EME4196

QUALITY ENGINEERING

Chapter 1
Fundamentals of Quality
Management
 Learning Outcome

LO1: Explain the concepts of quality and the

applicability of TQM, ISO 9000 and Six Sigma in
performance improvements.

(cognitive – understanding, level 2)

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 Contents

1. Definitions of Quality
2. History of Quality
3. Responsibility for Quality
4. Customer Satisfaction
5. Cost of Quality

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 1.1 Definitions of Quality

• When the term ‘quality’ is used, we usually think of

an excellent product or service that fulfills or
exceeds our expectations.
• These expectations are based on the intended use
and the selling price.
• Quality is somewhat of an intangible based on
perception.
• Quality can be quantified as:

where
Q = quality, P = performance and E = expectations
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 1.1 Definitions of Quality

• The American Society for Quality (ASQ) defines

quality as a subjective term for which each person or
sector has its own definition.
• In technical usage, quality can have two meanings:

 The characteristics of a product or service that bear on

its ability to satisfy stated or implied needs.
 A product or service that is free of deficiencies (defects,
significant variations).

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 1.1 Definitions of Quality

• According to ISO 9000, quality is defined as the

degree to which a set of inherent characteristics
fulfills requirements.
 Degree means that the quality can be used with
adjectives such as poor, good and excellent.
 Inherent is defined as existing in something, especially as
a permanent characteristic (eg. Processor performance).
 Characteristics can be qualitative or quantitative.
 Requirement is a need or expectation that is stated,
generally implied by the organization, its customers, and
other interested parties; or obligatory.

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 1.1 Definitions of Quality

The 9 Dimensions of Quality

No Dimension Meaning
1 Performance Primary product characteristics
2 Features Secondary characteristic, added features
3 Conformance Meeting specifications or industry standards
4 Reliability Consistency of performance over time
5 Durability Useful life
6 Service Resolution of problems and complaints
7 Response Human-to-human interface
8 Aesthetics Sensory characteristics
9 Reputation Past performance and other intangibles, ranking
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 1.1 Definitions of Quality

Terminologies
• Quality Control (QC) is the use of techniques to
achieve and sustain the quality of the product or
service.
• Quality Improvement is the use of tools and
techniques to continually improve the product,
service, or process.
• Statistical Quality Control (SQC) is the collection,
analysis and interpretation of data for use in the
quality activities.

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 1.1 Definitions of Quality

• Quality Assurance (QA) is all the planned or

systematic actions necessary to provide adequate
confidence that the product or service will satisfy
given requirements for quality.

 It involves making sure that quality is what it should be.

 This will include a continuing evaluation of adequacy and
effectiveness with a view to having timely corrective
measures and feedback initiated where necessary.

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 1.1 Definitions of Quality

• A Process is a set of interrelated activities (business

or production) that uses specific inputs to produce
specific outputs. Includes both internal and external
customers and suppliers.

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 1.2 History of Quality

• Skilled craftsmanship which required training during

the Middle Ages produced customized products.
• Craftsmen made their products by hand (coppers,
blacksmith, stone mason, baker, carpenters, etc.) and
took pride in their work due to long period of
apprenticeship.

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 1.2 History of Quality

• During the Industrial Revolution, the concept of

specialization of labour was introduced.
 Workers no longer made the whole product but only a
portion. This change brought about a decline in
workmanship because there was no longer a need for
skilled workers.
 Most products manufactured were not complicated, and
therefore quality was not greatly affected.
 Since productivity improved, there was a decrease in cost
which resulted in lower customer expectations.
 As products became more complicated and jobs more
specialized, it became necessary to inspect products after
manufacture.
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 1.2 History of Quality

Discussion
• Craftmanship in modern context

https://www.youtube.com/watch?v=LUlw6Z2p2Tk
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 1.2 History of Quality

• In 1924, Shewhart of Bell Telephone Laboratories

developed a statistical chart for the control of
product variables. This chart marks the beginning of
Statistical Quality Control (SQC).
• Later, Dodge and Ramig developed the area of
acceptance sampling as a substitute for 100%
inspection.
• The American Society for Quality was formed in
1946 to promote the use of quality for all types of
production and services.

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 1.2 History of Quality

• In 1950, Deming (who learned SQC from Shewhart),

gave lectures on statistical methods to Japanese
engineers and on quality responsibility to the CEOs
of the largest organizations in Japan.
• In 1954, Juran made his first trip to Japan and
further emphasized management’s responsibility to
achieve quality.
• Using both Deming and Juran concepts, the
Japanese set the quality standards for the rest of the
world to follow.

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 1.2 History of Quality

• In 1960, the first quality control circles (QCC) were

formed for the purpose of quality improvement.
Simple statistical techniques were learned and
applied by Japanese workers.
• By the late 1970s and early 1980s, U.S. managers
were making frequent trips to Japan to learn more
about the Japanese miracle. Actually they could have
just read the writings of Deming and Juran.
 Malaysia ‘Look East Policy’ in 1981
http://www.my.emb-japan.go.jp/English/JIS/education/LEP.htm

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 1.2 History of Quality

• By the middle of 1980s, the concepts of Total Quality

Management (TQM) were being publicized.
• In the late 1980s, the automotive industry began to
emphasize statistical process control (SPC). Suppliers
were required to use these techniques.
• The Malcolm Baldrige National Quality Award was
established in U.S.A. to measure and recognize U.S.
companies that have implemented successful quality
management systems.

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 1.2 History of Quality

• Taguchi introduced his concepts of parameter and

tolerance design and brought about a resurgence of
design of experiments (DOE) as a valuable quality
improvement tool.
• Emphasis on quality continued in the auto industry
in the U.S. in the 1990s when the Saturn automobile
ranked third in customer satisfaction behind the two
most expensive Japanese automobiles.
• In addition, ISO 9000 became the world wide model
for a quality system.

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 1.2 History of Quality

• The automobile industry modified ISO 9000 to

TS16949 in order to place greater emphasis on
customer satisfaction and added elements on the
production-part approval process, continuous
improvement, and manufacturing capabilities.
• ISO 14000 was approved as the worldwide model for
environmental management systems.
• By the year 2000, the quality focus was shifting to
information technology within an organization and
externally via the Internet.

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 1.3 Responsibility for Quality

• Quality is not the job of any one person or functional

area. Quality it is everyone’s responsibility.
• It includes the production operator, shift supervisor,
engineer, secretary, manager, storekeeper, service
personnel and even the CEO of the company.
• The responsibility for quality is delegated to the
various areas with the authority to make quality
decisions.

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 1.3 Responsibility for Quality

• Generally, the responsibility of quality begins when

Marketing determines the customer’s quality
requirements and continues until the product is
used for a period of time by a satisfied customer.

• When do customers start and end the quality

assessment of a product or service?

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 1.3 Responsibility for Quality

Areas Responsible for Quality

Customer

H. Service A. Marketing

Quality
G. Packaging B. Design
Product or
and Storage Engineering
Service
F. Inspection
C. Procurement
and Test

D. Process
E. Production
Design
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 1.3 Responsibility for Quality

(A) Marketing
• Helps to evaluate the level of product quality that
the customer wants, needs, and is willing to pay for.
• Provides the product quality data and helps to
determine quality requirements.

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 1.3 Responsibility for Quality

(A) Marketing
• Available marketing information:

 Customer dissatisfaction - customer complaints, product

service, warranty claims.
 Comparison of sales volume with the economy as a whole
is a good predictor of customer opinion of product or
service quality.
 Analysis of spare-part sales can locate potential quality
problems.
 Government reports on consumer product safety.
 Independent reports.
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 1.3 Responsibility for Quality

(A) Marketing
• If information is not readily available, the following
methods can be developed:

 Visit or observe the customer to determine the

conditions of product use and the problems of the user.
 Establish a realistic testing laboratory (eg. automotive
test track).
 Conduct a controlled market test (eg. free sample and
feedback survey – but exposure to competitor).
 Organize a dealer advisory or focus group.

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 1.3 Responsibility for Quality

(A) Marketing
• An information monitoring and feedback system on
a continuing basis is essential to collect data in an
effective manner.
• Marketing provides the company with a product
brief, which translates customer requirements into a
preliminary set of specifications such as:
 Performance characteristics (eg. usage, reliability)
 Sensory characteristics (eg. sight, taste, tactile, sound)
 Installation, configuration or fit
 Applicable standards, packaging
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 1.3 Responsibility for Quality

(B) Design Engineering

• Translates the customer's quality requirements into
operating characteristics, exact specifications and
appropriate tolerances for a new product or service
or revision of an established product.
• Early involvement of marketing, production, quality,
procurement and customer is essential to prevent
problems before they occur.
• This type of involvement is
called concurrent engineering.

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 1.3 Responsibility for Quality

(B) Design Engineering

• Whenever possible, utilize proven designs and
standard components Industry and government
standards are also used when applicable.
• Tolerance is the permissible variation in the size of
the quality characteristic, and the selection of
tolerances has a dual effect on quality.
• As tolerances are tightened, a better product or
service usually results, however production and
quality costs may increase.

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 1.3 Responsibility for Quality

(B) Design Engineering

• Ideally, tolerances should be determined
scientifically, by balancing the precision desired with
the cost to achieve that precision.
• The designer also determines the materials to be
used in the product or service.
• Apart from functional aspect, design engineering
needs to ensure that a quality product or service is
one that can be used safely, repaired easily and
maintained easily.

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 1.3 Responsibility for Quality

(B) Design Engineering

• Design reviews are conducted at appropriate phases
in the development of the product or service.
• These reviews should identify existing or anticipated
problem areas and inadequacies, and initiate
correction action to ensure the final design and
supporting data meet customer requirements.
• No design is perfect over time. Design-change
control is important.

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 1.3 Responsibility for Quality

(C) Procurement
• Based on the quality requirements established by
design engineering, procurement has the
responsibility for buying quality materials and
components and establishing a long-term
relationship.
• Purchases fall into 4 categories:
 Standard materials
 Standard hardware
 Minor components
 Major components
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 1.3 Responsibility for Quality

(C) Procurement
• To determine if a supplier is capable of providing
quality materials and components, a supplier quality
survey is conducted by visiting the supplier’s plant
(eg. facilities, standard compliance).
• ISO 9000 registration is sough after.
• Procurement should be concerned with the total
cost and not just the lowest price.

• What are the benefits and drawbacks of having a

single supplier?
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 1.3 Responsibility for Quality

(D) Process Design

• Process design has the responsibility for developing
processes and procedures that will produce a quality
product or service (SOP).
• This responsibility is achieved by specific activities
such as process selection and development,
production planning, and support activities.
• Process design review is
conducted to anticipate
quality problems.

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 1.3 Responsibility for Quality

(D) Process Design

• When a tolerance is too tight, the options are:
 To purchase new equipment.
 To revise the tolerance.
 To improve the process.
 To revise the design.
 To sort out defect during production.

• Process selection and development is concerned

with cost, quality, implementation time and
efficiency.
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 1.3 Responsibility for Quality

(D) Process Design

• Sequence of operation is developed to minimize
quality difficulties (eq. handling, location).
• Additional responsibilities include the design of
equipment, inspection devices and maintenance of
the production equipment.

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 1.3 Responsibility for Quality

(E) Production
• Responsibility to produce
a quality product or service.
• Quality cannot be inspected into a product, it must
be built into the product or service.
• The First-line supervisor is the key to a quality
product because they are considered by operating
personnel to represent management. Their ability to
convey quality expectations is critical for good
employee relations.

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 1.3 Responsibility for Quality

(E) Production
• In order for the operator to know what is expected,
training sessions on quality should be given
periodically.
• The primary objectives of the sessions is to develop
an attitude of “quality mindedness” and an
environment where two-way communication can
flourish.
• According to Deming, only 15% of quality problems
can be attributed to operating personnel – the
balance is due to the rest of the system.
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 1.3 Responsibility for Quality

(F) Inspection and Test

• Responsible to appraise the quality of purchased and
produced items and to report the results.
• Although inspection is done by representativesof
the inspection and test department, it does not
relieve operations of its own responsibility to
produce a quality product.
• Accurate measuring equipment
is needed to perform the
inspection activity.

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 1.3 Responsibility for Quality

(G) Packaging and Storage

• Responsibility to preserve and protect the quality of
the product or service.
• Quality specifications are needed for the protection
of the product during transit.
• These specifications are needed for vibration, shock,
and environment conditions such as temperature,
moisture and dust.

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 1.3 Responsibility for Quality

(H) Service
• Responsibility to provide the customer with the
means for fully realizing the intended function of the
product or service during its expected life.
• This includes sales and distribution, installation,
technical assistance, maintenance and disposal after
use.
• Prompt service can change
a dissatisfied customer into
a satisfied one.

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 1.3 Responsibility for Quality

(H) Service
• Service and marketing work closely with one other
to determine the quality the customer wants, needs,
and obtains.

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 1.3 Responsibility for Quality

Quality Assurance
• Quality assurance or quality control does not have
direct responsibility for quality.
• It assists or supports the other areas as they carry
out their quality control responsibilities.
• Quality assurance does have the direct responsibility
to continually evaluate the effectiveness of the
quality system.

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 1.3 Responsibility for Quality

Quality Assurance
• It determines the:
 Effectiveness of the system
 Appraises the current quality
 Quality problem areas or potential areas and assists in the
correction or minimization of these problem areas.

• The overall objective is the improvement of the

quality in cooperation with the responsible
departments.

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 1.3 Responsibility for Quality

Chief Executive Officer

• The highest-ranking executive officer within a
company or corporation, who has responsibility for
overall management of its day-to-day affairs under
the supervision of the board of directors.
• Ultimate responsibility for quality.
• CEO must be involved directly in the quality effort.
This requires a knowledge of quality and direct
involvement with the quality improvement program.

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 1.3 Responsibility for Quality

Chief Executive Officer

• Direct involvement requires creation of a quality
council and participation in meetings, quality
improvement project teams, recognition ceremonies
or even development of mission statement.
• The quality performance of the CEO can be
measured by a proportion (percent nonconforming)
chart that covers the area of responsibility.
• Approximately 35% of the CEO’ s time should be on
quality-related issues.

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 1.4 Customer Satisfaction

Customer Satisfaction
• A customer is anyone affected by a product or
process and fall into three categories: suppliers,
internal (in-process) and external (receive end
product or service).
• Customer needs must be discovered and served.
Customer expectations are constantly changing.
• Satisfaction can be a function of the entire
experience with the organization.
• A low level of dissatisfaction (eg. complaints) does
not necessarily mean that customers are satisfied
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 1.4 Customer Satisfaction

Customer Feedback
• In order to focus on customers, an effective
feedback program is necessary to:
 Identify customer needs and expectation.
 Discover customer dissatisfaction.
 Compare performance with the competition.
 Determine opportunities for improvement.

• Data can be collected by various methods such as

market survey, interview, focus group, mystery
shopper, and call centers for complaints.
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 1.4 Customer Satisfaction

Customer Complaints
• Survey on retail customers showed that dissatisfied
customers rarely complain.
• Only about 1% complain to management, 18%
complain to front-line people and 81% do not
complain.
• About 25% of the dissatisfied customers will not buy
that brand again and the manufacturer would have
lost potential sales without any explanation.
• Complaints should be viewed as opportunity for
quality improvement.
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 1.4 Customer Satisfaction

Accept complaint
Procedure on handling
customer complaints
Disseminate complaint
details

Investigate complaint

Eliminate root cause

Report result and solve

complaint

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 1.4 Customer Satisfaction

Customer Loyalty and Retention

• It is useful to distinguish between customer
satisfaction and customer loyalty. A dissatisfied
customer is unlikely to be loyal but a satisfied
customer is not necessarily loyal.
• An essential characteristic of customer satisfaction
occurs after the sale. An organization can create a
market advantage by being the best in this area.

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 1.4 Customer Satisfaction

Customer Loyalty and Retention

• On the average, it is said that it takes five times as
much money to win a new customer as to retain an
existing one.
• Loyal customers not only provide continuing sales
revenue but also contribute other benefits:
 Adding new sales by referring potential customers.
 Paying (often) a premium price.
 Buying other products from same company.
 Cooperating in development of new products
 Reducing company internal costs (eg. selling cost).
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 1.5 Cost of Quality

Categories of Quality Cost

• Many organizations summarize the cost of quality in
four categories:

Cost to Achieve
Cost of Poor Quality
Quality Objectives
A. Internal Failures C. Appraisal Cost

B. External Failures D. Prevention Cost

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 1.5 Cost of Quality

(A) Internal Failure Cost

• Cost of deficiencies discovered before delivery that is
associated with inefficient processes or fail to meet
the requirement of customers.
• Inefficient processes incur:
 Variability of product characteristics (eg. overfilled bottle).
 Unplanned downtime of equipment.
 Variability of process characteristics (eg. loss cycle time
compared to best practice).
 Non-value added activities (eg. redundant operator,
sorting inspection).
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 1.5 Cost of Quality

• Failure to meet customer requirements incur:

 Scrap cost of labour, material loss and
overhead on defects that cannot be repaired
economRework cost to correct defective products or
errors.
 Failure analysis cost to determine cause of failure.
 Redesign of hardware or software or changing processes
to correct deficiencies.
 100% sorting inspection in lots with unacceptable high
level of defectives.
 Scrap of obsolete products.

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 1.5 Cost of Quality

(B) External Failure Cost

• Cost of deficiencies discovered after the customer
receives the product or service.
• Lost opportunities for sales revenue from:
 Customer defection.
 Lost of new customer.
 Return, repair, recall.

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 1.5 Cost of Quality

• Failure to meet customer requirements incur:

 Warranty charges (eg. cost to replace or repair products
still within warranty period).
 Complaint adjustment and allowance (eg. cost of
investigation and compensation).
 Penalties (eg. late payment or late delivery).

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 1.5 Cost of Quality

(C) Appraisal Cost

• Cost incurred to determine the degree of
conformance to quality requirement such as:
 Inspection and test carried out on incoming materials,
during process and at final stage.
 Maintaining accuracy of test equipment (eg. calibration).
 Evaluation of stocks to evaluate degradation.

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 1.5 Cost of Quality

(D) Prevention Cost

• Cost incurred to keep failure and appraisal cost to a
minimum such as:
 Quality planning and implementation activities.
 New product reviews.
 Supplier quality evaluation.
 Quality audits.
 Training.

• Is prevention is better than cure?

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 References

• Adopted from S.T. Lim, “EME4196 Quality Engineering

Lecture Notes”, Trimester 3, 2016/2017.
• Dale H. Basterfield, “Quality Control”, 8th ed., Prentice Hall,
2009.
• Dale H. Basterfield, “Quality Improvement”, 9th ed., Prentice
Hall, 2014.
• Joseph A. De Feo, “Juran's Quality Handbook: The Complete
Guide to Performance Excellence” McGraw-Hill, 6th edition,
2010.

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