CHAPTER FIVE

QUALITY MANAGEMENT AND

CONTROL
5.1 Meaning and nature of quality
• Definition of quality is dependent on the people defining it
• There is a lack of a single, universal definition of quality
5 common ways of defining quality include:
 Conformance to specifications
Does product/service meet targets and tolerances defined by designers?
 Fitness for use
Evaluates performance for intended use
 Value for price paid
Evaluation of usefulness vs. price paid
 Support services
Quality of support after sale
 Psychological criteria
e.g. Ambiance, prestige, friendly staff
 General Quality ;-
 is “meeting, or exceeding, customer requirement now
and in the future”
 Fitness for use: is related to the benefits received by
the customer and to customer satisfaction.
 Only the customer, not a producer, can determine it.

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 DIMENSIONS OF QUALITY FOR MANUFACTURED PRODUCT INCLUDE THE FOLLOWING:

 Performance: The basic operating characteristics of a product; for example, how well a car handles
 Features: The “extra” items added to the basic features, such as a stereo CD or a leather interior in a car.
 Reliability: The probability that a product will operate properly within an expected time frame;
 Conformance: The degree to which a product meets pre-established standards.
 Durability: How long the product lasts; its life span before replacement.
 Serviceability: The ease of getting repairs, &the speed of repairs.
 Aesthetics: How a product looks, feels, sounds, smells, or tastes.
 Safety: Assurance that the customer will not suffer injury or harm from a product.
 Other perceptions: Subjective perceptions based on brand name, advertising, and the like.

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DIMENSIONS OF QUALITY FOR SERVICES INCLUDES THE
FOLLOWINGS
• Time and timeliness: How long must a customer wait
for service.
• Completeness: Is everything the customer asked for
provided?
• Courtesy: How are customers treated by employees?
• Consistency: The same level of service provided to
each customer each time.
• Accessibility and convenience: easy ways to obtain
the service? For example, when you call getting
answer quickly?
• Accuracy: Is the service performed right every time?
Is your bank or credit card statement correct every
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 Quality planning
 Important steps for quality planning.
Establishing quality goals.
 Identifying customers.
Discovering customer needs.
Developing product features.
 Developing process features.
Establishing process controls and
transferring to operations.
Cost of Quality includes:-
 Cost of Achieving Good Quality
 Prevention costs
 costs incurred during product design
 Appraisal costs
 costs of measuring, testing, and analyzing
 Cost of Poor Quality
 Internal failure costs
 include scrap, rework, process failure, downtime, and price reductions
 External failure costs
 include complaints, returns, warranty claims, liability, and lost sales
 Prevention Costs
 Quality planning costs
 costs of developing and
implementing quality
management program
 Product-design costs
 costs of designing products
with quality characteristics
 Process costs
 costs expended to make sure
productive process conforms
to quality specifications
 Training costs
 costs of developing and putting on
quality training programs for
employees and management
 Information costs
 costs of acquiring and maintaining
data related to quality, and
development of reports on quality
performance
 Appraisal Costs
 Inspection and testing
 costs of testing and inspecting materials, parts, and product at
various stages and at the end of a process
 Test equipment costs
 costs of maintaining equipment used in testing quality
characteristics of products
 Operator costs
 costs of time spent by operators to gar data for testing product
quality, to make equipment adjustments to maintain quality,
and to stop work to assess quality
 Internal Failure Costs
 Scrap costs
 Process downtime costs
 costs of poor-quality products
that must be discarded,
 costs of shutting down productive
including labor, material, and process to fix problem
indirect costs  Price-downgrading costs
 Rework costs  costs of discounting poor-quality
 costs of fixing defective products—that is, selling products
products to conform to quality as “seconds”
specifications
 Process failure costs
 costs of determining why
production process is producing
poor-quality products
 External Failure Costs
 Customer complaint costs  Product liability costs
 costs of investigating and satisfactorily  litigation costs resulting from product

responding to a customer complaint resulting liability and customer injury

from a poor-quality product  Lost sales costs
 Product return costs  costs incurred because customers are

 costs of handling and replacing poor-quality dissatisfied with poor quality products
products returned by customer and do not make additional purchases
 Warranty claims costs
 costs of complying with product warranties
 5.2. Overview of TQM
What is TQM? Word itself gave you the answer; total quality management
i.e. quality of the product and successful running of this system lies
throughout the company.

Total quality management is a structured system for satisfying internal and

external customers and suppliers by integrating the business environment,
continuous improvement, and breakthroughs with development,
improvement, and maintenance cycles while changing organizational culture
 5.2 TOTAL QUALITY MANAGEMENT (TQM)
 It includes a set of principles, tools, and procedures that provide guidance
in the practical affairs of running an organization.
 It also involves all members of the organization in controlling and
continuously improving how work is done.
 Total implies Made up of the whole
 Quality refer , Degree of Excellence a Product or Service provides.
 Management implies , Art of handling, controlling, directing etc.
 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.
 Quality can be quantified as follows
Q=P/E
Where
Q = Quality P = Performance E = Expectation
 TQM Philosophy
 TQM Focuses on identifying quality problem root causes
 Encompasses the entire organization
 Involves the technical as well as people

TQM relies on seven basic concepts

a. Customer focus
b. Continuous improvement
c. Employee empowerment
d. Use of quality tools
e. Product design
f. Process management
g. Managing supplier quality
 Pillars of TQM

Problem solving discipline

Interpersonal skills

 teamwork

Quality improvement process

 Principles of TQM

 Customer’s requirements must be met the first time, every time.

 There must be agreed requirements, for both internal and external customers.

 Everybody must be involved, from all levels and across all functions.

 Regular communication with staff at levels is must.

 Top management’s participation and commitment is must.

 Every job must add value.

 There should be focus on team work.

 Obstacles in implementing TQM

 Lack of management commitment

 Improper planning
 Lack of continuous training and education
 Incompatible organizational structure
 Ineffective measurement techniques
 Paying inadequate attention to internal and external customers
 Inadequate use of empowerment and teamwork
 Failure to continually improve
 Benefits of TQM

 Improved quality  Employee satisfaction

 Employee participation
 Productivity
 Team work
 Communication
 Working relationships
 Profitability
 Customer satisfaction
 Market share
 Concepts of Six-Sigma

 Six-sigma is defined a customer oriented, structured, systematic, proactive and quantitative company-

wide approach for continuous improvement of manufacturing, services, engineering, suppliers and other

business process.

 It is a statistical measure of the performance of a process or a product.

 It measures the degree to which the process deviates from the goals and then takes efforts to improve

the process to achieve total customer satisfaction.

 At the main objective of any business is to make profit.

 For increasing the profit, the selling price should increase and/or

 The manufacturing cost should come down.

 Since the price is decided by the competition in the market, cut down the manufacturing cost which

can be achieved only through continuous improvement in the company’s operation.

 Six sigma quality programs provide an overall framework for continuous improvement in the process

of an organization.
 Cont`---------

Six-sigma efforts target three main areas:

Improving customer satisfaction.
Reducing cycle time.
Reducing defects.
 Three key characteristics separate six-sigma from quality programs of the past:
I. Six-Sigma is a customer focused.
II. Six-sigma projects produce major returns on investments.
III. Six-sigma changes how management operates.
 6 SIGMA= 3.4 defects per million and this quality equates to 99.99966% defect free
products or transactions.
 Business Process Reengineering (BPR)

 Shift from organizing job around task to process based and hence job titles and organizational
arrangements (departments, divisions, work units, and so on) cease to matter, instead, process based
managing business over took.
 It is also , defined as the fundamental rethinking and radical redesign of business processes
to achieve dramatic improvement in critical, contemporary measures of performance, such as
cost, quality, service level, and speed.
 Cont`------------
The definition contains four key words.
 Fundamental :-It first determines what a company must do, then how issue

comes later.
 Radical :- redesign means getting to the root of things.

 Dramatic :- achieving quantum leaps in performance.

 Processes:- It is only business processes the object of reengineering.
 Contemporary issues in management
There are a number of contemporary challenges that confront all managers to day.
These are:-
1.The globalization of business
2. Quality and Productivity:-
Competition
Productivity
Costs
3. Ethics and Social Responsibility
4. Work Force Diversity
5. Change
6. Empowerment
THANK YOU!!!

END OF
CHAPTER FIVE!!