known as CIP or CI, is an ongoing effort to improve
products, services, or processes. These efforts can seek "incremental" improvement over time
or "breakthrough" improvement all at once. Delivery (customer valued) processes are
Page 70 of 267
constantly evaluated and improved in the light of their efficiency, effectiveness and
flexibility. Continuous improvement processes feature a systems approach to improving the
work flow in an organization. Typical phases of the model include an analysis phase to
identify specific problems. During this phase, teams conduct brainstorming sessions and
interviews to gather relevant information. In the next phase, the design phase, the project
team determines what to do to remedy the problems. During the implementation phase, the
team members responsible for carrying out the tasks take action. Finally, during the
evaluation phase, team members monitor the outcome and determine if the adjustment to the
process has produced the desired result. Continuous improvement processes allow project
team members to uncover problems and determine ways to fix them. Through careful
analysis, team members can see how individual tasks impact a business's overall process.
Because project teams work closely together, work group conflicts can also be resolved as a
part of the continuous improvement effort. The below shown is the continuous process
improvement cycle –
Kaizen is a well known and a widely used technique of continuous improvement. It is a long-
term approach to work that systematically seeks to achieve small, incremental changes in
processes in order to improve efficiency and quality. Kaizen can be applied to any kind of
work, but it is perhaps best known for being used in lean manufacturing and lean
programming. If a work environment practices kaizen, continuous improvement is the
responsibility of every worker, not just a selected few. Kaizen can be roughly translated from
Page 71 of 267
Japanese to mean "good change." The philosophy behind kaizen is often credited to Dr. W.
Edwards Deming.
Kaizen defines “the management’s role in continuously encouraging and implementing small
improvements in the individuals & organizations”. It emphasizes on dividing a complicated
process into several sub-processes and then improving upon the sub-processes. Constant
improvements in small portions lead to the creation of processes that are much more efficient,
easy to handle, control and flexible. Kaizen technique aims at identifying the root causes of
the deviations taken place and taking corrective actions against these deviations. Kaizen
practitioners are prepared to find even their own errors. Rather than taking errors as negative
they are seen as an opportunity to make further improvements. Kaizen stresses on a process
free of errors than a product free of errors. It is more of process focused technique of quality
control. It believes if the process are error free then automatically the products will also be
error free. Kaizen looks at improving the system as a whole instead of concentrating on
human resources alone. Also, if an employee commits a mistake then instead of blaming him
the measures are taken to remove the error and improve so as to avoid it the next time. A lot
of effort is put in to measure customer satisfaction and the rate at which errors are occurring.
Since Kaizen looks at making small improvements, it gets easier to implement it. On a
positive side, people find it easier to adapt to small changes and resist to bigger changes.
Moreover, the resistance to change is very less here because the employees participate
actively in this framework and themselves suggest the improvement proposals. This way the
employees are always motivated and it helps the business in beating its competitors. The
Kaizen lays emphasis on active participation of employees in decision making process.
Kaizen is not something which people do on daily basis. Instead, it is part of the
organizational culture and their lifestyle. Total Quality Management also seeks continuous
improvement as its major objective. But Kaizen and TQM are not the same. TQM uses
several tools and techniques to achieve and maintain quality levels whereas Kaizen is more
idealistic in its approach. Kaizen is a tool that is imbibed in organizational culture
and business environment where the business looks at achieving long-term goals. Thus, the
organizations have to wait patiently for the results if they are following Kaizen approach.
Five S of Kaizen: - “Five S” of Kaizen is “a methodical approach that provides an

organization with foolproof systems, standard policies, rules and regulations to give rise to a
healthy work culture at the organization”. Kaizen is a technique that plays a valuable role in
employee satisfaction and customer satisfaction by incorporating small and continuous
Page 72 of 267
modifications and removing any prevalent deviations/defects. Kaizen is an approach that
leads to the emergence of a well structured and an organized place of work bringing in higher
levels of productivity and yielding better outcomes. It also inculcates in employees, a feeling
of strong attachment and belongingness, towards the organizations. There are five dimensions
to this approach. These are discussed as below:
• SEIRI - SEIRI represents the phrase “Sort Out”. According to Seiri, employees must
sort out and organize things in a proper manner. All the items must be labeled as
“Necessary”, ”Critical”, ”Most Important”, “Not needed now”, “Useless” and so on.
All the items labeled as useless must be discarded and thrown out. All the items that
are not needed at the moment must be kept aside. All those items that are critical and
most valuable should be kept at a safe place.
• SEITION - Seition refers to “To Organize”. Various studies state that employees
waste half of their valuable time in looking out (searching) for important items and
critical documents. Every item must be assigned its own separate space and should
always be kept at that particular place only.
• SEISO - The word “SEISO” means “shine the workplace”. The workplace needs to be
kept clean at all times. The employees must de-clutter their workstations. All the
necessary documents must be kept in proper folders and files. Cabinets, cupboards
and drawers can be used to store all the items.
• SEIKETSU – The word Seiketsu refers to “Standardization”. Every organization must
have in place a set of standard rules and certain policies in order to ensure greater
quality levels.
• SHITSUKE (Self Discipline) – Employees must value the organizational policies and
should stick to set rules and regulations. It is very important to exercise self discipline.
Do not attend office in casuals. Employees should follow work procedures and should
always carry their identity cards to their workplace. It gives them a sense of
belongingness, pride and respect towards the organization.
4.7 Role of TQM in Control and Improvement Process: TQM is mainly concerned with
“continuous improvement in all work, from high level strategic planning and decision-
making, to detailed execution of work elements on the shop floor”. It is conceptualized from
the notion that errors can be avoided and defects can be prevented. It leads to “continuously
improving results, in all aspects of work, as a result of continuously improving capabilities,
people, processes, and technology and machine capabilities”.
Page 73 of 267
Continuous improvement is not only dealing with improving the results, but more also
making efforts in improving potential to yield better results in the future. The five crucial
areas that act as a focal point for capability improvement are “demand generation, supply
generation, technology, operations and human capability”. A fundamental principle of TQM
is that “mistakes may be made by people, but most of them are caused by faulty systems and
processes”. This stresses on identifying and then eliminating the root cause of such mistakes,
and preventing any recurrence by making appropriate changing in the process. There are
three ways of ensuring the prevention of mistakes:
• Preventing mistakes (defects) from happening – through mistake proofing or using

Poka-Yoke approach.
• In those cases where the mistakes can't be totally prevented, it is better to identify
them timely to prevent them from moving to the value added chain.
• In those cases where mistakes keep recurring, the production process must be stopped
until the required corrective steps have been taken to prevent the production of more
defective items.
The foundation for TQM implementation is “the establishment of a quality management

system which involves the organizational structure, responsibilities, procedures and
processes”. The most frequently used guidelines for quality management systems are the ISO
9000 international standards, which lay emphasis on the setting up of a well- documented,
standardized quality system.
4.8 Designing for Quality: The concept “Designing for Quality” was given by quality guru
Joseph Juran. Juran gave three processes for quality and innovation that are known as Juran
Trilogy. It talks about achieving advancements in new products, services, and
processes. Juran was of the view that most of the quality crisis and mistakes can be blamed
on the way quality is planned. According to Juran “quality” has two meanings to it. Quality
refers to the existence of specific features in products/services to ensure customer
satisfaction. Secondly, it talks about the reliability of those specific features. Not being able
to present these features in products/services can lead to customer dissatisfaction. It is
therefore, very important to ensure the presence of these features in order to provide desired
quality in products/services. Juran’s concept states these features are customer driven and the
organization must undertake processes to provide the features in products/services as per
customer requirements. The presence of these features as per customer needs lead to quality
Page 74 of 267
products, services, and processes. Following are the steps involved in the process of
“designing for quality”:
• Set clear project design targets and objectives.

• Clearly define the targeted markets and customers.
• Identify the customer requirements and market needs.
• Design the product in order to meet the customer requirements.
• Establish process controls in order to convert the product designs into operations.
The Juran Trilogy talks about the following aspects:
1. Quality Planning - In the planning stage, it is critical to define who your customers are
and find out their needs (the “voice of the customer”). After you know what your customers
need, you’re able to define the requirements for your product/process/service/system, etc.,
and develop it. Additionally, any plans that might need to be transferred to operators or other
key stakeholders should be done during the planning phase. Planning activities should be
done with a multidisciplinary team, with all key stakeholders represented.
2. Quality Control - During the control phase, determine what you need to measure (what
data do you need to know if your process is working?), and set a goal for your performance.
Get feedback by measuring actual performance, and act on the gap between your
performance and your goal. In Statistical Process Control (SPC), there are several tools that
could be used in the “control” phase of the Juran Trilogy: Pareto Analysis, flow
diagrams, fishbone diagram, and control charts, to name a few.
3. Quality Improvement - There are four different “strategies” to improvement that could be
applied during this phase:
• Repair – Reactive - to fix what is broken.

• Refinement – Proactive – to continually improve a process that is not broken (similar
to the continual pursuit of perfection in Lean production)
• Renovation - Improvement by bringing in innovation or technological advancement
• Reinvention - Most demanding approach – to start over with a fresh clean schedule.
Page 75 of 267
4.9 Check Your Progress – Fill in the blanks
1. Designing for Quality is a concept first outlined by quality expert ______________ .
2. ______________ is a well known and a widely used technique of continuous

improvement.
3. Q= (P / E) where, Q = quality, P= performance and E = _________________________
4. The word ______________ means shine the workplace.
5. An ________________ is one who isn’t a part of an organization, rather is one who

receives service or product from the organization.
6. Total Quality Management philosophy is a management approach aimed at achieving long-

term success with a strong focus on _________________
7. The Juran Trilogy defines the word "__________" as having two meanings: first, the
presence of features that create customer satisfaction; second, and the reliability of those
features.
4.10 Summary
With each day passing, better products are reaching the market. Some improvements result
from technology, others from better Total Quality Management philosophy. All the time,
competitors are seeking to gain an advantage by making their products better in satisfying the
customer. This is the theory of Total Quality Management. If companies don't seek to
improve, in satisfying the customers they get left behind. Small improvements are easier to
make than giant ones, especially for people lower down the chain of command. Small
improvements in satisfaction often produce surprisingly big advances. It is important to
improve not just production processes, but also management processes which enriche the
customer satisfaction to the highest level.
4.11 Glossary
Inputs of the Process - Manpower, materials, money, data etc.
Outputs - Products, Services, data etc. Outputs need performance measures – main outcome
being customer satisfaction.
Kaizen – It is an approach that defines the management’s role in continuously encouraging

and implementing small improvements in the individual & organization.
Page 76 of 267
Six Sigma – It is a method is a TQM process that uses process capability analysis as a means
of measuring progress.
1. Joseph M. Juran
2. Kaizen
3. expectations of the customer
4. SEISO
5. External Customer
6. customer satisfaction
7. Quality
4.13 REFERENCES
1. Jain, P.L., Quality Control and Total Quality Management, Mc Graw Hill Education
2. Besterfield, Dale H., Total Quality Management ,Pearson education LPE
1. Naagarazan, R.S. and Arivalagar, A.A, Total Quality Management, New Age International
Publishers.
1. Discuss the continuous improvement process..
2. Write a note on Juran’s Trilogy.
3. Discuss the role of customer satisfaction in TQM framework.
4. Explain in detail the Kaizen approach of quality management.
Page 77 of 267
LESSON-5
WORKFORCE TEAMS-I
Structure
5.1 Objectives
5.2 Introduction
5.3 Team
5.3.1 Types
5.3.2. Roles
5.3.3. Decision Making Method
5.3.4. Effective Team Meetings
5.3.5 Stages of Team Development
5.3.6 Ten Common People Problems and Their Solutions

5.5 Summary
5.6 Glossary
5.8 References
5.1 OBJECTIVES
 Understand workforce team and their types
 How the decisions making is made effective
Page 78 of 267
5.2 INTRODUCTION
Workforce teams
The team is defined as a group of people working together to achieve common or goals.
Teamwork is the cumulative actions of the team during which each member of the team
subordinates his individual interests and opinions to fulfill the goals of the group. The
objective or goal is a need to, accomplish something such as a problem, improve a process,
design a refrigerator, plan a conference, audit a process or please a custom-built needs to
be clearly defined, have milestones set, have resources provided, and use a systematic
approach. Members of the team will need to focus on how they relate to each other, listen
to the suggestions of others, build on previous information, and use conflict creatively.
They will need to set standards, maintain discipline, build team spirit, and motivate each
other. Each- member of the team has their own history of experience to help achieve the
objective. They should have a need to see the task completed, but also the needs of
companionship, fulfillment of personal growth, and self-respect.
Why Teams Work
Teams work because many heads are more knowledgeable than one. Each member the
team has special abilities that can be used to solve problems. Many processes are so
complex that one person cannot be knowledgeable concerning the entire process. second
one, the whole is greater than the sum of its members. The interaction within the team
produces results that exceed the contributions of each member. Third, team members
develop a rapport with each other that allows them to do a better job. Finally, teams
provide the vehicle for improved communication, thereby increasing the likelihood of a
successful solution.
5.3 TEAMS
5.3.1 Types of teams
The early history suggests that work simplification efforts by management and labor , were
most likely the first production-oriented teams. However, the development of quality
control circles by the Japanese in 1961 is considered to be the beginning of the use of
teams to improve quality. Quality control circles are groups of people from one work who
voluntarily meet together on a regular basis to identify, analyze, and solve quality and
other problems within their area. They choose their own problems and focus on quality of
work life and health/safety issues rather than on improving work processes. Often they
remain in existence over a long period of time, working on the project. Quality control
circles have been quite successful in Japan and enjoyed some initial success in other
countries but not as extensive. A major drawback was lack of middle management support.
Page 79 of 267
Outside Japan, the popularity of quality control circles has declined; however, this type of
team is the progenitor of our present teams. The current types of teams can be divided into
four main groups. They may be called by different names and have slightly different
characteristics to accommodate a particular organization.
1. Process improvement team. The members of a process improvement team represent

each operation of the process or sub-process. Usually the scope_ of the team’s activity is
limited to the work unit. A team of about six to ten members will come from the work unit
and,_depending on the location of the sub-process, an external or internal 'supplier and
external or internal customer would be included on the team During the course of the
team’s life, additional expertise from other work areas may be added to a permanent or
temporary as-needed basis. The life cycle of this type of team is usually temporary-it is
disbanded when the objective has been obtained. When the targeted process includes
many work units or the entire organization, a cross-functional team may be more
appropriate with work unit teams as sub-teams.
2. Cross-functional team. A team of about six to ten members will represent a number of
different functional areas such as engineering, marketing, accounting, production,quality,
and human resources. It may also include the customer and supplier. A design review team
is a good example of a cross-functional team. This type of team is usually temporary. An
exception would be a product support team, which would be permanent have as an
objective to serve a particular product line, service activity, or a particular customer This
type of team breaks down functional area boundaries.
3. Natural work teams. This type of team is not voluntary .It is composed of all the members
of the work unit. It differs from quality control circles because a manager is a part the team
and the projects to be improved are selected by management. Some employees may opt not
to work in teams for a variety of reasons, and managers should anticipate this action and be
prepared to help employees become comfortable in the team or, alternatively, find working
another unit that still performs work as an individual.Even though “team work” is
technically feasible, there may be such resistance that its introduction be delayed until
there has been substantial turnover.
4 Self-directed and self managed work teams -they are an xtélasron of natural work teams
without the supervision, Thus, they are the epitome of the empowered organization-they
not only do the work but also manage it. There is wide discretion to organize their work
subject to organizational work flow -requirements. There is a team coordinator to liaison
with senior management that may rotate among The team meets daily to plan their activity
and decision are usually by consensus.Additional responsibilities may include hiring
dismissal,performance evaluation,customer relation,supplier
relations,recognition/reward,and training.
Page 80 of 267
Developing these types of teams requires not only careful planning and substantial training
of the individuals, but also several organizational changes. As a result, many companies
begin with a few pilot teams that are implemented slowly to full development over several
years. The following example illustrates the complexity of self-directed work teams. In an
electronics plant, a self-directed assembly team handles all aspects of the customer's order:
it receives the order, prepares the components, assembles and solders circuit boards, tests
the boards, ships the boards, controls inventory levels, and processes all paperwork.
Jostens, Inc., manufacturer of class rings, began implementing two self-directed work teams
in the fall of 1991. By 1994, 35 such teams were in existence. The company no longer
records individual performance; instead, again sharing plan and a pay system that rewards
team performance has been instituted.19 Of course, there is some overlap between these
four main types of teams. Also, organizations will modify them to accommodate their
culture. Recognize that the use of teams to empower employees should be done gradually
so that acceptance by both management and employees is built on successful results of
teamwork. As an organization becomes more comfortable with the use of teams for
empowerment, teams will form both laterally and vertically throughout the organization.
5.3.2 Team Member Roles
Teams are usually selected or authorized by the quality council. A team will consist of a
team leader, facilitator, recorder, timekeeper, and members. All team members have clearly
defined roles and responsibilities.
The team leader, who is selected by the quality council, sponsor, or the team itself, has the
following roles.
• Ensures the smooth and effective operation of the team, handling and assigning record
keeping, orchestrating activities, and overseeing preparation of reports and
presentations.
• Facilitates the team process, ensures that all members participate during the meetings,
prevents other members from dominating, actively participates when appropriate,
guides without domineering, and uses positive interpersonal behavior.
• Serves as a contact point between the team and the sponsor or quality council.
• Orchestrates the implementation of the changes recommended by the team within
organizational constraints and team boundaries. Monitors the status and
accomplishments of members, assuring timely completion of assignments.
• Prepares the meeting agenda, including time, date, and location; sticks to the agenda or
modifies it where appropriate; and ensures the necessary resources are available for
the meeting.
Ensures that team decisions are made by consensus where appropriate, rather than by
unilateral decision, handclasp decision, majority-rule decision, or minority-rule .
Page 81 of 267
The facilitator is not a member of the team; he/she is a neutral assistant and may not be
needed with a mature team. This person does not get involved in the meeting content or
evaluation of the team's ideas. Roles are as follows:
• Supports the leader in facilitating the team during the initial stages of the team.
 Focuses on the team process; is concerned more with how decisions are made
rather than the decision itself.
 Acts as a resource to the team by intervening when necessary to keep the team on
track.
 Does not perform activities that the team can do.
 Provides feedback to the team concerning the effectiveness of the team process.
The team recorder, who is selected by the leader or by the team and may be rotated op a
periodic basis, has the following roles:
• Documents the main ideas of the team's discussion, the issues raised, decisions
made, action items, and future agenda items.
• Presents the documents for the team to review during the meeting and distributes
them as minutes after the meeting in a timely manner.
 Participates as a team member.
The timekeeper, who is selected by the leader or by the team and may be rotated on a
periodic basis, has the following roles:
• Monitors the time to ensure that the team maintains the schedule as determined by
the agenda.
• Participates as a team member.
The team member, who is selected by the leader, sponsor, or quality council or is a
member of a natural work team, has the following responsibilities
• Contributes best, without reservation, by actively participating in meetings and

sharing knowledge, expertise, ideas, and information.
• Respects other people's contributions—doesn't criticize, complain, or condemn.
• Listens carefully and asks questions.
• Is enthusiastic—it's contagious and helps galvanize the entire team.
• Works for consensus on decisions and is prepared to negotiate important points
• Supports the decisions of the team----badmouthing a decision or a member reduces
the effectiveness of the team.
• Trusts, supports, and has genuine concern for other team members. Understands
and is committed to team objectives.
• Respects and is tolerant of individual differences.
Page 82 of 267
• Encourages feedback on own behavior.
• Acknowledges and works through conflict openly.
• Carries out assignments between meetings such as collecting data, observing
processes, charting data, and writing reports.
• Gives honest, sincere appreciation.
5.3.3 Decision Making Method
Since the decision-making process is critical to the success of the team, it is essential to
understand the different methods. Five types of decisions, as well as no decision, occur
during the team process.
1. Non decision. Occasionally a team will discuss a subject extensively and not arrive at a
decision. This is unfortunate because time was wasted and the team ends up feeling poorly.
2. Unilateral decision. This type of decision is made by one person, usually the leader.
Assuming that the problem-solving process was followed, the advantage of this type is that
it saves time. However, it presumes that the leader has all the necessary information and
the team will not react negatively to the decision. If the team reacts negatively, it can
imperil team success.
3. Handclasp decision. When one person proposes a decision and another agrees, we have
the handclasp decision. If the two parties are the most knowledgeable concerning this
particular matter, then this decision can be effective. Otherwise, it will adversely affect
team success.
4. Minority-rule decision. When a few team members dominate the discussion and impose
their will on the majority, this type of decision occurs. This happens when members
abdicate their responsibility and go along with the decision in order to be cooperative and
avoid conflict. Naturally, the results produce low enthusiasm for implementation and
future involvement.
5. Majority-rule decision. This method is widely used when most of the team agrees on the
best alternative. It may stifle creativity and the search for compromises that lead to better
solutions. In addition, the commitment for implementation may be compromised.
6. Consensus. This method requires sufficient discussion for all members to feel they can
support the decision. Unanimous agreement is not required; it does mean that all members
are willing to implement it. Consensus decisions usually take more time than other
methods; however, the probability of successful implementation is enhanced. The key to
the consensus method is to give everyone an opportunity to have input. As long as there is
effective listening by team members, the method fosters creativity and produces more
acceptable solutions. Consensus decision making requires the use of the problem solving
Page 83 of 267
method. Further, team members should possess several problem solving qualities and
traits to include: creativity, analytical thinking, intuitiveness, criticality, and the ability to
synthesize.
Ultimately, it is up to the team leader to select the appropriate method. If the leader has the
trust of the team and the team understands the circumstances, whatever method is
selected will be accepted.
5.3.4 Effective Team Meetings
If the participants know their roles and utilize the characteristics of successful teams, the
probability of effective team meetings is enhanced. There are, however, a few items that
can help improve the process:
• Meetings should regularly schedule; have a fixed time limit, and start on time.
Participants should be notified ahead of time with the location, time, and objective. Avoid
unnecessary meetings through e-mail, voice mail and telephone calls; however, also avoid
accumulated issues.
• An age should be developed, either at the end of the previous meeting or prior to the
beginning of the next meeting. It should be sent to the participants prior to the meeting.
Each agenda item includes a process, such as brainstorming, affinity diagram, discussion,
and so forth; the presenters; and time guidelines.
• Agendas usually list: opening focus, previous meeting feedback, agenda review, agenda
items, summary, and action items.
• Periodically, the meetings should be evaluated by the participants.
5.3.5 Stages of Team Development
Organizations can dramatically improve team performance by understanding and

recognizing the stages in the life cycle of teams. Knowing a team's location in the life cycle
helps management understand team performance and avoid setting unrealistic objectives
that limit a team's success. Bruce Tuckerman found that there were four stages of a team's
development. These stages are forming, storming, forming, and performing.
• Forming is the beginning stage where members become aware of the boundaries of
acceptable behavior. Members are often not familiar with each other's skills, and
each prefers to do the work on their own as there is a lack of trust. Members are
cautious with their communication and tend to be formal. In general, the mission
and goals of the team are still questionable, and the problems seem too large to
solve.It is a stage of transition from individual to member status and of testing the
leader's guidance. Considerable time is spent in organizing and training. The team
Page 84 of 267
accomplishes little in regard to its objectives. To expedite the forming stage, an
individual should be tasked with chartering the team.In chartering a team, a
facilitator commonly meets with the upper management to discuss the specific
problem; he/she then develops a macro flowchart of the major processes associated
with the product, service or process. From this information, the facilitator can better
determine the team members that should be selected based on their skills and
knowledge. The facilitator can then have the team meet to evaluate the problem
posed by management, determine the type of training team members may need, and
identify the appropriate team leader.
• Storming is the most difficult stage as members start to realize the amount of work
that lies ahead. There is a tendency to panic. Members rely almost solely on their
personal and professional experience and resist working with other team members.
There is a great deal of conflict, and the leader needs to be patient and flexible in
working with the team. However, not all conflict is bad. If a team does not have any
conflict, chances are the level of organizational performance is low. Such teams
adapt slowly to change, show apathy, or are stagnant. On the other hand, when
conflict becomes disruptive, interferes with activities and makes coordination
difficult, the team is dysfunctional. Owen indicates that good teams fight more than
bad teams, at least at first. Each individual, particularly those on cross-functional
teams, brings with them both hierarchical and functional baggage,differences in
goals, differences in perceptions, as well as different levels of work ethics, sense of
time, career-family priorities, and attitudes toward authority. Team leaders and
facilitators need to know how to manage team conflict so that it is productive and
not destructive. Below are tips to help team members handle conflict.
• Ask those who disagree to paraphrase one another's comments. This may help them
learn if they really understand one another.
• Work out a compromise. Agree on the underlying source of conflict, engage in a give
and take, and finally agree on a solution.
• Ask each member to list what the other side should do. Exchange lists, select
compromises all are willing to accept, and test the compromise to see if it meshes
with team goals.
• Have the sides,each write ten questions for their 'opponents.' This will allow them
to signal their major concerns about the other side's position. The answers often
lead to compromise.
• Convince team members they sometimes may have to admit they are wrong. Help
them save face by convincing them that changing a position shows strength.
• Respect the experts on the team. Give their opinions more weight when the con-flict
involves their expertise, but don't rule out conflicting opinions.
• If managed properly, functional conflict leads to positive movement toward goals,
innovation and creativity, and solutions to problems.
Page 85 of 267
Norming is the stage where members begin to work together. Emotional conflict is
reduced as cooperation, cohesion, and constructive criticism start to become the
normal behavior. Because there is more time and energy to focus on the objectives,
significant progress begins to occur.
Performing is the stage where the team members have settled their relationships and
expectations. They better understand the project and begin performing by diagnosing
and solving problems and choosing and implementing changes. Members understand
their roles and work in concert to achieve their objective(s) effectively and efficiently.
Adjourning is a stage that is reserved for temporary teams. The team needs to evaluate
its performance and determine lessons learned. This information can be transferred by
members when they participate on future teams. There also needs to be a celebration to
recognize the team's contribution to the organization.
As a result of proper training and effective leadership, some teams arrive at the
performing stage so quickly that it may be difficult for an organization to observe the
first three stages.
5.3.6 Ten Common People Problems and Their Solutions
One way to deal with group problems is to talk about them as soon as they occur. Most
problems require a more structured approach. Common team problems and their solutions
are given below.
1. Floundering occurs when the team has trouble starting or ending a project or
different stages of the project. Solutions to this state are to look critically at the
improvement plan, review the mission statement, determine the cause of the
holdup, and have each member write down the reasons and discuss them at the
next meeting.
2. Overbearing participants have an unusual amount of influence in the team. They

usually have a position of authority or a particular expertise. Teams need these
abilities; however, it becomes detrimental when they discourage discussion. On
their expertise and discount other members' ideas. Solutions are to reinforce the
ground rules, talk to the person off-line and ask for cooperation, and enforce the
importance of data and the problem-solving method.
Page 86 of 267
3. Dominating participants like to hear themselves talk, use over long anecdotes,
and dominate the meeting. Members get discouraged and find excuses for
missing meetings. Solutions are to structure discussion on key issues OF equal
participation, talk to the offending person off-line, and have the team agree on
the need for limits and a balanced participation. In addition, the leader may act
as a gatekeeper by asking questions such as "Joe, we heard from you; what do
the others think?
4. Reluctant participants feel shy or unsure of themselves and must be encouraged

to contribute. Problems develop when there are no built-in activities that
encourage introverts to participate and extroverts to listen. In addition to
structured activities, solutions include dividing the task into individual
assignments and acting as a gatekeeper by asking questions such as, "John, what
is your experience in this area?" 5.
5. Unquestioned acceptance of opinions as facts occurs when members assert

personal beliefs with such confidence that other members think they are facts.
Solutions are to request data and to follow the problem-solving method.
6. Rush to accomplish is common to teams being pushed by one or more members

who are impatient for results. Teams must realize that improvements do not
come easily and rarely overnight. Solutions are to remind members that the
ground rules call for the problem-solving. Method or to confront the rusher off-
line and explain the effects of impatience.
7. Attribution is the activity of guessing at a person's motive when we disagree or

don't understand his or her opinion or behavior. Solutions are to reaffirm the
importance of the problem-solving method, question whether this opinion is
based on data, and find out the real meaning of the problem.
8. Discounts and "plops" arise when members fail to give credit to another's
opinions or no one responds to a statement that "plops." Every member
deserves the respect and attention from the team. Solutions are to reinforce
active listening as a team behavior, support the discounted member, or talk off-
line with members who frequently discount, put down, or ignore.
9. Wanderlust: digression and tangents happen when members lose track of the
meeting's purpose or want to avoid a sensitive topic. Discussions then wander
off in many directions at once: Solutions are to use a written agenda with time
Page 87 of 267
estimates, write meeting topics on flip charts, or redirect the conversation back
to the agenda.
10. Feuding team members can disrupt an entire team with their disagreements.
Usually these feuds predate the team and are best dealt with outside the team
meetings. Solutions are to get the adversaries to discuss the issues off-line, offer
to facilitate the discussion, and encourage them to form some contract about
their behavior.

1. One way to deal with group problems is to-
a. Talk
b. Be silent
c. Fight
d. None
2. …………..is the beginning stage where members become aware of the
boundaries of acceptable behavior.
a. Forming
b. Feeding
c. Wanderlust
d. Attribution
3. …………is the stage where the team members have settled their
relationships and expectations
a. progressing
b. Performing
c. Attribution
d. None
4. …………. is the process critical to the success of the team-
a. decision-making
b. processing
c. talking
d. none
5. The members of a team represent each operation of the process or sub-
process-
a. process improvement
b. procure
c. assess
d. none
Page 88 of 267
6. The ……..is defined as a group of people working together to achieve
common or goals.
a. goal
b. team
c. leader
d. individual
7. The current types of teams can be divided into ……..main groups.
a. two
b. three
c. four
d. five
8. …………….is the activity of guessing at a person's motive when we disagree
or don't understand his or her opinion or behavior
a. Attribution
b. Process
c. Wanderlust
d. none
5.5 SUMMARY
Organizations can dramatically improve team performance by understanding
and recognizing the stages in the life cycle of teams. Knowing a team's location in
the life cycle helps management understand team performance and avoid setting
unrealistic objectives that limit a team's success. Bruce Tuckerman found that
there were four stages of a team's development. These stages are forming,
storming, forming, and performing.team is the heart of any organization and to
be successful we need to have a strongand coherent team.
5.6 GLOSSARY
 Team- The team is defined as a group of people working together to achieve
common or goals.
 Teamwork – it is the cumulative actions of the team during which each member of
the team subordinates his individual interests and opinions to fulfill the goals of the
group.
 Adjourning – it is a stage that is reserved for temporary teams.
 Storming-it is the most difficult stage as members start to realize the amount of
work that lies ahead.
Page 89 of 267
1. A
2. A
3. B
4. A
5. A
6. B
7. C
8. A
5.8 REFERENCES
The Advantage: Why Organizational Health Trumps Everything Else In
Business, by Patrick Lencioni, 2012
Help the Helper: Building a Culture of Extreme Teamwork, by Kevin Pritchard
and John Eliot, 2012
Building Team Power: How to Unleash the Collaborative Genius of Teams for
Increased Engagement, Productivity, and Results, by Thomas Kayser, 2010
Teamwork and Teamplay, by James Cain and Barry Jolliff, 2010
Group Dynamics for Teams, by Daniel Levi, 2010

Thota Ramesh, Teamwork & Indian Culture: A Practical Guide for Managing
Indian Teams

1. What do you understand by teamwork
2. Explain different types of teams.
3. What are the Ten Common People Problems and Their Solutions
4. What do you mean by Discounts and "plops
5. What is Process improvement team.
6. What is formingand storming
Page 90 of 267
Lesson – 6
TEAM BUILDING
Structure
6.1 Objectives
6.2 Introduction
6.3 Team Building
1. Characteristics of team
2. Common Barriers to Team Progress
3. Benchmarking
4. Reasons to Benchmark
5. Approaches to Benchmarking
6. Deciding What to Benchmark
7. Understanding Current Performance
8. Pitfalls and Criticisms of Benchmarking

6.5 Summary
6.6 Glossary
6.8 References
6.1 OBJECTIVES
After reading this lesson, you should be able to understand:
1. Various characteristics of successful teams
2. Setting up benchmarks
3. Barriers to team building
4. Pitfall of benchmarking
Page 91 of 267
6.2 INTRODUCTION
By now it is clear that the teams work because many heads are more knowledgeable than
one. Each member the team has special abilities that can be used to solve problems. The
interaction within the team produces results that exceed the contributions of each member.
Third, team members develop a rapport with each other that allows them to do a better
job. Finally, teams provide the vehicle for improved communication, thereby increasing the
likelihood of a successful solution. This lesson takes it forward by making us understand
the characteristics of successful teams and it will also discuss the barriers to team progress.
Secondly, it will discuss benchmarking as an continuous improvement tool to to gain
competitive advantage.
6.3 TEAM BUILDING
1. Characteristics of Successful Teams
In order for a team to be effective, it should have certain characteristics, listed below.
Sponsor. In order to have an effective liaison With the quality council, there should be a
sponsor. Preferably the sponsor is a member of the quality council, thereby providing
organizational support.
Team charter.A team charter is a document that defines the team's mission, boundaries,
the background of the problem, the team's authority and duties, and re-sources. It also
identifies the members and their assigned roles—leader, recorder timekeeper, and
facilitator (optional). Detailed information on roles is given in a later section The sponsor
and the team negotiate the charter.
Team composition. The size of the team should rarely exceed ten people except in the
case of natural work teams or self-directed teams. Larger teams have difficulty maintaining
commitment, and interpersonal aspects become difficult to control. Teams should be
diversified by having members with different skills, perspectives, and potential.'Where
appropriate, internal and external customers and suppliers should be included.
Training. As the need arises, members should be trained in problem-solving techniques,

team dynamics, and communication skills.later section discusses training in detail.
Ground rules. The team must develop its rules of operation and conduct. There should be
open discussion on what will and will not be tolerated. -Periodically the ground rules uld be
reviewed and revised when appropriate.
Clear objectives. Without clear objectives and goals, the team will have difficulty.addition,
the criteria for success should be agreed on with management.
Page 92 of 267
Accountability.The team is accountable to perform. Periodic status reports should be
given to the quality council. In addition, the team should review its performance to
determine possible team process weaknesses and make improvements.
Well defined decision procedures. Effective, acceptable, and timely decisions have to be
made by the team.
Resources. Not only is funding and employee release time ,for the project important,but
also important is access to information. The team cannot ,be expected to perform
successfully without the necessary tools.
Trust. Management must trust the team to perform the task effectively.there must be trust
among the members and belief in each other.
Open communication. Members actively listen, without interruption, to other members,

speak with clarity and directness, ask questions, and say what they mean.
Appropriate leadership. All teams need leadership—whether imposed by the quality

council, or whether someone emerges as a leader figure as the life of the team progresses,
or whether the leadership changes as the team matures.
Balanced participation. All members must become involved in the team's activities by
voicing their opinions, lending their knowledge, and encouraging other members to take
part.
Cohesiveness. Members should be comfortable working with each other and act as a single
unit, not as individuals or sub-groups.
2. Common Barriers to Team Progress
Evidence shows that the barriers given below are due primarily to the system rather than
to the team.
• Insufficient training. Teams cannot be expected to perform unless they are trained in
problem-solving techniques, group dynamics, and communication skills.
• Incompatible rewards and compensation. In general, organizations make little effort to

reward team performance. Because of a strong focus on individual rewards it is difficult for
individuals to buy into the team concept. Similarly, performance appraisals do not accept
input from peers or team members.
• First-line supervisor resistance. Supervisors are reluctant to give up power, confident

that they can do the work better and faster, are concerned about job security, and are
ultimately held responsible.
Page 93 of 267
• Lack of planning. A lack of common direction or alignment on the use of collaborative
efforts, internal competition, redundancy, and fragmented work processes all prevent team
progress.
• Lack of management support. Management must provide the resources and "buy into"
the quality council/sponsor system.
• Access to information systems. Teams need access to organizational information such

as business performance, competitive performance, financial data, and so forth.
• Lack of union support. Organizations need union support for the team to be successful.
• Project scope too large. The team and organization are not clear on what is reasonable,
or management is abdicating its responsibility to guide the team.
• Project objectives are not significant. Management has not defined what role the team
will play in the organization.
• No clear measures of success. The team is not clear about its charter and goals.
• No time to do improvement work. Values and beliefs of the organization are not
compatible with the team's work. Individual departmental politics interfere with the team's
progress. Management has not given the team proper resources.
3. Benchmarking Introduction
Benchmarking is a systematic method by which organizations can measure them-selves

against the best industry practices. It promotes superior performance by pro-viding an
organized framework through which organizations learn how the "best in class" do things,
understand how these. best practices differ from their own, and implement change to close
the gap. The essence of benchmarking is the process of borrowing ideas and adapting them
to gain competitive advantage. It is a tool for continuous , improvement. Benchmarking is
an increasingly popular tool. It is used extensively by both manufacturing and service
organizations, including Xerox, AT&T, Motorola, Ford, and Toyota. Benchmarking is a
common element of quality standards, such as the Chrysler, Ford, and General Motors
Quality System Requirements. These standards stipulate that quality goals and objectives
be based on competitive products and benchmarking, both inside and outside the
automotive industry. The Malcolm Baldrige National Quality Award similarly requires that
applicants benchmark external organizations.
Benchmarking Defined
Benchmarking is the systematic search for best practices, innovative ideas, and highly
effective operating procedures. Benchmarking considers the experience of others and uses
Page 94 of 267
it. Indeed, it is the common-sense proposition to learn from otheis what they do right and
then imitate it to avoid reinventing the wheel. Benchmarking is not new and indeed has
been around for a long time. In fact, in the 1800s, Francis Lowell, a New England colonist,
studied British textile mills and imported many ideas along with improvements he made
for the burg American textile mills. benchmarking measures performance against that of
best-in-class organizations, determines how the best in class achieve those performance
levels, and uses the information as the basis for adaptive creativity and breakthrough
performance.' Implicit in the definition of benchmarking are two key elements. First,
measuring performance requires some sort of units of measure. These are called metrics
and are usually expressed numerically. The numbers achieved by the best-in-class
benchmark are the target. An organization seeking improvement then plots its own
performance against the target. Second, benchmarking requires that managers understand
why their performance differs. Benchmarkers must develop a thorough and in-depth
knowledge of both their own processes and the processes of the best-in-class organization.
An under-standing of the differences allows managers to organize their improvement
efforts to meet the goal. Benchmarking is about setting goals and objectives and about
meeting them by improving processes.
4. Reasons to Benchmark
Benchmarking is a tool to achieve business and competitive objectives. It is powerful and

extremely effective when used for the right reasons and aligned with organization strategy.
It is not a panacea that can replace all other quality efforts or management processes.
Organizations must still decide which markets to serve and determine the strengths that
will enable them to gain competitive advantage. Benchmarking is one tool to help
organizations develop those strengths and reduce weaknesses. By definition,
benchmarking requires an external orientation, which is critical in a world where the
competitoi can easily be on the other side of the globe. An external out-look greatly reduces
the chance of being caught unaware by competition. Benchmark-ing can notify the
organization if it has fallen behind the competition or failed to take advantage of important
operating improvements developed elsewhere. In short, bench-marking can inspire
managers (and organizations) to compete. In contrast to the traditional method of
extrapolating next year's goal from last year's performance, benchmarking allows goals to
be set objectively, based on external infor-mation. When personnel are aware of the
external information, they are usually much more motivated to attain the goals and
objectives. Also, it is hard to argue that an objec-tive is impossible when it can be shown
that another organization has already achieved it. Benchmarking is time and cost efficient
because the process involves imitation and adaptation rather than pure invention.
Benchmarking partners provide a working model of an improved process, which reduces
some of the planning, testing, and prototyping effort. As the old saying goes, Why reinvent
Page 95 of 267
the wheel? The primary weakness of benchmarking, however, is the fact that best-in-class
per-formance is a moving target. For example, new technology can create quantum leap
performance improvements, such as the use of electronic data interchange (EDI). Auto-
mobile makers no longer use paper to purchase parts from suppliers. A computer tracks
inventory and transmits orders directly to a supplier's computers. The supplier delivers the
goods, and payment is electronically transmitted to the supplier's bank. Wal-Mart uses bar-
code scanners and satellite data transmission to restock its stores, often in a mat-ter of
hOurs. These applications of EDI save tens of thousands of worker hours and whole forests
of trees, as well as helping to meet customer requirements. For functions that are critical to
the business mission, organizations must continue to innovate as well as imitate.
Benchmarking enhances innovation by requiring organiza-tions to constantly scan the
external environment and to use the information obtained to improve the process.
Potentially useful technological breakthroughs can be located and adopted early.
Process
Organizations that benchmark, adapt the process to best fit their own needs and culture.
Although the number of steps in the process may vary from organization to organiza-tion,
the following six steps contain the core techniques.
1. Decide what to benchmark.
2. Understand current performance
. 3. Plan.
4. Study others.
5. Learn from the data.
6. Use the findings.
6. Approaches to Benchmarking
AT&T's 12-Step Process
1. Determine who the clients are—who will use the information to improve their processes.
2. Advance the clients from the literacy stage to the champion stage.
3. Test the environment. Make sure the clients can and will follow through. with
benchmarking findings. 4. Determine urgency. Panic or disinterest indicate little chance for
success.
5. Determine scope and type of benchmarking needed.
Page 96 of 267
6. Select and prepare the team.
7. Overlay the benchmarking process onto the business planning process'.
8. Develop the benchmarking plan.
9. Analyze the data.
10. Integrate the recommended actions.
11. Take action.
12. Continue improvement.
Xerox's 10-Step Process
1. Identify what is to be benchmarked.
2. Identify comparative organizations.
3. Determine data-collection method and collect data.
4. Determine current performance gap.
5. Project future performance levels.
6. Communicate benchmark findings and gain acceptance.
7. Establish functional goals. 8. Develop action plans.
9. Implement specific actions and monitor progress.
10. Recalibrate benchmarks.
Above illustrates how AT&T and Xerox have adapted benchmarking to their own needs.
AT&T, in its first six steps, explicitly incorporates training and makes sure that personnel
using benchmarking results to improve their processes buy into the program. The
assumption is that if the process owners are not committed; they will ignore the re-sults
and the effort will have been wasted. Steps 7 through 12 represent the core bench-marking
process. Xerox, in Steps 5 through 8, devotes extra effort to integrating benchmarking
results into its formal planning process. This involves justification to senior management
and gaining agreement from senior management. Again, steps are added to fit the process
to the organizational need, but the core activities are consistent.
7. Deciding What to Benchmark
Page 97 of 267
Benchmarking can be applied to virtually any business or production process.
Improvement to best-in-class levels in some areas will contribute greatly to market and
financial success, whereas improvement in other areas will have no significant impact.
Most organizations have a strategy that defines how the firm wants to position itself and
compete in the mar-ketplace. This strategy is usually expressed in terms of mission and
vision statements. Sup-porting these statements is a set of critical activities, which the
organization must do successfully to realize its vision. They are often referred to as critical
success factors. Criti-cal processes are usually made of a number of sub-processes. In
general, when deciding what to benchmark, it is best to begin by thinking about the mission
and critical success factors. For example, take the case of two insurance organizations. The
chairperson of the first expresses the organization's vision as becoming the "easiest in the
industry to do business with." He wants to sell customers all their insurance needs by
emphasizing speed of writ-ing policies and an outstanding level of customer service.
Critical success factors in this case could include a 24-hour, 800-number service, fast
payment of claims, database systems that can relate information on all policies held by each
customer, and reduced cycle time. Benchmarking customer service processes would have a
substantial impact on the vision. The chairperson of the second organization admits that
his organization is only an av-erage performer in terms of customer service but intends to
reduce the cost of insurance through excellent investment performance. Because today's
premiums are invested to pay tomorrow's claims, higher earnings from investments would
allow the organization to charge less. The critical success factors for this firm could include
hiring and training good financial managers, using telecommunications to track and act on
developments in global money markets, development of on-line, real-time information
systems, and ex-pert forecasting. Benchmarking investment processes would be
appropriate in this case.2 Some other questions that can be raised to decide high impact
areas to benchmark are:
1. Which processes are causing the most trouble?
2. Which processes contribute most to customer satisfaction and which are not per-forming
up to expectations?
3. What are the competitive pressures impacting the organization the most?
4. What processes or functions have the most potential for differentiating our or-
ganization from the competition?
In deciding what to benchmark, it is best not to choose too large a scope. A bench-marking
study should be done quickly, or it may not get done at all. Teams can get very bogged
down in the technicalities of benchmarking and take a year or longer to complete a study.
Many circumstances can change in an organization over a year. Team members or
management may change in a year's time, and that may compromise the study or even
Page 98 of 267
force a study to be abandoned. In order to limit the scope of a study and thereby limit the
time it takes to conduct the study, it is best to choose a broad and shallow scope or a
narrow and deep scope. Broad and shallow studies ask, "What is done?" and span many
functions and people and do not go into detail in any one area. Broad and shallow studies
are useful in developing strategies, setting goals, and reor-ganizing functions to be more
effective. Narrow and deep studies ask, "How is it done?" and delve into a few aspects of a
process or function. Narrow and deep studies are use-ful in changing how people perform
their jobs. Some benchmarking teams start with a broad-and-shallow scope and identify a
few areas of particular interest to do a narrow and deep study. Other benchmarking teams
identify the narrow and deep target imme-diately, based on existing data or experience.
Pareto analysis can be a helpful technique for deciding what processes to investigate. It is
often effective to start with the process output and trace back to the inputs, asking what,
how, where, when, and why questions along the way. Cause-and-effect diagrams and flow
diagrams are excellent tools for tracing outputs back to inputs and for examin-ing factors
that influence the process. The bottlenecks identified become benchmarking candidates.
At this point, it is appropriate to begin thinking about metrics (measurements). Nu-merical

measures illustrate the effects of improvement and thereby aid in deciding where to direct
benchmarking activities. One quick and meaningful metric is the value added per employee.
Measuring labor productivity is a fundamental indicator of efficiency that strongly
correlates with profitability.
8. Understanding Current Performance
To compare practices to outside benchmarks, it is first necessary to thoroughly under-

stand and document the current process. It is essential that the organization's perform-
ance is well understood. Several techniques, such as flow diagrams and cause-and-effect
diagrams, and understanding. Attention must be paid to inputs and outputs. Careful
questioning is necessary to identify circumstances that result in exceptions to the normal
routine. Exceptions commonly consume a good deal of the process resources; however,
process participants may not think to mention them during interviews. Those working in
the process know the most about it and are the most capable of identifying and correcting
problems. The benchmarking team should be comprised of those who own or work in the
process to ensure suggested changes are actually implemented. When documenting the
process, it is important to quantify it. Units of measure must be determined. These are the
key metrics that will be compared during the benchmark-ing investigation. Common
examples include unit costs, hourly rates, asset measures, and quality measures. In some
cases, important measures are not available or are unclear. Decisions will have to be made
as to whether the information can be estimated or if ad-ditional data-collection efforts are
necessary. Data form the baseline for benchmark comparisons. Special care should be
Page 99 of 267
taken when using accounting information. Most accounting systems were developed to
satisfy external reporting requirements to the IRS and the SEC. As a result, costs may be
aggregated in a way that the activities 'under study are misrepresented. Benchmarkers
should take the time to determine what is and what is not included in accounting
information.
Planning
Once internal processes are understood and documented, it is possible to make deci-sions
about how to conduct the study. If not already selected, a bencnmarking team should be
chosen. The team should decide what type of benchmarking to perform, what type of data
are to be collected, and the method of collection. Organizations that are candidates to serve
as the benchmark need to be identified. Finally, timetables should be agreed upon for each
of the benchmarking tasks and the desired output from the study. Benchmark planning is a
learning process. In fact, the entire purpose of benchmark-ing is to learn. There is a
tendency to want to call several organizations immediately and schedule visits. This
activity is usually a waste of time. It is better first to use information in the public domain
to focus the inquiry and to find appropriate benchmark partners. There are three main
types of benchmarking. internal, competitive, and process. In most large firms, similar
activities are performed in different operating divisions. For example, Bell Labs trained
engineers to copy the work and social habits of the best performers. Some of these habits
were as simple as managing work in-baskets, ac-cepting constructive criticism, and seeking
help instead of wasting time. Engineers who went through the Bell Labs program boosted
their productivity by ten percent in eight months.4 Internal comparisons have several
advantages. Data are easy to obtain because problems of confidentiality don't exist. Often,
dialog with internal groups generates immediate improvement ideas or defines common
problems that help to fo-cus external inquiries. Product competitors are an obvious choice
to benchmark. Any organization's sur-vival depends on its performance relative to the
competition. In most cases, prod-ucts and processes are directly comparable. Some
competitors do share information. For instance, mortgage bankers compare their product
types, service fees, and inter-est rates on a weekly basis. On the other hand, some
organizations would never knowingly share proprietary information. However, there are
several ways to obtain data. Particularly good sources are information in the public domain
and third par-ties. For instance, Consumer Reports evaluates the features of various
products, Morningstar evaluates the financial performance of various stocks, and J.D.
Powers evaluates automobile customer-satisfaction levels. Buying a competitor's product
to take apart and test is another common practice. Exxon partners with its customers to
obtain information about competitors. The organization observes both its prod-ucts and its
competitor's products in use at the customers_ ocation and collects comparative data.5 - --
Page 100 of 267

Process benchmarking is sometimes known as functional* generic benchmarking. The idea
is that many processes are common across industrOoundaries, and innova-tions from other
types of organizations can be applied across industries. For example, every industry has
payroll and accounts receivable functions. All kinds of organizations design new products
and have logistics functions. A classic example of this type of benchmarking is the case of
Southwest Airlines. When Southwest was unhappy with the airplane turnaround time, it
benchmarked auto-racing pit crews and implemented many new ideas. Likewise, Motorola
looked to Domino's Pizza and Federal Express for the best ways to speed up delivery
systems. Another example of process benchmarking is when Remington Rifle Co. used
Maybelline cosmetics' shiny lipstick cartridge produc-tion process techniques to produce
shinier rifle shells Process benchmarking has several advantages. Compared With
competitive bench-marking, •it is much easier to get organizations to share information. •it
is relatively easy to find organizations with world-class operations through published
information and through discussions with suppliers and consultants who specialize in the
field. However, care must be taken to pick firms that are comparable. Often data must be
adjusted to ar-rive at a meaningful metric. Many excellent techniques are available to assist
in setting project time tables. These range from simple Gant charts to project evaluation
and review technique (PERT). Excel-lent discussions of these methods can be found in
management texts. Relatively inexpensive personal computer software that automates
these techniques is also widely available. Identifying the best firms to find a benchmark is a
research project. There is no pre-existing magic list of best-in-class companies. In fact,
"best-in-class" depends on the organization's needs. Find organizations that are the best
performers relative to the defined measures established by using the critical success
factors. Identify a large number of possible candidates and reduce the list to come up with a
short list for further research. Best practices can be found internally, in a competitor, in the
industry, in another U.S. organization, or in a global organization. The search starts with
publicly-available information, such as that in trade journals and on the Internet.
Magazines are published for industries, occupations, and functions, from accounting to
book keeping. These feature success story articles, technical information, and regular lists
of top-performing organizations. Often they are published by associations whose members
and officers are additional sources. There are also numerous bench-marking databases,
such as The Industry Week Survey of Manufacturers Benchmarking Database, which
contains information from 1,757 North American manufacturing firms, There is a nominal
fee for searches, and data can be sorted by industry type or question. Using public sources
of information requires a grasp of key process metrics. Re-searchers should look for
numbers and ratios to find industry best practices. Many sources of financial information
are available in the public domain. Annual reports and Securities and Exchange
Commission filings can be accessed through business libraries and online services.
Standard ratios are available for all publicly-traded organizations in the United States and
for many foreign firms. If the benchmarking team includes a skilled financial person, he or
Page 101 of 267

she should be able to derive additional measures from published information. Government
agencies also compile large quantities of industry information. This data can be acquired
through government publications and by talking directly to government experts. Finally,
business contacts, including suppliers, consultants, customers, and people within the
organization, can be a gold mine of information. Often a benchmarker is referred to
someone else for additional information. It is frequently worth the effort to follow these
leads. The planning process should result in a "short list" of possible benchmark partners.
The scope of the study and the type of benchmarking may require examination of several
outside organizations. When a process is broken into sub-processes, it is common to
discover that a single organization is not best-in-class for all sub-processes. In these cases,
studying multiple organizations ensures that the best practices are discovered.
Studying Others
Benchmarking studies look for two types of information: a description of how best-in-class
processes are practiced and the measurable results of these practices. In seeking this
information, benchmarkers can use internal sources, data in the public domain, original
research, or—most likely—a combination of sources. Considerations include the cost and
time involved in gathering data and the need for appropriate data quality and accuracy.
When most people think of benchmarking, they generally think of conducting original
research through site visits and interviews. This is not always necessary, and some
organizations find industrial tourism a waste of time. Needed information that is easier and
faster to obtain may be available internally or publicly. In any case, internal and public
sources should have been examined during the planning process, so benchmarkers will
have a good idea as to what additional information should be collected. Three techniques
for conducting original research are questionnaires, site visits, and focus groups.
Questionnaires are particularly useful to ensure respondent anonymity and confidentiality,
when data are desired from many external organizations, and when us-ing a third party to
collect information. Respondents can be surveyed by mail, by tele-phone, or in person.
Additionally, questionnaires can be developed as preparation for a site visit, as a checklist
during a site visit, or as a follow-up device. As with any survey, careful design and
interpretation are essential, especially when questionnaires are ad-ministered by mail or
phone. Site visits provide the opportunity to see processes in action and for'face-to-face
con-tact with best-in-class operators. Site visits usually involve a tour of the operation or
plant followed by a discussion period. Because personnel of both the visiting and the host
organizations devote time, it is important to prepare properly for the visit. Laying the
groundwork starts with the initial contact, which should establish a basis of mutual
learning and information sharing as well as rapport. The initial contact can be made
through marketing representatives if a supplier/customer relationship exists, through oc-
cupational or trade groups, or simply by one professional calling another. Before visit-ing,
Page 102 of 267

the parties should agree on an itinerary so that needed staff and infannation will be
available. As mentioned previously, internal operations should be fully understood be-fore
the visit, and relevant publicly-available information should have been acquired. As soon as
possible following the trip, the visiting team should hold a debriefing to docu-ment the
findings and determine follow-up activities. Focus groups are simply panels of
benchmarking partners brought together to discuss areas of mutual interest. Most often the
panels are comprised of people who have some previous joint benchmarking activity.
Alternatively, panels can be comprised of cus-tomers, suppliers, or members of a
professional organization such as the American So-ciety for Quality (ASQ).
Learning from the data
Learning from the data collected in a benchmarking study involves answering a series of
questions:
Is there a gap between the organization's performance and the performance of the best-in-
class organizations?
What is the gap?
How much is it? Why is there a gap?
What does the best-in-class do differently that is better?
If best-in-class practices were adopted, what would be the resulting improvement?
Benchmarking studies can reveal three different outcomes. External processes may be
significantly better than internal processes (a negative gap). Process performance may be
approximately equal (parity). Or the internal process may be better than that found in
external organizations (positive gap). Negative gaps call for a major improve-ment effort.
Parity requires further investigation to determine if improvement opportu-nities exist. It
may be that when the process is broken down into sub-processes, some aspects are
superior and represent significant improvement opportunities. Finally, the finding of a
positive gap should result in recognition for the internal process. There are at least two
ways to prove that one practice is superior to another. If the processes being compared are
clearly understood and adequate performance measures are available, the practices can be
analyzed quantitatively. Summary measures and ra-tios, such as activity costs, return on
assets, defect rates, or customer satisfaction levels, can be calculated and compared. It is
fairly simple to determine superior practices, as the numbers speak for themselves,
provided relevant measures are used. A second way to prove superiority is through market
analysis. Consumers of prod-ucts and services vote with their checkbooks. Does the market
prefer one process over others? If so, it can be judged superior. How many more customers
would we have if we delivered in 24 hours instead of five days? Another way to use market
Page 103 of 267

analysis is to price outside services. If we had excess capacity, could we sell this service to
others? For how much? What do suppliers charge for this process? Identifiable benchmark
gaps must be describedand quantified. By definition, processes have inputs, activities, and
outputs. Processes determined to be superior should be described using words and
graphics to the level of detail necessary so that each step can be understood and emulated.
The level of detail must be sufficient to allow eventual quantification. Describing best-in-
class processes in appropriate detail is the primary way to determine why there is a gap
and how to close it. Once best-in-class practices are described and understood, key process
measures should be quantified. The objective is to determine in summary form the overall
effect on the internal operation of adapting the best-in-class practices. In other words, what
is the size of the gap and what are the appropriate benchmark metrics and objectives? Any
summary measures are likely to be synthetic or derived rather than directly measured
from external processes. One reason is that when a process is broken down to its
component steps, a single external operation may not be the best in all sub-processes.
Numbers may come from several organizations and then be combined to arrive at a com-
bined best-in-class projection. Second, even if a single best-in-class benchmark exists, there
will almost certainly be enough situational differences to require adjustments in the
measures. These include differences in industry, operation size and scale, geographic reach,
and required outputs. In many cases, it is appropriate that metrics be expressed as ranges
rather than single point numbers. When best-in-class processes have been described and
quantified, additional analy-sis is necessary to determine the root causes of the gaps. Gaps
are a result of process practices themselves, general business practices, and the
organizational and operational structure. Given enough time, anything can be changed.
However, some judgment is needed to determine what can be done in the relevant
planning period to arrive at an ap-propriate benchmark goal or objective. Process practices
are the methods that make up the process itself. An example is a customer-fulfillment
process that consists of receiving an order, selecting it from the warehouse, packing the
order, shipping it, billing it, collecting payment, and updating the customer record for each
transaction. Of course, each of these sub-processes may consist of multiple steps. Business
practices are more general in nature and may apply to many or all of the organization's
processes. These include personnel policy and pro-cedures, accounting practices, and
measurement and reward systems Organizational and operational structure has to do with
the location of activities, the organization chart, separation of responsibilities, and
information system capabilities. Process practices are generally the easiest to change.
Changing general business practices and organizational and operational structure will
,often be long-term projects and will almost certainly af-fect other processes. However,
objective information developed through benchmarking studies can offer compelling
reasons to make changes.
Using the Findings
Page 104 of 267

When a benchmarking study reveals a negative gap in performance, the objective is to
change the process to close the gap. Benchmarking is a waste of time if change does not
occur as a result. To effect change, the findings must be communicated to the peo-ple
within the organization who can enable improvement. The findings must translate to goals
and objectives, and action plans must be developed to implement new processes. Two
groups must agree on the change. The first group consists of the people who will run the
process, the process owners. The second group consists of the people, usually .upper
management, who can enable the process by incorporating changes into the plan-ning
process and providing the necessary resources. Process owners may be inclined to
disbelieve or discount the findings, particularly if the gap is large. Therefore, it is im-
portant to completely describe how the results were obtained from the external organi-
zations studied. Of course, current practices can't generate best-in-class results, but
changing the process can. Process changes are likely to affect upstream and downstream
operations as well as suppliers and customers. Therefore, senior management has to know
the basis for and payoff of new goals and objectives in order to support the change. As
discussed in the previous section, changes in business practices and in organizational and
operational structure may be indicated. These changes have to be considered and
incorporated into the strategic planning process. Because findings are objective, the
benchmarking process helps make the case to both groups. The effect of change can be
predicted quantitatively and the process fully described.
9. Pitfalls and Criticisms of Benchmarking
The basic idea of benchmarking can be summed up quite simply. Find someone who
executes a process better than you do and imitate what he or she does. The most persistent
criticism of benchmarking comes from the idea of copying others. How can an organization
be truly superior if it does not innovate to get ahead of competitors? It is a good question,
but one can also ask the reverse: How can an organization even survive if it loses track of
its external environment? Benchmarking is not a panacea. It is not a strategy, nor is it
intended to be a business philosophy. It is an improvement tool. To be effective, it must be
used properly. Bench-marking isn't very helpful if it is used for processes that don't offer
much opportunity for improvement. It breaks down if process owners and managers feel
threatened or do not accept and act on the findings. Over time, things change, and what was
state-of-the-, art yesterday may not be today. Some processes may have to be benchmarked
repeatedly. Benchmarking is also not a substitute for innovation; however, it is a source of
ideas from outside the organization. Business success depends on setting and achieving
goals and objectives. Benchmarking forces an organization to set goals and objectives
based on external reality. Consumers don't care if a process achieved a 20% year-to-year
pro-ductivity gain. They care about quality, cost, and delivery, and they vote with their
checkbooks for the superior organization.
Page 105 of 267

TQM Exemplary Organization?
Located in Garland, Texas, KARLEE is a contract manufacturer of precision sheet metal and
machined components for customers in the telecommunications, semiconductor, and
medical-equipment industries. Since beginning in 1974 as a one-man, garage-based
machine shop, the company, which employs 550 people, has developed into a one-stop
supplier of manufacturing services. Its work ranges from initial design and prototyping to
painting and assembly to integration of cabling and power elements. To guide
improvements in manufacturing and service performance, the company makes extensive
use of benchmarking studies. Among other things, these comparisons help to eliminate
potential blind spots resulting from difficulties in gathering information on competitor
performance and capabilities. Annual goals are aligned with the company's five key
business drivers: customer satisfaction; operational performance; financial performance;
community service; and team member safety, satisfaction, and development. Members of
the Steering Commit-tee work with functional and cross-functional teams to translate the
goals into improvement projects with measurable objectives. Manufacturing teams use
statistical process control methods to monitor process performance. In addition, teams in
all areas conduct monthly self-audits, and the Quality Assurance Department performs a
monthly assessment of team performance, .yielding a weighted quality rating for each team
and each department. Results of these evaluations are posted on team, department, and
corporate bulletin boards. This permits all team members to check progress toward
accomplishing company objectives. Manufacturing cell teams are empowered to schedule
work, manage inventory, and design the layout of their work areas. Every team has a
budget for recognition and celebration, which complements the company's broader
program of reward; and recognition. These range from free movie passes to monthly and
quarterly awards for outstanding performance by team members and leaders. In the area
of supplier/customer communication, KARLEE representatives participate on customers'
design and production-planning teams. Between 1996 and 2000, production volumes
tripled. Still, assembly lead times were trimmed from weeks to two or three days and, in
some instances, to a few hours. Over the same period, KARLEE's surveys indicated that its
customer satisfaction had im-proved by nearly a third. Since 1995, labor productivity
(measured in terms of sales per hour of labor) has nearly doubled, and waste has been
reduced to less than 0.5% of sales, down from nearly 1.5%. The number of inventory turns,
a measure of organizational efficiency, has improved from an average of 9.2 in 1995 to 15.7
in fiscal year 2000.

1. ………….is a systematic method by which organizations can measure them-
selves against the best industry practices
a. Benchmarking
Page 106 of 267

b. Team building
c. Workforce team
d. None
2. TQM stands for-
a. Total quality management
b. Total quantity management
c. Total quality marketing
d. None
3. ………………is a tool to achieve business and competitive objectives.
a. Benchmaking
b. Quality cost
c. Benchmarking
d. None
4. In order to have an effective liaison With the quality council, there should
be a
a. dealer
b. sponsor
c. buyer
d. none
5. To compare practices to outside benchmarks, it is first necessary to
thoroughly under-stand and ………the current process
a. Deal
b. Document
c. Decide
d. None
6. Benchmarking can be applied to virtually any ………or production process
a. Business
b. Shop
c. Consumer
d. none
6.5 SUMMARY
Benchmarking is a systematic method by which organizations can measure
them-selves against the best industry practices. It promotes superior
performance by pro-viding an organized framework through which
organizations learn how the "best in class" do things, understand how these.
best practices differ from their own, and implement change to close the ga
Benchmarking studies look for two types of information: a description of
Page 107 of 267

how best-in-class processes are practiced and the measurable results of
these practices.
6.6 GLOSSARY
Benchmarking is a systematic method by which organizations can measure
them-selves against the best industry practices
Team charter.A team charter is a document that defines the team's mission,
boundaries, the background of the problem, the team's authority and duties,
and re-sources.
Cohesiveness. Members should be comfortable working with each other and
act as a single unit, not as individuals or sub-groups.
6.7 ANSWER TO CHECK YOUR PROGRESS

1. a
2. a
3. c
4. b
5. b
6. a
6.8 REFERENCES
The Advantage: Why Organizational Health Trumps Everything Else In Business, by
Patrick Lencioni, 2012
Help the Helper: Building a Culture of Extreme Teamwork, by Kevin Pritchard and
John Eliot, 2012
Building Team Power: How to Unleash the Collaborative Genius of Teams for
Increased Engagement, Productivity, and Results, by Thomas Kayser, 2010


1. What is XEROX points
Page 108 of 267

2. Define benchmarking. What are its advantages?
3. What are the characteristics of team building
4. Discuss various pitfalls of Benchmarking
Page 109 of 267

LESSON – 7
Total Quality Management for Marketing Function
Structure
7.1 Objectives
7.2 Introduction
7.3 Quality in Marketing and Sales
7.4 Factors for Excellence
7.5 BPR & IT: Business Process Management
7.7 Summary
7.8 Glossary
7.10 References
Page 110 of 267

7.1 Objectives
1. Understand the significance of TQM in effective sales and marketing framework
2. Describe TQM Sales methodology
3. Understand the leverage that the sales organizations represent in terms of quality,
costs, and overall competitiveness.
4. Explain how the companies use total quality management system to exploit the
potential and achieve more growth, profits, and market share.
7.2 Introduction
Total Quality Management can be defined as a management philosophy that evolves

customer focused learning for those companies that are committed to achieving total
satisfaction through constant progress in the effectiveness and competence of the firm as a
whole and its several processes. Many quality gurus have given many different definitions
and meanings of TQM, but the answer is an all inclusive approach to quality that cuts
prevails at all times across all cross functions and levels of the organization.
Total Quality Management basically means a combination of certain standard techniques,

tools and concepts. Over a period of time, several theories have been given in TQM and
outcome is the logical and cohesive set of principles that have been mentioned below:-
 Customer comes first always

 Top management leadership
 Continuous Improvement being focal point
 Valuing intellectual capital and involving employees in problem solving
 Reduce dispersion in processes
 On the job trainings for employees, regularly
 Knowledge about statistical variation
 Believing in prevention of defects than detection
 Maintain long term relationships with suppliers
 Setting of performance measures against corporate goals
 Standardizing work processes
 Quality Design
Page 111 of 267

 Emphasis on teamwork
 Identifying needs of internal customers
 Incorporating organizational cultural change
TQM is strategy oriented. It involves various processes that improve upon the organization’s
competitive position, ensure continuous improvement in products and services, and leads to
fulfilling/exceeding the customer expectations resulting in high levels of customer
satisfaction and thus, customer retention. Organizations have to make investments worth
millions in order to implement TQM frameworks within the group. The companies have to
clearly state the mission, vision of the group and implement TQM as a strategic programme.
The top management must ensure personal involvement in this initiative and also commit to
every decision and actions taken. As it involves major investment and critical decision
making the total management must stay committed without looking at success in the
immediate period of time.
“Total Quality programs just as other philosophies, has its negative side. Although many
companies have derived significant benefits, there are no guarantees. The development time
and resource investment are other aspects of the program that raise concern, particularly
when objectives are vague. What is needed is an overall strategic plan with total quality
being one component. Most executives know that radical improvements are necessary but
the situation often resembles a ball of string where the end is not clearly visible”.
The eventual objective of the TQM process is to make sure that the whole organization stays
customer driven and is determined to meet their expectations. Therefore, it becomes very
important to describe that what the definition of customer requirements is. According to
TQM, the marketing function revolves around determining, foreseeing and satisfying
customer requirements in the best possible ways. But some people feel that sales are a key
resource in this field. Preferably, the sales function will only present significant feedback
about the opportunities available in the short run whereas marketing function will focus on
indentifying new opportunities and customer's requirements in the long run.
7.3 Quality in Marketing and Sales
Total quality management (TQM) is a firm-wide management philosophy of continuously

improving the quality of the products/services/processes by focusing on the customers’ needs
Page 112 of 267

and expectations to enhance customer satisfaction and firm performance. There are mixed
results about the relationship between total quality management practices and performance.
Overall TQM practices have positively been related to productivity and manufacturing
performance, quality performance, employee satisfaction/performance, innovation
performance, customer satisfaction, competitive advantage, market share, financial
performance, and aggregate firm performance.
TQM firms focus on serving the external customers. They first need to know the customers’
expectations and requirements and then should offer the products/services, accordingly. By
the aid of successful customer focus efforts, production can be arranged with respect to the
customers’ needs, expectations, and complaints. This encourages firms to produce high
quality and reliable products/services on time with increased efficiency and productivity.
When customer expectations are met, their satisfaction will be increased, and the firm’s sales
and the market share will increase.
Customer focus positively affects operational performance, inventory management

performance, employee performance, innovation performance, customer satisfaction/results,
sales and aggregate firm performance. “The ultimate aim of the TQM process is to ensure
that the whole organization is focused on the customer and is striving to meet their
requirements. This raises the obvious question of where or who develops the definition of
customer requirements. From a formal standpoint, the marketing function is charged with
identifying, anticipating and satisfying customer requirements profitably. However, from a
frequency of contact basis, few would argue that sales are a key resource in this area. Ideally,
the sales function can provide important feedback regarding opportunities in the short run
while marketing needs to focus on the future including new opportunities and customer's
long-term needs”.
The Baldrige Award and the ISO 9000 standards also stress upon the need for integration of
quality with sales and marketing. One third of points mentioned in the Baldrige model talk
about customer focus and satisfaction.
The Malcolm Baldrige Award
“The Malcolm Baldrige National Quality Award was established by Congress in 1987. It is
awarded annually to up to six firms based on a rigorous measurement of quality
achievements in seven categories with varying points not exceeding a total of 1000. A
fundamental hypothesis is that quality is defined by the customer and the customer
Page 113 of 267

satisfaction category is weighted with 300 points or 30% of the probable score. The Baldrige
award is based on the evaluation of performance in operational results, customer focus and
satisfaction, and having a well defined process to actualize the company's quality vision. The
model signifies as to how a firm is advancing in its journey toward continuous improvement.
But it does not tell an organization about the ways to improve. For an organization it is
commendable and a very rewarding effort to win the Baldrige Award. Also, using the scoring
methodology is useful as a measurement to determine progress of an organization’s TQM
program”.
ISO 9000
“ISO 9000 is a set of quality management concepts, models and quality assurance
requirements published by the International Standards Organization (ISO). The ISO 9000
series was published in 1987, as a need to harmonize on an international scale, the impact of
quality as a factor in international trade. The ISO 9000 series provides a certification scheme
which enables a company to be certified as compliant with the ISO standards by a third party
accreditation organization. Once certified, the company is then listed on a register which
notifies other companies (customers) of this status. Such certification can be a contractual
requirement for being considered as a supplier for some corporations. Though recent
decisions by the European Economic Community have placed the necessity of certification in
question, the discipline and reporting requirements of the ISO 9000 standards represent a
sound basis for quality systems”.
The objective of ISO 9000 is to make sure the constant repeatability of a set of product and
service features that have been explicitly and implicitly established by a customer or supplier.
“TQM, as earlier defined is a non prescriptive way to provide total customer satisfaction
through continuous improvement”. To achieve this philosophy, management in addition to
having an effective quality system in place, needs to set up support systems like regular
training, acknowledgment and feedback systems, and ensure availability of information.
Thus, ISO 9000 holds significant place in a TQM framework.
ISO 9004 establishes the following specifications:
• Need for Marketing: "The marketing function should take the lead in establishing quality
requirements for the product."
Page 114 of 267

• Product Outline: "The marketing function should provide the company with a formal
statement or outline of product requirements; e.g. a product brief."
• Information about Customer Feedback: "The marketing function should establish an
information monitoring and feedback system on a continuous basis."
It can be clearly mentioned that the proper descriptions of TQM and the related Baldrige and
ISO models support the considerable involvement of sales and marketing. And it can also be
said that there is clear indication that many companies have not integrated their quality
programs with sales and marketing.
“A US Government study found that practitioners of the Baldrige program enjoyed average
improvements of sales per employee of 8.6% per year, gained 13.7% market share, and
increased customer satisfaction by 2.5%. The study reported that these achievements required
coordinated action on the part of manufacturing and sales”.
“An internal study by IBM management found that sales organizations that hold on to
Baldrige criteria does better than those that do not. The successful companies normally
achieved over 30% increase in sales, market share, and overall profitability in comparison to
those that did not follow the Baldrige criteria. Therefore, an IBM sales organization that
expanded market by 2% and did not apply Baldrige principles essentially failed to gain an
additional 1% growth in market share. The evidence was so dramatic that the corporation
insisted that all sales organizations worldwide speed up their implementation of quality
practices. IBM took an initiative to change the focus of the sales organization. A vision
statement was created which positioned the company as not only selling computers to data
centers, but also to help customers gain competitive advantage in the worldwide market”.
In response to this vision, four steps were taken immediately:
1. The six branch offices were given one quota to encourage offices to work as a team.
2. The number of managers was reduced to facilitate a flatter organization and
empowerment.
3. An educational program was started.
4. A new compensation system was developed which rewards revenue contribution,
customer satisfaction improvement, leadership, and skills development.
Page 115 of 267

“Surveys indicated that customers wanted: 1) representatives with better skills, and 2) an
easier company to do business with. One of the changes involved the pooling of the technical
services organization so that the right resource would be available at the right place. Within
six months, the technical consulting services organization increased contract work revenue
by more than 100%”.
There is a similar case of Eastman Chemical Corporation. “Eastman Chemical Corporation

was one of the winners of the 1993 Malcolm Baldrige Quality Award. Their Total Quality
Management Process started with a review and assessment of customer relationships and
opportunities for improvements. The company is committed to making improvements in
these areas and reporting back to their customers”.
“The sales organization contracts with the company's ten separate (and diverse) business
units. The sales organization is charged with implementing all of those strategies. In support
of the TQM process, the sales people often find themselves in the position of coordinating
many of Eastman's employee team efforts focused on improving customer relationships. This
is referred to as "linking in" the sales function into the quality effort. The overall program is
called "MEPS"- Make Eastman the Preferred Supplier. Two valuable tools for determining
customer satisfaction are the complaint process and the customer satisfaction survey. In the
past, Eastman observed that it would require the equivalent of three meetings to decide that
an item should be added to the complaint file. This quickly changed under the new mind-set
and Eastman now makes it easy for customers to register complaints. One indication that the
quality system is working is that in the past two years, claims and returns have decreased by
40%”.
Customer surveys are sent out on an 18 month cycle. Performance factors include: order
entry/processing, on-time delivery, product quality, pricing practice, new products,
management contacts, and sharing of market information. It is the responsibility of the sales
rep to go back to the customer and discuss the survey results and to disclose improvement
efforts completed and underway.
Prevalence of Sales TQM
Sales Quality Associates conducted a survey of thirty-three major companies in the U.S. The
companies included in the survey were - IBM, Federal Express, Unisys, NCR, and several
other well-known companies. The respondents were asked to respond to questions regarding:
Page 116 of 267

• “Sales quality improvement teams”
• Metrics & objectives of Sales process
• Sales process stability
• Sales process benchmarking
• Sales management
The survey indicated the following profile information:
• 3.2 years is the average life of a sales quality program

• On an average there were 14 quality improvement teams
• Order Defects was the area of sales improvement project
• Vague and unclear sales process improvement targets
• No statistical stability achieved
“Although these numbers reflect considerable maturity regarding the initiatives, the data is
skewed by some early adopters. Approximately 75% of the programs have been in existence
less than five years and half for two years or less. Focus of the improvements is concentrated
in the areas of ordering/billing, proposals, partnership relationships, customer satisfaction,
and the reduction of non-value added activities. Benchmarking activities concentrated on
ordering/billing, sales process, and service processes”.
These statistics may be misleading in terms of the sample size and clear direction toward
organizations; the likely returns for integrating sales in the TQM program are considerable.
“One can only speculate the reason for delaying such an obvious source of synergy.
Possibly there is a concern regarding the dilution of sales effort, effectively tying the widely
dispersed sales organization into team problem solving, or simply not being able to define
tangible results given the investment in resources”.
The TQM/Value Relationship - Value versus Price

The concept of value means that “price is an arrangement of trade-offs of product/service
functionality, support, terms, unit price, risk, availability, competitive alternatives and other
intangibles”. From a schematic viewpoint, this operation appears as shown below:
Page 117 of 267

Product Attributes
Services Attributes
Perceived Benefits
Vs. = VALUE
Perceived Cost
Transaction Cost
Life Cycle Cost
Risk
Hence, the most of the company’s sales process aim to understand the basis for determining
value while placing the attributes of an organization in a way to maximize sales revenue and
overall profitability.
In order to achieve highest sales revenue and higher profits, an organization needs to
understand its customers' value "equation" and must clearly establish quality product and
service offerings that can be provided to the customer at a considerably lesser cost than the
assigned customer value.
Factors for Excellence

1. Listening to the Customer – “Both quality and value are defined by the customer. In
concept, this appears straight forward but in reality the buying decision is often more
Page 118 of 267

complex involving many people with different perspectives and agenda”. For example,
considering the varied interests of the following functions:
 Purchasing: Terms, price and availability

 Engineering: Consistency with current manufacturing equipment, low failure rate
 Receiving: Accurate counts, correct paperwork
 Manufacturing: Consistent results, easy to use packaging
 Shop Operator: Easy to handle
 Environmental: Reuse packaging
 Accounts Receivable: Orders are accurate, paperwork easy to read, deliveries timely,
contacts friendly and knowledgeable.
“Value is a function of product attributes, service attributes, flexibility, terms and personal
interfaces. Only sales have insight into all of these areas and are responsible for the entire
chain of satisfaction. If the supplier organization does not provide an effective means for
communicating these needs from the field and/or ignores their input, sales will quickly adopt
a compensating strategy which places sales in a game of working around the organization.
From a quality chain perspective, consider what happens when the sales person misinterprets
the needs of the customer in completing the order or otherwise supplies inaccurate
information. No matter how accurately, the supplier organization implements the order; the
customer is unlikely to receive what they want or when they want it”.
2. Easy to do business with

The common attributes of service quality would include the following:
 Reliability
 Responsiveness
 Competence
 Courtesy
 Credibility
 Communication
 Understanding the Customer
Other issues which could be characterized as quality but are often referred to as ease of doing
business include:
 Timely Billing Procedures

 Minimum Delivery Times
Page 119 of 267

 Easy Claims Handling
 Fair Return Policies
 Accurate Order status
 Location of Service Facilities
 Warranties
 Inquiry Handling
 Hot Lines
3. Cycle times
For clarity and completeness, it is pertinent to include cycle time reduction as an important
component of the total quality standpoint. “In addition to improving quality and competitive
position, cycle time reduction typically involves simpler processes, less steps and less cost.
Cycle time reduction can pertain to macro processes such as product development and to
micro processes such as literature fulfillment. Speed of response (maintaining or improving
quality) instills a sense of confidence in both the sales organization and with the customer”.
4. Customer Value Leadership

Leadership can be netted out being the best in the following areas:
Best Solution Best Economics Best Supplier

Function Price/Value Responsive
Availability Ownership Cost Cooperative
Usability Productivity Available
Durability Terms and Conditions Knows Customer
5. The Sales Process

Customer
PLAN Pre Sale Sales Post Sales Relation Review
Page 120 of 267

Supporting Process
Post
Plan Pre-Sale Sell Sale Relationship Review
Product
Deployment Lead Mgmt. Order Entry Billing Reports Development
Training Credit Order Status Installation Sales Tools Reports
Sales Tools Proposal Distribution Service Analysis Competition
Communication Tech. Support Promo Mgmt. Returns Recognition
Motivation Funnel Mgmt. Customer. Service Warranty
Coordination Product Planning Change Order
Channel Strategy Pricing
Terms/Conditions
Contracts
The sales and supporting process charts provide a graphic view of the inter-relationships
between sales, the customer, and the organization at-large.
6. The Organizational Response

According to TQM definition, as stated earlier, “TQM is projected as a management
philosophy that looks at customer driven learning for organizations committed to total
customer satisfaction through continuous improvement in the effectiveness and efficiency of
the organization and its processes”. The point of the discussion has been that “price and
competitiveness is a function of aligning the internal focus and processes of the company to
respond to the customer's needs as defined by the customer”. “Competitiveness, quality and
cost are associated with the business processes practiced by a company. Although TQM
techniques are oriented at improving these process steps, the approach is decidedly
incremental in nature. Recognizing that most processes cut across functional lines and
involve policies and assumptions, which may not be valid, a more aggressive and
encompassing approach to process analysis has been identified. This methodology seeks
drastic change in performance, cost, and quality. The next section will describe how
reengineering can be used in the context of the sales process as a means to change the
competitive, cost, and quality position of an organization”.
Page 121 of 267

7. Six Sigma
Six Sigma is the data-driven methodology for eliminating defects in organizations based on
standards, measurements, and repeatable processes, has provided undeniable success for
organizations around the world by eliminating waste and improving productivity. A
measurable and quantifiable Six Sigma-like process has been defined and documented to
help address these error-prone, human aspects of sales management. The initial requirement
is an accurate measure of any individual’s skills, competencies, motivational drivers, work
habits, and potential for developing future competencies. The assessment instrument must be
criterion validated to be predictively accurate of measured productivity improvements and/or
reduction in “unwanted” turnover well beyond the 55-65% accuracy most commonly
reported. Research suggests that only a Six Sigma or TQM approach can accomplish the
necessary level of quality improvement in the management of intellectual capital. Using a
TQM for sales or Total Quality Sales Management (TQSM) requires focusing primarily on
identifying the “causes of failure” of otherwise qualified sales and service people. This is a
counter opposite approach to the more common identification of the criteria for success as
typically seen in job analyses and competency studies. A TQSM approach is capable of
establishing a single instrument that can measure all of the relevant competencies with an
accuracy level robust enough to support substantial quality gains in the management of a
company’s most valuable “Human” assets. The idea of using Six Sigma to improve the sales
process is innovative but it does make sense. A process consists of related and ordered steps
to a predetermined goal. Improving sales and marketing by treating them as an assembly line
is a not much different from building an assembly line to manufacture automobiles. Once you
under-stand that without sales there is no need for production, you start to realize that if you
applied the same principles to the sales process that are common to production you would
end up with a method of managing the complete sales function which would produce far
more predictable out-comes.
BPR & IT: Business Process Management
Business Process Re-engineering is also known as business process redesign (BPR). In the time
of rapidly changing technologies and ever-shorter product life cycles, the concept of
reengineering is a radically new methodology that emerges from the traditional industrial
improvement approaches to produce the efficiencies and capabilities that lead to market success.
Page 122 of 267

Business reengineering is described as "a conceptually new business model and an associated
set of techniques used to reinvent competing organizations." Reengineering is understood to
achieve fast immediate, massive breakthrough change by integrating and enlarging the scale of
existing business improvement disciplines to a company-wide level, instead of applying
improvement techniques to individual functions and isolated processes that may not be critical to
a company's success. Companies are told to completely revamp their functional approach to
process, to redesign outdated processes, and to enhance competitive potential. At the heart of
reengineering is the notion of discontinuous thinking - of recognizing and challenging the
traditional approach to management the outdated rules of work design and fundamental, but
invalid assumptions about technology, people, and organizational goals. Quality, innovation, and
service are now more important than cost growth and control. Reengineering cannot be planned
meticulously or accomplished in small and cautious steps. It is an all or nothing proposition with
an uncertain result. Unlike the traditional process improvement BPR aims for 60, 80, or 100%
improvements in process performance.
Principles of BPR
1. Job design-. Management should organize and design a person’s job around an
objective or outcome instead of a single task. In other words, management should
compress the responsibility for the various steps of the task and assign it to one person
to perform.
2. Work process: Management should allow those who use the output/result of the process
to perform the process so that there is little need for the overhead associated with
managing it. For example, departments can make their own purchase using modem
technologies such as expert systems and shared databases without sacrificing the benefits of
specialized purchases Interfaces, liaisons, and the mechanisms that are used to coordinate
the performers and benefactors of the process can be eliminated.
3. Information processing: Management should attempt to include information-processing
work into the real work that produces the information. In other words,
managers should reorganize/redistribute the work' so that an organization that produces the
information also processes it.
4. Network Technology: Management should treat geographically dispersed resources as
though they were centralized by using databases, telecommunications networks, and
standard and coordination while maintaining the benefits of flexibility and service.
5. Parallel Processing: Managers should link parallel activities instead of integrating their
Page 123 of 267

results. Product development typically operates in parallel process; separate units perform
the same function or separate units perform different activities that must be
integrated. There is a need to forge links between parallel functions and to coordinate them
while their activities are in process rather than after they are completed using means such as
communications networks, shared databases, and teleconferencing.
6. Decision making: Decision making should be delegated to the person who performs the
work, and management should build control into the process. In most organizations, the
workers are distinguished from their supervisors and the decision maker.
Reengineering suggests that the performer should .make the decisions and that the process
itself can have built-in controls, resulting in self-managing and self; controlling employees.
Pyramidal management layers can therefore be compressed the organization
flattened and hierarchy disappeared. For instance, information technology can capture and
process data and expert systems can, to some extent, supply knowledge, to enable people to
make their own decisions.
7. Information storing: Information should be captured once and at the source. Bar coding,
relational database, and electronic data interchange (EDI) help organizations to collect
store, and transmit information more easily and quickly.
Relationship between TQM & BPR
Most reengineering projects provide at least some opportunity to apply TQM methods of
improvement, both as a means of maintaining and enhancing gains in a process, and as a first
step towards adopting TQM as a total corporate management style. The purpose of TQM is
to encourage and enable all employees in an organization to make improvements, whether large
or small, that will increase customer satisfaction. Thus, a TQM organization may use
reengineering when appropriate.
Continuous improvement is a new style of quality management based on the goal of increasing
customer satisfaction through process improvement. Therefore, the management structure of the
product can be completely redesigned with TQM. Elements of TQM that can be integrated into a
process during reengineering include customer focus, goals and objectives, management
planning for improvement training in improvement goals and objectives, training in TQM
methods, formal training in job skills and tasks, teamwork at all levels, feedback systems, and
reward systems.
Page 124 of 267

Similarities between TOM and BPR
The following are some similarities between TQM and business reengineering:
1. First of all, both the TQM philosophy and the concept of business reengineering honor the
importance of business and `product processes and the needs of the customers
2. In many cases, the methods and tools used for both TQM and reengineering are the same,
such as the use of cross-functional teams. In reengineering, these are usually ad hoc teams of
managers and experts who work together for the duration of the redesign project
In TQM they are usually permanent teams of managers from all parts of a production process,
who meet regularly to plan and coordinate ongoing improvement. Sometimes, TQM uses
short-term special project teams consisting of managers employees, suppliers, and even
customers, who focus solely on a part of a larger core business process
2. Both TQM and reengineering teams utilize objective decision making based on facts. Thus,
both teams may use measurement and analysis tools such as check sheets, cause-and-effect
diagrams, bar charts, scatter diagrams, run charts, and control charts, or data
gathering and analysis methods such as brainstorming and the nominal group technique.
3. Reengineering like TQM is customer/market-driven and quality oriented and requires those
involved in the redesign process to quantify their objective. A customer orientation, which
derives from the TQM philosophy, is equally fundamental to successful reengineering. Yet the
new methodology has broadened the customer focus to include the competitors with whom
customers could choose to do business.
Differences between TOM and BPR
The key differences between TQM and business reengineering, particularly in the scope and
the underlying assumptions, are given as follows:
1. The focus of improvement in TQM is smaller processes that integrate to become a larger
business process, while the focus in reengineering is a large, cross-functional business
process. In other words, TQM attempts to enhance the existing process by
means of continuous and steady incremental improvement while reengineering on the other
hand seeks major breakthroughs through dramatic, radical change
2. TQM usually focuses on improving one or more parts of the process, such as its inputs
Page 125 of 267

(information and materials), transformation components (people, supplies, methods,
machines, and environment), and outputs (information and materials). However, mature
TQM organizations always improve their smaller processes with the larger process in mind
in order to ensure that all improvements maximize total performance. In contrast,
reengineering means discarding the entire old system starting over from scratch and
searching for new models and approaches of organizing work
3. It is generally assumed that the fundamental purpose and structure of a process in a TQM
will remain intact On the contrary; reengineering assumes that the whole process would be
completely redesigned. Reengineering also involves a different approach from TQM to
change the management.
Technically, reengineering cannot be considered as an alternative to TQM because business

reengineering is a method of doing things while TQM is a philosophy of
management Although reengineering has been quite successful with several huge organizations,
it is still too early to speculate on the long-term impacts. In fact reengineering can be generally
redefined as a subset of TQM but with a larger span/scope of operations. Although both TQM
and. business reengineering recognize the importance of business processes and the needs of
the customers, they differ in the magnitude of the process to be redesigned For instance, TQM
believes in redesigning small processes a few at a time by means of continuous and steady
incremental improvement, business reengineering, on the other hand believes in seeking major
breakthroughs through dramatic, radical change. Further, TQM is a philosophy of management
and reengineering is merely a tool. Therefore, it is difficult to compare a management
philosophy with a management tool. In conclusion it would be more beneficial for
organizations to combine the TQM philosophy and the reengineering tool to achieve
more substantial and practical results.
1. The __________________________________was established by Congress in 1987.

2. ISO 9000 is a set of quality management concepts and quality assurance requirements
published by the ___________________
3. Business Process Re-engineering is also known as ___________________
Page 126 of 267

4. ________________is a new style of quality management based on the goal of increasing
customer satisfaction through process improvement.
7.7 Summary
Total Quality Management (TQM) is perhaps the leading management approach that
companies employ to improve their product and service quality with the aim of improving
typical measures of business performance (e.g. increased profits, increased market share,
reduced costs). However, consumer perception of quality not only results from an evaluation
of the intrinsic quality attributes of the product (e.g. performance, reliability, durability) but
is also affected by the marketing mix (e.g. price, advertising, warranties) adopted by the
company selling the product. This chapter examines the relationships between TQM, some
marketing mix variables and measures of company performance. TQM dimensions are the
system of employee relations and the use of quality management-related design tools. There
is an absolute existence of a relationship amongst price, advertising and warranties and the
entire marketing process
7.8 Glossary
Business Process Reengineering: Business reengineering is described as "a conceptually new

business model and an associated set of techniques used to reinvent competing organizations."
Six Sigma: Six Sigma is the data-driven methodology for eliminating defects in
organizations based on standards, measurements, and repeatable processes, has provided
undeniable success for organizations around the world by eliminating waste and improving
productivity.
Malcolm Baldrige Award: This award is given annually to a maximum of six firms based
on a rigorous evaluation of quality achievements in seven broad categories worth varying
points not exceeding a total of 1000.

1. Malcolm Baldrige National Quality Award
2. International Standards Organization
3. Business Process Redesign
4. Continuous improvement
Page 127 of 267

7.10 REFERENCES
1. Cortada, James W., TQM for Sales and Marketing, Mc Graw Hill Education
2. Hradesky, John L., Total Quality Management Handbook, Mc Graw Hill Education
1. Deming, William Edwards, Quality, Productivity, and Competitive Position, MIT Press
2. TQM in Sales and Marketing: A Practitioner's Guide, Technical Communications Press
1. Discuss the relationship between TQM and BPR.
2. Write a detailed note on factors for excellence in sales and marketing.
3. What are the several principles of BPR?
4. Write a note on the prevalence of sales TQM?
Page 128 of 267

LESSON – 8
Quality Control
Structure
8.1 Objectives
8.2 Introduction
8.3 Statistical Quality Control
8.4 Objectives of Statistical Quality Control
8.5 Benefits of Statistical Quality Control
8.6 Procedure of Statistical Quality Control
8.7 Tools of Statistical Quality Control
8.7.1 Statistical Process Control
8.7.2 Descriptive Statistics
8.7.3 Acceptance Sampling
8.8 Change Management
8.9 Quality in After Sales Service
8.11 Summary
8.12 Glossary
8.14 References
Page 129 of 267

8.1 OBJECTIVES
1. Explain various categories of Statistical Quality Control

2. Elucidate the use of descriptive statistics in measuring quality characteristics
3. Understand the acceptance sampling approach
4. Recognize and establish root causes of deviation
5. Discuss the use of control charts
6. Understand the distinction between several control and attribute charts
8.2 Introduction
Quality of a product/service is a significant matter of concern for any manufacturing
organization because of the constantly evolving quality standards. Quality Control is a
process by which organizations evaluation the quality of the parameters involved in
manufacturing process. Quality control is a set of procedures that are used to ensure that a
manufactured product or a service adheres to a defined set of quality standards and meets the
requirement of the customer. ISO 9000 defines quality control as “a part of quality
management focused on fulfilling quality requirements.” Traditionally, the quality control
was designed to prevent the production of those products which failed to meet the set
standards. This was accomplished by the way of inspection of the products which lead to
either rejection or rework of the defective products. This was in turn leading to an increase in
the cost and time which further lead to loss of productivity, customer dissatisfaction and loss
of competitive advantage. To avoid the rework or rejections, it was seen that quality must be
built into the products and the processes.
Quality as a concept can be categorized into quality of design and quality of conformance.
Quality of design is known by the extent to which products and services are designed by
keeping in view the needs and requirements of the customer. Quality of conformance refers
to the objective of the designer that is actually built into the product or service.
Quality control stresses on testing of products to identify the defects and taking corrective
action by removing the deviations so that these defects do not happen again. Quality control
lays emphasis on well defined processes, job management, performance criteria, skills,
knowledge, experience, motivation, team spirit and identification of records.
Page 130 of 267

In order to set up an effective Quality Control framework, an organization must set up the
specific standards that a product or service must meet. The activities involved in a quality
control process like testing, inspection, reporting, corrective measures, customer satisfaction
must be clearly defined. It must be ensured that quality is instilled in every process, activity
and personnel involved. Quality control process is an ongoing process that ensures that
remedial actions, if needed, are providing satisfactory results and also report the recurrences
and new incidents of troubles immediately.
8.3 Statistical Quality Control

Statistical quality control is referred to the phrase that is used to illustrate the set of various
statistical tools and techniques used by quality experts. It is helps in analyzing all the
problems related to quality and find solutions to them. SQC refers to “the use of statistical
methods in monitoring and maintaining quality of products and services”. It helps in
controlling inventories received by production department, internal rejections, customers,
claims and appraisals of the remedial measures related to the follow-ups. SQC tools guide all
the quality related activities. It also links the development and performance indicators to
management, customer requirements and satisfaction.
“Dr. Walter Shewart laid the foundation of statistical quality control in Bell Telephone Labs
in the 1920s while conducting research on methods to improve quality and lower the costs.”
He came up with the theory of controlling all the variations occurring and also developed the
concept of Statistical Process Control. Dr. Edwards Deming further worked on the concepts
given by Shewart and took them to Japan. Japanese industry adopted these concepts which
resulted in high quality Japanese products. Statistical Process Control is an approach being
widely used by the manufacturing firms across the world. Dr Deming is known as “God of
Quality” throughout in Japan.
8.4 Objectives of Statistical Quality Control – The main objective of SQC is to reduce the
variations existing in all the processes. The aim is to identify the causes of variations and
device ways of eliminating them. There can exist random causes of variation or the
assignable causes of variation. The purpose of statistical quality control is to isolate the
random variation from other sources of variation that are traceable or whose cause can be
identified.
Page 131 of 267

8.5 Benefits of Statistical Quality Control – 1. It signals when a problem has occurred.
2. It detects assignable causes of variation.
3. It monitors process quality and feedback for keeping processes in control.
4. It helps in process characterization.
5. It helps in making changes to a process and helps in evaluating the side effects of the
changes made.
8.6 Statistical Quality Control Procedure – The SQC process involves following steps of
PDSA cycle as given by Walter Shewart –
Plan (P) – Identify the problem and its causes with the help of quality control tools.
Do (D) – Make changes designed to rectify or improve the problem.
Study (S) – Study the effects of the changes made. This step uses control charts to
understand the effect of changes over a period of time. Evaluate the results and
repeat/abandon the changes made.
Act (A) – If the result is successful, standardize the changes and if result is not successful
then look for some other ways to change the process.
8.7 Tools of Statistical Quality Control - Statistical quality control (SQC) encompasses
three broad categories of:
1. Statistical process control (SPC) – defined as “the application of statistical techniques
to control a process by monitoring various physical variables and the correction of
variables when they deviate from the established standards”.
2. Descriptive statistics - include the mean, standard deviation, and range
3. Acceptance sampling – defined as the task of exercising control by randomly
inspecting a batch of the incoming raw material and outgoing finished goods to
determine acceptance/rejection.
8.7.1 Statistical Process Control – Statistical Process Control is “an industry standard
methodology for measuring and controlling quality during the production process”. It is used
to determine the stability and predictability of a procedure. Quality data with regards to
product and process measurements are taken in real time during the production process. This
data with pre established control limits is then plotted on a graph. These graphs are known as
Control Charts. The first control charts were developed by Walter Shewart in the 1920s’.
Page 132 of 267

A control chart helps in recording data and seeing any unusual event taking place. Control
charts help in identifying any process variations occurring and also indicate the process
instability. After knowing the variations and instability, an action plan can be determined to
remove the out of control condition. This process continues until the process is capable and in
control. This further helps in achieving higher levels of quality. Control charts are an
effective and confirmed technique for getting better productivity and are quite effective in
preventing the defects from recurring. Control charts consist of the following four vital
features –
1. Data points are the individual measurements or the averages of subgroup
measurements and are plotted on the x and y axis. Time is always shown on the x axis.
2. The centre line also known as average line is the mean of data points. It is drawn
across the middle of the graph.
3. The upper control limit (UCL) is the line plotted above the centre line and is known as
“+3σ” line.
4. The lower control limit (LCL) is the line plotted below the centre line and is known as
“-3σ” line.
General model for a control chart - UCL = μ + kσ
CL = μ
LCL = μ – kσ
where “μ is the mean of the variable, and σ is the standard deviation of the variable”.
UCL=upper control limit; LCL = lower control limit; CL = center line where k is the distance
of the control limits from the center line, expressed in terms of standard deviation units.
When k is set to three, it refers to 3-sigma control charts. Traditionally, k = 3 happens to be
known as an accepted standard in manufacturing industry.
Control Chart Basic Procedure -
• Select the appropriate control chart for the data.

• Decide the suitable time period for collection and plotting of data.
• Collect data, draw the chart and do the data analysis.
• In the control chart, find the “out-of-control signals”. When any such signal is found out
then highlight it on the chart and explore the cause of such out of control signals. Record
how these signals were investigated, what was the learning, what were the root causes and
Page 133 of 267

what corrective actions were taken.
• Keep plotting the data as and when it is generated. With plotting of new data points any
out of control signals must be checked for and identified.
There are two categories of control charts –
A. Variable Control Charts – These charts use variables to express those features that can
be numerically expressed and measured. For example - length, weight, diameter, time,
temperature etc. It is applied to data with continuous distribution. There are further types of
variables control charts -
1. R chart (range) – “The control limits on the X-bar chart are derived from the average
range, so if the Range chart is out of control, then the control limits on the X-bar chart are
meaningless”. Keep checking for out of control signals. If any such signals are spotted, then
the assignable causes for these need to be removed. “There should be more than five distinct
values plotted, and no one value should appear more than 25% of the time”. If there are
values that get repeated again and again, it points towards the unsatisfactory resolution of the
measurements. These can unfavorably affect the control limit calculations. In such a case, it
is necessary to review the way a variable is measured and efforts must be made to measure it
accurately. When the cause of the “out of control points” from the r chart is eliminated, then
move to the X-bar Chart.
R1  R2  ...  Rn
CL  R 
n
UCL R  R  3
LCL R  R  3
Page 134 of 267

2. X-bar (average/mean chart) - X-bar charts are used to observe the changes in the central
value of a process (measures of central tendency). These charts “monitor the process location
over time, based on the average of a series of observations, called a subgroup”. X-bar or R
charts are used when the measurements in groups (subgroups) having observations between
two to ten can be collected rationally. These subgroups at any given point in time denote a
"snapshot" of the process. X axis in these charts is time based and thus shows a history of the
entire process. “Therefore, data should be in the order of time and must be entered in the
sequence from which it was generated. If this is not the case, then trends or shifts in the
process may not be detected, but instead attributed to random (common cause) variation”. X-
bar Charts are “efficient at detecting relatively large shifts in the process average, typically
shifts of +-1.5 sigma or larger”. With an increase in the subgroup, the chart gets increasingly
receptive toward the shifts, providing a Rational Subgroup that can be formed. Center line
and control limit formulas –
x 1  x 2  ...x n σ
x , σx 
n n
where (n ) is the # of sample means and (n) is the number of observations within each sample
CL  x
UCL x  x  kσ x
LCL x  x  kσ x
Page 135 of 267

3. S chart – In case of S charts the standard deviations of the sample are plotted so as to
control the variability of a variable. For sample size (n>10), the S-chart is more efficient than
R-chart. For situations where sample size exceeds 10, the X-bar chart and the S-chart should
be used.
CL  s 
s i
si 
 ( xi  x)2 k
n 1 UCL  sB4
LCL  sB3
4. Moving Average–Moving Range Chart (also called MA–MR chart) - Moving Average
also called Range Charts are the control charts that are used for variables data. The type of
control charts observe the location of a process over a period of time, based on the mean
values of the existing subgroup and one or more previous subgroups. The moving average/
range charts evaluate the process variations over a period of time. Moving Average Charts
are usually employed to detect any small shifts in the process mean. These are very effective
in detecting shifts of 0 .5 sigma to 2 sigma. But at the same time, these charts lag behind in
detecting large shifts in the process mean. “The control limits on the Moving Average chart
are derived from the average range, so if the Range chart is out of control, then the control
limits on the Moving Average chart are meaningless”.
B. Attributes Control Charts – Charts constructed to control the quality characteristics of

attributes are known as control charts for attributes. Designating units as "conforming units"
or "nonconforming units" can be a good example of a common quality characteristic
classification. Sorting units into "non defective" and "defective" categories can be another
quality characteristic criteria. These types of quality characteristics are called attributes. “The
number of failures in a production run, the proportion of malfunctioning wafers in a lot, the
number of people eating in the cafeteria on a given day, etc make good examples of attribute
quality characteristics”. There are further classifications of attributes control charts –
1. P Chart - The p-charts are the most common attribute chart. The letter p denotes a
fraction/percentage of the number of items that are defective and unacceptable. These charts
help in examining and controlling the percentage of items that are found to be defective in a
production process. It tracks the percentage of those items that do not conform to the set
standards in a sample taken out from a production lot. As per a random sample plan the
Page 136 of 267

chosen sample contains those consecutive items that have been picked up at a specified time.
The sample may consist of the items that form hundred percent part of the production for a
particular period of time (hours, days, and weeks). In the evaluation process even if an item
has many defects it would be counted as defective only for once. Whether or not a sample lot
will be accepted, this decision may depend on the evaluation of one or more characteristics.
Before the p chart is actually carried out, there must be complete readiness to ensure that the
projected data achieves complete accuracy. The entire process must be defined clearly.
Following steps are involved in constructing a p chart:
First of all the needed data is collected after deciding the size, frequency and number of
samples to be taken. Caution must be taken to ensure that the sample size is large enough so
that most of the samples have no defects at all. The sample size should be so big that an
average of five or more defectives is obtained per sample. It is considered reasonable to have
a sample size of minimum fifty units. In order to carry out the calculations and analysis of the
chart in an easy manner it must be ensured that the sample size remains constant. If the size
of the sample does not exceed twenty five percent of the average size of the sample then one
can make use of a single set of control limits. The need for separate control limit calculations
will arise in case the sample size exceeds twenty five percent of the average size of sample.
The p-chart must show an accurate interpretation of the entire process over the specified time
intervals. All the items that have been manufactured during that period of time must stand an
equal chance of getting selected in a sample. A minimum of 20 samples must be chosen.
The second step is to calculate the value of p (percentage of defectives) for each sample. This
is done by dividing the number of defectives (np) by the actual sample size (n). The equation
framed will be - [p = np/n]. Let us suppose, if the number of defects in the sample size of 50
units is 4, then p will be equal to 0 .08. As per formula: [p = 4/50; .08).
The third step is to set up a scale for plotting of p-chart on a graph. After calculating several p
values, the scale must be set from 0 to twice the largest calculated value of p.
In the fourth step all the p values are plotted on a graph or a chart and then all the plotted
points are connected with a straight line.
In the fifth step, the value of p bar and control limits are calculated. Adding all np values
(total number of defects) and dividing the sum by the total amount of units in all samples will
Page 137 of 267

give the value of p-bar. Let us suppose that the total number of defects is 134 units, and the
total number of samples is 20 with a sample size of 50 units in each sample. This gives us a
total of 1000 units; the calculation will give a p-bar value of 0.134 that is 134/1000. This p
bar value can be shown in the chart/graph in the form of a solid line.
The last step in the construction of a p chart is to interpret the graph plotted. If all the p values
fall within the control limits, this shows that the process is well within the statistical control.
number of Defectives
CL  p 
Total numbr of itemsInspected
p(1  p)
σp 
n
UCLp  p  k σ 
LCLp  p  k σ 
The following is a typical example for conducting a p-chart.
Sample # of defects p-value UCL= .134 + 3.134 x (1. - .134)/50 LCL= .134 - 3.134 x (1. -
.134)/50
n np np/n
= .134 +3.134 x .866/50 = .134 -3.134 x .866/50
50 4 0.08
= .134 +3.1164044/50 = .134 -3.1164044/50
50 5 0.10
= .134 +3.00232088 = .134 -3.00232088
50 9 0.18
= .134 +3 (.4818) = .134 -3 (.4818)
50 6 0.12
= .134 + .1445 = .134 - .1445
50 5 0.10
UCL= .2785 LCL= -.1050
50 11 0.22
50 4 0.08
50 7 0.14
50 8 0.16
50 3 0.06
50 7 0.14
50 9 0.18
50 6 0.12
Page 138 of 267
P Chart for 20 Samples of 50 units
0.30
0.25
0.20
0.15
P Value
0.10
0.05
0.00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Sample #
2. C Charts- C charts are also known as count charts. These charts deal with “the number of
defects occurring in units that have a uniform size and/or quantity”. C charts represent
graphically the total number of defectives found in each piece or unit during the inspection
process. “If the number of defectives in a specific unit lie above or below the upper or lower
control limits or if all of the points lie within the control limits but behave in a nonrandom
manner, then it is likely that the process is not in control and should be adjusted to prevent
the defects before continuing with production”.
There are certain steps that need to be followed so as to construct a C chart. The first step is
to find out the average number of defectives per unit. These defects are denoted by c bar, and
the standard deviation is denoted by the square root of c bar, for the process. The next step is
to plot the average number of defects on a chart or a graph. The plotted values when joined
form the central line. After this, the upper control limit (UCL) is calculated by adding three
times the standard deviation to the value of C bar. The formula is: UCL = c bar + 3c bar.
Similarly, the lower control limit is calculated by subtracting three times the standard
Page 139 of 267

deviation to the value of C bar. The formula is: LCL = c bar - 3c bar. After finding out the
UCL and LCL values, these are then on a chart or a graph. After plotting the number of
defects on the graph, the points are connected and this forms a straight line on the graph. The
x-coordinate on the graph denotes the individual units of the process, and the y-coordinate on
the graph denotes the number of defects per each unit. After plotting the C chart on a graph, it
is concluded if the process is within the control limits or outside the control limits. This can
be done by examining the points that have been plotted to see if they are lying within the
control limits, or if there is a pattern arising that is nonrandom to the data. If any of these
situations arise, then the process is scrutinized and corrective measures are taken to prevent
the occurrence of defects in future. C charts are widely used for exercising quality control in
manufacturing and processing. For example, in painting department of an automotive
production system, the number of defects occurring in the paint of a car can be calculated and
plotted on a c chart. After plotting the chart, it can be decided if the paint job is within the
control limits for the process. C charts can be constructed in all those cases where the number
of defectives/nonconformities can be counted. The number of defects in a bed sheet, the
number of defects in a woven carpet, the number of defects in a roll of aluminum foil is
example of those processes that are eligible to be evaluated using the c charts.
C chart is a very effective statistical tool that is widely used in quality management. If the
process wherein the C chart is being applied deals with “units whose defects or
nonconformities can be counted or expressed numerically, then it is definitely an advantage
for the employees to make use of c charts to evaluate that process”. With the ever increasing
focus on quality control and quality management, c charts are a very powerful tool of
statistical quality control process.
number of complaints
CL  c 
number of samples
UCLc  c  k c
LCLc  c  k c Page 140 of 267
3. Np Chart – These charts are similar to C charts but their control limits are based on
binomial distribution and therefore, these cannot be used for samples having rare number of
defects. The number of defects must be a minimum of 5%. These charts are helpful in those
cases when it is convenient to count the number of defective items and the sample size
remains the same and doesn’t change. The numbers of defective route boards, bad snacks in a
hotel, cashier dealings in a bank, bills etc. make good examples.
4. U chart – U chart helps in determining “the stability of counted data (e.g., errors per
widget, inquiries per month, etc.) when the sample size varies”. The u chart helps in
reviewing the stability level of a process in those cases where there exists one or more defect
per unit. These charts are also helpful when one wants to know “how many defects are there
not just how many defective items are there”. There is a difference between getting to know
how many defective boards, servings of food, dealing or bills are there and getting to know
how many defects have been found in all these defective items. It is based on the Poisson
distribution.
These charts are used when the size of a sample keeps changing- the number of boards,
servings of food, or bills drawn keeps changes.
8.7.2 Descriptive Statistics - Descriptive Statistics include:
1. The Mean- Mean is the measure of central tendency also known as average/central value
of a given data. Mean is denoted with the symbol of x bar.
 x
x 
n
2. The Range- Range is the “difference between highest and smallest observations in a set of
given data”. R = H-S
3. Standard Deviation –This statistical tool measures the amount of data dispersion around
mean.
 X  X 
2
σ
n 1
Page 141 of 267

4. Distribution of Data shape – 1. Normal or bell shaped 2. Skewed
8.7.3 Acceptance Sampling – It is another important division of Statistical Quality Control

that “points towards the process of randomly inspecting a certain number of items from a
production lot or batch so as to determine if the entire batch can be accepted or it has to be
rejected”. It is very different from Statistical Process Control because acceptance sampling is
executed either before or after the process has completed rather than during the process. In
sampling before the process, the sample is chose from the raw material supplied by the
suppliers. Inspection of finished items/components before they are shipped or before they are
assembled is done in case of sampling after the process. This technique is appropriate in those
cases where inspection process gets costly or the volume of items to be inspected is high.
Though the technique of acceptance sampling can be used on both the variable and attribute
measures, but it is widely used for attributes. Acceptance Sampling determines the criteria for
acceptance or rejection on the basis of:
(1) Size of the lot denoted by N

(2) Size of the sample denoted by n
(3) Number of defects over and above which a lot will be rejected are denoted by c
(4) Level of confidence that the firm wants to achieve
8.8 Change Management in Quality Control- Change management holds much

significance because it is a fundamental part of commercial success in the business world.
Consumers change and business structures see various forms of transition as well. Unless a
Page 142 of 267

business entity is ready to change its operations and methodologies, it cannot succeed in the
ever evolving business environment. Companies must implement different changes in a
cohesive plan. People are often afraid to try new things out. They must be encouraged to
overcome their fear of change.
There is another aspect to change management in quality control. Change management is “a

process in quality control that keeps track of all changes made throughout the life of a
project”. It is very important to record and document the entire process of finding a defect in
a product and then undertaking the process of repairing these defects. The change can lead to
several issues with other requirements of the production line. Change management holds
even more importance because changes influence the human resources in a big way. A single
change can have an effect on the entire project and if such changes are not well
communicated then several snags can be faced during the entire quality control process which
can further lead to even bigger problems. If an enterprise aims at achieving total quality then
any change happening in a quality control environment must be well controlled. Quality
control is all about organizing several procedures and processes. It is very essential to keep
following the changes in a systematic way so that it becomes easier to evaluation these
changes. Any change can bring about a huge difference to the end result (output/yield) of a
product or service.
8.9 Quality in After Sales Service – Quality control is not only about delivering a quality
product to the customer but also providing the quality after sales services. After sales service
refers to “various processes which make sure customers are satisfied with the products and
services of the organization”. Companies must keep in touch with the customers even after
the sales have been done. Customer calls should never be ignored, they should be given
necessary support, help them to install/maintain/operate a product. If a customer complains of
getting a product that broken or in a damaged condition then it must be exchanged
immediately. The customers should never be harassed and their grievances should be listened
to patiently and handled immediately. Organizations must have some system through which
the customers are able to register their complaints and queries. Companies must regularly
take feedback of their products and services from the customers. These feedbacks help the
organizations to understand the customers better and bring about the relevant changes in
products/service to ensure better customer satisfaction. The organizations must bring
exchange policies that are transparent and favourable to the customers. Any customer who
asks for an exchange of a product must be treated in the same way as he was when he came
Page 143 of 267

for the first time. The objective must be to create not only new customers but also to retain
the old ones by through brand loyalty. Higher levels of quality must be ensured while
providing after sales service because if the quality of after sales service is poor then it will
discourage new customers from purchasing and existing customers from staying with the
product.

1. __________________________laid the foundation of statistical quality control
2. UCL stands for _____________________________
3. Range is the difference between __________ and __________ observations in a set of

given data.
4. Descriptive statistics include the _________, ____________, and _______________.
5. A statistical chart of time-ordered values of a sample statistic is a ___________________
6. U chart is based on ___________________ distribution.
7. ____________________ is used in those cases where inspection process is costly or the

volume of items to be inspected is high.
8. _________________ is based on binomial distribution.
9. Assignable causes of _____________ are the ones that can be identified and removed.
10. _______________ is used to determine the actual number of defects in a chosen sample.
8.11 SUMMARY
Quality control is a process using which “an organization seeks to ensure that the product
quality is maintained/improved and manufacturing defects/variations are reduced or
eliminated”. Quality control requires the companies to set up an environment in which both
management and employees put in the best efforts to achieve perfection. This can be done by
providing training to employees, setting up benchmarks, testing/inspecting products to check
for variations using statistical quality control tools. Quality control is setting up a framework
of well defined control limits. The control limits help in standardization of production and
quality aspects. Quality control is “all about setting standards about how much variation is
acceptable”. For organizations that have adopted quality control as a continuous
Page 144 of 267

improvement process, Statistical Quality Control and Statistical Process Control are
commonly used tools. “A quality control approach can be highly effective at preventing
defective products from reaching the customer. But at the same time if the defect levels are
very high, the company’s profitability will suffer and this can only be handled if steps are
taken to find out and eliminate the root causes of variations taking place”.
8.12 GLOSSARY
Normal Distribution: Normal distribution falls in the category of continuous probability

distribution having wide applications. Any normal distribution when shown graphically is
called normal curve. Normal distribution shows perfectly symmetrical data forming a bell
shaped curve. Perfect symmetry means that mean, median and mode are equal in case of a
normal distribution. The normal curve is unimodal, it has only one peak.
Binomial Distribution: A process in which each trial can result only in one of the two states
is called binomial distribution. The trials are independent of each other and the probability of
success in each trial is same.
Poisson distribution: Poisson distribution is a discrete type of probability distribution. It

explains the how many times an event takes place during a specified interval. The interval
may be taken in terms of time, distance, area, volume etc. This distribution is suitable where
it is not possible to know the total number of possible outcomes. The probability of success is
very small and n is large. It is called discrete probability distribution because it is formed by
counting.
Skewness: Skewness refers to asymmetry of a distribution and describes the shape of the
distribution. It refers to the symmetry or lack of symmetry in the shape of a frequency
distribution. In a symmetrical distribution, mean, median and mode coincide and lie at the
center of the distribution. In an asymmetric distribution, these three values are pulled apart.
Sample: the set of observations that is taken from some source of observations for the
purpose of obtaining information about the source is called a sample. It is a finite collection
containing part of the observations from the population.
Page 145 of 267

1. Dr. Walter Shewart
2. Upper Control Limit
3. Highest, Smallest
4. Mean, standard deviation, range
5. Control Chart
6. Poisson
7. Acceptance Sampling
8. Np chart
9. Variation
10. C chart
8.14 REFERENCES
1. Jain, P.L., Quality Control and Total Quality Management, Mc Graw Hill Education
2. Montgomery, Douglas C., Statistical Quality Control, Wiley Publications
1. Kulkarni, V.A., Quality Control, Wiley Publications
3. Montgomery, Douglas C., Statistical Quality Control, Wiley Publications
1. Discuss in the Statistical Quality Control.
2. Write a detailed variables control charts?
3. What do you understand by Statistical Process Control? Discuss various methods of

exercising SPC?
4. What do you understand by Acceptance Sampling?
5. What are the various methods of quality control that organizations can use to instill
TQM framework?
Page 146 of 267

Lesson - 9
ORGANISATION FOR QUALITY
STRUCTURE
9.1 Objectives
9.2 Introduction
9.3 Dimensions of Quality
9.4 Quality Circles
9.5 Quality Control
9.6 Quality Planning
9.7 Reliability of Quality Characteristics
9.8 Quality Culture
9.9 Quality Leadership
9.11 Summary
9.12 Glossary
9.14 References
9.1 OBJECTIVE
From the chapter you will be able to understand:
1. Meaning of Quality.
2. How to manage team and work in a team.
3. Importance of Reliability of Quality and what is Quality Leadership.
4. Quality Culture will be more clearly understood.
9.2 INTRODUCTION
Page 147 of 267

J.M. Juran is known as father of Quality. Managers deal with a very critical issue of
profitability and productivity. The cost of operations and quality of the goods and
services produced, all contribute to profitability. Of all these elements organization,
quality is the most important element that limits the long-run success or failure of
the quality reduces costs, increases productivity and satisfy customers and most
importantly generates profits. QUALITY can be defined as “Quality is the totality of
features and characteristics of a product or service its ability to satisfy given needs.
Further quality is meeting or exceeding customer expectations. “
9.3 DIMENSIONS OF QUALITY
The concept of quality can be examined from a different view. The perspective of
quality should shift as products move from conception to market.All
approaches/dimensions should be embodied in the overall company philosophy to
get a quality product. David Garvin has given eight principal quality dimensions.
These are
1. Performance: This represents the primary operating characteristics of a
product. The operating characteristics depend on individual tastes and likes and
dislikes.
2. Feature: These are secondary characteristics of a product. For e.g. free
snacks/lunch served on Rajdhani Express. The features cannot be easily
separated from the performance dimension.
3. Reliability: It is the chance of a product surviving over a set period of time under
stated conditions of usage.consumers viewpoint reliability is important as
maintenance is often expensive. This proportion is really important in case of
consumer durables..
4. Conformance: The degree to which the physical and performance characteristics
of a product match pre-established standards is conformance. It is a relatively
objective standard of character and therefore is less potential to reflect
individual tastes.
5. Durability: This dimension represents the use one gets from a product before it
physically deteriorates or until a replacement is preferable. The goal of this time
period demands replacement. In some events, repairs are possible, but
replacement is chosen.
6. Serviceability: This is the speed, courtesy and competency to repairs with which
repairs are carried out. Customers, often, evaluate the quality of the product on
the basis of the .
Page 148 of 267

7. Aesthetics: This dimension represents the looks, feel, sound, taste or smell of a
product. This is a very subjective phenomenon, although uniformity in ranking is
not impossible.
8. Perceived Quality: This is the subjective assessment of a product resulting from
the icon of the product, its advertising campaign or its brand name. These
perceptions may not reflect the reality of the actual quality may differ from the
customer's perceived quality.
9.4 QUALITY CIRCLES (QC's)
After the colossal destruction in World War II, Japan became notorious for the poor quality
of its goods. 'Made in Japan' became a synonym for shoddy goods. The Japanese started
searching for ways to improve quality. Dr. Deming and Dr. Juran played a key role in this
process. They trained Japanese supervisors thoroughly in the use of Statistical Quality
Control (SOC) techniques. The supervisors disseminated this knowledge and exhorted the
workers to use SQC in solving problems related to quality. This gave birth to the quality
control movement in Japan in the early sixties. The Japanese exploited the SQC and
quality circle philosophy to such an extent that their products became a major threat
to sophisticated western products. Dr. lshikawa Kaoru played a major role in launching
this movement in Japan.
Characteristics of quality circles
1. QC's are small groups, ranging from 4 to 15 members. Eight members are
considered to be the norm.
2. All members come from the same work area. This gives the circle its identity.
3. The members work under a supervisor, who is a member of the circle. The
supervisor is usually, though not always, the leader of the circle.The members, as a
group, make their own decisions.
4. Circles, usually meet once every week to discuss and solve the problems facing
them.
5. Circle members receive training in the rules of quality circle participation, the
mechanics of running a meeting and making management presentations, and
techniques of group problem solving.
6. Circle members, not management, choose the problems they intend to work on,
collect information, analyze the problems and develop solutions.
7. Technical specialists and management assist circles with information and expertise,
whenever required to behave thusly.
Process of quality circles
Page 149 of 267

In the QC philosophy, the circle members identify the work area problems, analyses them
and recover answers. It aims to achieve the objectives through the development of people,
the most important asset of an organization. The process of QC involves:
1. Problem Collection: The creation of a problem bank is one of the main tasks that the
circle members perform. Each problem bank gives a priority number depending on its
benefit potential and urgency. Problem collection is an on-going process.
2. Problem Analysis: Problem analysis depends on facts and not on beliefs.A good number
of data collection tools, charts and statistical techniques to establish facts, before
proceeding to find solutions. Subjective opinions have no place in this philosophy.
3. Problem Solution: A proper environment and group thinking together with expertise in
work area generate appropriate solutions to troubles. Various alternative solutions are
explored and the optimum solution is chosen. Experience proves the people involved in a
work area are better fitted to resolve its troubles and their results are viable and practical.
4. Management Presentation : The solutions chosen by the circle members are presented to
the management, highlighting the benefits anticipated. Acceptance of the solution acts as a
powerful motivator.
5. Implementation, review and follow up: After obtaining the sanction of the management,
the circle members chalk out a docket for the implementation of the results.The results are
constantly reviewed and follow-up action is taken if required. In fact, review and follow-up
are a continuing responsibility of the band.
Benefits of quality circles
There are no financial rewards in the QC's. But there are many other gains, which primarily
benefit the individual and in turn, benefit the organization. These are
1. Self-development: QC's facilitate self-development of individuals by bringing about

attitudinal change, improving self-confidence and a sense of achievement.
2. Social development: QC is a participative and a consultative program where each
member interacts with others. This interaction helps in developing team-spirit.
3. The chance to acquire knowledge: QC members have an opportunity for acquiring
new knowledge by sharing ideas, views and experience.
4. Potential Leader: Every person brings an opportunity to get his leadership potential,
since any member can become a leader.
5. Improved communication skills: The joint problem solving and presentation before
the management helps the members to better their communication skills.
6. Job satisfaction: QC's encourage creativity by tapping the dormant intellectual skills
of the people. People also perform activities different from everyday work, which
boosts their self-confidence and gives them immense job satisfaction.
Page 150 of 267

7. Healthy work environment: QC's generates a tension - free environment which each
member likes, understands and co-operates with others.
8. Organizational benefits: The individual benefits, generate a synergistic effect,
leading to higher productivity, better quality, reduction in waste and cost
effectiveness. All these benefits are long-term in nature, which bring about
improvements over a point of time.
Drawback of QC's /Essentials of effective QC's :-
1. Unconditional Support- The top management should provide unconditional support

to the QC movement. The support should also be made visible, by the top managers
by participating frequently in the QC activities.
2. Prompt approval: The acceptable recommendations of the circle or delayed, reason
for should be promptly approved to boost the enthusiasm of members. If the
recommendations are not accepted or delayed, reasons the same should be
explained to the members.
3. Long-term approach: The objectives intended to be achieved can be attained over a
point of time QC's are a long-term approach. Overnight miracles can't be achieved in
a QC's.
4. Proper orientation: The QC Philosophy should be prized by one and wholly. For this
proper orientation at all grades need to be taken on. This will help in increasing
everybody's involvement in the movement.
5. Morale trickles from the top: The top management should praise the work of the
members. This boosts the morale of the members and helps in maintaining their
continued enthusiasm. The rule to be recalled is that morale trickles from the
summit.
6. Expenditure scrutiny: The top management should get the cost — benefit analysis
done expeditiously. Delays can demotivate the members.
7. Dispel fears: The middle management often entertains fears like losing importance,
becoming redundant, being exposed, etc. The top level needs to take steps in this
guidance and ensure that such concerns are driven out.
8. Identify of interests: Middle management cooperation and identify of interests with
circles is important. Lack of understanding of objectives lead to a diversity of
interests and to misdirected goals.
9. Regular communication: The communication channels should be kept open to
secure the success of QC. Communication gap can lead to misinformation or no
information between different people affected in the QC operations.
10. Also, there should be no language barrier. Training should be conducted in a
common language.
Page 151 of 267

11. Proper environment: A proper environment with mutual trust, faith and respect is
necessary for QC's to thrive.
12. Effective leader: The success of a QC depends largely on the leader. He bears to take
initiative, be tolerant, appreciate the objectives, motivate the members and foster a
spirit of unity. He should also own responsibility for the action of the QC.
9.5 QUALITY CONTROL
Quality Control is the principle managerial function that is vital to an effective

quality assurance system. Quality Control is the chronic process of assessing performance,
comparing the performance with the laid down criteria and requiring disciplinary action
when necessary. Any quality control system has three components
(a) A standard
(b) A means of measurement of attainment
(c) Comparison of actual results with the standard, along with feedback to form the
foundation for disciplinary action.action.
Quality control is of two types-
(a) On—line quality control: This consists of all control actions that are carried
during the production cycle of a merchandise.
(b) Off—line quality control: These consist of all control actions that are directed
externally to the production process viz. Improving the product plan, control of
incoming materials and other special process studies.
Objectives of quality control:
The following are the main objectives of a quality control program:
1 The quality of raw material used, of semi-finished goods and the final product
produced can be easily assessed at various stages of the production process.
2. It assists in insuring that the production process operates up to the desired

standard and if there is some deviation from the set standard, necessary remedial
measures are required.
3. Quality control facilitates improvement in the measure of goods made with very
small or no growth in the price of production.
Page 152 of 267

4. Introducing quality controls the various departments/sections of the
manufacturing unit develop quality consciousness.. This helps in reducing the cost of
inspection.
5. Quality control helps in minimizing wastage thereby improving the overall

productivity of the firm.
6. Improved quality generates consumer satisfaction and the firm gets higher
profits. These profits can be used to give various monetary and non-monetary benefits to
the employees resulting in improved motivational levels.
Quality audit for quality control
A quality audit is a systematic and independent examination and evaluation to determine

whether quality activities and solutions comply with planned arrangements and whether
these agreements are implemented effectively and are suited to accomplish A quality audit
is a systematic and independent examination and evaluation to determine whether quality
activities and solutions comply with planned arrangements and whether these agreements
are implemented effectively and are suited to accomplish aims.
Demand for Quality Audit
1. It helps in providing a benchmark for determining the completion of a quality

system set by the company.
2. Timely reviews for quality makes aware that top management is serious about the
caliber of the product being made up.
3. It helps in identifying areas of concern and budding of new ideas to solve the
problem.
4. It helps in maintaining a permanent record for the goals to be achieved in terms of
tone.attaining supplier certification and vendor selection for the materials being
purchased.
9.6 QUALITY PLANNING
The ability to identify all functional needs of the product ahead of time and incorporate this
information into each stage in the product development lifecycle is key to assuring product
quality. The functional requirements of the product identified from every possible source
including client feedback and all product characteristics that are necessary to confirm these
demands may be keyed out and tracked across product development to ascertain they are
being met. For Instance, design engineers will have a criteria defining which parts to select
in support of these requirements; test engineers will know which characteristics to
examine for and what their minimum performance must be; manufacturing will know
Page 153 of 267

which phases of the product to control during production to ensure product safety and
capital punishment; and service technicians will pick out which prospects of product
performance to address during routine maintenance or repairs.
9.7 RELIABILITY OF QUALITY CHARACTERISTICS
Practical Approach
In 1956, Armand Feigenbaum took Juran’s ideas a step further by offering “total quality
control” (TQC).Companies would never make high-quality products, he argued, if the
manufacturing department were forced to pursue quality in isolation. TQC called for
“interfunctional teams” from marketing, technology, purchasing, and fabrication.These
teams would share responsibility for all stages of design and manufacturing and would
disband only when they had placed a product in the manpower of a satisfied customer—
who remained satisfied.
Feigenbaum noted that wholly new products moved through three levels of activity: design
control, incoming material control, and merchandise or shop floor control. It was definitely
a step in the right direction. But Feigenbaum did not really look at how quality was first of
all a strategic question for any occupation; how, for lesson, quality might govern the
development of a plan and the choice of features or options. Rather, design control meant
for Feigenbaum mainly preproduction assessments of a new design’s manufacturability, or
that projected manufacturing techniques should be debugged through pilot runs. Materials
control included vendor evaluations and incoming inspection procedures.
In TQC, quality was a kind of burden to be shared—no single department shouldered all the
responsibility. Top management was ultimately accountable for the effectiveness of the
system; Feigenbaum, like Juran, proposed careful reporting of the costs of quality to senior
executives in order to ensure their commitment. The two also stressed statistical
approaches to quality, including process control charts that set limits to acceptable
variations in key variables affecting a product’s production. ion. They endorsed sampling
procedures that permitted managers to make inferences about the tone of entire lots of
products from the condition of items in a small, randomly selected sample.
Despite their attention to these techniques, Juran, Feigenbaum, and other experts like W.
Edwards Deming was trying to stimulate managers to look beyond purely statistical
controls on quality. ty.. ty. Meanwhile, another branch of the quality movement emerged,
relying even more heavily on probability theory and statistics. This was “reliability
engineering,” which started in the aerospace and electronics manufactures.In 1950, only
one-third of the U.S. Navy’s electronic devices worked properly. A subsequent study by the
Rand Corporation estimated that every vacuum tube the military used to throw to be
endorsed by nine others in warehouses or on order. Reliability engineering addressed
these problems by adopting the laws of probability to the challenge of predicting
equipment stress.
Page 154 of 267

Reliability engineering measures led to:
 Techniques for reducing failure rates while products were still in the design stage.
 Failure mode and effect analysis, which systematically reviewed how alternative designs
could get bad.
 Individual component analysis, which computed the failure probability of key
components and aimed to eliminate or strengthen the weakest links.
 Derating, this required that parts be used below their specified stress levels.
 Redundancy, which called for a parallel organization to back up a significant element or
subsystem in case it failed.
Of course, an effective reliability program required managers to monitor field

failures closely to give company engineers the data needed to plan new designs. The
field failure report also called for the evolution of systems of data aggregation,
including the paying back of failed parts to the lab for testing and analytic thinking.
Today, the proponents of all these approaches to quality control might well have
denied that their prospects of quality were purely defensive. But what else was
implied by the solutions they stressed—material controls, outgoing batch
inspections, stress tests? Maybe the best means to understand the conditional
relations of their logic is in the traditional quality control’s most extreme form, a
plan named “Zero Defects.” No other program defined quality, so stringently as an
absence of failures—and no wonder, since it came out from the defense industries
where the product was a missile whose flawless operation was, for obvious reasons,
imperative.s, imperative.
Merchandise quality is quickly becoming an important competitive issue. The

superior reliability of many Japanese products has sparked considerable soul-
searching among American managers.1 In addition, several surveys have voiced
consumers' dissatisfaction with the existing levels of quality and service of the
products they buy.2 In a recent study of the business units of major North American
companies, managers ranked “producing to high quality standards” as their chief
current concern. (Garvin, What Does "Product Quality" Really Mean?, October 15,
1984)
Hence Reliability as a dimension reflects the chance of a product malfunctioning or

failing within a limited time period.the most common measures of reliability are the
mean time to first failure, the mean time between failures, and the failure rate per
unit time. Because these steps require a product to be in use for a limited period,
they are more relevant to durable goods than to products and services that are
consumed directly. Normally it becomes more important to consumers as downtime
and maintenance become more expensive. Farmers, for instance, are particularly
sensitive to downtime during the short harvest season.on. Reliable equipment can
mean the difference between a good year and spoiled crops. But consumers in other
marketplaces are more attuned than ever to product reliability too. Computers and
Page 155 of 267

copying machines certainly compete on this basis. And recent market research
shows that, peculiarly for young women, reliability has become an automobile’s
most desired attribute. Nor is the regime, our biggest single consumer, immune.
Seeing its expenditures for major weapons repair jump from $7.4 billion in fiscal
year 1980 to $14.9 billion in fiscal year 1985, the Department of Defense has begun
cracking down on contractors whose weapons fail frequently in the field. (Garvin,
November,1987)
9.8 QUALITY CULTURE
Quality culture is a set of group values that guide how improvements are made to
everyday working practices and consequent outputs. A quality culture is, arguably, a set of
taken-for-granted practices that encapsulate the ideology of the group or organization.
(Quality Culture).
Another definition as cited by Viljoen and Waveren July 2008 is: Quality culture
encompasses an organization’s practices, central values and philosophy and can be defined
as the concentration of all people and resources in a never‐ending quest for greater quality
and service in every dimension of the organization.
Thus, quality culture refers to a specific portion of the organizational culture related to an
organization’s quality initiative, whereas organizational culture refers to the integral
culture of an establishment.
Total Quality Culture Culture includes who we are, what we believe, what we do and how
we do it. To understand a Quality Culture, one must first understand an Organizational
Culture. Organisational culture is an amalgam of traditions inherited from the past, shared
values and beliefs, a common mindset, characteristic behaviors and symbols. It is for this
reason that corporate culture should be incorporated into organizational processes aimed
at managing strategic change. Organisational culture can be determined as the way things
routinely operate, what people can choose for granted about their organizational life and
how the great unwashed can be expected to be processed.d to be processed. An
organizational culture is the net sum of Business Environment, Organizational Values,
Cultural Role Models, Organizational Rites, Rituals and Customs and finally Cultural
Transmitters. Good results quality is an indicator of aligned organizational culture, where
people’s actions, opinions and experiences align with the requirements results.
Total Quality Culture
As quoted by Salon and Qin, TQM requires that management, and eventually every member
of the organization, commit to the need for continual improvement in the way work is
carried out. The challenge is to produce a robust culture where the estimation of character
improvement is not just widely understood across departments, simply becomes a
fundamental, deep‐ seated value within each functional area as well. The common mistake
is to work with top of the Organizational culture pyramid. More effects are put into actions
to get better results. The fact that people think their beliefs and that there are reasons their
Page 156 of 267

past experience why people think the way they do are ignored. Working with the bottom of
the pyramid experiences and beliefs can yield more significant, long‐lasting change, but it
also takes more effort long term endeavor. When people’s past experiences mostly bad are
erased/readdressed with good experiences positive information flow with management,
their beliefs are altered for good. Doing things actions the right way gets a person’s second
nature. All of this contributes to better quality results. We can name this culture change as
fostering the “civilization of accountability”, when in everyone management and employees
in the governing body creates a personal dedication to accomplishing the organization’s
results customer satisfaction. Setting the foundation “Character is like the creation of a
house ‐ it is below the surface.” – Unknown source.
The same way a solid foundation is a prerequisite for establishing good characteristics in a
quality conscious organization. Following building blocks/steps as given by Goetsch and
Davis 2012 could be applied to establish a good quality culture foundation-
1. Understand the Organizations concept of quality and organizational goals -Assess

2. Desires to tweak or change the quality culture -Plan
3. Define problem/opportunity-Expect
4. Define process/service to be addressed-Model
5. Define measures of success- Training and Monitor
6. Define stakeholders, customers and team- Reinforce and Maintain
Characteristics of Quality Culture
These characterize the assumptions behind the behavior and approach of corporations
with traditional approach to quality.
In an organization with a traditional culture, the primary focus is return on investment and
short‐term profits.
• The boss knows best. Managers think and employees do.

• Lack of team spirit. Everyone for him or herself. Creates an unnecessary strain
between co‐workers. “MVP” Syndrome, organization depends on few individuals
“heroes” to help in tough time.
• Focus on individual work; work in silos
• Keep communication limited and secretive. Keep most information at the top,
and share it only when necessary.
• Success is everything; no tolerance for failure. Success is measured by
immediate bottom line without much concern for long term growth and survival.
So organization with Quality Culture has to be opposite of traditional culture, as this

approach does not seem to work most of the times. A quality culture is guided by
management who believes in the systems view and understands that their company exists
Page 157 of 267

to create a mutually beneficial relationship between itself, its people and its customers.
Modified ISO9000 process model ISO 2009 can be treated a system view of quality culture.
(Asar, April 03, 2014)
Summarizing the discussions on quality culture at the First European Forum For Quality
Assurance, Harvey, (2007) wrote: Although there was much discussion around quality
culture, there were few attempts in the discussion sessions or the forum as a whole to
define quality culture. However, there was considerable exploration of the characteristics
of a quality culture. The following features emerged as indicative of a quality culture:
• There is academic ownership of quality.
• There is a recognition by academics and administrators of need for a system of quality
monitoring to ensure accountability (and compliance where required) and to facilitate
improvement. However, this should not be a 'bureaucratic' system
• Quality culture is primarily about the behaviour of stakeholders rather than the operation
of a quality system.
• The quality system needs to have a clear purpose, which articulates with the quality
culture.
• A quality culture places consumer at the centre.
• A quality culture is about partnership and co-operation, sharing of experiences and team
working.
• A quality culture is about supporting the individual as an autonomous scholar, but not at
the expense of the learning community; there is a symbiotic relationship between
individual and community.
• Leadership in a quality culture is more inspirational rather than dictatorial. Leadership is
at all levels in the institution and does not refer to just senior managers.
• A quality culture welcomes external critical evaluation from a variety of sources, including
formal external evaluations, external peers acting as critical friends, and internal peer
review and support.
• At heart a quality culture is about facilitating and encouraging reflexivity and praxis; self-
reflection, developing improvement initiatives and implementing them. (Harvey, 2014)
9.9 QUALITY LEADERSHIP
“Quality today has become the foundation for constant foundation for constant
management innovation and leadership ”. Feigenbaum,,2007
“Attaining quality leadership requires that upper managers personally take charge of the
quality initiative.” Juran, 1995
The role of leadership in quality management forms the backbone of any improvement
strategy. Leaders provide a unity of purpose, while also establishing the direction of the
organisation. As such, the responsibility of leaders consists of creating and maintaining the
internal environment. In this environment, employees are able to become completely
involved in achieving the organisation’s goals and aims. In this way, good leadership is
Page 158 of 267

essential in order to improve quality across the organisation, as the leading force that sets
objectives and assists employees to implement these objectives (Stainow, 2011).
Key Differences In Leadership Between Quality And Traditional Approach -
• Strategic Focus- leaders in a quality system try to strategically focus on the needs and
wants of the end user as compared to the traditional approach of just producing whatever a
manufacturer can produce.
• Vision- the leader has a straight vision in quality perspective as what has to be achieved
and he knows what work has to be given to whom. Whereas in traditional approach
producers were the king and use to dictate the consumer.
• Designing Reward Systems- quality leadership focuses on giving rewards to the person
who accomplishes the target and sustaining the project right from the start to end.
• Empowerment and Teamwork- Quality leadership further focuses on teamwork as

without good team targets cannot be achieved.
The Role of Leadership in Total Quality Management

Mrotek, 2014 said “The quality management process is a part of a business that has been
often overlooked in the past; now firms are realizing it is an integral piece of the puzzle and
overhauling their total quality assurance departments in order to gain a competitive
advantage. How does leadership play a role in improving quality management; and what
are some steps you can take today to ensure sustainable success?”. There are many
sources that explain the theory of the Total Quality Management (TQM) process of the firm.
Leadership puts these principles into action. Without sound leadership, the quality control
process would be less effective. A firm may have all the industry "best practices" employed,
but it takes internal leadership to take quality management to a level that will put the firm
in the best possible position to succeed.
1. Create the proper environment: This overhaul can be accomplished through

organizational leadership. The role of leadership in quality management is a major part of
any organizational developmental strategy. If the leader can maintain an environment that
fosters employee responsibility, the organization will be more likely to meet their quality
output goals because each individual will be involved in firm's advancement.
2. Lead by example: This can be accomplished by leading by example. True leaders

can get people to willingly follow them, as opposed to managing by dictation. Especially as
it applies to quality management, the leader must fully grasp and be a proactive reactor to
the external environment. The leader must perform due diligence when researching the
Page 159 of 267

market in which they are competing. This includes having a flexible strategy. Like in the
game of chess, a true visionary leader will react accordingly to moves of their opponent.
3. Craft a strategy, then be flexible with it: Again, like in chess or even checkers, the
leader must unify his employees (not a derogatory comment against employees, just an
analogy) to use all of their unique skills and talents in a unified manner. This way, every
step of the process will ensure an output of high quality. Of course, this is the goal of the
quality management department of any business.
Total Quality Management is just another piece of the puzzle that organizational leaders
must strive to master so that they may move the firm forward. By doing so, the business
will have an even better shot to position itself to be a winner in it's industry.
1. Who is the father of Quality-

a) J.m Juran
b) Demming
c) Mehta
d) None of these
2. A ____________ is a systematic and independent examination and evaluation to
determine whether quality activities and solutions comply with planned
arrangements and whether these agreements are implemented effectively and are
suited to accomplish.
a. Quality Control
b. Quality Audit
c. Quality Cirlcle
d. None of the above
3. Which is not a Dimension of Quality-
a. Performance
b. Conformance
c. Reliability
d. Accuracy
4. SOC stands for
a. Statistical Quality Control
b. Statistical Quality Circle
c. Statistical Quality Creation
5. Dr. Ishikawa played major role in launching ___________activity in Japan.
Page 160 of 267

a. Quality Audit
b. Statistical Quality Control
c. Quality Planning
d. Quality Assurance.
6. Which is the first step in the process of Quality Circle
a. Problem Collection
b. Problem Analysis
c. Problem Solution
d. Problem data
7. Quality Control has ________ components
a. 4
b. 3
c. 2
d. 5
8. “Quality today has become the foundation for constant foundation for constant
management innovation and leadership ”. whos said these words
a. Feigenbaum
b. Juran
c. Ishikawa
d. Demming
9.11 SUMMARY
Quality is the totality of features and characteristics of a product or service its
ability to satisfy given needs. The concept of quality can be examined from a
different view. The perspective of quality should shift as products move from
conception to market.All approaches/dimensions should be embodied in the overall
company philosophy to get a quality product. David Garvin has given eight principal
quality dimensions. Dr. Deming and Dr. Juran played a key role in training Japanese
supervisors thoroughly in the use of Statistical Quality Control (SOC) techniques.
Although thers are no financial rewards in the QC's. But there are many other gains,
which primarily benefit the individual and in turn, benefit the organization.
Reliability as a dimension reflects the chance of a product malfunctioning or failing
within a limited time period.the most common measures of reliability are the mean
time to first failure, the mean time between failures, and the failure rate per unit
time.on the other hand, Quality culture is a set of group values that guide how
improvements are made to everyday working practices and consequent outputs.
A quality culture is, arguably, a set of taken-for-granted practices that encapsulate
the ideology of the group or organization. According to Feigenbaum, Quality today
has become the foundation for constant foundation for constant management
innovation and leadership ”.
Page 161 of 267

9.12 GLOSSARY-
1. Quality is the totality of features and characteristics of a product or service its

ability to satisfy given needs.
2. Quality Circle-QC's are small groups, ranging from 4 to 15 members where Eight
members are considered to be the norm and all members come from the same work area.
This gives the circle its identity.
3. Quality culture is a set of group values that guide how improvements are made to
everyday working practices and consequent outputs.
4. Quality Management -The quality management process is a part of a business that
has been often overlooked in the past; now firms are realizing it is an integral piece of the
puzzle and overhauling their total quality assurance departments in order to gain a
competitive advantage.
5. Quality Leadership-The role of leadership in quality management forms the
backbone of any improvement strategy. Leaders provide a unity of purpose, while also
establishing the direction of the organization.
9.13 ANSWERS
1.-a; 2-b; 3-d; 4-a; 5-b; 6-a; 7-b; 8-a
9.14 REFERENCES
Asar, P. (April 03, 2014). Total Quality Culture:Changing Hearts,Mind,and Attitude.
company, T. p. (n.d.). MANAGING QUALITY, RELIABILITY, AND RISK THROUGHOUT THE

PRODUCT LIFECYCLE. Quality Lifecycle Management .
Garvin, D. A. (November,1987). Competing on the Eight Dimensions of Quality. Harvard

Business Review .
Garvin, D. A. (October 15, 1984). What Does "Product Quality" Really Mean? MIT Sloan
Management Review .
Harvey, L. (2014). Analytic Quality Glossary. Quality Research International , 14.
Mrotek, J. (2014). The Role of Leadership in Total Quality Management . Digital Marketing
Strategist .
Quality Culture. (n.d.). www.qualityresearchinternational.com/ .
Page 162 of 267

Stainow, C. (2011). The Role of Leadership in Quality Management. Quality Management
Principles .

3. Mehta,P.V, An Introduction to Quality Control for the Apparel Industry

1. what do you understand by dimensions of Quality.
2. What are the process of Quality Circle.
3. What is the difference between Quality and Leadership.
4. what do you mean by Quality Culture.
5. What is Reliability according to you.
6. what is the Role of Leadership in Total Quality Management .s
Page 163 of 267

Lesson-10
Total Employee Involvement
Structure
10.1 Objectives
10.2 Introduction
10.3 Employee Involvement and Employee Empowerment
10.4 Awareness of Quality
10.5 Recognition and Rewards
10.6 Education and Training
10.7Check Your Progress
10.8 Summary
10.9 Glossary
10.11 References
10.1 OBJECTIVES

1. Understand the importance of total employee involvement for the successful TQM
initiative.
2. Define how the tools and techniques of Total Quality Management can be used to
10.2 INTRODUCTION
Total employee involvement is the likely result of a work environment that persuades each
employee to participate actively in the daily operation of any organization. Indeed it is very
Page 164 of 267

easy to say that the for better work environment, organizations’ should have clearly
defined goals and objectives; there should be uniformity in directions and command;
management should be efficient and leaders should be trustworthy; there should be open
communication system. And normally top management opines that these conditions
already exist in their respective organizations. But the fact is that majority of the
organizations do not meet any such criteria and, therefore, do not have the hundred
percent support of their workforce. It is the top level management which is the key to total
employee involvement. Only the highest level management can influence organizational
policy and procedure that are essential requirement of the significant part of
implementation of any improvement program. But due to lack of involvement of the top
level management in the day to day operations and particularly on shop floor level, they fail
to recognize that the existing management philosophy and policies are not encouraging
employee involvement Though many organizations have tried a participation-style of
management by involving employees in the problem solving and decision making
processes but not all have succeeded. For a successful TQM initiative, employee
involvement is very important. Thus, it can be said that employee involvement is a system
wherein employees are motivated to use their experience, proficiency and understanding
to propose methods for enhancement in their respective domains. These proposals may be
related to betterment in the work, the product, the work environment or for the overall
organization.
10.3 EMPLOYEE INVOLVEMENT AND EMPLOYEE EMPOWERMENT
By now we have understood that if an organization really wants to build a positive work
environment that is based on high belief in management, extraordinary customer
satisfaction and service, dedicated and collaborative teamwork, efficient operations, and
creative problem solving, then the top management must try to understand, respect, invest
in, and be open and also respond to the needs of the its most important asset i.e. the
employees. Higher level of motivation amongst employees, enhanced productivity and
better creativity is what the return is, as an outcome of the investment in TQM. This
outcome will further improve the profitability of the organization. The concept of Total
Quality Management is based on the premise that the employees must be engaged and
empowered.
Employee Involvement:
Apostolou opines that “ Employee involvement means that every employee is regarded as
a unique human being, not just a cog in a machine, and each employee is involved in
helping the organization meet its goals. Each employee’s input is solicited and valued by
Page 165 of 267

his/her management. Employees and management recognize that each employee is
involved in running the business.” It is a process that empowers employees to participate
in managerial decision-making and improvement activities that are relevant to their task
level in the organization. It is from the time when Mc Gregors Theory Y introduced the idea
of participative management style, employee involvement has taken various shapes
including job satisfaction, job design approaches, enhancing quality of work-life, work-life
balance. This is the reason why Japanese companies are successful in global markets as the
always recognized and valued the concept of integration of people with organizational
philosophy.
There is difference between employee involvement and conventional quality assurance

management practices. Under quality assurance management practice, the top level
management takes all decisions pertaining to the organization and passes it on to the
workers; the job of workers is just follow these decisions to complete their jobs. This top-
down approach is slow, rigid, and allows almost negligible competition; particularly in
today’s business environment where customer is a king and expects rapid response for his
the ever-changing needs of the customer.
Employee Empowerment
Other than what we have studied under the concept of employee involvement, there is one
more important concept i.e employee empowerment. Employee empowerment is different
from employee involvement. As per ASQ the basic premise of employee empowerment is
to sanction power to employees so that they can make vital decisions, and it also ensures
that decisions made are the "right" ones. Once the decisions are right, the results would be
better efficiency and improved quality of work life. In other words it means that
management recognizes the capability of their employees and empowers them with the
necessary decision making authority so that they can take right decisions with the purpose
to continuously improve their performance. The management gives its employees the
opportunity and authority to solve the problems. The employees then also feel their
responsibility and understand their authority to participate in the decision making process
and contribute in the problem solving at their respective operating level.
In reality the employee empowerment is practiced different in different organizations. The

concept of employee empowerment is based on the premise of job enlargement and job
enrichment. Again as per AQS “Job enlargement means changing the nature and scope of
the work in order to include a larger part of the horizontal process. Job
enrichment involves increasing the depth of the job to include responsibilities that have
traditionally been carried out at higher levels of the organization.”
Page 166 of 267

The word ‘Empowerment’ was first coined in the year 1849 and in general it referred to
“the gaining of power”. Particularly in the context of Total Quality Management, empower
means to permit, to bestow, to grant authorization to, or to give the ability of power to. In
simple words ‘empowerment’ is the authority granted to act autonomously to meet
expectations. Management gives this authority to their employees with the intention to
associate them with the decision making process and this will help in bringing continuous
improvements in organization through the TQM program.
Benefits Employee Involvement & Empowerment
From the above discussion it is clear that both employee involvement and employee
empowerment are different from each other but the benefits of both are almost same. Both
employee involvement and empowerment tends to enhance morale of the employees,
enhances their productivity, creates a healthier coworker relationships and boost creative
thinking. However, following are the benefits in detail:
1) Improved Morale. When the employees participate in decision making process

including the matters related to policy changes, they feel empowered and autonomous.
This improves the morale of the employees which ultimately have a great impact on the
performance of the employees. When organizations treat their employees as an asset and
give due consideration to the inputs provided by them, it increases the belongingness,
reliability and output of the employees towards the organization which gives them
significant benefits. Improved morale helps in increasing tenure of the employee with the
company i.e. employee turnover ratio reduces down. As the longer an employee is
associated with the company, their potential increases and they become more experienced.
This makes them act as mentors to new employees and therefore becomes indispensable to
managerial staff.
2) Increased Productivity. Both employee involvement and engagement also results into
increased productivity. Employees respect the organizations by working in organization’s
best interest and increases their increase their role in the company, and promote a
stronger work ethics and culture. When employees are given autonomy and expected to be
more self-sufficient, they ultimately become more efficient. They gain knowledge of
understanding their responsibilities with minimal intrusion of managerial staff. This
allows managerial staff to become efficient as they can spend more time towards their own
responsibilities other than giving instructions and assignments to their juniors.
3) Team Cohesion. Employee empowerment promotes superior relationships between

employees and with their superiors, as employees that are given more autonomy to form
healthier working relationships. Each becomes self dependable and sees the other as
Page 167 of 267

mutually benefiting co-worker from their working relationship. Further, more self-
governance in the workplace reduces burden on managers by reducing dependency on
supervisors and redirects that confidence laterally to coworkers.
4) Innovation. When the employees are engaged in the decision making process, they
participate in the growth of the organization by offering more ideas. Whenever there is
some problem, employees develop innovative techniques of problem solving and thus
contribute in bringing sustainable growth. The new and innovative policies and products
which are developed as a result of challenging environment, promote imaginative thinking.
Since the employees operate at ground level they can come out with perspectives which are
different than the opinion of managers. This shifts them from a simple staff member to
creative solution providers.
Following table shows the difference in attitudes towards employee involvement and
empowerment between the traditional hierarchical management approach and TQM
approach
Traditional Management TQM Approach

Approach
Overall Perception of Companies may protect All employees are to trusted
Employees itself from careless and and respected. Ethics and
dishonest employees. integrity are unquestionned.
Financial Assets Authorisation of dunds Rather than Job’s position, it
depends upon the position is a person’s need that
in management hierarchy defines authority for
handling financial assets
Physical assets Only designated managers All employees are given
are provided with passkeys access to all places. Safety
practices will be followed
depending upon
requirement
Business Information Only managers and All employees have access to
designated employees have all information
access to sensitive
information
Level of Authority Decision making or problem Employees are authorised to
solving at the level of take decisions and solve
employees can be done after problems related to their
Page 168 of 267

adequate approvals from the level by aligning the interest
managers towards the achievement of
company mission
Obstacles to Employee Involvement and Empowerment and Recommended Solutions

Following are obstacles to employee involvement and empowerment and relative
suggestions to avoiding or overcoming them:
(1) Negative attitude in considering improvement related recommendations of

employee: Sometimes it may happen that the idea suggested by the employee does not
make any sense and the employees are adamant about the soundness of their improvement
recommendation. Generally the suggestions for improvement are rejected at first go.
Management is not ready to accept why they have not seen that earlier. Managers may
take it as a threat. The best way to resolve this is to honestly explain them why idea is not
making sense. The suggestions can be reconsidered by open mind because if the
suggestions are not taken well employee may feel bad and will not come out with
suggestions soon.
(2) Fear : Management professionals around the globe support the viewpoint that the
employees do not come out with the suggestions as they fearful of top management. But
this obstacle can also be avoided. Deming is also lists this as one of his major quality points.
So, in case any employee is involved and empowered but he is also fearful, then the
suggestions may not be that worthy and there is all possibility of collapse of the endeavor
made under stress and fear.
(3) Failure to acknowledge employee recommendations: Failure to acknowledge the

recommendations given by employees is another way to slaughter an employee
involvement and empowerment effort. If management does not respond to employee
recommendations, employees will quickly conclude that management does not think that
the idea is worth and that they are not interested in their ideas. So it is important that the
management must atleast acknowledge all recommendations, including deemed to be not
feasible one.
Thus, it can be concluded that the employees can be empowered by giving them authority,
resources and training to solve problems and continuous improve work processes. The fact
that one who is doing a certain job is most qualified one to provide solutions for the
problem that arises from that job and he is the one who can come out with valid
Page 169 of 267

suggestions, is acknowledged by TQM. Continuous improvement result in improved
efficiencies and improved efficiencies often mean the elimination of positions within an
organization. Let us take an example of Harley-Davidson, a premier motorcycle
manufacturer. “Herley-Davidson recognized this possible critic early in their mid-1980s
continuous improvement and profitability turnaround. Harley-Davidson solve the problem
by working in concert with their labor union to effectively prevent the elimination of jobs
mandated by efficiency improvements. Harley-Davidson’s approach was to pull in work
formerly subcontracted to other companies, thereby creating more jobs within Harley-
Davidson, to keep those displaced by efficiency improvements on the payroll. The approach
is working well. The bottom line is that organizations seeking to involve and empower their
employees in an ongoing quest for continuous improvement must recognize that positions
may be eliminated as a result of the improved efficiencies (and employees will know this).
The organization has to have an approach for allaying these fears.”
10.4 AWARENESS OF QUALITY

Building awareness for better understanding of Total Quality Management is one of the
first and the most important step in implementing TQM. It is of paramount importance for
every employee of the organization to understand and to be aware of the requirement of
continuous improvement, the advantages of implementing TQM, the methodologies of
TQM, and the tools that are adopted for improvement efforts. The key that can open the
door of TQM potential is ‘Awareness’.
This awareness about quality through TQM can be built at the personal level i.e. at the level
of top management and by organizing and attending symposia, workshops, and
conferences on the concepts related to TQM. Building awareness at the top level
management is very essential as first they themselves need to be very clear about why TQM
should be implemented and then comes everyone else.
10.6 EDUCATION AND TRAINING
By now it is clear that both employees empowerment and involvement at all levels is
important to gain competitive advantages and business overall success. It is vital to
problem solving and therefore plays an integral role in quality continuous improvement.
Since employees are involved and focused in their job, at their level, they are in the best
position to make relevant decisions to have control over processes improvement. It has
been observed that the organizations that shifted toward philosophies focused on
implementation of Total quality management, have undertaken these initiatives through
employees training and development. Training of the employees is a fundamental
Page 170 of 267

requirement before embarking on forming self managing teams so that they are prepared
for the empowerment. They should have wiliness to change and should be able to manage a
change. The team members should learn good qualities and they establish sound
relationship with the other team members. In the better interest of the organization, all
teams members should work single minded to discharge their duties. The training of teams
should be done in such way that all the members should understand their responsibilities,
adjust them with the other members, motivate the others and they should have a
motivational attitude.
When there is higher involvement from employees’ side, it means they assume more
responsibility, they may require specific skills, and generally these skills are provided
through training and development programs. It has been proved many times that such
focused training and development programs contribute as powerful agents to develop
personal capabilities and skills and thus resulting into improvement in organizational
growth and profitability. No doubt, it is true that training and development are
fundamental factors in implementation of TQM, but one caution should be kept in mind
while designing training that employees should be provided with the main skills and
knowledge compatible with the role they are concerned with. This will enable them ensure
higher commitment levels towards quality improvement thereby leading to enhanced
efficiency and effectiveness. The need of better training and development is also supported
by the fact that customers’ expectation of quality products at lower prices is increasing;
particularly this is a challenge for small firms in this global market arena where SME are
competing. All this has reinforced the importance of human factors and has strengthened
the need for effective training and development initiatives focused on quality
improvement, as a means of reaching sustainable competitive advantages.
As pointed out by the literature, there is difference in implementation of TQM at the large
scale organizations and at small scale organizations. What can be applied to larger
organizations cannot be applied to smaller ones. There are significant operational
differences between SME and large firms. Several researches have been looking for key
factors, crucial for a successful TQM principles implementation. Unfortunately most of
these focused essentially on large firms and few paid special attention to smaller firms. But
there are some important dimensions that are common to both types of firms i.e. enhancing
HR management and training and education.
But as compared to larger firms, SME face particular problems like lack of capital, human
resources and technical resources which may hinder their progress through TQM.
Therefore there are some characteristics of quality management which are suitable to
smaller firms, while other characteristics are more in line with larger organizations. In
case of smaller organizations, principles such as employee participation, flexibility, and
Page 171 of 267

customer relationship management are more successfully applied. These organizations
have higher flexibility and due to their lean structure they have faster decision making
process. Their social subsystem provides greater values compared with large firms.
Although small firms may benefit from special advantages, they also face significant
difficulties that may hinder quality improvement efforts. The major difficulties includes
insufficient financial resources, lack of specialist skills, lack of adequate and updated
quality related information, lack of professional managerial approach, preference of short
term goals over long term goals. Small firms largely depend on orders from larger
organizations. As the size of these firms grow, more formal training and development
programs are required. Training and development initiatives required to be more
structured and formal, and normally these are delegated to specialists inside or outside the
firm. Most successful small organisations provide more employees training and
development programs than the average in order to create awareness. Though small
organizations with time has understood the importance of training and development for
improvements in productivity and for gaining competitive advantage but generally they
show reluctance to provide formal employee training. This reluctance may be due to their
affordability of course fees and also to costs inherent to outputs reduction while employees
are off-the-job. Lack of resources and expertise, lack of understanding and calculation of
cost benefit analysis can be another reason of reluctance. Trained employees’ retention is
another problematic concern as these firms may lack internal promotion opportunities.
Due to these reasons formal trainings initiatives seems unattractive to SMEs. As a result,
SME lack systematic approaches to employees’ training and development programs which
are usually qualified as informal, unplanned, reactive, and short-term oriented. They end
up with informal training and development initiatives and their training and development
initiatives are essentially provided on-the job. On-the-job training and development
initiatives allow employees to learn, be integrated in the real context, where skills are daily
used. Furthermore, training programs in smaller firms are essentially developed on-the-job
paying little attention to employee development.
However, the basic advantages of training and development are as follows:
*Improves Employees Abilities and Skills: Training and development in quality

management issues may improve employees’ abilities/skills, further allowing
organizations to promote employees’ commitment and foster workforces’ quality
awareness.
*Improves Employees’ Overall Performance: Developing extensive training programs

ensures employees’ overall performance. It provides them with the skills needed for
effectively implementing quality and productivity improvement initiatives.
Page 172 of 267

*Positive Impact on Individual Productivity: Training has a positive impact on
employees’ individual productivity. Training is significantly related to organizational
performance.
If supported by significant training, implementation of total quality management strategy

becomes more effective. Well implemented training and development programmes ensure
strong commitment to TQM
will not have significant impact on firms Thus, as the concept of intrinsic motivation is
the heart of TQM and is utmost important in bringing employee involvement in decision making, as
employee involvement leads to more responsibility, which in turn requires a greater level of skill. A
greater level of skills can be imbibed throughTRAINING.
Basic Steps of Effective Training Plans
Following are the basic steps in effective training plans:
 The first and foremost step in training process is create awareness. It must be clear with everyone
that what the training is all about. Why training programme is required. What is its purpose. The
observations on this purpose should be gathered.
 The second step is to get acceptance from the trainees. The trainees must feel that training will be
of value to them.
 The third step is to generate willingness and presence. Ensuring that everyone who is going to
attend the training programme feel that they are a part of it.
 The fourth step is to proficient what has been agreed upon. Employees should be made aware of
what changes must be made in behavior and attitudes.
The type of training depends on the need of the particular company. The domains that are covered in
training programmes for almost all types of companies includes problem solving and communication
skills. In addition to these domains, other important domains are quality awareness (TQM), statistical
process control (SPC), safety, and technical aspects of job. Dr. Juran has recommended following chart
regarding the type of training to be imparted at different organizational levels. The areas recommended
are indicated in green color:
Page 173 of 267

10.5 RECOGNITION AND REWARDS
As quoted by Hasan (2010) “Total Quality management (TQM), a process of continuous

improvement and innovation led by top management, is fundamentally based on the
concept that all people in an organization, at all levels, should be committed to, motivated
by, rewarded upon the basis of, and equipped to perform the task of meeting or exceeding
customer expectations.” In the former discussions it is clear that the important factors to
successful implementation of TQM is employee involvement, their participation, and
employee empowerment, which results in a motivated, productive workforce who
regularly give ideas to improve processes which are required as per ever increasing
customers' expectations. The organizations embracing TQM strategies must also undergo a
philosophical corporate cultural transformation through changes in beliefs, attitudes, and
behaviors of their human resources. The belief, attitude and behavior of the employees can
be influenced by and reinforced by having a policy of rewards and recognitions. It is a
proven fact that rewards are given to performances only, so rewards and recognisitions
Page 174 of 267

acts as reinforcement chain for bringing about changes. Employees those who perform well
always expect that top management should recognize their performances. Rewards
motivated them further. Reward may be defined as the conveyance of items of value and
other forms of personal satisfaction to individuals or groups. Recognition are termed as an
ongoing communications activity by which appreciation is declared for the contributions of
individuals or groups. Recognition itself is a useful tool, but reward is ineffective without
recognition. Recognition of employees’ achievements is one of the most important factors
that motivate employees. When a company implements a TQM initiative, it must clearly
reward and recognize the following behaviors: process improvement; teamwork and
collaboration; problem prevention; customer satisfaction; and the role of manager as coach
or facilitator. Both line managers and Human Resources representatives should be involved
to ensure integration of reward and recognition with a company's business objectives.
Numerous organizations both in private and public sectors have been appreciating their
employees through the policy of rewards and recognitions and have been adopted
numerous ways of rewards and recognitions. Since, one special type of reward may not
motivate equally everyone. Some may perceive it as reward and other may think it as
punishment. Anyways in TQM environment, it is important to recognize an achievement of
employees, customers and suppliers. Every employer feels motivated and try to meet the
requirements in order to get awards. He tries to exceed employer expectations by his
exceptional performance. One thing should be kept in mind that the awards should be
given to the real achievers. Organisations should announce awards periodically and it
should not be a routine affair. The selection awardees should be given due to consideration,
so that the few that have performed a top notch job are awarded. The awards should be for
all the departments and sub systems of the organizations and should not be restricted to
any particular functional area. The selections o awardees should be based on certain
transparent parameters so that those who are not getting awards must respect and accept
the awardees. The parameters for selection of awardee may include
*Commitment
*Creativity
*Flexibility
* Adaptability
*Determination
*Responsibility
Rewarding of meritorious achievements is must but it should not create hurdles in
practicing team work. So the organization should try to reward team as far as possible
Page 175 of 267

over individuals as it will bring harmony in the system. There are numerous types of
rewards and recognition that an organization can offer to its employees. These can be
formal or informal, intrinsic or extrinsic, monetary or non-monetary, individual or group,
large or small, and so on.
Following is the list of rewards and recognitions that have been adopted by different
organizations over a period of time:
*Writing a letter to the employee’s family telling them about the excellent job the employee
is doing.
* Arranging lunch with a senior level manager
* Personal call from the CEO of the organization
*Finding out what the employee’s hobby is and publicly award him or her gift relating to
that hobby.
*Designating the best parking space in the lot.
*Creating a “Wall of Fame” to honor outstanding performance.
* Naming a formal reward for example IBM’s Market Driven Quality Award, Xerox’s
President’s Award and Team Excellence Award, FedEx’s Golden Falcon Award. Recipients
of the Golden Falcon Award receive a gold pin, a congratulatory call from the CEO,
recognition in the company newsletter, and 10 shares of company stock.
*Plaques and certificates. For example Diner’s Club and American Express offer rewards
with redemption choices including merchandise, travel and gift certificates.
*A monetary reward
*A getaway weekend package at a prestigious hotel or a money order.
* An individual and group photograph (photos are used for publication in the company
newsletter and are placed on a notice board in the company canteen; each category winner
also receives an individual copy of the photo).
*Few companies follow a series of different rewards every day for seven straight days. One
day, workers receive a letter of congratulations from the manager; the next day they
receive chocolate; then movie tickets; restaurant gift certificates; CDs; denim shirts and
finally wrist watches.
* Strategic rewards in terms of training and educational opportunities, job redesign,
flexible work schedules, stock option, merchandise.
* No-cost rewards – handwritten notes of appreciation; time off; reserved parking space.
Page 176 of 267

*Low-cost rewards – tickets for a restaurant or a movie; flowers; coffee mug, desk clock;
birthday card signed by supervisor and high-level administrators.
*High cost rewards – plane ticket to go overseas; laptop computer; banquet; paid vacation.
It is going to matter the type of awards, the employee will definitely be motivated. The
organization should periodically announce the rewards. Whichever team exceeds the
performance could be awarded by the same type of award. The organization should not
keep on changing the type of award. The period of awards should be uniform at equal
intervals. This will improve employee’s satisfaction, employee’s morale and employee’s
satisfaction as a whole. The awards should be genuine and without any bias, such awards
will demotivate the others. The management should select perform teams.
10.7CHECK YOUR PROGRESS

(1) McGregor’s Theory Y first brought to managers the idea of a
(a) participative management style (b) Non-participative Management Style
(2) Employee empowerment mean
(a) giving employees the means for making important decisions, and making those
decisions the "right" ones.
(b) Management recognizes employees’ capability, and provides employees with the tools
and authority required to constantly improve their performance.
(c)Both (a) and (b)
(3) The word ‘Empowerment’ was first coined in the year ___________.
(4) In general empowerment referred to

(a) the gaining of power
(b) Granting of Authority
(c) Doing Right
(d) Involvement
10.8 SUMMARY
As global competitiveness soars, companies’ consciousness of the fundamental role played
by the biggest asset of the organization i.e. employees in creating a competitive advantage
is improving. But a great deal of work has still to be done to alter the culture of workplaces
to more respectful equitable and consistent organizations. The potential of workers
remains locked up in the management styles of their managers. Largely, managers still do
Page 177 of 267

the thinking while workers do the implementation of their thoughts. Employees should be
involved and empowered. The main inhibitor of empowerment is resistance to change.
Resistance might come from employees, unions, and management. Management related
inhibitors include insecurity, personal values. Ego, management training, personality
characteristics, exclusion, organizational structure and management practice. Improving a
suggestion system that involves improving both the system and individual suggestions is a
key to success. The system can be improved by ensuring that all suggestions receive a
formal response, all suggestions are responded to immediately, monitored participation,
system costs and savings. Poor suggestion can be handled without damaging morale by
listening carefully, expressing appreciation, carefully explaining your position, encouraging
feedback and looking for compromise. Full appreciation of the suggestion system can be
achieved by removing hidden barriers, encouraging new employees and coaching reluctant
employees. Full involvement of employees, in all their diversity, in continuous
improvement is the key to the successful implementation of TQM.
10.9 GLOSSARY
Employee involvement : It is a process that empowers employees to participate in
managerial decision-making and improvement activities that are relevant to their task level
in the organization.
Employee Empowerment : It means that management recognizes this capability, and

provides employees with the tools and authority required to constantly improve their
performance.
Job enlargement: It involves changing the scope of the job to include a greater portion of
the horizontal process.
Job enrichment: It involves increasing the depth of the job to include responsibilities that
have traditionally been carried out at higher levels of the organization.”
10.10 ANSWER TO CHECK YOUR PROGRESS

1. (a)
2. (c)
3. 1849
4. (a)
10.11 REFERENCES
1. Beck, Joseph & Susan, TQM: Implementing Continuous Improvement, Sterling
Page 178 of 267

Publishing Co, New York, 1993.
2. Bounds, Gregory, Dobbins, Gregory and Fowler, Oscar, Management: A Total
Quality Perspective, International Thomson Publishing, Ohio, 1995.
3. Hasan. S.T.S, “A Review on An Employee Empowerment in TQM Practice”, JAMME, Vol.
39, Issue 2, 2010
George, Stephen & Weimerskirch, Arnold, Total Quality Management, John Willey
& Sons, New York, 1994.
Hradesky, Jack, Total Quality Management Handbook, Mc-Graw Hill, New York,
1995.
Pike, John & Barnes, Richard, TQM in Action, Chapman & Hall, London, 1994.
Ryan, Joe, Giving people the chance to sparkle, People Management, June, 1998,
p.p. 40-42.

Q:1 Discuss the difference in attitudes towards employee involvement and empowerment
between the traditional hierarchical management approach and TQM approach.
Q:2 Are employee involvement and empowerment beneficial to organizations? Explain.
Q:3 Explain and resolve the obstacles to employee involvement and employee
empowerment.
Q:4 Are rewards and recognitions important? Discuss
Page 179 of 267

1
Lesson-11
Quality Cost
Structure
11.1 Objectives
11.2 Introduction
11.3 Quality Control
11.4 Quality Assurance
11.5 Dimensions of Quality
11.6 Cost of Quality
11.7 Cost of poor Quality
11.8 Categories of Quality cost
11.9 Analysis of Quality cost
11.10 Measuring cost of quality
11.11 Strategy for Reducing Quality Costs
11.12 Steps in Implementing Quality Costs
11.13 Benefits of cost of Quality control
11.15 Summary
11.16 Glossary
11.18 References
11.1 OBJECTIVES
1. Understand the significance of Quality Control
2. Describe Quality Assurance
3. Understand the Concept of cost of quality, its measurement and control
Page 180 of 267

2
4. Examine the cost of poor quality
11.2 INTRODUCTION
Quality may be defined as the “totality of features and characteristics of a product or
service that bears on its ability to satisfy the customer.” John Rabbit defines quality as
“the ability to exceed a customer’s expectations while maintaining a cost competitive
market position.” Quality is unusually risky and tricky to come in hold with and
therefore, someone has said, “Quality is somewhat I make out when I see it”. Quality is
an indispensable factor; a unique trait; asset, a character/feature, superiority of variety,
degree of position or brilliance. Quality is a multifaceted concept. No single definition
can define the scope, areas of impact and concerns relating to quality. The term quality
may be used in many ways by different people as well as industrialist/experts in term of
Skill level, the most excellent money can buy, meeting the measurement or conformance
to specifications, the degree of power a brand holds over other brands. The quality can
be defined in the following perspective by different people- in transcendent definition
Quality is absolute, natural and collectively recognisable and often loosely related to
comparison of features and characteristics of products. E.g. small domestic retailer vs.
multinational brand, in terms of product quality is communicative by sum total of
accurate and quantifiable characteristics or components of a finished product.
Differences in product quality can be accredited to differences in components or
characteristics. e.g quality of the woven fabrics as Weight in GSM or oz/yd2 ; from
producers’ perspective quality is defined as “conformance to specifications and
standards”; from customer Perspective quality depends on the magnitude of a product
or service that are of significance to that user of the product. The focus on this
chapteris on quality controland assurance, cost of quality and its measurement and
control.
11.3 QUALITY CONTROL

A set of activities or techniques whose purpose is to ensure that all quality
requirements are being met by monitoring of processes and solving performance
problems through Inspecting and Testing (GOPALAKRISHNAN DURAISAMY, 2014).
Quality control is the process of maintaining a given standards in the product, from the
design phase to the end user of the product. It consists of five stages:
1. Establishing quality standards for the finished manufactured goods (garment) with
regards aesthetics (emotional appeal), durability, and utility.
2. Establishing specs for the raw material necessary to accomplish the aesthetics, dur-
ability and utility specs in (1).
3. Referring specs for processes (machines, manpower, utilities, equipment, tools) to
achieve (1) with (2) during production, packaging and shipping.
Page 181 of 267

3
4. Prescribing quality control and inspection procedures necessary to maintain the

specs in (2).
5. Prescribing quality inspection procedures to maintain the specs in (3).
11.4 QUALITY ASSURANCE

Quality Assurance is prevention based method wherein it focus on quality of processes.
Quality planning and manuals are prepared with the aim to build quality with in the
manufacturing system.
Four phase model Perhaps the most common description of way in which quality and
quality improvements have evolved into the present day Total Quality Management
(TQM) is that which identifies the four phases or stages illustrated in Figure 1: Quality
Inspection, Quality Control, Quality Assurance, and TQM [Garvin, 1988; Kanji & Ascher,
1993; Dale, 1999 and Dahlgaard et al., 1998]
Figure 1 Illustration of the concepts of quality inspection, quality control, quality

assurance and total quality management. The figure shows one common description of
the evolution of quality management. [From Bergman & Klefsjö 2003].
Quality Inspection stage
Quality management started with simple inspection-based systems. Under such a
system, one or more characteristics of a product are examined, measured or tested and
compared with specified requirements to assess its conformity (Kanji and Asher, 1993).
This system is used to appraise incoming products, manufactured components and
assemblies at appropriate points in the production process. It is undertaken mainly by
staff employed specifically for this purpose. Products which do not conform to
specification may be scrapped, reworked or sold as lower quality items. In some cases,
Page 182 of 267

4
inspection is used to grade the finished products. The system is an after-the-fact

screening process with no prevention content other than, perhaps, the identification of
suppliers, operations or workers manufacturing non-conforming products. Simple
inspection-based systems are usually wholly in-house and do not directly involve
suppliers or customers.
Quality Control Stage
Under a system of quality control, product testing and documentation control became
the ways to ensure greater process control and reduced non-conformance. Typical
characteristics of such systems were performance-data collection, feedback to earlier
stages in the process, and self-inspection. While screening inspection was again the
main mechanism for preventing products which were outside the specification from
being shipped to customers, quality control measures led to greater process control and
a lower incidence of non-conformance.
Quality Assurance Stage
The quality assurance stage came with the change away from product quality towards
system quality. In this stage, an organization sets up a system for controlling what is
being done and the system is audited to ensure that it is adequate both in design and
use. A major part of this change is the use of both second-party and third-party audits to
assess the efficiency of the system. The major characteristics of this stage are the use of
quality manuals, procedures, work instructions, quality planning, quality audits, etc. The
fundamental difference is that quality assurance is prevention-based while quality
control is inspection-based.
Total Quality Management Stage
Total quality management stage is the highest level, involving the application of quality
management principles to all aspects of the business. Total quality management
requires that the principles of quality management be applied in every branch and at
every level in an organization. Typical of an organization going through a total quality
process would be a clear and unambiguous vision, few interdepartmental barriers, time
spent on training, excellent supplier and customer relations and the realization that
quality is not just product quality but also the quality of the whole organization,
including sales, finance, personnel and other nonmanufacturing functions.
11.5 DIMENSIONS OF QUALITY

The characteristics or conditions those are important to quality need to be established.
Garvin has identified eight dimensions related to quality. They are
(1).Performance
(2).Features
(3).Reliability
Page 183 of 267

5
(4).Conformance
(5).Durability
(6).Serviceability
(7).Aesthetics
(8).Perceived Quality
1. Performance : Performance is based on the primary operating characteristics of a

product. For example a rain coat should be a water repellent, a mosquito net should not
allow mosquito to enter inside, a pen should be writeable.
2. Features : Features of a product are those secondary characteristics that supplement
a product basic functioning. Examples - baby clothing should be dressing ease, softness,
durability, safety
3. Reliability: Reliability refers to the probability of products malfunctioning or failing
within a specified period of time. We depend on, demand, and expect reliable products.
It takes a long time for a company to build up a reputation for reliability, and only a
short time to be branded as "unreliable" after shipping a flawed product. Reliability is
"quality changing over time”Reliability is a major economic factor in determining a
product's success Sometimes equipment failure can have a major impact on human
safety and/or health. Automobiles, planes, life support equipment, and power
generating plants are a few examples. Some failures have serious social consequences
and this should be taken into account when planning reliability studies.
4. Conformance : Conformance refers to the degree or extent to which a product
design and operating characteristics meet pre-established standards.
5. Durability & Serviceability : Durability means the length of time a product will last
or product life. Serviceability refers to the speed, courtesy, competence and ease of
repair of a product.
6. Aesthetics & Perceived Quality : Aesthetics refers to how a product looks feels,
sounds, tastes or smells. Perceived Quality refers to what consumers perceive to be the
quality of a product based on image, advertising, and brand name reputation
11.6 COST OF QUALITY
The history of evaluating the cost of quality (sometimes referred to as the cost of poor
quality) dates to the first edition of Juran’s QC Handbook in 1951. Today, quality cost
accounting systems are part of every modern organization’s quality improvement
strategy. Indeed, quality cost accounting and reporting are part of many quality
standards. Quality cost systems help management plan for quality improvement by
identifying opportunities for greatest return on investment. However, the quality
manager should keep in mind that quality costs address only half of the quality
equation. The quality equation states that quality consists of doing the right things and
Page 184 of 267

6
not doing the wrong things. “Doing the right things” implies developing product and
service features that satisfy or delight the customer. “Not doing the wrong things”
means avoiding defects and other behaviors that cause customer dissatisfaction. Quality
costs address only the latter aspect of quality. It is conceivable that a firm could drive
quality costs to zero and still go out of business. (Keller & Pyzdek, 2013)
11.7 COST OF POOR QUALITY

The fundamental principle of the cost of quality is that any cost that would not have
been expended if quality were perfect is a cost of quality. This includes such obvious
costs as scrap and rework, but it also includes many costs that are far less obvious, such
as the cost of reordering to replace defective material. Service businesses also incur
quality costs; for example, a hotel incurs a quality cost when room service delivers a
missing item to a guest. Specifically, quality costs are a measure of the costs specifically
associated with the achievement or non-achievement of product or service quality—
including all product or service requirements established by the company and its
contracts with customers and society. Requirements include marketing specifications,
end-product and process specifications, purchase orders, engineering drawings,
company procedures, operating instructions, professional or industry standards,
government regulations, and any other document or customer needs that can affect the
definition of product or service. More specifically, quality costs are the total of the cost
incurred by (a) investing in the prevention of non-conformances to requirements, (b)
appraising a product or service for conformance to requirements, and (c) failure to
meet requirements
It is a measure that measures the cost of control/conformance and the cost of failure of
control/non-conformance. In other words, it sums up the costs related to prevention
and detection of defects and the costs due to occurrences of defects. (Defect, 2010)
 Definition by ISTQB: cost of quality:
“The total costs incurred on quality activities and issues and often split into prevention
costs, appraisal costs, internal failure costs and external failure costs.”
 Definition by QAI:
“Money spent beyond expected production costs (labour, materials, and equipment) to
ensure that the product the customer receives is a quality (defect free) product. The
Cost of Quality includes prevention, appraisal, and correction or repair costs.”
Page 185 of 267

7
Fig 2. Cost of Quality (Cost of Quality :: Overview, 2015)
The concept of quality costs was first mentioned by Juran (Quality Control Handbook
published in 1951) and this concept was mainly useful in the manufacturing industry.
The price of non conformance (Philip Crosby) or the cost of poor quality (Joseph Juran),
the term 'Cost of Quality', referred to the costs associated with providing poor quality
product or service.
Juran advocated the dimension of costs on a periodic basis as a management control
tool. Quality development cannot be justified simply because "everyone else is doing
them” but return on quality (ROQ) has remarkable impacts as companies mature.
Research shows that the costs of poor quality can range from 15%-40% of business
costs (e.g., rework, returns or complaints, reduced service levels, lost revenue). Most
businesses do not know what their quality costs are because they do not keep reliable
statistics. Finding and correcting mistakes consumes inordinately large portion
resources. Typically, the cost to eliminate a failure in the customer phase is five times
greater than it is at the development or manufacturing phase. Effective quality
management decreases production costs because the sooner an error is found and
corrected, the less costly it will be.
Cost of quality refers to the sum of costs incurred to prevent non-conformance from
happening and the costs incurred when non-conformance in products and system
occurs which is commonly known as cost of poor quality.Cost of poor quality is actually
the cost of doing things wrong.Cost of poor quality refers to the costs associated with
providing poor quality product or service.
Page 186 of 267

8
Hidden Failure Costs
Scrap warranty rework
Engineering
Time management
Increased inventory
Dissatisfaction
Loss of customer trust
Fig 3.Various cost of Quality
11.8 CATEGORIES OF QUALITY COST
Quality costs fall into two main categories:

1. Cost of achieving good quality
Prevention Costs
Appraisal Costs
2. Cost of poor quality
Internal failure Costs
External failure Costs
Examples for the above are-
Prevention Costs- The important subcategories of prevention costs follow-
1. Quality planning and engineering-
Costs associated with the creation of the overall quality plan, the inspection plan,
the reliability plan, the data system, and all specialized plans and activities of the
quality-assurance function; the preparation of manuals and procedures used to
communicate the quality plan; and the costs of auditing the system.
2. New products review. Costs of the preparation of bid proposals, the evaluation of
new designs from a quality viewpoint, the preparation of tests and experimental
programs to evaluate the performance of new products, and other quality activities
Page 187 of 267

9
during the development and preproduction stages of new products or designs.

3. Product/process design. Costs incurred during the design of the product or the
selection of the production processes that are intended to improve the overall
quality of the product. For example, an organization may decide to make a
particular circuit component redundant because this will increase the reliability of
the product by increasing the mean time between failures. Alternatively, it may
decide to manufacture a component using process A rather than process B, because
process A is capable of producing the product at tighter tolerances, which will result
in fewer assembly and manufacturing problems. This may include a vendor’s
process, so the cost of dealing with other than the lowest bidder may also be a
prevention cost.
4. Process control. The cost of process-control techniques, such as control charts,
that monitor the manufacturing process in an effort to reduce variation and build
quality into the product.
5. Burn-in. The cost of preshipment operation of the product to prevent early-life
failures in the field.
6. Training. The cost of developing, preparing, implementing, operating, and
maintaining formal training programs for quality.
7. Quality data acquisition and analysis. The cost of running the quality data system
to acquire data on product and process performance; also the cost of analyzing
these data to identify problems. It includes the work of summarizing and publishing
quality information for management.
Appraisal Costs. The major subcategories follow.

1. Inspection and test of incoming material. Costs associated with the inspection
and testing of all material. This subcategory includes receiving inspection and test;
inspection, test, and evaluation at the vendor’s facility; and a periodic audit of the
quality-assurance system. This could also include intraplant vendors.
2. Product inspection and test. The cost of checking the conformance of the product
throughout its various stages of manufacturing, including final acceptance testing,
packing and shipping checks, and any test done at the customer’s facilities prior to
turning the product over to the customer. This also includes life testing,
environmental testing, and reliability testing.
3. Materials and services consumed. The cost of material and products consumed in
a destructive test or devalued by reliability tests.
4. Maintaining accuracy of test equipment. The cost of operating a system that
keeps the measuring instruments and equipment in calibration.
Page 188 of 267

10
Internal Failure Costs. The major subcategories of internal failure costs follow.
1. Scrap. The net loss of labor, material, and overhead resulting from defective
product that cannot economically be repaired or used.
2. Rework. The cost of correcting nonconforming units so that they meet
specifications. In some manufacturing operations rework costs include additional
operations or steps in the manufacturing process that are created to solve either
chronic defects or sporadic defects.
3. Retest. The cost of reinspection and retesting of products that have undergone
rework or other modifications.
4. Failure analysis. The cost incurred to determine the causes of product failures.
5. Downtime. The cost of idle production facilities that results from
nonconformance to requirements. The production line may be down because of
nonconforming raw materials supplied by a supplier, which went undiscovered in
receiving inspection.
6. Yield losses. The cost of process yields that are lower than might be attainable by
improved controls (for example, soft-drink containers that are overfilled because of
excessive variability in the filling equipment).
7. Downgrading/off-specing. The price differential between the normal selling price
and any selling price that might be obtained for a product that does not meet the
customer’s requirements. Downgrading is a common practice in the textile, apparel
goods, and electronics industries. The problem with downgrading is that products
sold do not recover the full contribution margin to profit and overhead as do
products that conform to the usual specifications.
External Failure Costs. Subcategories of external failure costs follow.

1. Complaint adjustment. All costs of investigation and adjustment of justified
complaints attributable to the nonconforming product.
2. Returned product/material. All costs associated with receipt, handling, and
replacement of the nonconforming product or material that is returned from the
field.
3. Warranty charges. All costs involved in service to customers under warranty
contracts.
4. Liability costs. Costs or awards incurred from product liability litigation. Indirect
costs. In addition to direct operating costs of external failures, there are a significant
number of indirect costs. These are incurred because of customer dissatisfaction
with the level of quality of the delivered product.
5. Indirect costs In addition to direct operating costs of external failures, there are a
significant number of indirect costs. These are incurred because of customer
Page 189 of 267

11
dissatisfaction with the level of quality of the delivered product. Indirect costs may
reflect the customer’s attitude toward .(Montgomery.C.Douglas, 2009)
11.9 THE ANALYSIS AND USE OF QUALITY COSTS

How huge are quality costs in the industry. The response depends on the type of
organization and the success of their quality improvement endeavour. In some
organizations quality costs are 4% or 5% of sales, whereas in others they can be as high
as 35% or 40% of sales. Obviously, the cost of quality will be very different for a high-
technology Automated Industry than for a typical service industry, such as a
department store or hotel chain/hospital etc. In most business, however, quality costs
are higher than needed, and management should make systematic efforts to estimate,
analyze, and reduce these costs. The utility of quality costs shoots from the leverage
effect; that is, money invested in prevention and appraisal have a payoff in reducing
dollars incurred in internal and external failures that exceeds the original investment.
For example, a rupees invested in prevention may return Rs.20 or Rs.200 (or more) in
savings from reduced internal and external failures. Quality-cost have as its main
objective of cost reduction through classification of improvement opportunities. This is
often done with a Pareto analysis. The Pareto analysis consists of identifying quality
costs by category, or by product, or by type of defect or nonconformity. For example,
inspection of the quality-cost information in Table ….. concerning defects or
nonconformities in the assembly of apparel product reveals that defective fabric is the
highest quality cost incurred in the series as it accounts for 42% of the total defects in
this particular type of product and for almost 52% of the total scrap and rework costs. If
the incoming fabric quality can be improved, then there will be dramatic reductions in
the cost of quality. How much reduction in quality costs is possible? Although the cost of
quality in many organizations can be significantly reduced, it is unrealistic to expect it
can be reduced to zero. Before that level of performance is reached, the incremental
costs of prevention and appraisal will rise more rapidly than the consequential cost
reductions. However, paying attention to quality costs in conjunction with a focused
effort on variability reduction has the capability of reducing quality costs by 50% or
60% provided that no organized effort has previously existed. This cost reduction also
follows the Pareto principle; that is, most of the cost reductions will come from
targeting the few problems that are responsible for the majority of quality costs. In
analyzing quality costs and in formulating plans for reducing the cost of quality, it is
important to note the role of prevention and appraisal. Many organizations devote far
too much effort to appraisal and not enough to prevention. This is an easy mistake for
an organization to make, because appraisal costs are often budget line items in
manufacturing.
Page 190 of 267

12
Type of Defect Percent of Total Defects Scrap and Rework Costs

fabric Defect 42% $37,500.00 (52%)
Misaligned parts 21% 12,000.00
Wrong sizes 15% 8,000.00
Missing parts 10% 5,100.00
Stains 7% 5,000.00
All other causes 5% 4,600.00
Total 100% %) $72,200.00
TABLE 1. Monthly Quality-Costs Information for Assembly of Garment Factory
The most widely accepted method for measuring and classifying quality costs is the
prevention, appraisal, and failure (PAF) model. Follow this five step process.
1 gather some basic information about the number of failures in the system
2 apply some assumptions to that data in order to quantify the data
3 chart the data based on the four elements listed above and study it
4 allocate resources to combat the weak-spots
5 do this study on a regular basis and evaluate your performance
The cost of Quality will not happen unless people do certain things Doing things
requires time and time costs money, therefore, in this sense, quality has a cost.
However, there is a very big difference between expenditure and investment.
Expenditure occurs when financial resources are employed to acquire asset –material
and human- whose benefits decrease over time. The purchase of a motor car is a food
example. The car, as a resource, is at its prime on the day it is delivered and it
deteriorates steadily from that time onwards. The same is essentially true of a computer
system or a photocopier. With investment, the situation is reversed, the costs incurred
may bring no immediate benefits and there are often negative effects in the short term.
The decision to begin a long-term savings plan, for example, will results in an immediate
reduction of expendable income and consequent constraints on possible actions. In a
different context, the experience of Brian Thomas (Total Quality Training) working in
the field of therapy indicates strongly that individuals or couples who wish to change
some aspect of their behaviour or relationship experience negative movement in the
initial stages of the process. At first, things get worse. Such negative movement is
common to many instances of attempted long-term change and is directly related to the
degree to which behaviours, attitudes or beliefs are habitualized. It is similar in many
ways to the commonly experienced phenomenon that accompanies adults’ attempts to
Page 191 of 267

13
improve their handwriting. Adults who embark on some form of calligraphic self
development almost always find that the immediate effect is to make the handwriting
they are already dissatisfied with even worse. Investment, by definition, is a process
that aims to yield results in the long term (as opposed, say, to gambling or speculating).
It demands the immediate commitment of resources, changes in the customary and
accepted ways of doing things and, in return, it offers immediate negative effects and an
uncertain outcome. Little wonder that real substantial long-term investment is a rarity.
Quality, like training, is an investment rather than expenditure. The shift in direction
from the way we do things now to the way we will need to do things in order to achieve
quality will require investment in financial and human terms.
COQ is primarily used to understand, analyze & improve the quality performance.
COQ can be used by production personnel as well as a management measure. It
can also be used as a standard measure to study an organization’s performance
vis-à-vis another similar organization and can be used as a benchmarking indices.
Figure 4. Classical model of optimum quality costs. From Jurans Quality Control
Handbook, 4th edition. J.M. Juran, editor. Copyright © 1988, McGraw-Hill.
Total quality costs are defined as the difference between the firm’s costs of
development, production, marketing, and supply of products and services and what the
(reduced) costs would be in the absence of defects or inefficiencies in these activities.
Put another way, total costs can be found by comparing the firm with ‘the perfect firm’
or ‘the perfect processes’. In this sense, there is a close connection between the concept
of quality cost and benchmarking. There is also a close connection between quality
control points and quality costs
11.10 MEASURING COST OF QUALITY
COQ data can be measured and presented in many different ways.
• % age of sales
• % age of profits
• % age of manufacturing cost
Page 192 of 267

14
• % of defects and reworks

• Rs per direct labor hr
• Rs per unit of product
Fig5. Link between Quality and Profits(Jamil, 2013)
11.11 STRATEGY FOR REDUCING QUALITY COSTS

As a general rule, quality costs increase as the detection point moves further up the
production and distribution chain. The lowest cost is generally obtained when non-
conformances are prevented in the first place. If non-conformances occur, it is generally
least expensive to detect them as soon as possible after their occurrence. Beyond that
point there is loss incurred from additional work that may be lost. The most expensive
quality costs are from non-conformances detected by customers. In addition to the
replacement or repair loss, a company loses customer goodwill and reputation. In
extreme cases, litigation may result, adding even more cost and loss of goodwill.
Another advantage of early detection is that it provides more meaningful feedback to
help identify root causes. The time lag between production and field failure makes it
very difficult to trace the occurrence back to the process state that produced it. While
field failure tracking is useful in prospectively evaluating a “fix,” it is usually of little
value in retrospectively evaluating a problem.
The accounting department bears primary responsibility for accounting matters,
including cost of quality systems. The quality department’s role in development and
maintenance of the cost of quality system is to provide guidance and support to the
accounting department.
The cost of quality system is an integrated subsystem of the larger cost accounting
system. Terminology, format, etc., should be consistent between the cost of quality
system and the larger system to speed the learning process and reduce confusion. The
ideal cost of quality accounting system will simply aggregate quality costs to enhance
their visibility to management and facilitate efforts to reduce them. For most
companies, this task falls under the jurisdiction of the controller’s office.
Page 193 of 267

15
Quality cost measurement need not be accurate to the penny to be effective. The
purpose of measuring such costs is to provide broad guidelines for management
decision-making and action. The very nature of cost of quality makes such accuracy
impossible. In some instances it will only be possible to obtain periodic rough estimates
of such costs as lost customer goodwill, cost of damage to the company’s reputation, etc.
These estimates can be obtained using special audits, statistical sampling, and other
market studies. These activities can be jointly conducted by teams of marketing,
accounting, and quality personnel. Since these costs are often huge, these estimates
must be obtained. However, they need not be obtained every month. Annual studies are
usually sufficient to indicate trends in these measures. (Keller & Pyzdek, 2013)
11.12 STEPS IN IMPLEMENTING QUALITY COSTS
The following sequence applies to most organizations
1. Review the literature on quality costs or consult others in similar industries who
are using the same tool.
2. Select one organizational unit of the company to serve as a pilot site
3. Discuss the objectives of the study with the key people in the organization
4. Collect whatever cost data are conveniently available from the accounting
system
5. Make a proposal to management for a full study
6. Publish a draft of the categories defining the cost of poor quality
7. Finalize the definitions and secure management approval
8. Secure agreement on responsibility for data collection and report preparation
9. Collect and summarize the data
10. Present the cost results to management along with the results of a
demonstration quality improvement project
11.13 BENEFITS OF COST OF QUALITY
Identifying COQ can have several benefits:
 It provides a standard measure across the organisation & also inter-organisation
 It builds awareness of the importance of quality
 It identifies improvement opportunities
 Being a cost measure, it is useful at shop floor as well as at management level
 Quantify the size of the quality problem
 Identify major opportunities for cost reductions
 It helps in Identification of opportunities for reducing customer dissatisfaction
and associated threats to product salability
 Measures the results of quality improvement activities
 Align quality goals with organizational goals
Page 194 of 267

16
 Set cost reduction targets

(Hasan, 2011)
13.1 Case study: XYZ Automobiles
The XYZ Automobiles produces small motors for use in lawnmowers and garden
equipment. The company instituted a quality improvement program in 1999 and has
recorded the following quality cost data and accounting measures for 4 years.
Table2. Quality Costs of XYZ Automobiles for 4 years

The company wants to assess its quality assurance program and develop quality index
using sales basis for the 4 year period.
Key points of study:
 Approximately 75% of the XYZ Automobiles total quality costs are a result of
internal and external failures.
• In 2000 company spent more money on product monitoring and inspection that
resulted into high appraisal cost.
• With this strategy, H&S was able to identify more defective items, resulting in an
apparent increase in internal failure cost and lower external failure cost.
• In year 2001 & 2002 company spent more money on prevention activities i.e.
training of employees, redesigning the production process and planning how to
build in product quality etc.
• Prevention costs increased by more than 300 % during the 4 year period
resulted into decrease in overall quality costs.
• The XYZ Automobiles also desired to develop index numbers using quality costs
as a proportion of sales.
• Quality index no. for 1999 sales is:
= (810,400/4,360,000)*100 = 18.58 and similarly for other years:
Page 195 of 267

17
Year Quality sales index
1999 18.58
2000 19.32
2001 12.66
2002 10.49
Table 3. Quality Sales Index

These index no's alone provide little insight into the effectiveness of the quality
management program; however as a standard to make comparisons over time they can
be useful.
1. Which of the following is not a quality cost
a.prevention
b. appraisal
c. working
d. internal failure
2. Quality control is regarded as __________
a.corrective function
b. inspection function
c. protective function
d. quality function
3. Historical development of Quality has ____________as first step-
a.inspection
b. appraisal
c. quality control
d. quality assurance
4. First step in implementing quality cost is ------------------.
a.review of literature
b. inspection
c. identifying task
d. quality assurance
5. COQ is known as ---------------------.
a.cost of quantity
b. cost of Quality
c. cost of quarter
d. none of above
6. Failure cost incluses-
Page 196 of 267

18
a.external and interval cost

b. external and internal cost
c. exigency and internal cost
d. exit and interval cost
7. Prevention cost include-
a.overall quality plan
b. the inspection plan
c. the reliability plan,
d. all of above
8. COQ data cannot be measured and presented by-
a.% age of sales
b. % age of profits
c. % age of manufacturing cost
d. % of cutting and spreading
11.15 SUMMARY
The costs of poor quality concern two parties—the supplier of the goods or service and
the consumer. Poor quality also increases the costs of the consumer of the product in
the form of repair costs after the warranty period, various losses due to downtime, etc..
The net customer cost is defined as the total value realized by the customer from the
purchase and use of the goods or service less that which must be sacrificed to obtain
and use it. From the birth of the cost of poor quality with the emphasis on the cost of
errors in manufacturing, the concept is now extended in the scope of cost elements and
applies to manufacturing and service industries in both the profit and nonprofit
sectors. (Juran.J.M & Blanton.A, 1979)
11.16 GLOSSARY
1. Product: The output of any process. To many economists, products include both
goods and services.
However, under popular usage, “product” often means goods only.
2. Product feature: A characteristic possessed by goods or services that is proposed
to meet consumer
Needs and wants
3. Customer: the end user of the product.
4. Customer satisfaction: A situation where customers feel that their expectations
have been met by the product features.
5. Deficiency: Any fault (defect or errors) that damage a product’s fitness for use.
For e.g manufacturing errors, factory scrap, failures to meet delivery dates, low grade
raw material used etc.
6. Customer dissatisfaction: A situation in which deficiencies (in goods or services)
result in consumer displeasure, grievances, claims, and so on.
Page 197 of 267

19
1- c; 2-a; 3-a; 4-a; 5-b; 6-b; 7-d; 8-d
11.18 REFERENCES
Aized, T. (2012 ). Total Quality Management and Six Sigma. intech.
Corporation, T. M. (2012). Changes and Innovations. http://www.toyota-global.com/ .
Cost of Quality :: Overview. (2015). thequalityportal .
Defect. (2010). http://softwaretestingfundamentals.com/ .
Gopalkrishnan Duraisamy. (2014). Apparel Quality Standard and Implementation.
Retrieved from Slideshare..
Hasan, A. (2011). Cost of quality. Slide Share .
Jamil, I. (2013). Cost of Quality (COQ). Slide share .
Ltd., E. W. (2013). Quality Movement. http://www.amuldairy.com/ .
Montgomery.C.Douglas. (2009). Introduction to Statistical Process Control. John Wiley &
Sons, Inc.
Quality Magazine. (2003, may 3). Motorola: A Tradition of Quality .
Yang, C.-C. (2012). The Integration of TQM and Six-Sigma. http://www.intechopen.com/ .


1. What do you understand by Quality and its dimensions?
2. Describe the historical development of Quality
3. Differenciate between Prevention and Appraisal cost?
4. Discuss benefits of Cost of Quality?
5. Discuss Steps in Implementing Quality Costs
6. Discuss Strategy for Reducing Quality Costs
Page 198 of 267

LESSON – 12
SUPPORTING TECHNOLOGIES: OVERVIEW OF SUPPLIER QUALITY
ASSURANCE SYSTEM
Structure
12.1 Objectives
12.2 Introduction
12.3 Supplier Quality Management
12.4 Metrics to be used for Scoring of Supplier Quality Management
12.5 Supplier Quality Management Evaluation
12.7 Summary
12.8 Glossary
12.10 References
Page 199 of 267

12.1 Objectives
1. Understand the meaning and significance of Supplier Quality Assurance
2. Describe Supplier Quality Assurance evaluation methodology
3. Understand how supplier quality can affect an organization’s quality, costs, and
overall competitiveness.
4. Explain how supplier quality system can be used to exploit the potential and gain
superior growth, margin, and market share performance.
12.2 Introduction
Supplier Quality Management (SQM) can be defined as a belief in a supplier's ability to

deliver those products/services that will satisfy the customer requirements. Supplier Quality
Management aims at ensuring that a product or a service fit into the “customer requirement”
window with no need for any change or inspection. This quality can only be achieved through
a cordial relationship between the supplier and the customer. The US quality guru Joseph M.
Juran has categorized the process of supplier quality assurance into the following listed steps:
 Defining the quality requirements of a product

 Evaluating the available substitutes of suppliers
 Select the best suitable supplier
 Planning quality jointly with supplier
 Cordial relationship with supplier
 Validating the acceptable customer requirements
 Certifying eligible suppliers
 Quality Improvement Planning
 Establishing Supplier Ratings
The organization require “each of their supplier and their sub-tier suppliers to adhere to the
quality requirements mentioned in their agreement and to maintain a quality system that
ensures supplies and services conform with all requirements”. If a supplier cannot comply
with any portion of this document, then the supplier must advise the organization well in
advance. Quality oriented organizations are “committed to continuous improvement in the
Page 200 of 267

quality and integrity of their products and services and to the satisfaction of their customer
needs and expectations”. The suppliers’ adherence to this notion through the quality and
reliability of their products and services is a precondition. The supplier must produce, repair,
release and deliver all products in agreement with the purchase order and all requirements
acknowledged in it. All products manufactured must be strictly in agreement with the
purchase order. The delivery of incomplete product is not permitted unless it has been
mentioned in the purchase order.
Supplier Quality Management has become known as one of the primary business practices
over the past few years. World-class manufacturers are making significant investments in
their systems and frameworks to improve supplier quality. This chapter talks about the
practices implemented by such manufacturers in supplier quality management.
With companies outsourcing their manufacturing to strategic partners across the globe, the
supply chains have become very long. Many consumer products are manufactured in one
corner and then shipped to another corner markets using several logistics providers by way of
sea, air, rail and roads. It can take weeks for a finished product to reach the store shelves from
a supplier in the far flung areas. Also, the manufacturers have restructured their supply chain
and implemented lean inventory management techniques. Due to these changes, any issue in
supplier quality can quickly result in stock outs leading to lose of customers.
Companies that sell industrial products need to have steady partnerships with their preferred
suppliers in order to continue their future business. As a result, they are under pressure to
ensure that their “products continue to meet or exceed acceptable PPM and Corrective Action
thresholds set by their customers”. Therefore, managing the supplier’s quality is very high on
the agenda for these world class manufacturers.
12.3 Supplier Quality Management
In the last few years the customer requirements and expectations in the markets have changed
dramatically. The market competition has become more aggressive in terms of quality, costs
and customer satisfaction. Today the manufacturing companies expect perfect quality from
their suppliers. A low price is not seen as contradiction. There exist clear quality goals and
their meaning for the supplier and for the companies. The firms has made the transition and
specified the quality goal for its suppliers to zero ppm. The only way to ensure customer
Page 201 of 267

satisfaction is to pass down this target to the suppliers: it is not possible to supply the
customer with zero ppm, if the firms do not have absolutely error free supply by its suppliers.
For world class manufacturers, their definition of quality is predicated on “how well they stay
aligned with the demanding, diverse and unique requirements of their customers while
staying in compliance with regulatory requirements”. According to Szwejczewski, Goffin,
Lemke, Pfeiffer, Lohmuller (2001) “keeping the entire value chain of a business well-
orchestrated and focused on supplier quality needs to start with a clear, consistent strategic
plan about suppliers as co-creators of a series of product generations, not just selectively
sourced from based on cost alone”. Suppliers must be selected primarily for not only cost
reductions but for their devised role in providing auditable products/services, unfailingly high
performance. The research studies of flourishing Supplier Quality Management (SQM)
frameworks constantly show that “the orchestration of supplier alliances, supplier
development and supplier monitoring are the three foundational elements to a globally
scalable, secure supplier network”.
Following are the six important strategies that can be used to enhance supplier quality
management in manufacturing companies:
1. Managing suppliers to consistent, high quality standards – “Too often

manufacturers fall into allowing specific supplier bases to lapse on quality standards, when
the rigorous applying of consistent, clear quality goals is needed. Not allowing certain
program or product suppliers to fall behind their peers is essential to continually driving
down extraneous, avoidable costs by enforcing consistent quality across the entire supplier
network”.
2. Not allowing poor systems to slow down quality management –“The bottom line is
that without tight integration of quality management, ERP, supply chain, pricing, service
systems any manufacturer is going to be at a disadvantage compared to competitors. To
compete today and in the future, manufacturers need to think in terms of accuracy, speed and
tight orchestration of suppliers, even if it means breaking down the longstanding barriers that
is keeping valuable data locked away in legacy systems”.
3. Create Corrective Action Preventative Action (CAPA) processes – “Complaints

from customers, process variations and production inconsistencies need to be managed using
Page 202 of 267

the CAPA process. Data captured, analyzed and acted on using CAPA also needs to be
measured over time and provide benchmarks for further corrective action performance
improvements. CAPA can be a catalyst of continued improvement when integrated into the
daily operations of a manufacturer”.
4. Track and report variability and cycle time reduction and risk mitigation –
According to Weiss (1998) – “these three factors are foundational to achieving compliance
and quality management objectives”. Supplier quality management strategies that “measure
defects, corrective actions, improvements in quality, traceability and first article inspection
performance are the single greatest contributors to reducing the cost of quality”. According
to Theodorakioglou, Gotzamani, Tsiolvas (2006), “unifying all of these factors together into a
single dashboard delivers insights into supplier performance unavailable through manually-
based approaches”.
5. Supplier audits - Studies by Gartner and IDC reveal that “supplier audits are very
effective in driving down quality costs, increasing quality levels, and improving overall
production performance when they are used enterprise-wide”. The producers who are making
high progress towards their supplier quality management objectives are adapting to these
performance outcomes to “change their cultures daily, bringing in a high performance
mindset into their organizations.
6. Implement a “Non-Compliance/Corrective Action” process– “Non-

Compliance/Corrective Action data shared with all manufacturing centers and suppliers leads
to benchmarking and corrective action strategies based on agreed-upon improvement goals”.
NC/CA databases are helpful for considering “what lessons have been learned in the past that
are applicable to new production lines and specific engineer-to-order projects requiring
unique suppliers as well”.
Manufacturing a product/service in today’s age isn’t the same as it was a decade ago, and it
won’t remain the same 10 years from now. Business is evolving at such a rapid rate that
market leaders have no choice but to continually adapt to emerging strategies to gain an edge
over the ever increasing competition. “As relationships with global partners become more of
a necessity in business, the need for adaptation is certainly a key issue for those responsible
for supply chain management. Many market leaders are executing supplier quality
Page 203 of 267

management (SQM) so well that it has become a basis of differentiation from close
competitors”. The strategies undertaken to achieve this level are always evolving and
building on past successes. The following are the best practices that enable successful
companies to improve their own quality by improving their supplier’s product and delivery
quality:
1. Measuring cost of poor supplier quality – “Most organizations do not track and measure
the Cost of Poor Supplier Quality (COPQ) attributed to their suppliers. These COPQ may
reduce up to over 10% of the organization’s revenue”. Certain companies follow supplier
COPQ by calculating scrap and increase in MRB (material review board) stocks. The
following aspects must be considered while calculating the actual COPQ -
 Scrap, rework and processing costs incurred due to poor quality

 MRB inventory and related costs due to no inspection
 Assembly line shutdowns due to poor quality
 Freight costs incurred because of accelerated shipment to customers or downstream
plants
 Warranty costs incurred due to poor quality
 Recall expenses, on products already delivered to customers, due to poor quality
2. Cost Recovery - The companies must adopt a hand on approach of working with their
suppliers to enhance their product/service quality in order to reduce their own COPQ. Hence
a cost-recovery system may be set up wherein suppliers can be charged some amount of
money for providing poor quality products. It is an effective way to bring accountability into
the supply chain.
Based on a study conducted in US, it was found that “less than 50% of companies pursue cost
recovery with their suppliers”. And in case they pursue cost recovery then most of these
enterprises recover only the material costs from their suppliers. According to a research
report of AMR, an industry analyst organization, “about 65% of the costs attributed to the
poor supplier quality are non-material related”. “If a company institutes a quality
management system to aggregate such costs and use it for charge-backs, not only would they
be able to fully recover the costs of poor quality from their suppliers, they would be able to
Page 204 of 267

institute a discipline that forces the suppliers to quickly improve their quality of products
shipped”.
3. Supplier Audit - Supplier Audits are an effective way of ensuring that the supplier
adheres to the processes and procedures that were decided upon during the supplier selection
processes. The supplier audit identifies any non conformity in quality levels of
manufacturing, shipment, engineering, invoicing and delivery process at the supplier’s side.
After the audit, the supplier and manufacturer decide together the corrective actions which
must be incorporated by the supplier within an agreed span of time. A future audit is then
done to ensure that these corrective actions have been successfully implemented.
A research found that more than 50% of the manufacturers fail to follow the best practices in
audit. By putting into practice the best practices, manufacturers can “ensure that the audit
process is effective and efficient and allows them to audit their entire supplier base at least
once a year while maintaining a lean staff of auditors”.
4. Supplier Scorecard - Supplier Scorecards are one of the best techniques in “using facts to
rank the supplier’s relative performance within the supply base and tracking improvement in
supplier’s quality over time”. Scorecards provide a data point into any future business
negotiations. Following are the major operational metrics that world class manufacturers
follow in their supplier scorecard:
 PPM (parts per million) of Supplier Components

 Number of Corrective Actions in the previous period
 Average Response and Resolution time taken for implementing corrective actions
 Number of merchandise returns processed per month
 MRB (material review board) Inventory Levels
 Number of hours reworked due to poor quality
 Amount of COPQ claimed from Suppliers
 Number of Customer Complaints due to poor quality
 Warranty costs and reserves
 Ranking of supplier
 Benchmarking the Performance
Page 205 of 267

5. Closed Loop Corrective Action - Methodical cutbacks in the cost of bad quality can be
achieved by setting up a Supplier Quality Assurance System that provides “an integrated and
closed loop corrective action process”. In a production oriented organizations “deviations,
nonconformance, out of specifications, quality incidents or customer complaints occur,
corrective and preventive actions need to be initiated to remedy the problems”.
Once a quality problem has been identified, the first step is “to initiate an investigation and to
properly identify the root cause of the problem”. After identifying the root, Corrective Action
(CAPA) items need to be created and routed for approval. When approved “appropriate
changes are implemented in the environment and then the CAPA is closed out”. These
changes may include “amendments to a documented procedure, upgrading the skill set of an
employee through a training and certification process, or recalibrating the manufacturing
equipment”. The system can also capture COPQ associated with non conformity and use the
available information to initiate and complete a cost recovery process with a supplier.
It is significant to set up a closed-loop integrated supplier quality assurance system, rather

than a set of loosely connected modules from one or more vendors. Integration ensures that
“the information flows out the corrective action process with a high degree of accuracy and
velocity without falling through the cracks”. An integrated system also makes sure that
“audits become a core driver into the corrective action process and become a key tool for
continuous improvement”.
6. Involving Suppliers in quality systems - It is very important for manufacturing

companies to involve their suppliers in all phases of their quality management system, so that
the supply-base is fully integrated into the supplier quality assurance system being rolled out.
For involving the suppliers in quality systems following requirements must be taken care of:
 Supplier should be “able to provide quality-related data to the manufacturer without

having to deploy a mandated quality management system within their environment”.
This can be achieved by “feeding information from supplier’s quality system into
manufacturer’s quality system (for larger suppliers or ones sharing their production
line with multiple customers) or getting the supplier to use a manufacturer’s web-
based quality management system (for smaller suppliers or ones with dedicated lines
for a customer)”. An online quality management system can drastically reduce the
Page 206 of 267

cost of ownership for a supplier by providing the right information to a major
customer without having to set up software in-house.
 Manufacturer should be able to get every relevant stakeholder involved within the
supply base to use the quality system without having to train every casual user.
Emerging capability includes “a scenario where an application form is embedded
within an email delivered by the system to the casual user at a supplier”. When the
user opens an email, they press reply, feed the data in the embedded form and press
send. The data in the form then gets processed by the system in the same as if it came
from the screen. Therefore, the user can participate in the quality system without
having to learn to navigate the quality application,
The world class manufacturers have been adopting these best practices which have led to a
dramatic improvement in their supplier quality and accomplish their own business objectives.
Such practices are being implemented by the leading organizations using enterprise quality
management software.
12.4 Metrics to Use for Scoring Supplier Quality Management
The following are the five key metrics that are widely used for Scoring Supplier Quality
Management
1. Cost of quality. This metric computes the cost levied by an organization for producing a
quality product. These costs are divided into two broad groups: cost of fine quality and cost
of bad quality. These two can be further classified as:
Internal failure costs – These costs are linked with “defects found before the customer
receives the product or service”. For example – Cost incurred due to Rework, Delays, Re-
designing, Shortages, Re-testing, Downtime, Lack of flexibility and adaptability
External failure costs – These costs are linked with “defects found after the customer receives
the product or service”. These costs are – Cost incurred due to lack of quality planning,
supplier assessment, new product appraisal, capacity appraisals, quality improvement team
meetings etc.
Appraisal costs – These costs are incurred to “inspect and determine the degree of conformity
to quality requirements”. These are the costs incurred while examining and testing the goods
Page 207 of 267

and services delivered by supplier, inspections during and after the processes, field testing
etc.
Prevention costs – These costs are incurred to “keep failure and appraisal costs to a
minimum”. For example – costs incurred in determining the specifications for incoming
materials, formation of plans for ensuring quality, dependability, development and
maintenance of the quality system.
2. Overall equipment effectiveness (OEE). It is very important to create an all-inclusive

measure that presents a view of the crucial areas of processes as quality affects the entire
business performance. “Overall equipment effectiveness is one such technique that measures
how frequently the equipment is available and when it should be producing product for a
customer. It measures how close the equipment is producing to its actual capacity. OEE also
measures the percentage of products that are produced within the said quality specifications”.
The OEE calculation is based on the three factors that are mentioned below:
Availability: While doing calculations, availability takes into account any loss/cost arising
due to down time Loss. The formula for calculation of availability is:
“Availability = Operating Time / Planned Production Time”
Performance: While doing calculations, performance takes into consideration the speed loss.
The formula for calculation of performance is:
“Performance = Ideal Cycle Time / (Operating Time / Total Pieces)”
Performance can also be calculated as:
“Performance = (Total Pieces / Operating Time) / Ideal Run Rate”
Ideal Cycle Time: Ideal cycle time is “the minimum cycle time that any process can be
expected to achieve in optimal circumstances”. It is also known as “Design Cycle Time or
Theoretical Cycle Time or Nameplate Capacity”.
Performance is checked at 100% level in order to make sure that if an error takes place in the
specified Ideal Cycle Time (Ideal Run Rate) then its effect on OEE will be limited.
Page 208 of 267

Quality: Quality takes note of Quality Loss, and can be calculated using the formula as given
below:
Quality = Good Pieces meeting conformance / Total Pieces
OEE: OEE takes into account all three above mentioned factors, and is calculated using the
formula:
OEE = Availability x Performance x Quality
Let us take an example to understand the OEE formulas and calculations made:
The table below shows imaginary shift data that can be used to understand the OEE
calculation. We will use the formulas for calculation of the three OEE factors of Availability,
Performance, and Quality. It must be taken care of that the similar units of measurement are
consistently used throughout the calculations using the given data:
Item Data
Shift Length 8 hours = 8*60 = 480 min.
Short Breaks Two of 15 minutes each = 15*2 =30 min.
Meal Break One for 30 minutes = 30 min.
Down Time 47 minutes
Ideal Run Rate 60 pieces per minute
Total Pieces 19,271 pieces
Reject Pieces 423 pieces
Planned Production Time = Shift Length - Breaks
= 480 – 60 = 420 minutes
Operating Time = Planned Production Time - Down Time
Page 209 of 267

= 420 – 47 = 373 minutes
Good Pieces = Total Pieces - Rejected Pieces
= 19,271 – 423 = 18848 pieces
Availability = Operating Time / Planned Production Time
= 373 minutes / 420 minutes = 0.8881 minutes
Performance = (Total Pieces / Operating Time) / Ideal Run Rate
= (19,271 pieces / 373 minutes) / 60 pieces per minute = 0.8611 pieces per minute
Quality = Good Pieces / Total Pieces
= 18,848 / 19,271 pieces = 0.9780 pieces
OEE = Availability x Performance x Quality
= 0.8881 x 0.8611 x 0.9780 = 0.7479 = 74.79%
3. Percentage of products in compliance. This is another important measure that plays a

crucial role and is used in standardized industries such as medical devices, pharmaceutical,
biotechnology, food and beverages, defense, aerospace, automotive etc. It calculates “the
percentage of products that are in compliance with government regulations and internal
guidelines”. This technique evaluates the efficacy of an organization in adhering to the
compliance structures of local, national, or global laws and policies that can impact any
business.
It is very difficult for the organizations to keep updating employee knowledge and skill level
in order keep up with the changing and ever evolving compliance scenario.
In addition to this, guidelines for compliance to the “European Union’s registration,

evaluation, authorization, and restrictions of chemicals (REACH) directive, the restriction on
hazardous substances (ROHS), waste electrical and electronic equipment (WEEE) directive”
affects the organizations differently based on the type of industry. This further enhances the
complexity of selling the products/services in a global market.
Page 210 of 267

4. Deliver Complete shipments on time – “The quality of the product should not be
managed at the cost of delaying final delivery to the customer. This metric about on-time and
complete shipments seems very easy to understand, there exist several different ways that
companies adopt to measure this metric”. This metric is defined as “percentage of products
delivered on time and complete with no errors or repromise dates”.
5. New products introduction (NPI). NPI is a metric that is defined as “a percentage of new
products introduced in the market that hit time, volume, and quality targets”. Companies keep
introducing new products in the market and these become the source of competitive
advantage in industries. For example - mobile phones, cameras, other automotive and
consumer electronics. A company’s profitability growth depends on how effective an
organization is at striking NPI targets rather than based only on how well an organization is
doing at launching new products into the market.
12.5 Supplier Quality Management Evaluation Process
Following are the five key metrics that provide an organization with critical insight into
operational and financial performance of its supplier.
1. Risk Criteria Evaluation
Supplier Quality Management: Risk Assessment
“In order to get a full picture of a company’s supplier risk portfolio, individualized risk
assessments should be made on the performance of each supplier. This can be done in various
ways. The quality managers can send representatives for on-site audits to view actual
production lines. This has become costly with globalization, unless multiple suppliers have
been strategically chosen within close proximity. Another method is to build into the quality
agreement the delivery of data reports and audits upon request or at specified times
throughout the life of the contract”.
Supplier Quality Management is “an integral component to the total cost of quality,
Enterprise Quality Management Software (EQMS) companies have begun incorporating it
into available software”. “A quality manager should integrate its EQMS with that of the
suppliers and, if possible, with the supplier’s suppliers (often through a shared web-portal).
Page 211 of 267

This is an ideal method of obtaining a real-time performance assessment and greater
visibility. However, the integration may seem overbearing for smaller companies that would
rather remain independent from larger entities”.
Supplier Quality Management: Risk Quantification
“A supplier’s risk can be quantified as a function of two variables and ultimately assigned a
level of risk for comparison and, later, prioritization”. The first variable is associated to the
aforesaid performance of the supplier. “By analyzing performance indicators in a way that
creates standardized metrics—average response time for corrective actions, MRB inventory
levels, delivery times, customer complaints, etc.—suppliers can be rated based on their
overall performance relative to others. Supplier Quality Management greatly facilitates this,
as information is recorded and available within the software, allowing companies to make an
assessment on the likelihood a supplier will have a particular failure in a standardized way”.
“The second risk variable, impact, greatly depends on the supplier’s criticality to production
and the final product. For example, if a there is no substitute for a material used, then that
supplier should automatically be considered riskier despite its levels of performance. If
production cannot continue without this supplier, it should hold considerable weight in a risk
portfolio. Conversely, the less critical a supplier is to continuity, the less risk it should be
assigned”.
Supplier Quality Management: Risk Prioritization
Now-a-days the companies are depending a great deal on supply chains for manufacturing;
supplier quality management thus holds great deliberation in setting the strategic vision of an
organization. The organizations can easily and effectively list out the matters that need
greater attention by calculating supplier risk in terms of both performance and significance.
The organizations prefer to deal with these external threats in ways similar to dealing with
internal inefficiencies or loopholes. The application of techniques like “closed-loop CAPA or
other variation management techniques” can help to alleviate the supplier risk. This can also
help in avoiding the similar issues from happening in the near future.
Page 212 of 267

2. Audit Strategy
 Prioritize the list of suppliers on the basis of risk assigned by taking into account the
time when the last audit was done.
 Select the first five maximum risk suppliers and program the quality audits throughout
the year.
 Hire a supplier quality engineer (SQE) - one for every fifteen suppliers. “Five supplier
audits/year/SQE x three years/cycle = 15 supplier audits/SQE/cycle” which needs
onsite audit. The numeric “5” is subjective, but “5” is in the correct order of enormity.
3. Frequency of Supplier Audits
As such there is no specific requirement for the manufacturers to conduct supplier audits. The
companies do it in order to exercise quality control. In case an audit is to be done then there is
no limit as to do it n number of times in a year. But in certain cases where there lies is a new
persisting issue and the supplier has not taken any corrective action then a visit can prove to
be appropriate and necessary, even if it has not been pre-planned. Major dealers (top five
suppliers with maximum risk) must be visited atleast once each year by the organization or
by an outsourced auditing company hired by the company. Sometimes, unplanned audits
prove to be better and preferred as the dealer can be caught unawares and unprepared. This
helps in auditing a “normal production day” at the supplier’s place.
4. Audit Priorities
A major concern is “auditing top management to insure that quality is a top management
focus and they know and understand the quality/auditing process, no matter the industry
type”. It is essential to know - the quality framework of supplier; supplier’s goals and
objectives; mode of quality training and education; supplier’s perception of quality;
availability of any supplier quality manual and the frequency at which it is updated. The audit
priority can be defined as a “balanced scorecard of measurements focused on cost, quality
and timeliness”.
1. MRB stands for __________________________________
Page 213 of 267

2. ___________________ is known as PPM
3. Supplier Quality Management (SQM) can be defined as a belief in a supplier's ability to

deliver those products/services that will satisfy the ________________.
4. CAPA is known as ______________________.
5. ___________________________ stands for COPQ.
6.REACH stands for _______________________________________ directive
12.7 Summary
In today’s globalized world of constantly changing supply and demand networks, companies
the organizations are required “to efficiently optimize the supply base given a broad set of
requirements that go well beyond cost”. To do this in the best possible way, the companies
need “to use a risk based approach that looks at both the criticality of a supplier and the
likelihood of failure of a supplier”. The long term accomplishment of proposals around
supplier quality is much more likely to be fruitful if the companies apply standardized risk
evaluation techniques and audit tools through an enterprise structure.
12.8 Glossary
Material Review Board: “This procedure covers determining the disposition of MRB
material and identifying corrective action to prevent future discrepancies. The Material
Review Board (MRB) consists of representatives Manufacturing Engineering, Materials,
Quality and Purchasing department”. The Material Review Board (MRB) can dispose the
objects that fail during examination process. MRB also takes decisions with regards to “scrap
material, rework completed assemblies, transfer MRB material to stock and return purchased
items to the supplier, including customer-supplied production material”. Customer-supplied
production material is discarded only after the customer has been given the choice to get the
material returned. Material review board holds meetings everyday to decide upon the
disposition of all material that suffers from any discrepancies.
Part per Million: One part per million refers to one defect in a million items i.e.
1/1,000,000. Earlier a supplier would have a defect rate of less than 1%, which means 10,000
Page 214 of 267

parts per million. Over a period of time as the production and quality control processes have
grown stringent the expectation has been enhanced to 0.1% which makes it 1,000 parts per
million. These days the level for most of the components is targeted at twenty parts per
million which makes it 0.0025%. For example, in case of twenty five defective units in a
consignment of a thousand units = 25/1000= .025 which is 2.5% defective and 025 X
1,000,000 = 25,000 parts per million.
Return Merchandise Authorization: Return material authorization (RMA) is an e-

commerce word that describes “an arrangement in which the supplier of a good or product
degrees to have a customer or client ship that item back to them in exchange for a refund or
credit”. Such kinds of agreements provide a scope for a higher degree of guaranteed quality.
These are also known as “return merchandise authorization or returned goods authorization”.
It hold importance in cases where the products are being sold and the customers are not in a
position to completely judge the product that they are purchasing and therefore, depend on
the narratives and photographs to get an idea of the quality. “A return material authorization
is used for a software package or technology product, and is applicable within a specified
warranty period. In certain cases, the provider authorizes this kind of agreement at some
future point when the user experiences a defect or malfunction in the product”.
Supplier Audit: Supplier audits are the process of pursuing the procedures and processes
that have been contacted upon during the selection audit process. It determines if there are
any non conformity in the production process, process of engineering transformation, billing
process, quality process, and the process of shipment of consignment. Supplier audits are
investigation that is carried out to file the relationship between different companies so as to
substantiate and establish if a supplier’s products, services and processes are in compliance or
not.

1. Material Review Board
2. Parts per million
3. Customer Requirements
4. Create Corrective Action Preventative Action
5. Cost of Poor Supply Quality
6. Registration, evaluation, authorization, and restrictions of chemicals
Page 215 of 267

12.10 REFERENCES
1. Fernandez, Ricardo, TQM in Purchase and Supply Management, CRC Press LLC
2. Hradesky, John L., Total Quality Management Handbook, Mc Graw Hill Education
1. Deming, William Edwards, Quality, Productivity, and Competitive Position, MIT Press
2. Shah, Janat, Supply Chain Management: Text and Cases, Pearson Education India
1. Discuss the significance of supply quality assurance system.
2. What are the key strategies for improving supplier quality management in
manufacturing companies?
3. Discuss the steps given by Joseph M. Juran in the process of supplier quality
assurance.
4. What are the best practices that enable successful companies to improve their own
quality by improving their supplier’s product and delivery quality?
5. What are the five key metrics that are widely used for Scoring Supplier Quality
Management
Page 216 of 267

Chapter 13
TQM Implementation
Structure
13.1 Objectives
13.2 Introduction
13.3 Implementing TQM
13.4 Barriers To Total Quality Management Implementation
13.5 Six Sigma Concept
13.6 Control Methods And Alternatives
13.8 Summary
13.9 Glossary
13.10Answers To Check Your Progress
13.11 References
13.13Terminal And Model Questions
13.1 OBJECTIVES
1. The common barriers to implementation of total quality management

2. The concept of six sigma including its applications, advantages and implementation.
3. Various control methos and alternatves.
13.2 INTRODUCTION
It can be concluded here that the advantages of TQM have been widely discussed, but the
challenges of implementation have received slight attention. A quality philosophy is
Page 217 of 267

required for the successful implementation of a quality project. This philosophy must
facilitate a long-term lifestyle change for a company. Commitment of top management is
indispensable. Substantial inflow of resources, adequate preparation, workforce
participation and effective measurement techniques are some of the key success
ingredients. A successful TQM program is unique, and it should motivate middle
management to focus on long-term strategies rather than short-term goals. Teamwork is
the key to involvement and participation. Groups should be encouraged to work closely
and effectively, and should focus on character improvement and client satisfaction.
For successful implementation of TQM organizations should focus on creating consistency
of purpose toward improvement of the product and service so as to become competitive,
stay in business and provide jobs, Ceasing dependence on mass inspection; require,
instead, statistical evidence that character is built on, Adopting the new philosophy,
Improving the quality of incoming materials and finding the problems; constantly improve
the system of production and service. At that place should be a continual advance in
productivity and a reduction in prices.
13.3 IMPLEMENTING TQM
In any institution/establishment, a TQM movement has to be originated and implemented

by the top management. However, it is possible that the initiative can come from the
middle or lower rung to a fault. However, unless the top management feels the demand for
quality improvement, implementing TQM would be hard. Thus, TQM can begin only when
the necessity of quality in education is felt by one and all. The implementation of TQM will
begin by first identifying the reasons for change. This exercise may be initiated through
brainstorming among key functionaries. In this exercise a sincere effort should be made to
identify core problems and issues and to bring to surface, deficiencies and inadequacies.
Once it is decided to introduce TQM, then an environment, building exercise should be
followed through workshops and seminars to create awareness about quality issues and to
open up the communication channels. TQM planning teams headed by the Head of the
Page 218 of 267

concerned department or his nominee should be constituted. The planning team will
provide guidance and leadership to the TQM movement.
Development of vision and mission statements as well as strategic action plan could be
taken up through workshops. The assistance of trained facilitators may be taken to
organize the workshops. Based on the framework of the mission statements and the
strategic objectives evolved from the vision statement, specific Core Teams/Improvement
Teams may be identified to address the issues. Simultaneously, flowcharts of the core
processes which require change may be drawn up. Thereafter attempts must be made to
develop norms and standards for key processes. Special training and skills in TQM tools
and techniques may be imparted to the members of the planning team as well as the Core
Teams/ Improvement Teams in the change process. The stakeholders too may be imparted
training to appreciate the importance of data driven decision making and systematic
problem solving processes. For every theme or activity identified under TQM, the Core
Team/Improvement Team or task force will be primarily responsible. The said teams must
identify strategies and techniques for addressing the theme/issue. The improvement team
must fix dates and the time for team meetings. The teams should be encouraged to
complete their task in a time bound manner. It would be useful for the Improvement Team
to benchmark important processes with similar organizations. The Improvement Teams
must document the status of the processes before and after initiating TQM - Base Line
Study, Mid term assessment and continuous monitoring and assessment. This will enable
the institution to measure tangible results.
13.4. BARRIERS TO TOTAL QUALITY MANAGEMENT IMPLEMENTATION
TQM is a management philosophy that seeks to integrate all organizational functions

(marketing, finance, design, engineering, production, customer, etc.) to focus on meeting
customer needs and organizational objectives. TQM views an organization as a collection of
processes. It maintains that organizations must always strive to continuously improve
these processes by incorporating the knowledge and experiences of workers. There are
several factors that may stand against a movement for Total Quality Management. It is not
possible to ensure an environment in which all sections of the organization wholeheartedly
Page 219 of 267

agree to TQM in principle. There can be individual differences of opinion as well as
collective opposition to a total quality approach. There are seemingly justifiable reasons for
resistance whenever innovations are introduced. This need not make the project leader feel
disheartened. It only indicates that greater amount of work needs to be done.
The implementation of total quality is similar to that of other decentralized control
methods. In developing TQM, companies need to understand how consumers define quality
in both goods and services offered. If a company pays more attention to quality in its
production processes, fewer problems are bound to occur when the product is in the
customers’ hands. Management should make a commitment to measure the performance of
a product relative to its quality through customer surveys, which can help managers to
identify design, manufacturing or any other process that has a bearing on the quality of a
product or service, and therefore provide an opportunity for continuous improvement.
An obstacle is an object, a thing, an action or a situation that causes an obstruction.
Obstacles can be physical, social, economic, technological or political. There are a number
of barriers that face the process of TQM implementation.
Discussed below are some of the barriers or obstacles that total quality management face
during implementation.
1. Vision and Mission of Top Management
Sheer lack of vision and mission of an institution or an organization can become the
greatest barrier for any TQM movement. The workforce has joined the institution for
employment and its members will continue to work as long as they are directed to work.
They would be satisfied as long as the job specifications are achieved. Unless the top
management has a vision and it takes such vision to the workforce, the members will not be
able to share the vision. There may be several missions, which can be successfully
conducted by the workforce. It is possible that the leadership of the management has not
thought about sharing its vision with the workforce. A TQM movement should primarily get
its vision cleared. This is the responsibility of the top management. The institutional vision
has to be put in clear terms so that every member of the workforce is able to understand it.
It may be necessary that the mission statement, it is made with the help of the members of
the workforce so that it becomes their own product. Once they have accepted the vision,
they may be led to the necessary missions to achieve the vision. It is also possible that
Page 220 of 267

every member of each team will visualize the result of each one's or each team's mission.
Undoubtedly, this would ask for, using tools like strategic planning or brainstorming.
2. Complacency and Satisfaction -A large number of staff serving in different sections of

the workforce may be satisfied with whatever work they had been doing. Sometimes it so
happens that customers do not complain against mediocrity. They are seemingly satisfied.
In the absence of challenges from customers the workforce is likely to repeatedly perform
in the same manner. This would result in complacency and an unwillingness to change.
This attitude would mostly come from the senior members of the workforce. Success of
TQM will depend on the long-term devotion of the senior members of any stream of the
workforce. Strategic planning to convince them would be an important part of environment
building for Total Quality Management. Once convinced they would back it and buttress it.
Most often these people would like the TQM project to be achieved but will be unwilling to
do extra work. Also, most of them even after being convinced would like to return to the
traditional methods and forget about the innovations and experiments.
3. Volume of Work- A workforce who had been performing with a particular design will
be unwilling to comply if asked to perform more. TQM would definitely demand more work
from the workforce. It will ask for preparation of statistical documents. There will be a
need for systematic evaluations. All these put together would amount to plenty of work for
each member of the workforce. Therefore, TQ Managers have to design and define work in
such a manner that the members of the various teams are not burdened with the sheer
volume of the work itself. TQ Managers will have to involve everyone in such a manner that
they do not feel pressurized to work but are willing to work voluntarily. Every result has to
be highlighted and the team's success and the contribution of its members necessarily
acknowledged. The increase in the quantum of work should be seen by everyone as a need
for successful production or performance. This is possible only when problem solving
techniques are used. Therefore TQM cannot be an order from the top to work more; it has
to be a decision by every stream of the workforce. As participatory approaches become
more common, the workforce will understand the need for different types of work to be
done.
Page 221 of 267

4. Resource Crunch- One of the problems that a TQ movement may face is lack of
adequate resources - material as well as human. Financial resources may not be available at
the right time. However, a committed group of workers led by an equally committed top
management is bound to come up with innovative ideas and improvise. More importantly,
the human resource available may not need financial support to become more powerful
and capable.
5. Middle Management Power- Middle managers are the regulators of day to day
activities and as such their support of a movement is very important for success. Unless the
middle managers are convinced, they are unlikely to support the cause of quality. Also, they
may not be familiar with the needs of other stakeholders and therefore they may not see
the need for qualitative changes. The TQ managers, therefore, should take the middle
managers in confidence right at the beginning. They should be made the advocates of
several aspects of total quality management. They should be given adequate knowledge
about the quality movement, so much so that they will become the pillars around which
most in the team can work.
6. Fear of Empowerment -Most managers of teams will be cautious about the

empowerment of the lower level workforce. They may not be willing to accept the idea of
people subordinate to them taking decisions. They may have been used to passing orders
and the prospect of their juniors becoming independent may not be acceptable to them. If
they were people with a very high sense of values of hierarchy, they would like to preserve
them. Any activity that may possibly reduce their power will not be acceptable to them.
Promoters of TQM movement have to assure every employee that each person has a
specific job to do. Team building has to take place in such a way that everyone understands
the importance of each member of the team. Experiences have to be offered to such
employees to make them realize that their position has not eroded just because others have
been assigned tasks previously assigned to them. There is nothing to replace experiential
learning.
Page 222 of 267

7. Skeptics and Cynics- Skepticism and cynicism are the characteristic factors of a
workforce that has been successful in completing needed tasks. They become suspicious of
any experiment or innovation that is mooted by the top management. They have a
tendency to disbelieve anything that is going to change the existing patterns of work. They
would see a TQ Movement as an intervention which is bound to fail. It is necessary that any
quality assurance has to take into consideration the need to guarantee success stories in
the beginning. The bodily functions taken up should be such that they are bound to be
successful and therefore skeptics and cynics would see a different figure. More importantly,
the movement should be led by members of the staff who are acceptable to the rest. A TQ
Manager’s success is in identifying such members of the staff who will be acceptable to the
others. Selection of the initiators of TQ movement, therefore, is crucial.
8. Accountability and Transparency- Members of any workforce are generally

accountable only to their own definitions of their jobs. The accountability and transparency
of such people are confined to the limited performances that they would have been making
out. Thus, they will not be willing to take on more, which they cause to account for. They
will as well be unwilling to take up new systems which will require them to be more
sheer.er. Participation of such members of the workforce in TQM teams will have a spread
effect that is passed on from the initiators. Therefore, initiators have to be clearly trained
and trained so that they will be capable to win over any member of the workforce who will
be unwilling to become accountable and transparent.. Repeated discussions on these two
values are likely to make such employees believe in the new pattern of work.
9. Competitive markets- A competitive market is a pushing strength behind many of the

other obstacles to quality. One of the effects of a competitive market is to lower quality
standards to a minimally acceptable level. This barrier to quality is mainly a mental barrier
caused by a misunderstanding of the definition of quality. Unfortunately, too many
companies equate quality with high cost. Their definition leads to the assumption that a
company can’t afford quality. A broader definition needs to be utilized to look at quality,
not exclusively in the company’s product, but in every part of the society. All company
functions have an element of quality. If the quality of tasks performed is poor, unnecessary
Page 223 of 267

cost is incurred by the company and, ultimately, turned over to the customer. TQM should
work with inspiring employees at every level to continuously improve what they manage,
thus rooting out unnecessary costs. Done correctly, a company involved with TQM can
dramatically reduce operating costs. The competitive advantage results from concentrating
resources (the employees’ brainpower) on controlling prices and improving client service.
10. Lack of leadership for quality-Excess layers of management quite often lead to
duplication of duty and obligation. This has caused the lower employees of an arrangement
to give the quality implementation to be a management’s job. In addition, quality has not
been taken as a joint responsibility by the management and the employees. Paired off with
the notion that management is infallible and thus it is always right in its decisions,
employees have been impelled to hold up a peripheral role in quality improvement. As a
result employees who are directly involved in the production of goods or delivery of
services are not motivated enough to incorporate quality issues that have been raised by
the customers they serve since they do not feel as part of the continuous process of quality
improvement. Moreover, top management is non visible and explicitly committed to quality
in many establishments.
11. Lack of cultural vigor- organization has its own unique way of doing things. This is
determined in terms of the culture of the system. The procedures, the philosophy, the
processes and the traditions define how the employees and management contribute to the
accomplishment of goals and meeting of organizational objectives.es. The procedures, the
philosophy, the processes and the traditions define how the employees and management
contribute to the accomplishment of goals and meeting of organizational objectives.
Nevertheless, culture has to be reviewed and for that matter re-adjustments have to be
done in line with the prevailing economic, political, societal and technological realities so as
to improve on efficiency.
12. Inadequate resources for total quality management-Since most companies do not
involve quality in their strategic plan, little attention is paid to TQM in terms of human and
financial resources. A lot of the attention is sucked up to increasing profit margins of the
organization with little respect as to whether their offers/ supply to customers is of
expected quality. There is paltry budgetary allocation made towards employee training and
development which is critical for total quality management implementation. Employee
Page 224 of 267

training is frequently seen as unnecessary cost which belittles the profit margins, which is
the main objective for the existence of businesses and as a result TQM has been overlooked
as its implementation “may not necessarily bring gains to the system in the short term”.
13. Lack of client focus-Most strategic plans of organizations are not customer driven.
They tend to focus much on earnings-oriented objectives within a collapsed time frame.
Little (if any) market research is done to ascertain the product or service performance in
the market relative to its quality. Such studies are considered by most organizations as
costly and thus little concern is shown to quality improvement for consumer satisfaction.
14. Lack of effective measurement of quality improvement-TQM is centered on
monitoring employees and processes, and establishing objectives that anticipate the
customer's needs so that he is surprised and enraptured. This has posed a considerable
challenge to many companies. Measurement problems are caused by goals based on past
substandard performance, inadequate preparation, and lack of resources and competitor-
based criterion.criterion. Worse still, the statistical measurement procedures applied to
production are not applicable to human system processes.
15. Want of proper training/Inadequate Human Resource Development- There is
evidence that lack of understanding and proper training exists at all levels of any
organization, and that it is a large contributor to worker resistance. Schein (1990), for
instance, noted that business school failure to teach relevant process skills contributed to
manager ineffectiveness. TQM requires a well-trained manpower with a strong
understanding of basic math, learning, authorship and communication. Although
companies invest heavily in quality awareness, statistical process control, and quality
circles, often the training is also narrowly focused. Frequently, Duran’s warning against
training for specific organizational levels or product lines is unheeded. This has also been
underscored by Newell and Dale, who argue that poor education and training present a
major obstruction in the evolution and carrying out of a quality program. For a company to
produce a quality product, employees need to know how to do their jobs. For TQM being
successful, organizations must commit to training employees at all floors. TQM should
provide comprehensive training, including technical expertise, communication skills, small-
team management, problem-solving tools, and customer relations.
Page 225 of 267

13.5 SIX SIGMA CONCEPT
Six Sigma is a highly disciplined process that helps us focus on developing and delivering
near-perfect products and services.
1. Characteristics of Six Sigma

Six Sigma's aim is to eliminate waste and inefficiency, thereby increasing customer
satisfaction by delivering what the customer is expecting.
a) Six Sigma follows a structured methodology, and has defined roles for the
participants.
b) Six Sigma is a data driven methodology, and requires precise data collection for the
processes being studied.
c) Six Sigma is a business-driven, multi-dimensional structured approach for:
a. Improving Processes
o Lowering Defects
o Reducing process variability
o Reducing costs
o Increasing customer satisfaction and loyalty
o Increased sales and profitsnd profits
The word Sigma is a statistical term that measures how far a given process deviates from
perfection.
The fundamental idea behind Six Sigma: If you can quantify how many "defects" you
possess in a process, you can systematically figure out how to eradicate them and become
as near to "zero defects" as possible and specifically it means a failure rate of 3.4 parts per
million or 99.9997% perfect.
2. Key Concepts of Six Sigma

At its essence, Six Sigma revolves around a few central concepts.
 Vital to Quality: Attributes most important to the client.t : Failing to deliver what
the customer wants.
Page 226 of 267

 Operation Capability: What your process can drive home.ome.
 Variation : What the customer sees and feels.
 Stable Operations: Ensuring consistent, predictable processes to amend what the

customer sees and experiences.es.
 Design for Six Sigma : Designing to meet customer needs and process capability.
Our Customers Feel the Variance, Not the Mean. So Six Sigma focuses first on reducing
process variation and then on improving the process capability.
3. Myths about Six Sigma

In that respect are several myths and misunderstandings surrounding Six Sigma. Some of
them are given below:
 Six Sigma is simply borne on with reducing defects..

 Six Sigma is a process for production or engineering.
 Six Sigma cannot be given to engineering activities.
 Six Sigma uses difficult-to-interpret statistics.
 Six Sigma is simply preparation.
4. Benefits of Six Sigma
Six Sigma offers six major benefits that attract companies:
 It generates the opportunity for sustained success.

 Sets a performance goal for everyone
 Enhances value to clients
 Accelerates the pace of advance
 Encourages learning and cross-pollination
 Executes strategic change
5. Origin of Six Sigma
Six Sigma originated at Motorola in the early 1980s, in response to achieving 10X
reduction in product-failure levels in 5 years. Engineer Bill Smith invented Six Sigma, but
died of a heart attack in the Motorola cafeteria in 1993, never knowing the range of the
furor and controversy he had touched off. Six Sigma is based on various quality
Page 227 of 267

management theories (e.g. Deming's 14 points for management, Juran's 10 steps in
achieving quality). In that respect are three central components of Six Sigma Process
Improvement:
a. The Customers: Customers define quality. They expect performance, reliability,

competitive prices, on-time delivery, service, clear and correct transaction processing and
more. This means it is important to furnish what the customers require to attain customer
delight.
b. The Processes: Defining processes as well as defining their metrics and measures is the
cardinal facet of Six Sigma. In a business, the quality should be looked from the customer's
perspective and so we must look at a defined process from the outside-in.By realizing the
transaction lifecycle from the customer's needs and procedures, we can see what they are
experiencing and touch sensation. This gives a chance to identify weak areas within a
process and then we can improve them.
c. Employees: A company must involve all its employees in the Six Sigma program. The
company must provide opportunities and incentives for employees to focus their talents
and ability to meet clients. It is important to Six Sigma that all the team members should
possess a well-defined role with measurable targets.
Under a Six Sigma program, the members of an organization are assigned specific roles to
play, each with a claim. This highly structured format is necessary in order to implement
Six Sigma throughout the organization. At that place are seven specific responsibilities or
"character areas" in a Six Sigma program, which are as follows.
Leadership: A leadership team or council determines the goals and objectives in the Six
Sigma process.ss. Just as a corporate leader sets a tone and course to achieve an objective,
the Six Sigma council sets the goals to be met by the team.
Sponsor: Six Sigma sponsors are high-level individuals who understand Six Sigma and are
dedicated to its winner. The individual in the sponsor role acts as a problem solver for the
ongoing Six Sigma project. Six Sigma is more often than not directed by a full-time, high-
level champion, such as an Executive Vice President.
Presenters: Presenters are the owners of processes and systems, who help initiate and
coordinate Six Sigma improvement activities in their fields of responsibilities.
Page 228 of 267

Implementation Leader : The individual responsible for supervising the Six Sigma team effort,
who endorses the leadership council by ensuring that the work of the team is completed in
the desired fashion, is the implementation Leader. Ensuring success of the execution plan
and resolving problems as they arise, training as needed, and assisting sponsors in
motivating the team are some of the key obligations of an implementation leader.
Coach : The tutor is a Six Sigma expert or consultants who goes down a schedule, definite
result of a project, and who mediates conflict, or deals with resistance to the plan.
Responsibilities include acting as a go-between for sponsor and leadership, scheduling the
work of the team, identifying and determining the desired outcomes of the project,
mediating disagreements, differences, and resistance to the program and identifying
success as it comes about.s as it comes about.
Team Leader: It is an individual responsible for managing the work of the team and for
acting as a go-between with the presenter and the team members. Responsibilities include
communication with the sponsor in determining project goals and rationale, picking and
helping team members and other resources, keeping the project on agenda, and keeping
track of steps in the process as they are finished.
Team Member: An employee who functions on a Six Sigma project, given specific duties
within a project, and has deadlines to meet in reaching specific project goals. Team
members execute specific Six Sigma assignments and work with other members of the
team within a defined project schedule, to reach specifically identified goals.
Process Owner: The individual who takes on responsibility for a process after a Six Sigma
team has completed its work.
6. Expanded Definitions of Roles Belt- Colors

The assignment of belt colors to various roles is derived from the obvious source, the
martial arts. Founded on experience and expertise following roles have developed over the
twelvemonth.
NOTE: The belt names are a tool for limiting levels of expertise and experience.
Page 229 of 267

1. Black Belt : The person possessing this belt has attained the highest skill level and is
an experienced expert in several techniques. As applied to the Six Sigma program,
the individual designated as a Black Belt has completed a thorough internal training
program and delivers the experience working on several tasks. The black belt
holder is usually taken in the role of a team leader, the person who is responsible
for implementation and scheduling.
2. Master Black Belt: A individual who shares with the team or its leadership; but is not
a direct member of the team itself. This may be tantamount to the character played
by the coach, or for more technical and complex tasks. The Master Black Belt is
available to answer procedural questions and to resolve the technical issues that
come up.
3. Green Belt: The Green Belt designation can also go to the team leader or to a member
of the team working directly with the team leaThe Green Belt designation can also
go to the team leader or to a member of the team working directly with the team
leader. The beginning point in gearing up for Six Sigma is to verify if you are ready
to adopt a change that says."There is a more honorable direction to guide your
organization."organization."
7. The Cost of Six Sigma Implementation

Some of the most important Six Sigma budget items can include the following:
 Direct Payroll for the individuals dedicated to the effort full time.
 Indirect Payroll for the time devoted by executives, team members, process owners
and others, involved in activities like data gathering and measurement.
 Training and Consultation fee to teach Six Sigma Skills and getting advice on how to
make efforts successful.
 Improvement Implementation Cost.
8. StartingSix Sigma
Here are some steps, which are required for an organization at the time of starting Six
Sigma implementation.
Page 230 of 267

1. Plan of route: There may be many paths to Six Sigma but the best is the one that
functions for your system.
2. Define objective: It is important to determine what you desire to accomplish, and

priorities are important.
3. Cling to what is feasible: Set up your plans so that they can match your influences,
resources and scope.
4. Preparing Leaders: They are required to establish and guide the Six Sigma Effort.
5. Creating Six Sigma organization: This includes preparing Black Belts and other
functions and assigning them their duties.
6. Preparing the organization: Apart from having black belts, it is needed to impart
training of Six Sigma to all the employees in the system.
7. Piloting Six Sigma effort: Piloting can be given to whatever facet of Six Sigma
including solutions derived from process improvement or design redesign projects.
9. Task Selection for Six Sigma
One of the most difficult challenges in Six Sigma is the choice of the most appropriate
problem to attack. There are broadly two ways to generate projects:
1. Top-down: This approach is mostly linked to business strategy and is aligned with
client demands. The major weakness is they are also broad in scope to be finished in a
timely way (most six sigma projects are anticipated to be finished in 3-6 months).
2. Bottom-up: In this approach, Black Belts choose the projects that are well-suited to the
capabilities of teams. A major drawback of this approach is that, projects may not be
connected directly to the strategic concerns of the management, thereby, receiving
little financial backing and low recognition from the peak.
Key Methodologies
Six sigma has two key methodologies
1. DMAIC: It refers to a data-driven quality strategy for improving operations. This

methodology is practiced to amend an existing business operation.
Page 231 of 267

2. DMADV: It refers to a data-driven quality strategy for designing products &
processes. This methodology is applied to produce new product plans or process
plans in such a fashion that it results in a more predictable, mature and defect free
performance.
On that point is one more methodology called DFSS - Design For Six Sigma. DFSS is a data-
driven quality strategy for designing or redesigning a product or service from the primer
upwards.
Sometimes a DMAIC project may turn into a DFSS project because the process in question
requires complete redesign to bring about the desired degree of improvement.
1. DMAIC Methodology:
This methodology consists of the following five steps.
Define --> Measure --> Analyze --> Improve -->Control
1. Define: Define the problem or project goal that demands to be spoken.
2. Measure: Measure the problem and process from which it was created.
3. Analyze: Analyze data and process to find root causes of defects and opportunities.
4. Improve the operation by finding solutions to fix, diminish, and preclude future
troubles.
5. Control: Implement, control, and sustain the improvement solutions to continue the
process on the new path..
2. DMADV Methodology
This methodology consists of five stairs:
Set --> Measure --> Analyze --> Design -->Verify
1. Define: Define the Problem or Project Goal that needs to be addressed.
2. Measure: Measure and determine customers needs and specifications.
3. Analyze: Analyze the process to meet the customer needs.
Page 232 of 267

4. Design: Design a process that will meet customers' needs.
5. Verify: Verify the design, performance and ability to meet customer needs.
3. DFSS Methodology
DFSS is a separate and emerging discipline related to Six Sigma quality processes. This is a
systematic methodology utilizing tools, training, and measurements to enable us to design
products and processes that meet customer expectations and can be produced at Six Sigma
Quality levels.
This methodology can have the following five steps.
Define --> Identify --> Design --> Optimize -->Verify
1. Define: Define what the customers want, or what they do not want.
2. Identify: Identify the customer and the project.
3. Design: Design a process that meets customers' needs.
4. Optimize: Determine process capability and optimize the design.
5. Verify: Test, verify, and validate the design.
10. Five High-Level Steps In The Application Of Six Sigma
There are five high-level steps in the application of Six Sigma to improve the quality of
output.
1. The first step is Define. During the Define phase, four major tasks are undertaken.
1. Task Team is Formation
 Do two activities who needs to be on the team.

 What characters will each person do?
Picking the proper team members can be a difficult decision, specially if a task calls for a
heavy number of sections. In such tasks, it could be wise to wear them down into smaller
bits and study toward completion of a series of phased project. In such tasks, it could be
wise to wear them down into smaller bits and study toward completion of a series of
phased projects. Every project has customers. A customer is the recipient of the product or
Page 233 of 267

service of the process, targeted for improvement. Every client receives one or multiple
needs from his or her supplier. For each need provided for, there are requirements for the
indigence. The prerequisites are the characteristics of the need that determine whether the
customer is happy with the product or service offered. Thus, document customer needs
and related necessities..
2. A set of business processes is documented. These procedures will be accomplished to

fulfill customer's requirements and to resolve their Critical to Quality issues.
3. Get a Project Charters is a document that names the project, summarizes the project by
explaining the business case in a brief statement, and lists the project scope and ends.A
project charter has the following components:
 The name of the project

 Business case development
 The scope of the project.
 Milestones
 Particular requirements
 Special assumptions
 Functions and responsibilities of the project team
4. Develop the SIPOC process map:
A procedure is delineated as a series of steps and actions that require inputs, total value,
and bring on an output.
SIPOC is a process map that identifies all the following elements of a project:
a) Providers
b) Input
c) Process
d) Output
e) Customers
The SIPOC process map is indispensable for distinguishing:
 The way processes occur currently.
Page 234 of 267

How those processes should be changed and amended throughout the continuing stages of
DMAIC.
At the end of the design stage, you should know who the customer or end-user is, their
resistance issues, and prerequisites. You should also possess a well-defined understanding
of goals and the range of the project including budget, time restraints, and deadlines. One
should also possess a well-defined understanding of goals and the range of the project
including budget, time restraints, and deadlines. In that respect are three important
sections of Measure Phase. A data collection plan is made to gather the needed
information. This plan includes what type of data needs to be collected, what are the
sources of data, etc. The reason to collect data is to identify areas where current processes
need to be improved.
You collect data from three primary sources: input, process, and output.
 The input source is where the process is generated.
 Process data refers to tests of efficiency: the time requirements, cost, value, defects
or errors, and labor spent on the process.
 Output is a measurement of efficiency.
2. Data Evaluation:
At this stage, the collected data are evaluated and sigma is calculated. It presents an
approximate number of flaws.
 A Six Sigma defect is defined as anything outside of customer specifications.
 A Six Sigma opportunity is the total quantity of opportunities for a fault.
First, we calculate Defects Per Million Opportunities (DPMO), and based on that a Sigma is
decided from a predefined table:
Number of defects
DPMO = ------------------------------------------- x 1,000,000
Number of Units x Number of opportunities
Page 235 of 267

As stated above, Number of defects are the total number of defects found, Number of Units
is the number of units produced, and number of opportunities mean the number of ways to
generate defects.
For example, the food ordering delivery project team examines 50 deliveries and finds out
the following:
 Delivery is not on time (13)

 Ordered food is not according to the order (3)
 Food is not fresh (0)
So now, DPMO will be as follows:
13 + 3
DPMO = ----------- x 1,000,000 = 106,666.7
50 x 3
According to the Yield to Sigma Conversion Table given, below 106,666.7 defects per
million opportunities is equivalent to a sigma performance of between 2.7 and 2.8.
This is the method used for measuring results as we proceed through a project. This
beginning point enables us to locate the cause and effect of those processes and to seek
defect point so that the procedure can be improved.
Failure Mode and Effects Analysis -FMEA
 The last section of the measure phase is called FMEA. It brings up to preventing
defects before they happen. The FMEA process usually includes rating possible defects, or
losers, in three ways:
 The likelihood that something might go wrong.
 The power to find a fault.
 The level of severity of the defect.
You may employ a rating scale. For example, rate each of these three areas from 1 to 10,
with 1 being the lowest FMEA level and 10 being the highest. The higher the grade, the
more severe the rating. Hence, a high FMEA indicates the need to organize and implement
improved measuring steps within the overall operation. This would cause the consequence
Page 236 of 267

of preventing defects. Understandably, there is no need to pass a great deal of time on this
procedure if the likelihood of a defect is low.
Yield to Sigma Conversion Table

Yield % Sigma Defects Per Million Opportunities
99.9997 6.00 3.4
99.9995 5.92 5
99.9992 5.81 8
99.9990 5.76 10
99.9980 5.61 20
99.9970 5.51 30
99.9960 5.44 40
99.9930 5.31 70
99.9900 5.22 100
99.9850 5.12 150
99.9770 5.00 230
99.9670 4.91 330
Page 237 of 267

99.9520 4.80 480
99.9320 4.70 680
99.9040 4.60 960
99.8650 4.50 1350
99.8140 4.40 1860
99.7450 4.30 2550
99.6540 4.20 3460
99.5340 4.10 4660
99.3790 4.00 6210
99.1810 3.90 8190
98.9300 3.80 10700
98.6100 3.70 13900
98.2200 3.60 17800
97.7300 3.50 22700
97.1300 3.40 28700
Page 238 of 267

96.4100 3.30 35900
95.5400 3.20 44600
94.5200 3.10 54800
93.3200 3.00 66800
91.9200 2.90 80800
90.3200 2.80 96800
88.5000 2.70 115000
86.5000 2.60 135000
84.2000 2.50 158000
81.6000 2.40 184000
78.8000 2.30 212000
75.8000 2.20 242000
72.6000 2.10 274000
69.2000 2.00 308000
65.6000 1.90 344000
Page 239 of 267

61.8000 1.80 382000
58.0000 1.70 420000
54.0000 1.60 460000
50.0000 1.50 500000
46.0000 1.40 540000
43.0000 1.32 570000
39.0000 1.22 610000
35.0000 1.11 650000
31.0000 1.00 690000
28.0000 0.92 720000
25.0000 0.83 750000
22.0000 0.73 780000
19.0000 0.62 810000
16.0000 0.51 840000
14.0000 0.42 860000
Page 240 of 267

12.0000 0.33 880000
10.0000 0.22 900000
8.0000 0.09 920000
Six Sigma aims to define the causes of defects, measure those defects, and analyze them so
that they can be reduced. We consider five specific types of analyses that help to promote
the goals of the project. These are source, process, data, resource, and communication
analysis. Now we will see them in detail.
3. Source Analysis
This is also called root cause analysis. It attempts to find defects that are derived from the
sources of information or work generation. After finding the root cause of the problem,
attempts are made to resolve the problem before we expect to eliminate defects from the
product.
Three Steps to Root Cause Analysis

 The open step: During this stage, the project team brainstorms all the potential
explanations for current sigma performance.
 The narrow step: During this phase, the project team narrows the list of possible
explanations for current sigma performance.
 The close step: During this stage, the project team validates the narrowed list of
accounts that explain sigma performance.
4. Operation Analysisis
Analyze the numbers to find out how well or poorly the processes are working, compared
to what's possible and what the competition is doing.
Process analysis includes creating a more detailed process map, and analyzing the more
detailed map, where the greatest inefficiencies exist.
Page 241 of 267

The source analysis is frequently difficult to distinguish from process analysis. The process
refers to the accurate movement of materials, data, or requests from one position to some
other.
5. Data Analysis
The utilization of measures and data (those already collected or new data accumulated in
the study phase) to spot patterns, tendencies or other constituents about the problem that
either indicate or prove/disprove possible cause of the trouble.
The data itself may have defect. There may be a case when products or deliverables do not
supply all the required info. Hence, data are examined to find out defects and attempts are
created to solve the problem before we look to eliminate defects from the merchandise.
6. Resource Analysis
We also need to ensure that employees are properly trained in all departments that affect
the process. If training is inadequate, you want to identify that as a cause of defects.
Other resources include raw materials needed to manufacture, process, and deliver the
goods. For model, if the Accounting Department is not paying vendor bills on time and,
consequently, the vendor takes up a shipment of shipping supplies, it becomes a resource
problem.
7. Communication analysis
One problem common to most processes high in defects is poor communication. The
classic interaction between a client and a retail store is worth studying because many of
the usual communication problems are apparent in this example.
The same types of problems happen with internal customers as well, even though we may
not know the sequence of outcomes as a customer service problem.he exercise of looking
at issues from both points of view is instructive. A vendor wants payment according to
agreed-upon terms, but the Accounting Department requires to make its batch processing
uniform and efficient. Between these types of groups, such disconnects demonstrate the
importance of communication analysis.
Analysis can take various courses. Some Six Sigma programs tend to employ a lot of
diagrams and worksheets, and others prefer discussion and list building. There are many
tools that can be used to perform analysis like Box Plot, Cause and Effect Diagram,
Progressive Analysis, Ranking, Pareto Analysis, Prioritization Matrix, Value Analysis, etc.
Page 242 of 267

The proper procedure is the one that works best for your team, provided that the end
result is successful.
If the project team does a thorough job in the root causation phase of analysis, the improve
phase of DMAIC can be quick, easy, and satisfying work.
 The objective of Improve Phase is to identify improvement breakthroughs, identify

high gain alternatives, select preferred approach, design the future nation, sets the new
Sigma level, perform cost/benefit analysis, design dashboards/ scorecards, and create a
preliminary implementation plan.
o Apply idea-generating tools and techniques to identify potential solutions

that eliminate the root drives.
 Identify/Select High Gain Alternatives:
o Develop standards to evaluate candidate improvement solutions.
o Think systematically and holistically.
o Prioritize and evaluate the candidate solutions against the solution

evaluation criteria.
o Conduct a feasibility assessment for the highest value solutions.
o Develop preliminary solution timelines and cost-benefit analysis to assist in

recommendation presentation and future implementation planning.
Improvement can involve a simple fix once we discover the causes of defects. Nevertheless,
in some instances, we may ask to use additional tools as well. These include the following:
 Solution options
 Experiments with solution options
 Provision for future visit
Quality is at the heart of the Six Sigma philosophy. Reducing defects have everything to get
along with striving for flawlessness. Whether we achieve perfection or not, the effort
defines our attitude toward quality itself.
Page 243 of 267

Standardization enables processes to go as smoothly as possible. In a manufacturing
environment, the value of standardization has been proven over and over.
We need to devise a control feature to processes so that the majority of work is managed in
a standardized manner.
13.6. CONTROL METHODS AND ALTERNATIVES

 The evolution of a new process of any alteration to an existing process requires the
evolution of processes to control workflow.
 When a procedure cannot be handled in the normal fashion, we demand to come up

with alternatives, short of forcing conformity to the standardized method.
 Responding when Defects Occur

 The last footprint in a control process is recognizing how to respond once a fault is
detected. The weak links in the procedure, where defects are most likely to occur, can and
should be monitored carefully so that defects can be spotted and fixed before the process
continues.
The answer to a defect may be to prevent a discovered flaw from becoming a flaw at all.the
best designed systems, defects can be reduced to near zero, so that we may actually believe
that Six Sigma can be attained.
It can be concluded that the project team learns how to technically master the newly
improved process and produces a response plan to insure the novel procedure, and
likewise maintains the improved sigma performance.

Tick the correct option:
1. TQM means-
a. total Quality Measure
b. Total Quality Management
c. Total Quanity measure
d. Total Quantity Mix
2. What does benchmarking involves-

a. defining competitors features
Page 244 of 267

b. finding defects
c. Quality analysis
d. Reduction in responsibility
3. Which is not a key concept of TQM-

a. centering on customer
b. management commitment
c. Universal Quality Response
d. Detection of Defect
4. TQM starts from-

a. bottom level
b. top level
c. middle level
d. none of above
5. Six Sigma aims to –

a. Increase profit
b. Eliminate waste and inefficiency
c. Customer retention
6. Six Sigma originated at-

a. Tata’s
b. Motorola’s
c. Suzuki
7. DMAIC stands for –

a. Define-measure-analyze-improve-control
b. Define-make-analyze-improve-control
c. Define-measure-aid-improve-control
d. Define-measure-analyze-implement-control
8. TQM is a ___________philosophy
a. Business
b. Social
c. Scientific
Page 245 of 267

d. Psychological
13.8 SUMMARY
Quality is generally defined as conformance to requirements. TQM is a people

driven process. It requires changes in people’s attitudes primarily. In summation, it
handles with a process orientation and continuous improvement of the operation. It
considers in making quality everyone's concern and obligation. Quality should
become a habit and not a thing of luck. TQM ensures attainment of this objective
generating a number of benefits to the organization. The implementation of total
quality is similar to that of other decentralized control methods. In developing TQM,
companies need to understand how consumers define quality in both goods and
services offered. A quality philosophy is required for the successful implementation
of a quality project. Six Sigma is a highly disciplined process that helps us focus on
developing and delivering near-perfect products and services. A Six Sigma defect is
defined as anything outside of customer specifications. There are three central
components of Six Sigma Process Improvement: Customers,Processes and
Employees.Six Sigma has two key methodologies: DMAIC and DMADV Methodology.
13.9 GLOSSARY
1. TQM is a people driven process. It requires changes in people’s attitudes primarily.
2. Sigma Sigma- A Six Sigma defect is defined as anything outside of customer
specifications.
3. DMAIC- Define --> Measure --> Analyze --> Improve -->Control
4. DMADV-Set --> Measure --> Analyze --> Design -->Verify
5. FMEA-Failure Mode and Effects Analysis

6. DPMO-Defects Per Million Opportunities
7. DHU- Defects per Hundred units

1-b; 2-a; 3-d; 4-b; 5-b; 6-b; 7-a; 8-a
Page 246 of 267

13.11 REFERENCES
Ratesh. (MARCH 2012).Barriers to Total Quality Management Implementation retrieved
from http://smartinvestorsreports.blogspot.in/ .
Six Sigma Tutorial. (2015). http://www.tutorialspoint.com/ .

J.M.Juran and frank M.Gryna,Quality Planning and Analysis,Tata McGraw-Hill Publishing
Company Limites,New Delhi
Armand V. Feigenbaum,McGraw-Hill International Editions.
L.C.Jhamb,Quantitative Techniques to Managerial Decisions,Everest publishing House,Pune.

1. What is the importance of TQM.
2. What do you understand by Six Sigma Concept.
3. How can you implement TQM in the industry.
4. Discuss the two key methodologies of Six Sigma Concept.
5. Five High-Level Steps In The Application Of Six Sigma.
6. What are the Three Steps to Root Cause Analysis.
Page 247 of 267

LESSON – 14
Introduction to ISO 9000
Structure
14.1 Objective
14.2 Introduction
14.3 ISO 9000
14.3.1 Elements of ISO 9000 – QMS
14.3.2 Models of ISO 9000
14.3.3 Advantages of ISO 9000 Systems
14.3.4 Disadvantages of ISO 9000 Systems
14.4 ISO 9001:2000
14.5 Principles of ISO 9001:2000
14.6 Scope of ISO 9001:2000
14.7 ISO 9001:2000 QMS Requirements
14.8 ISO 9001:2000 Documentation Requirements
14.9 ISO 9001:2000 Certification Process
14.10 Potential Benefits of Registration
14.11 Problems with Registration
14.13 Summary
14.14 Glossary
14.16 References
Page 248 of 267

14.1 OBJECTIVES
1. How the ISO 9000 standards help the companies achieve assured quality and
consistency of the output.
2. The formal documentation of procedures, performance measurements and records.
3. The quality objectives of ISO 9000 standards.
14.2 INTRODUCTION
The quality movement has its roots embedded in medieval Europe, where craftsmen started
forming unions also known as guilds in the late 13th century.
Till the beginning of 19th century, manufacturing in the industrialized era goes back to this
craftsmanship model. The factory system, stressing upon on product inspection, began in
Great Britain in the mid-1750s and went on to become the Industrial Revolution in the early
1800s.
In the beginning of 20th century, manufacturers started to include quality processes in quality
practices.
After America became a part of World War II, “quality became a critical component of the
war effort: Bullets manufactured in one state, for example, had to work consistently in rifles
made in another. The armed forces initially inspected virtually every unit of product; then to
simplify and speed up this process without compromising safety, the military began to use
sampling techniques for inspection, aided by the publication of military-specification
standards and training courses in Walter Shewart’s statistical process control techniques”.
The emergence of total quality in America was a straight reaction to the quality revolution
that began in Japan after World War II got over. The Japanese hailed the contributions of
American quality experts Joseph M. Juran and W. Edwards Deming. Japanese organizations
emphasized on improving all the organizational processes and procedures through the
employees who used them rather than concentrating on inspection only.
Page 249 of 267

In 1970s’, American industrial segments such as automobiles and electronics had been
attacked by Japan’s quality oriented competition. In response to this competition, the
Americans emphasized not only on statistics but approaches that gripped the entire
organization. This approach then became to be known as total quality management (TQM).
By the end of 20th century, TQM became to be known as a fad by several corporate leaders.
Though TQM was viewed as a fad but even today its practices continue to prevail in the
organizational cultures.
Over a period of time, the quality movement has grown much beyond the concept of Total
Quality. Based on the foundations provided by Deming, Juran and various Japanese quality
experts, new quality systems have evolved and quality has shifted ahead of manufacturing
into service, healthcare, education and public sectors.
The business landscape has changed significantly since Crosby, Juran and Deming advanced
their principles of quality, but they are still relevant than they were when they were
published.
Many business leaders define quality as being important, according to a research carried out
by Chartered Quality Institute, only 50 percent said quality was placed at the heart of their
organization and only 23 percent claimed to be offering a "very consistent" level of quality.
Even fewer (16 percent) claimed their quality is market leading, but this is precisely what
companies need to set themselves apart as the economy struggles and consumer spending
continues to fall.
"In an open, free market economy, with few barriers to market entry there is little alternative
but to compete on quality to win customers from high quality-driven EU competitors and
emerging economies with lower production costs," the report noted.
The work in creating a definition and framework for achieving quality has already been done;
companies must now take steps to apply this to their organization and ultimately reap the
rewards.
14.3 ISO 9000
Page 250 of 267

“ISO 9000 is a set of international standards of quality management that have become
increasingly popular for large and small companies alike. Adherence is accomplished through
an application process for ISO 9000 certification in company standards for inspecting
production processes, updating records, maintaining equipment, training employees and
handling customer relations”. According to Francis Buttle (International Journal of Quality
and Reliability Management) - "ISO is grounded on the 'conformance to specification'
definition of quality”. "The standards specify how management operations shall be
conducted. ISO 9000's purpose is to ensure that suppliers design, create, and deliver products
and services which meet predetermined standards; in other words, its goal is to prevent non-
conformity." Practiced by both production and service enterprises, by the end of 2005 ISO
9000 standard has been adopted by more than hundred nations as their national quality
management/quality assurance standard.
“This quality standard was first introduced in 1987 by the International Organization for
Standards (ISO) in hopes of establishing an international definition of the essential
characteristics and language of a quality system for all businesses, irrespective of industry or
geographic location. Initially, it was used almost exclusively by large companies, but by the
mid-1990s, increasing numbers of small- and mid-sized companies had embraced ISO 9000
as well. In fact, small and moderate-sized companies account for much of the growth in ISO
9000 registration over the past several years. As of December 15, 2003 a revised standard
replaced the 1994 edition of the ISO 9000. The new standard is referred to as ISO 9001:2000
but is often still referred to simply as ISO 9000. Revisions of the ISO standards occur
periodically”.
“The increased involvement of small and mid-sized firms in seeking ISO 9000 registration is
generally attributed to several factors. Many small businesses have decided to seek ISO 9000
certification because of their corporate customers, who began to insist on it as a method of
ensuring that their suppliers were paying adequate attention to quality. Other small business
owners, meanwhile, have pursued ISO 9000 certification in order to increase their chances of
securing new business or simply as a means of improving the quality of their processes”.
According to a management consultant (in an interview with Nation's Business) - "The
pressure for companies to become ISO 9000-certified is absolutely increasing and will
continue to increase". Many smaller companies need to ask themselves a question about
when, not if, they will get ISO 9000-registered."
Page 251 of 267

14.3.1 ELEMENTS OF ISO 9000 QUALITY MANAGEMENT SYSTEMS
The standard of ISO 9000 lists about twenty requirements for an organization's quality
management system in the following areas:
 Management Responsibility
 Quality System
 Order Entry
 Design Control
 Document and Data Control
 Purchasing
 Control of Customer Supplied Products
 Product Identification and Tractability
 Process Control
 Inspection and Testing
 Control of Inspection, Measuring, and Test Equipment
 Inspection and Test Status
 Control of Nonconforming Products
 Corrective and Preventive Action
 Handling, Storage, Packaging, and Delivery
 Control of Quality Records
 Internal Quality Audits
 Training
 Servicing
 Statistical Techniques
14.3.2 MODELS OF ISO 9000
“The ISO 9000 quality standards are divided into three model sets—ISO 9001, ISO 9002, and
ISO 9003. Each of these models stipulates a number of requirements on which an
organization's quality system can be assessed by an external party registrar in accordance
Page 252 of 267

with the ISO's quality system audits standard. A quality system involves organizational
structure, processes, and documented procedures constituted towards achieving quality
objectives”.
By the end of 2003, ISO 9000 was revised and these three standards were combined into a
single ISO 9001:2000. “The new standard was published in 2000 and companies migrated to
the new standards during the first three years of the new century. Organizations and
companies that were certified under the older ISO 9000, ISO 9001, ISO 9002, and ISO 9003
systems were required to take steps to transfer or upgrade their certification to the new
standard. An organization was required to demonstrate to an accredited registration body that
its quality management system met the requirements of the new ISO 9001:2000”.
14.3.3 ADVANTAGES OF ISO 9000 SYSTEM
The organizations who have secured the ISO 9000 certification system enjoy plentiful
advantages. These benefits have a wide influence on all the aspects of a business and refer to
a wide array of several dimensions ranging from increased reputation to bottom-line
operational savings. They include:
 Heightened marketability: “ISO 9000 registration provides businesses with clearly

heightened credibility with current and prospective clients alike. It proves that the
company is dedicated to providing quality to its customers. This benefit manifests
itself not only in increased customer retention, but also in increased customer
acquisition and increased ability to enter into new markets”.
 Reduced operational expenses: “The rigorous registration process for ISO 9000
certification often exposes significant shortcomings in various operational areas.
When these problems are brought to light, the company can take the appropriate steps
to improve its processes. These improved efficiencies can help companies acquire
savings in both time and money. The cost of scrap, rework, returns, and the employee
time spent analyzing and troubleshooting various products are all considerably
reduced by initiating the discipline of ISO 9000”.
 Better management control: “The ISO 9000 registration process requires so much
documentation and self-assessment that many businesses that undergo this rigorous
process quote increased understanding of the company's overall direction and
processes as a significant benefit”.
Page 253 of 267

 Enhanced customer satisfaction: Since the ISO 9000 certification discover segments
in which final quality of a product can be improved; such efforts frequently bring
about “higher levels of customer satisfaction”. Apart from this, the organizations that
seek out and secure ISO 9000 certification provide their customers with the
“opportunity to publicize their suppliers' dedication to quality in their own business
dealings”.
 Better internal communication: The ISO 9000 certification processes emphasize on
“self-analysis and operations management issues encourage various internal
departments of companies to interact with one another in order to gain better
understanding of the needs and desires of their internal customers”.
 Better customer service: The process of seeking and securing ISO 9000 registration
usually helps to “refocus company priorities on pleasing their customers in all
respects, including customer service areas”. It also aids in intensifying consciousness
of quality matters among the employees working across.
 Reduced product-liability risks - Several business experts argue that companies that
secure ISO 9000 certification are must less likely to suffer from product liability
lawsuits because of the quality levels present in their products/services/processes.
 Attracting Investors - Management consultants and small business owners both agree
that ISO-9000 certification can act as an effective tool in securing monetary assistance
from venture capitalists or private investors.
14.3.4 DISADVANTAGES OF ISO 9000 SYSTEM
Inspite of several benefits that come along with the ISO 9000 certification, management
advisors warn organizations to do a detailed review of the rigorous certification process
before entrusting resources to it. Below mentioned are the disadvantages that companies must
consider before committing to a framework to gain ISO 9000 certification:
 Owners and managers do not have an adequate understanding of the ISO 9000
certification process or of the quality standards which results in wasted time and
effort.
 ISO 9000 can be a very costly process, especially for smaller firms. According to a
Quality Systems Update survey, the average cost of ISO certification for small firms
(those registering less than $11 million in annual sales) was $71,000.
Page 254 of 267

 The process of ISO 9000 certification “relies heavily on documentation of internal
operating procedures in many areas and it takes up much time. Business executives
and owners familiar with the ISO 9000 registration process warn that it is a process
that takes many months to complete”. The Quality Systems Update survey indicated
that “it took businesses an average of 15 months to move from the early stages of the
process to passage of the final audit, and that processes of 18-20 months or even
longer were not that uncommon”.
14.4 ISO 9001:2000

ISO stands for International Organization for standardization, is “quality management
standard which is occurred by ISO”. ISO 9001 is a standard which “identifies effective
quality management system”. An organization is awarded ISO 9001 certificate only when it
meets the given requirements of this standard. This certificate shows that “product and
services are produced suitable to standard accepted by international”. This standard was
developed by ISO (International Organization of standardization) headquartered in
Switzerland at Geneva. About 160 countries are members of ISO. Power of accreditation of
certification bodies were given to committees of member countries. Accreditation power in
Turkey was given to TURKAK.
Different standards which are developed for similar Technologies in different countries and
different Technologies, are named as “technical obstacle for trade’’ and these standards are
used against producers. ISO aims to prepare recognized ISO 9000 quality management
standards.
During establishing of quality management system applied necessary requirements which

was identified, and it is dependency to certification audit. It is name of given certificate.
ISO 9000 standard is reviewed at the end of every five years and revisions are done according
to the ideas and needs of suppliers and the revised version is then issued. “The number 2000
means that revision was done and issued in 2000 year”. This number 2000 refers to the
version date (ISO 9001: 2000 version).
Page 255 of 267

Too many organizations desire to obtain ISO 9001 certificates. This certificate alone can
provide several market advantages. Out of several market advantages that come due to
ISO9001, an organization gets continual improvement and discipline. An ISO certificate does
not mean that an organization has succeeded excellence. An organization which is
certificated with ISO 9001 has an opportunity to improve with every problem. Non
reoccurrence of problems must hold greater importannce than solving of problem.
OVERVIEW OF ISO 9001: 2000

User-friendly – “The requirements and language of the standard are intended to be more
user-friendly, and it now caters for all sizes of company, including those that provide a
service”.
Requires demonstration of customer satisfaction – “One interesting point is that the title of
the new standard does not include the term ‘quality assurance’. This is to reflect the fact that
a company must demonstrate its capability to achieve customer satisfaction. There is a clear
requirement for continual improvement of the quality management system (QMS), although
this could be difficult for an assessment body to measure objectively”.
‘Design’ has now become a basic requirement for all the organizations. An important change
is that “the design element of a process is included in the Scope as a requirement for all
companies”. “This could include companies that install security systems or supply a manned
security service. Some inspectorates are already implying that these services are ‘designed’
on an individual basis”.
An organization can claim ‘permitted exclusions’ from the design section of the standard
(sub-clause 7.3) in its QMS, but then it would need to bring out a strong case to put up. This
gives rise to an interesting debate on using the logo of a certification body on company
literature. It is assumed that the logo only shows that the company is registered to ISO 9001,
and does not distinguish between the companies that “include elements of design in their
scope and the ones who do not”.
14.5 PRINCIPLES of ISO 9001:2000 - QUALITY MANAGEMENT
 Customer driven: “Organizations depend on customers, therefore organization should

understand needs of customers now and in the future, adjust to customer requirements and
meet customer requirements and endeavor to pass over customer expectations”.
Page 256 of 267

 Leadership: “Leaders provide union of aim and administrative. Leaders should occur
internal ambient to attendances as whole to succeeded objectives of organization”.
 Attendance of people: “All levels of people are compressed in an organization,
attendance and other benefits are provided to use their abilities for benefit of
organization”.
 Process Approach: When actions and related resources are managed as a process,
successful results are realized as efficiency.
P – Plan – Determine objectives and processes
U - Apply - Apply processes
K - Control - monitor & measure
I - Improve - provide continual improvement
 Systematic approach to management: “When each other related processes are
determined, understood and managed, it provides efficiency and increases productivity of
organization for succeeding of objectives”.
 Continual improvement: The permanent goal of an enterprise must always be to strive
for improved overall performance of the organization. This refers to incorporating an
increase in the features and specifications of product and also increase the efficacy and
output of processes to manufacture and to dispense the products/services.
14.6 SCOPE of ISO 9001:2000

With regular revisions the scope of ISP 9001:2000 has been widened, and there is now a
requirement for an organization “to demonstrate its ability to provide consistently product
that meets customer and applicable regulatory requirements, and to include processes for the
continual improvement of the system and the prevention of nonconformity.” The ISO 9001:
1994 specifies the requirements that largely intend to prevent nonconformities in order to
achieve customer satisfaction.
This is the latest requirement that provides information on the “permissible exclusions” that
an enterprise can put into its QMS. “The only exclusions permitted are those that do not
affect an organization’s ability to provide product that meets customer and applicable
regulatory requirements”. The following are the reasons that can lead to these exclusions:
 the nature of the organization’s product;
 customer requirements;
 the applicable regulatory requirements.
Page 257 of 267

“The term ‘organization’ (company) used in ISO 9001:2000 replaces the term ‘supplier’,
which was used previously to mean the unit to which ISO 9001 applied. The term ‘supplier’
is now used instead of the previous term ‘subcontractor’. Old terms “sub-contractor >
supplier > customer” have been replaced by new terms “supplier > organization > customer”.
14.7 ISO 9001:2000 QUALITY MANAGEMENT SYSTEMS REQUIREMENTS
The following are the quality management systems requirements as per ISO 9001:2000
standard:
Quality Management System: There is greater weight being attached to the need for
continuous improvement in QMS. “The organization shall establish, document, implement,
maintain and continually improve a QMS. This should be achieved by identifying relevant
processes, determining the sequence and a criterion of these processes, ensuring information
is available on the processes and by measuring and monitoring these processes”.
Management Commitment: “Top Management commitment by communicating to the

organization the importance of meeting customer as well as regulatory and legal
requirements. It also stresses on establishing the quality policy and quality objectives;
conducting management reviews; ensuring the availability of necessary resources”.
Customer Focus: “This requirement reinforces the involvement of Top Management, which
should ensure that customer needs and expectations are determined, converted into
requirements and fulfilled with the aim of achieving customer satisfaction”.
Quality Policy: It also talks about “framing a policy so that there should be a commitment to
meeting requirements and to continual improvement and a framework should be provided for
establishing and reviewing quality objectives”.
Quality Objective: There is a requirement that “Quality objectives are established at relevant
functions and levels within the organization, which should be measurable and consistent with
the quality, including the commitment to continual improvement”.
Quality Management Systems (QMS) planning: This requirement has been revised to
clarify and to ensure that planning process takes into consideration the management of
change. Planning shall cover:
a) the planning of the QMS; b) the integrity of the QMS
Planning must be done in a way that change is carried out in a well controlled manner and
that the uprightness of the QMS remains unchanged during this process of change.
Page 258 of 267

Management Representative: A member of the management must be appointed by the top
management. Irrespective of other responsibilities and tasks, this member shall be responsible
and accountable for:
a) Ensuring that the QMS processes well established and properly maintained;
b) Appraising the top management about the QMS performance and about the need for any
further improvement;
c) Creating, among all the employees, responsiveness towards customer needs
Internal Communication: This is another latest addition to new requirements that need the
organizations to set up and maintain procedures for ensuring internal communication between
the various departments about the QMS and its productivity.
Management Review: This requirement emphasizes the need of establishing a QMS
procedure in the organization for Management Review. The following points must be given
due consideration while meeting this requirement:
a) Customer feedback
b) Process and product performance
c) Status of preventive and corrective actions
d) Changing circumstances
Resource Management: This requirement further clarifies “the requirement for an
organization to determine and provide resources needed to establish and maintain the QMS,
in order to address customer satisfaction”.
Competency, Awareness and Training: The scale of training requirements has further been
widened to include competence and awareness along with the training needs. Procedures and
system level procedures are required to:
a) establish the competency and training needs;
b) provide training to deal with identified needs;
c) review the effectiveness of training at regular intervals;
d) ensure employees are conscious of the importance of the tasks assigned;
e) maintain and document proper records of education, training, skillfulness and know-how
Infrastructure: “The organization shall identify, provide and maintain the facilities it needs
to achieve the conformity of product, including workspace and associated facilities;
equipment, hardware and software; supporting services”.
Page 259 of 267

Work environment: This is a very common prerequisite. In order to achieve desired product
quality levels the organization must determine and supervise the involved human and
physical factors of the work environment.
Product Realization: It is a proper order of various processes and sub-processes that are
followed to accomplish the desirable product. The section mentions the requirements to be
met in order to achieve this:
 Determination of requirements related to the product
 Review of requirements related to the product
 Customer communication
 Design and development planning
 Design and development inputs
 Design and development outputs
 Design and development review
 Design and development verification
 Design and development validation
 Control of design and development changes
 Purchasing process
 Purchasing information
 Verification of purchased product
 Control of production and services
 Validation of process for production and service provision
 Identification and traceability
 Customer property
 Preservation of product
 Software used for monitoring and measuring of specified requirements shall be
validated prior to use.
Customer Satisfaction: This requirement is new and emphasizes that “a process for
obtaining and monitoring information and data on customer satisfaction shall be
implemented”. It is the responsibility of the organization to “define the methods and
measures for obtaining and utilizing customer satisfaction information and data”.
Page 260 of 267

Measurement and Monitoring of Processes: This clause lays more stress on the method
that is used to measure the processes that are essential to meet customer needs. In particular,
“Measurement results SHALL be used to maintain and/or improve those processes.”
Analysis of Data: Apart from the need of traditional statistical tools & techniques of the
1994 standard, this section concentrates on “the analysis of applicable data as one means of
determining where QMS improvements can be made”. “The organization shall analyze
applicable data to provide information on:
 customer satisfaction, and dissatisfaction
 conformance to customer requirements and
 characteristics of processes, products and/or services”
 supplier
This clause is “essentially limited to the identification of a need for the use of statistical
techniques and then establishing an appropriate procedure to implement and control the
application of the statistical techniques”.
Continuous Improvement: This requirement emphasizes that “the organization shall

continually improve the QMS”. The organization must set up “a system level procedure that
describes the use of quality policy, objectives, internal audit results, analysis of data,
corrective and preventive action and management review to facilitate continual
improvement”.
14.8 ISO 9001:2000 DOCUMENTATION REQUIREMENTS
During the revision process of the ISO 9000 standard the two most important objectives have
been “to develop a simplified set of standards that will be equally applicable to small as well
as medium and large organizations for the amount and detail of documentation required to be
more relevant to the desired results of the organization’s process activities”.
ISO 9001:2000 has reduced the documentation requirements significantly. It helps in

exercising much more flexibility while selecting the documentation system and has become is
much less dictatorial. It allows each organization to build up the minimum amount of
documents needed to exhibit the effective planning, organizing, operations and process
Page 261 of 267

control and the execution and continuous advancement of the efficacy of its quality
management system. Following are the general document requirements as per ISO 9001:2000
standard:
• Documented Statements of Quality Policy - Includes a commitment to comply with

requirements and continually improve the effectiveness of the Quality Management
System and a framework for establishing and quality objectives. The policy should be
communicated and understood within the organization and reviewed for continuing
suitability.
• Documented Statements of Quality Objectives - Includes the objectives needed to

“meet requirements for product and are established at relevant functions and levels
within the organization”. It must be ensured that these are assessable and constant
with Quality Policy.
• Quality Manual – Includes “documented procedures established for the QMS, or

references to them, it describes the interaction between processes of the QMS”. The
structure of the manual is a decision for the organization based on organization’s size,
organization’s complexity, organization’s culture.
• Documented Procedures – The following are required by ISO 9001:2000: Control of

documents, Control of records, Internal Audit, Control of nonconforming product,
Corrective action, Preventive Action.
There are many prerequisites of ISO 9001:2000 wherein an enterprise can do the value
additions to its Quality Management System and exhibit compliance by preparing the
following documents:
 Process maps
 Process flow charts
 Organization charts
 Specifications
 Work and/or test instructions
 Production schedules
 Approved suppliers lists
Page 262 of 267

 Test and inspection plans
 Quality plans
Records for ISO 9001:2000: The prerequisites for control of records & documents differ
from those for other records. All records must be under proper control according to the
guidelines of Clause 4.2.4. There are no limitations for organizations to develop records that
are required to exhibit consistency & compliance of their products, processes and the QMS.
The documentations required for the certification are:
 Management reviews
 Education, training, skills and know-how
 Substantiation that the processes and products meet the set guidelines
 Product Design and development inputs
 Outcome of design and development evaluation process
 Outcome of design and development verification process
 Outcome of design and development validation process
 Outcome of review of design and development changes
 Outcome of supplier review process
 Process validation to measure output
 unique identification of a product
 Customer property
 Basis for calibration of measuring equipment
 Calibration results
 Internal audits
 Product release
 Product quality non conformity
 Outcome of corrective measures taken
 Outcome of preventive measures taken
14.9 ISO 9000 CERTIFICATION PROCESS
1. The first step is to implement the control and documentation processes as mentioned in the
series.
Page 263 of 267

2. Second step is to arrange for an audit by an independent certification enterprise (i.e., a
Registrar) that has been licensed to register quality systems by an accreditation body. For
example - Registrar Accreditation Board in U.S.
3. If the organization procedures are found in compliance then the organization gets a
registration certificate and its name is included in a published directory of registered
suppliers.
4. The processes and system will be verified regularly by the registrar through periodic
supervision and full audits will be carried after every few years.
14.10 POTENTIAL BENEFITS OF CERTIFICATION
 Documentation of quality management system

 Reduction of variation
 Help develop and expand business
 Reduction or elimination of customer audit
 Increased profitability/reduced costs
 Improved communication, both internal and external
 Greater awareness of quality by employees
 Provision of training to all employees
 Ability to remain or become competitive
 Elimination of duplication of quality systems
14.11 PROBLEMS WITH CERTIFICATION
 Costs - application & maintenance

 Time - application & maintenance
 Level of internal expertise
 Executive commitment
 Selection of registration
Page 264 of 267

14.12 CHECK YOUR PROGRESS – FILL IN THE BLANKS
1. The quality standard was first introduced in 1987 by the ________________________in
hope of establishing an international definition of the essential characteristics and language of
a quality system for all businesses, irrespective of industry or geographic location.
2. The ISO 9000 quality standards are divided into three model sets ____________________
3. Standard was developed by ISO (International Organization of standardization)

headquartered in ___________________.
4. Accreditation power of international standards in ____________was given to TURKAK.
5. The term ‘organization’ (company) used in ISO 9001:2000 replaces the term ‘________’,
which was used previously to mean the unit to which ISO 9001 applied.
14.13 SUMMARY
ISO is the word that represents the International Organization for Standardization. It is the
worldwide federation of national standards bodies for approximately 160 countries.
The ISO 9000 standards are “produced by an international consensus of countries with the
aim of creating global standards of product and service quality”. These sets of standards form
“a quality management system and are applicable to any organization regardless of product,
service, organizational size, or whether it’s a public or private company”.
ISO covers “all technical fields and is not limited to any particular discipline. It does not,
however, cover electrical or electronic engineering which is the responsibility of the IEC”.
The responsibility for information technology is performed by a joint ISO/IEC technical
committee. ISO 9000 provides “a framework and systematic approach to managing business
processes to produce a product/service that conforms to customer expectations”. For
customers, the certification of suppliers to ISO standards means that they can be “assured that
the development of their products and services are compliant to reference documents that are
globally accepted”. This means that customers and suppliers are able to compete in markets
around the world.
Page 265 of 267

14.14 GLOSSARY
 ISO 9001 lays the requirements for “an organization whose business processes range
all the way from design and development, to production, installation and servicing”.
 ISO 9002 is the suitable standard for “organizations that do not design and develop
products, since it does not include the design control requirements of ISO 9001”. Its
requirements are identical aside from that distinction.
 ISO 9003 is the suitable standard for “an organization whose business processes does
not include design control, process control, purchasing or servicing”. It focuses on
inspection and testing to make sure that end products and services meet the set standards.
1. International Organization for Standards Upper Control Limit

2. ISO 9001, ISO 9002, and ISO 9003.
3. Switzerland
4. Turkey
5. supplier
14.16 REFERENCES
1. Haider, Syed Imtiaz, ISO 9001:2000 Document Development Compliance Manual: A
Complete Guide, CRC Press LLC.
2. Gaal, Arpad ISO 9001:2000 for Small Businesses: Implementing Process-approach Quality
Management, CRC Press LLC
1. Tricker, Ray; Sherring-Lucas, Bruce; ISO 9001: 2000 in Brief, Taylor & Francis Ltd.
2. Gaal, Arpad ISO 9001:2000 for Small Businesses: Implementing Process-approach Quality
Management, CRC Press LLC
1. Discuss the principles of ISO 9001:2000 standard.
2. What are the ISO 9001:2000 quality management system requirements?
Page 266 of 267

3. List the elements of ISO 9000 – quality management systems?
4. What are the potential advantages and disadvantages of ISO 9000 system?
Page 267 of 267

Total Quality Management: Self Learning Material

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Total Quality Management: Self Learning Material

Uploaded by

Copyright:

Available Formats

Self Learning Material

Total Quality Management

Course: Master Business Administration

Distance Education Programme

Note : Relevant Case Studies should be discussed in class.

11 Quality Cost 180

© IK Gujral Punjab Technical University Jalandhar

1.3 Basic Approach

1.4 History of TQM

1.5 Benefits of TQM

1.6 Objectives of TQM

1.7 Gurus of TQM

1.9 Check Your Progress

1.12 Answers to Check Your Progress

1.14 Suggested Readings

1.15 Terminal and Model Questions

After reading this lesson, you should be able to:

• Understand the significance of TQM

"Quality is everyone's responsibility." ~ Edward Deming

Total Quality Management (TQM) is an enhancement to the traditional way of doing

Total - Made up of the whole

Let us focus on Quality. According to Deming, “Quality may be defined as an excellent

Quality can be quantified as follows

Following are the dimensions of Quality:

Performance: Primary product characteristics, such as the brightness of the picture.

MANUFACTURING INDUSTRIES SERVICE INDUSTRIES

Product features Performance Reliability Accuracy Timeliness Completeness

Priorities Second to service and First among equals of

Emphasis Detection Prevention

Errors Operations System

Responsibility Quality control Everyone

Problem solving Managers Teams

Procurement Price Lifecycle costs,

1.3 BASIC APPROACH

TQM requires six basic concepts:

1. A commitment and involved management to provide long-term top-to-bottom

1.4 HISTORY OF TQM

Mass Production and Scientific Management: Mass production techniques reaped

The American Approach to Quality: The failure of American corporations to listen to

Development of the Importance of Quality Management

These are summarized below:

1.5 BENEFITS TO TQM

The advantages of total quality management (TQM) include:

1.6 OBJECTIVES OF TQM

Following are the objectives of TQM:

1.7 GURUS OF TQM/ PRINCIPLES AND PHILOSOPHIES OF QUALITY MANAGEMENT

Contribution of W. Edwards Deming

Deming has given 14 principles as stated below:

Deming’s cycle or PDCA cycle

P – PLAN (Process the improvement)

Joseph M Juran Contribution

Following is Juran’s Quality Trilogy

Quality improvement Develop a process which is able to produce the

1. Build awareness for the need and opportunity for improvement.

Contribution to Philip B Crosby

Quality means conformance to requirements, not goodness.

Contribution of Armand V Feigenbaum

Contribution of Kaoru Ishikawa

Ishikawa’s biggest contribution is in simplifying statistical techniques for quality control in

Ishikawa’ s PDCA Model

Determine goals and targets

Engage in education and training

Check the effects of implementation