Sunteți pe pagina 1din 203

KARANATAKA STATE OPEN UNIVERSITY

Total Quality Management

MBA III SEM


CENTRE CODE - MBA14

5
Aspects of Quality

UNIT 1

UNIT I

6
Total Quality Service Management

7
Aspects of Quality

LESSON

1
ASPECTS OF QUALITY
CONTENTS
1.0

Aims and Objectives

1.1

Introduction

1.2

Different Perspectives of Quality

1.3

Definition given by the Quality Gurus

1.4

Dimensions of Quality

1.5

Dimensions of Quality for Goods

1.6

Dimensions of Service Quality

1.7

Quality Mission

1.8

Quality Policy
1.8.1

Quality of Services

1.8.2

Customers Satisfaction

1.8.3

Preparedness and Satisfaction of Employees

1.8.4

Competence of the Organisations Management and Administration

1.9

Objectives of Quality

1.10

Concepts of Quality

1.11

The Need and Importance of Quality

1.12

Evolution of Quality
1.12.1

From Inspection to Total Quality

1.13

Determinants of Quality

1.14

Interpretation and Process of Quality Audit

1.15

Let us Sum up

1.16

Lesson End Activity

1.17

Keywords

1.18

Questions for Discussion

1.19

Suggested Readings

1.0 AIMS AND OBJECTIVES


After studying this lesson, you should be able to:
z

Understand the concept of quality.

Learn about the process and determinants of quality.

Know the objective and dimensions of quality.

Write an appraisal of various costs of quality.

8
Total Quality Service Management

1.1 INTRODUCTION
Quality is an abstract concept. Without definition or specification, quality cannot be
assured. Thinkers and writers have been trying to tackle big abstract words like
knowledge and beauty for thousands of years. Quality depends upon various factors
and hence can be defined in a variety of ways.
To start with, we can define it as a product or service free of deficiencies, as the
totality of characteristics of an entity that depend on its ability to satisfy stated or
implied needs. The customer defines quality.
For some, quality means excellence in all aspects. Here, the price or affordability
aspect is ignored and this is a major limiting factor.
The Oxford English Dictionary defines quality as that aspect of things under which
they are considered in thinking or speaking of their nature, condition, or properties.
The Websters Dictionary defines it as degree of excellence.
Quality is the extent to which products, services, processes, and relationships are free
from defects, constraints, and items which do not add value for customers. There are a
variety of perspectives that can be taken into account when defining quality (e.g.
customers perspective, specification-based perspective).

1.2 DIFFERENT PERSPECTIVES OF QUALITY


Quality is defined as meeting or exceeding the needs and expectations of the
customer. It is necessary to give customers what they want, but customers may not be
willing to pay the price for features that vastly exceed their needs.
Quality can be defined as the degree to which a product is fit for the specific use. It
can be defined as products and services beyond present needs and expectations of
customers.
Quality simply means delivering to the customer what they expect. Thus, for example,
if a product:
z

Has the right configuration/features

Does what its supposed to do,

Is reliable,

Is delivered on time, and

Is well supported, then.. its a quality product!

Quality is defined as the totality of characteristics of an entity that bear on its ability to
satisfy stated or implied needs.
Quality is the ongoing process of building and sustaining relationships by assessing,
anticipating, and fulfilling stated and implied needs.
The quality if a product is determined by how well it suits ones needs in terms of:
z

Reliability

Durability

Safety

Maintainability

Cost

1.3 DEFINITION GIVEN BY THE QUALITY GURUS


Shewhart: Shewhart, pioneer of modern quality control defined quality in terms of
objective and subjective quality.
z

Objective quality: quality of a thing independent of people.

Subjective quality: quality is relative to how people perceive it. (Value).

Deming: Quality can be defined only in terms of the agent, who is the judge of
quality. Thus, quality may mean different things to different people.
Juran: Quality is fitness for use. Therefore, quality products should meet or exceed
customer requirements.
Crosby: Quality is conformance to requirements. Thus requirements must be clearly
stated so that they cannot be misunderstood.
Feigenbaum: Quality is the total composite product and service characteristics of
marketing, engineering, manufacture, and maintenance through which the product and
service in use will meet the expectation of the customer.
Kaoru Ishiwaka: Quality does not only mean the quality product but also of after sale
service, quality management, the company itself and the human life.
Genichi Taguchi: Quality is the loss imparted to society from the time the product is
shipped.
It is not easy to formulate a simple definition of what constitutes quality. The
definition of the inverse of quality is rather straightforward. Variation is the enemy
of quality.
ISO 9000:2000 defines quality as the degree to which a set of inherent characteristics
fulfill requirements and as fitness for purpose meets requirements, delighting
customers right first time and all the time.
ANSI/ASQC Standard A3-1978 defines quality as the totality of features and
characteristics of a product or service that bear on its ability to satisfy given
needs. (This definition is also adopted in ISO 8402:1994 and other national
Standards with the word given replaced by the words stated or implied.)
The features and characteristics referred to, in the above definition, may be of several
types. Physical characteristics are those continuous variables such as length, weight,
voltage, viscosity, etc. The feature variables are usually discrete or attribute in nature
such as sensory lines viz. taste, appearance, colour and smell.
Certain characteristics if quality, like reliability, maintainability, serviceability, are
time dependent. The phrase given needs in the definition requires a clear list of needs
to be identified. It is obvious that all the needs of the customer of a product or service,
including safety, design, aesthetics, etc, should be listed in the set of given needs.
The price or affordability of the product or service should also receive major
consideration. The performance or use quality characteristics should be improved ones
if price is not a limiting factor.
Societal needs may be considered in addition to customer needs in certain cases. How
far does the set of characteristics and features meet the given needs? That is, the
ability to satisfy the (customer) needs is the quality built into the product or service
through the features and characteristics.
Quality is thus a multi-dimensional perspective-based concept having dimensions as
under:
z

Performance

Features

9
Aspects of Quality

10
Total Quality Service Management

Reliability

Conformance

Durability

Serviceability

Aesthetics

Perceived Quality

One thing is certain: the client ultimately decides if the quality of the product
delivered is acceptable. Hence, quality of the product may, therefore, include many
things other than a single deliverable.
Defining quality means developing expectations or standards of quality. Standards
can be developed for inputs, processes or outcomes. A good standard is explicit,
reliable, realistic, valid and clear.
Defined standards or definitions of quality are prerequisites for measuring quality. If
standards dont exist, they must be designed. Although standards are context-specific,
universally accepted standards are often a good starting point for developing local
standards.
Standards of quality can be developed according to the dimensions of quality and
should be based on the scientific evidence available.

1.4 DIMENSIONS OF QUALITY


Quality exists in five distinct dimensions. It is made up of
z

Experience,

Measurement,

Relationships and Systems Thinking,

Inter-connectivity and Paradigm Logic, and

Value Sharing

Experience: Quality of a product or service will not exist unless and until it is
translated into experience. The ability to translate vision into reality is the primary
impact of this dimension. Experience is the translation into reality of the true state
of vision of the organization. Further, it provides learning. The successful
organization is one that can experiences learn from it.

Measurement: Measurement gives quality the first of its multidimensional


characteristics. It provides the ability to, not only assess experience, but also to
determine how well or how poorly it was done. This dimension provides the
knowledge of the system. Examples of this dimension are the use of statistical
tools such as the check sheet, the Pareto chart, the histogram, the run chart and the
control chart.

Relationships and Systems Thinking: Systems thinking transforms a quality


system beyond a shallow, two-dimensional system to one that is dynamic,
integrated, and leveraged. The ability to see one set of data plotted against another
set of data reveals relationships and common threads. From these, inferences can
be drawn that begin to define the quality system and set its parameters. It also
addresses the impact of interpersonal relationships on trading relationships.

Inter-connectivity and Paradigm Logic: The first three dimensions give us the
ability to establish a system, as we measure the results of relationships among
various parts of the system and make modifications necessary to produce the

desired results. However, a system existing only in three dimensions is a closed


system. This dimension gives us the ability to look beyond three-dimensional
thinking to the inter-connectivity of all systems and processes. This gives us the
power to understand the paradigm, or set of rules or guiding principles, upon
which a system is based. The power of interconnectivity is that it provides a
foundation for quantum leaps in quality improvement.
z

Value Sharing: Value sharing is a universal paradigm that provides a foundation


for a complete quality system. An understanding of value sharing gives us the
power to measure the strength of relationships. The measure of this strength is in
the willingness of participants to consecrate resources to other participants or to a
common good.

Value sharing is expressed in the phrase, Delight the Customer. In other words,
Give the customer more than what the customer is paying for.
As the relationship with the customer grows, there is mutual consecration of resources
by both parties as each share the value it derives from trade with the other party.
The five dimensions of value sharing involve the integration and fulfillment of all the
other dimensions with respect to all the participants.
Since quality means different things to different people, the dimension of quality is
also different. Dimensions of quality are also different for manufacturing and service
functions.
Example: Quality of Health Care
Quality of care should be defined in light of both technical standards and patients'
expectations. While no single definition of health service quality applies in all
situations, the following common definitions are helpful guides:
Quality Assurance is that set of activities that are carried out to monitor and improve
performance so that the care provided is as effective and as safe as possible (Quality
Assurance Project, 1993).
The application of medical science and technology in a way that maximizes its
benefits to health without correspondingly increasing its risks. The degree of quality
is, therefore, the extent to which the care provided is expected to achieve the most
favorable balance of risks and benefits (Avedis Donabedian, 1982).
Proper performance (according to standards) of interventions that are known to be
safe, that are affordable to the society in question, and that have the ability to produce
an impact on mortality, morbidity, disability, and malnutrition (M.I. Roemer and C.
Montoya Aguilar, WHO, 1983).
The most comprehensive and perhaps the simplest definition of quality is that used by
advocates of total quality management (W. Edwards Deming, 1982): "Doing the right
thing right, right away." Experts generally recognize several distinct dimensions of
quality that vary in importance depending on the context in which a QA effort takes
place. The following nine dimensions of quality have been developed from the
technical literature on quality and synthesize ideas from various QA experts.
Together, they provide a useful framework that helps health teams to define, analyze,
and measure the extent to which they are meeting program standards for clinical care
and for management services that support service delivery. While all of these
dimensions are relevant to developing country settings, not all nine deserve equal
weight in every program. Each should be defined according to the local context and
specific programs.
1. Technical performance: The degree to which the tasks carried out by health
workers and facilities meet expectations of technical quality (i.e., adhere to
standards).

11
Aspects of Quality

12
Total Quality Service Management

2. Access to services: The degree to which healthcare services are unrestricted by


geographic, economic, social, organizational, or linguistic barriers.
3. Effectiveness of care: The degree to which desired results (outcomes) of care are
achieved.
4. Efficiency of service delivery: The ratio of the outputs of services to the
associated costs of producing those services.
5. Interpersonal relations: Trust, respect, confidentiality, courtesy, responsiveness,
empathy, effective listening, and communication between providers and clients.
6. Continuity of services: Delivery of care by the same healthcare provider
throughout the course of care (when appropriate) and appropriate and timely
referral and communication between providers.
7. Safety: The degree to which the risks of injury, infection, or other harmful side
effect are minimized.
8. Physical infrastructure and comfort: The physical appearance of the facility,
cleanliness, comfort, privacy, and other aspects that are important to clients.
9. Choice: As appropriate and feasible, client choice of provider, insurance plan, or
treatment.

1.5 DIMENSIONS OF QUALITY FOR GOODS


The dimensions of quality that can be explicitly defined and is exclusive of the other
dimensions of quality can be given as:
1. Performance: It is the main or primary operating characteristics of the product.
Example: the mileage of a car
2. Features: Features are those secondary characteristics that supplement the
products basic functioning. These are the extra characteristics or the extra
items added to the basic features such as stereo CD in a car.
3. Conformance: The degree to which the physical and performance characteristics
of a product match with pre-established standards.
4. Reliability: The consistency of performance or the probability a product will
operate properly over a specified period of time under stated conditions.
Example: Usage of a fridge without repair for about 7 years.
5. Aesthetics: How a product looks, feels, tastes or smells. A dimension of quality
that refers to subjective sensory characteristics such as taste, sound, look and
smell.
6. Durability: This includes useful life or life span of the product. It is the ability of
a product to function when subjected to hard and frequent use. It is measured as
the period or amount of use one gets from a product, before it physically
deteriorates or until replacement is preferable.
7. Serviceability: This includes speed, courtesy and competence of repair. It
indicates the ability to repair a product quickly and easily including the courtesy
and competence of the repairer.
8. Perceived Quality: Customer perception or subjective assessment resulting from
image, advertising or brand names.
9. Safety: Assurance that the customer will not suffer injury or harm from a product.

These dimensions of product quality provide a good conceptual framework for


understanding the multidimensional nature of product quality. To determine the
dimensions of service quality is more difficult.

1.6 DIMENSIONS OF SERVICE QUALITY


Many researchers have shown that service quality is also multidimensional. Evans and
Lindsay provide a list of 8 dimensions of service quality. These are general lists and
serve as good starting points.
1. Time how long must a customer wait?
2. Timelines will a service be performed when promised?
3. Completeness Are all items in the order included?
4. Courtesy Politeness, consideration for property, clean and neat appearance.
Do front line employees greet each customer cheerfully?
5. Consistency Are services delivered in the same fashion for every customer and
every time for the same customer?
6. Accessibility and convenience Approachability and ease of contact. Is the
Service easy to obtain?
7. Accuracy Is the service performed right the first time?
8. Responsiveness Willingness or readiness to provide prompt service. Can
Service personnel react quickly and resolve unexpected problems?

1.7 QUALITY MISSION


Quality mission of a company can be defined through its quality mission statement,
which may state it as the companys mission.
To provide a quality product that satisfies our customers needs and expectations the
first time, every time!
Our goal is to satisfy our customers needs, whether it be through timely\delivery;
providing the best value for the money; efficient and courteous service; or superior
quality, reliability and durability of our products.
As such, we have committed ourselves to the following:
1. Understanding and responding to our customers needs and expectations.
2. Providing proven design products.
3. Improving the systems of production to generate continuing quality and
productivity improvements.
4. Developing a highly trained and motivated workforce with full accountability and
responsibility.
5. Establishing long-term relations with suppliers.
6. Continually improving on all of the above.

13
Aspects of Quality

14
Total Quality Service Management

Check Your Progress 1


1. Define quality.
.
.
2. What is quality mission of a company?
.
.

1.8 QUALITY POLICY


The companys quality edifice stands on the following Pillars:
1. Total commitment for customer satisfaction.
2. Protection and Advancement of Environment.
3. Market Leadership.
4. Strive for Quality Excellence.
5. Sustainable Development of Stakeholders.
In its quality policy declaration a company may state as under:
The companys commitment to quality is unflinching, our hunger for growth is deeprooted and our capacity for details is amazing. Over the decades, the company has
demonstrated a rare resilience and fortitude. The company is determined to improve
productivity and focus continuously on innovation and up-gradation of its products
and people.
In order to support good-quality fulfillment of its tasks, the Centre for Regional
Development has introduced a suitable and effective quality management system,
implemented following an internationally approved model of the ISO 9001:2000
standard, and has declared its quality policy which fully covers all the organisations
activities, is binding for each employee and targeted as follows:

1.8.1 Quality of Services


z

Services and products must be delivered in a highest professional quality, respect


the needs of customers, co-operating partners and Management Authorities of the
national state administration;

Through continuously increasing the quality of its services and products, the CRD
CR aims at:

Achieving very good and stable evaluation of the organisations activities by


control and audit companies;

Achieving the very best evaluation of the organisation in main spheres of its
activities in the domestic and foreign markets.

1.8.2 Customers Satisfaction


z

Customers satisfaction is the priority objective of quality policy. It rests on the


provision of high-quality services, products and information by responsible,
educated, professionally advanced and satisfied employees able to communicate
with customers in a positive way.

A further objective is to eliminate serious complaints about the organisations


activities and its employees caused by their own mistakes.

1.8.3 Preparedness and Satisfaction of Employees


z

Preparedness and satisfaction of employees and their responsible approach to


fulfilling tasks are linked to the sense of belonging to the organisation and
knowledge of personal development prospects.

Employees are personally motivated to high-quality performance of the


organisations tasks entrusted to them. They bear full responsibility for their
proper fulfillment, which is reflected in their evaluation.

In relation to their colleagues and customers, all employees apply principles of


positive communication at work.

Employees bear personal responsibility for their professional growth and the
utilisation of conditions created by the organisations top management.

1.8.4 Competence of the Organisations Management and Administration


z

Top management continuously inform their employees about the organisations


objectives, tasks and its overall targeting.

Top management have committed to implementing advanced information


technologies and creating working environment in their organisation leading to
sustainable high-quality work of employees.

Top management, together with other managers, have committed to continuous


creating - through a training system, work meetings and support to informal
activities of the employees conditions for increasing qualification of the
employees, strengthening team spirit and human relations.

Managers continuously improve their management skills and professional


knowledge.

The organisations managers bear personal responsibility for adhering to the


quality management system and creating jointly conditions for continuous
improvement of its efficiency.

It is of crucial importance to mention here that the relationship between specific


bundles of human resource management (HRM) policies and practices and
organisational performance in the service industry is not well understood. Based on
open-ended interviews with managerial staff, and examination of management
documents, the human resource management policies and practices adopted by an
organisation in support of a strategic decision to enhance quality are considered in
order to shed light on the nature of the relationship between HRM bundles and
effectiveness in a quality-focused service context. The changes in service quality are
adopted to have measurable positive effects on the key indicators of service used by
the organisation.

1.9 OBJECTIVES OF QUALITY


The Total Quality Management (TQM) process begins with a definition of the specific
quality objectives important to the clients business. Assessments are conducted to
benchmark the business relative to standards agreed upon with the client.
Establishing objectives is serious business and requires close attention and great
understanding. They must be set within the process capability in order to drive
improvement.

15
Aspects of Quality

16
Total Quality Service Management

The following five steps should be observed for writing the broad quality objectives
for an organization.
z

Assemble input: The mission statements of the organization must be circulated


widely through out the organization and get the input from all stake holders as to
what we have to accomplish to fulfill the mission.

Find the optimum input: Analyze the inputs received and take those that are in
tune with the organizations mission and vision.

Resolve differences: Discuss the proposed objectives in detail and resolve the
differences.

Select the final objectives: After resolving the differences, finalize the list. The
objectives are then rewritten and edited to ensure that they are in tune with the
mission and vision of the organization.

Publicize the objectives: Inform all the stakeholders the organizations objectives.
Publish it with vision, mission and guiding principles.

A successful TQM environment requires a committed and well-trained workforce that


participates in quality improvement activities. Such participation is reinforced by
reward and recognition systems emphasizing the achievement of quality objectives.
Now develop the specific tactics for achieving the objectives.
Specific tactics are well-defined, finite projects and activities that are done to
accomplish the objectives. They have the following characteristics:
z

They are specific in nature.

They are measurable.

They can be quantified.

They can be achieved within the specified time.

They can be assigned to a specified person or group.

They are tied to a broad objective directly.

1.10 CONCEPTS OF QUALITY


Quality Concepts is a concept-driven business that focuses on Specialty Business
Development! With Quality Concepts as the central hub, and building on the strength
of shared resources, we are developing the model for training, management, and
accountability necessary to the success of any business model! Growing from the
center out, the model for specialty industries and the added value support of Quality
Concepts systems is steadily being pioneered, piloted, and duplicated on a regional
basis.

1.11 THE NEED AND IMPORTANCE OF QUALITY


According to Juran, there remains need for quality as it involves fitness for use as
seen by the user(or, rather, something like approximate fitness for use as seen by a
big enough group of users). Put at its most simple, we define service quality
management as the processes and systems used to monitor and manage the service
provided by a company. We see it as part of an operator's OSS (operational support
system). An OSS is net of computerised systems that support the business and
operational processes peculiar to the online business industry. These are broadly:
1. order management
2. inventory and workforce management
3. mediation and service provisioning.

According to industry insiders there are two schools of thought about managing
network quality. One view is that the network has inbuilt mechanisms to control and
heal itselfa view subscribed to by many network equipment vendors. On the other
hand, many feel that, from a business point of view, an overall system of control is
needed. Networks are composed of many desperate elements. Whilst they may well be
generating alarms and be able to heal themselves to some extent, this does not
necessarily take into account any knock-on effects or an unusual combinations of
events. One of the primary aims of network management is to be able to understand
the root cause of performance problems. There also remains a need for quality as
effective management of the service network brings with it a number of benefits:
1. improved performance
2. better return on investment by facilitating maximizing use of resources
3. revenue assurance
4. improved customer satisfaction
5. better forecasting.
Network management draws this information together into reports that are used for
the various activities. Some of these activities can happen automatically and some will
need human intervention. The network monitoring and management process entails
three activities:
1. collecting data from the network
2. sorting and analysing this data
3. presenting the findings as intelligible reports that provide visibility, in
understandable terms, of the behaviour of the networks and the services that ride
upon them.
This overall process is service quality management.
There has been considerable realignment in the service market through mergers,
acquisitions and divestments. This, coupled with the development of new services,
means that operators are increasingly operating in a multi-vendor, multi-technology
environment. Their newly acquired companies may well be using equipment sourced
from different vendors, or may even be offering different services. Network
monitoring and management needs to have the ability to address this type of
environment, and all types of networkfixed, mobile, IP and cable, across all domains
including switching, transport and access. In this climate, the need and importance of
quality remains in benefiting the operators, in understanding the network behaviour
through effective use of the information generated from network monitoring are
broadly:
1. Operations-relatedcentred on protecting the service provider's infrastructure
whilst making the most of its assets and streamlining operations.
2. Business-relatedreducing costs such as SLA penalties, maximising revenues and
satisfying customers.
3. Understanding and controlling network performance.
4. Keeping track of the growing complexity of networks.
Further, the importance of the Quality of Service Management approach lies in the
fact that, it:
z

Allows you to quantify the monetary benefits of a particular configuration so that


you can obtain the maximum profit from that environment.

17
Aspects of Quality

18
Total Quality Service Management

Allows you to predict when upgrades and enhancements will be required so they
can be planned and achieved at lowest possible cost.

Ensures that you can plan and prepare better Service Level Agreement targets,
confident in the knowledge that you can support them without penalty.

Provides the means to measure and maximise the return on your investments
while minimising overall Total Cost of Ownership.

Today's growth in Service Level Agreements and the costs involved with entire
service networks are significant management challenges that need to be addressed.

1.12 EVOLUTION OF QUALITY


Before the concepts and ideas of TQM were formalised, much work had taken place
over the centuries to reach this stage. This section charts the evolution, from
inspection through to the present day concepts of total quality.

1.12.1 From Inspection to Total Quality


During the early days of manufacturing, an operatives work was inspected and a
decision made whether to accept or reject it. As businesses became larger, so too did
this role, and full time inspection jobs were created. Accompanying the creation of
inspection functions, other problems arose:
z

More technical problems occurred, requiring specialised skills, often not


possessed by production workers.

The inspectors lacked training.

Inspectors were ordered to accept defective goods, to increase output.

Skilled workers were promoted into other roles, leaving less skilled workers to
perform the operational jobs, such as manufacturing.

These changes led to the birth of the separate inspection department with a chief
inspector, reporting to either the person in charge of manufacturing or the works
manager. With the creation of this new department, there came new services and
issues, e.g, standards, training, recording of data and the accuracy of measuring
equipment. It became clear that the responsibilities of the chief inspector were more
than just product acceptance, and a need to address defect prevention emerged.
Hence the quality control department evolved, in charge of which was a quality
control manager, with responsibility for the inspection services and quality control
engineering.
In the 1920s statistical theory began to be applied effectively to quality control, and
in 1924 Shewhart made the first sketch of a modern control chart. His work was later
developed by Deming and the early work of Shewhart, Deming, Dodge and Romig
constitutes much of what today comprises the theory of statistical process control
(SPC). However, there was little use of these techniques in manufacturing companies
until the late 1940s.
At that time, Japans industrial system was virtually destroyed, and it had a reputation
for cheap imitation products and an illiterate workforce. The Japanese recognised
these problems and set about solving them with the help of some notable quality gurus
Juran, Deming and Feigenbaum.
In the early 1950s, quality management practices developed rapidly in Japanese
plants, and become a major theme in Japanese management philosophy, such that, by
1960, quality control and management had become a national preoccupation.

By the late 1960s/early 1970s Japans imports into the USA and Europe increased
significantly, due to its cheaper, higher quality products, compared to the Western
counterparts. In 1969 the first international conference on quality control, sponsored
by Japan, America and Europe, was held in Tokyo. In a paper given by Feigenbaum,
the term total quality was used for the first time, and referred to wider issues such as
planning, organisation and management responsibility. Ishikawa gave a paper
explaining how total quality control in Japan was different, it meaning company
wide quality control, and describing how all employees, from top management to the
workers, must study and participate in quality control. Company wide quality
management was common in Japanese companies by the late 1970s.
The quality revolution in the West was slow to follow, and did not begin until the
early 1980s, when companies introduced their own quality programmes and
initiatives to counter the Japanese success. Total quality management (TQM) became
the centre of these drives in most cases.
In a Department of Trade & Industry publication in 1982 it was stated that Britains
world trade share was declining and this was having a dramatic effect on the standard
of living in the country.
There was intense global competition and any countrys economic performance and
reputation for quality was made up of the reputations and performances of its
individual companies and products/services. The British Standard (BS) 5750 for
quality systems had been published in 1979, and in 1983 the National Quality
Campaign was launched, using BS5750 as its main theme. The aim was to bring to the
attention of industry the importance of quality for competitiveness and survival in the
world market place. Since then the International Standardisation Organisation (ISO)
9000 has become the internationally recognised standard for quality management
systems. It comprises a number of standards that specify the requirements for the
documentation, implementation and maintenance of a quality system.
TQM is now part of a much wider concept that addresses overall organisational
performance and recognises the importance of processes. There is also extensive
research evidence that demonstrates the benefits from the approach. As we move into
the 21st century, TQM has developed in many countries into holistic frameworks,
aimed at helping organisations achieve excellent performance, particularly in
customer and business results. In Europe, a widely adopted framework is the so-called
Business Excellence or Excellence Model, promoted by the European Foundation
for Quality Management (EFQM), and in the UK by the British Quality Foundation
(BQF).

1.13 DETERMINANTS OF QUALITY


Quality, quality management, quality control, etc. are not functions but products of
sound management. Principles and effective management of design, are - scope,
specification, documentation, cost, budgets and time. From inception to the
completion of a construction project, each function must be aimed at the achievement
of quality, whether the function is design, specification, documentation or
procurement. Furthermore, the element of competition and what it purports to achieve,
must not be forgotten.
The traditional approach to competitive tendering involves the calling of tenders
addressed to a principal, which purports to carry out specified work and/or the supply
of goods in return for specified payment. In the evaluation of the tenders, the principal
will seek a tender that best suits the specific requirements of price, time and quality.
From time to time, other criteria may also apply. In recent South African experience,
tenders submitted to the various state bodies might also be evaluated on the basis of:
z

Affirmative action

19
Aspects of Quality

20
Total Quality Service Management

Training

Labour content

Local materials

Community involvement.

The appointment of professionals may also be classified as 'competitive' as the


consultant team should be able to produce a product meeting standard levels of
acceptability, manage the process and motivate the contractor to achieve the highest
levels of quality.
Taking the foregoing into account, the generation of quality products in construction
is influenced by the following determinants:
z

Budgets

Development cost plans

Design and design management

Specification

Documentation

Communication systems

Total cost management and control

Time scheduling and time management.

Quality is inherent in each of these processes, which should not be reactive, but rather
inherent in dynamic and proactive management of quality-achievement. At the risk of
subordinating the purposes and interests of those who use and live in buildings,
professionals, consultants, developers and contractors must realise the needs of the
market, the people and the community they serve. The danger is that through
"conceptual frameworks we risk isolating fragments of social reality, decontextualising, then recontextualising and, in so doing, creating a different kind of world".
In the final analysis, quality can only be achieved in a specific context, within a
specific environment, for a real community.
The determinants of quality are of importance to operations academics and managers,
and they provide the identification of the determinants of service quality. There are
some quality determinants that are predominantly satisfiers and others that are
predominantly dissatisfiers. It is found that the predominantly satisfying determinants
are attentiveness, responsiveness, care and friendliness; and the dissatisfiers are
integrity, reliability, responsiveness, availability and functionality. Responsiveness is
identified as a crucial determinant of quality as it is a frequent source of satisfaction,
and the lack of it is a major source of dissatisfaction. Contrary to the existing
literature, shows that the causes of dissatisfaction are not necessarily the obverse of
the causes of satisfaction and, furthermore, that reliability is predominantly a source
of dissatisfaction not satisfaction.
Further, determinants of quality include the management activities of control,
improvement and the rest. Using various examples, the use of people and data are
explained in the management of control and improvement. It is concluded that if
companies are to improve their service/ product's quality, they must review the needs
for improvement of data collection and presentation and the quality skills needed at all
managerial levels.
With the recent growing interest in service relationships in the industrial sector, a need
exists to investigate the underlying determinants for service quality for business-tobusiness service encounters.

Example:

21
Aspects of Quality

Here is an example of the determinants of quality needs in the case of childcare:


There is consensus around the world that young children must experience high quality
services, not only to ensure the best possible future outcomes, but because children
have the right to the best possible present. All children are found to benefit from high
quality early childhood programs, but those from disadvantaged backgrounds demonstrate stronger advantages. The catchphrase the importance of the early years has
now become a call to arms: it is recognised worldwide that we must provide the best
possible services to young children and their families.
However, there is not universal agreement as to what constitutes best possible early
childhood services. Understandings of quality are value-based and change as values
change. (Childcare Resource and Research Unit 2004).
Understandings are also different across cultures, religions, contexts and the person or
group making the judgment. Myers (2004, p.19) argues that different cultures may
expect different kinds of children to emerge from early educational experience and
favour different strategies to obtain those goals. There is not a universal definition of
quality: in different times and places different kinds of practices are valued as high
quality.
Despite this, within the Western world, professionals assume at least a basic common
understanding. The European Commission Childcare Network attempted to define
these commonalities and came up with 40 quality targets. Analysing the literature
from a range of European countries, Myers (2004) argues there is consensus around
quality components including safety, good hygiene, good nutrition, appropriate
opportunities for rest, quality of opportunity across diversity, opportunities for play,
opportunities for developing motor, social, cognitive and language skills, positive
interactions with adults, support of emotional development, and the provision of
support for positive peer interactions. However, performance indicators identifying
how these principles play out in practice differ in different contexts and with different
levels of expectations and resources.
What is clear is that quality is multidimensional, complex and multi-theoretical.
Single indicators of quality are ineffective, as quality outcomes for children are found
to relate to a complex interplay of many different factors. In this context of
complexity and uncertainty, researchers attempt to measure quality, and states attempt
to regulate for quality care. Research tools measuring quality tend to focus on
particular theoretical approaches to learning, for example the developmentally
appropriate practice approach. At state level, regulations are introduced addressing
certain easily measured aspects of care. There is general agreement that where
regulations are strict, quality is enhanced and outcomes for children are better, so the
assumption remains that regulations must be doing some good. OKane (2005) agrees,
arguing that regulations contribute to enhancing quality practice, but they are not
solely responsible as there are a number of other factors coming into play.
Check Your Progress 2
Fill in the blanks:
1. ______________________ cost is expended to develop data requirements
and measurements.
2. The Quality Council (QC) is the focal point of the _________________.
3. Leadership in quality can only be accomplished by ongoing
improvements and through the active participation of all _________.

22
Total Quality Service Management

1.14 INTERPRETATION AND PROCESS OF


QUALITY AUDIT
Quality audit is the process of systematic examination of a quality system carried out
by an internal or external quality auditor or an audit team. It is an important part of
organization's quality management system and is a key element in the ISO quality
system standard, ISO 9001.
Quality audits are typically performed at predefined time intervals and ensure that the
institution has clearly-defined internal quality monitoring procedures linked to
effective action. This can help determine if the organization complies with the defined
quality system processes and can involve procedural or results-based assessment
criteria.
With the upgrade of the ISO9000 series of standards from the 1994 to 2000 series, the
focus of the audits has shifted from purely procedural adherence towards
measurement of the actual effectiveness of the Quality Management System (QMS)
and the results that have been achieved through the implementation of a QMS.
Quality audits can be an integral part of compliance or regulatory requirements. One
example is the US Food and Drug Administration, which requires quality auditing to
be performed as part of its Quality System Regulation (QSR) for medical devices
(Title 21 of the US Code of Federal Regulations part 820).
Several countries have adopted quality audits in their higher education system (New
Zealand, Australia, Sweden, Finland, Norway and USA) Initiated in the UK, the
process of quality audit in the education system focused primarily on procedural
issues rather than on the results or the efficiency of a quality system implementation.
Audits can also be used for safety purposes. Evans & Parker (2008) describe auditing
as one of the most powerful safety monitoring techniques and 'an effective way to
avoid complacency and highlight slowly deteriorating conditions', especially when the
auditing focuses not just on compliance but effectiveness.
The processes and tasks that a quality audit involves can be managed using a wide
variety of software and self-assessment tools. Some of these relate specifically to
quality in terms of fitness for purpose and conformance to standards, while others
relate to Quality costs or, more accurately, to the Cost of poor quality. In analyzing
quality costs, a cost of quality audit can be applied across any organization rather than
just to conventional production or assembly processes.

1.15 LET US SUM UP


Quality measurement should begin with a system for documenting non-conformances.
Every time an item fails a test, a purchased item is rejected, a statistically controlled
process exceeds its limits, or a product is returned from a customer, the nonconformance must be documented.
Quality costs help to show the importance of quality related activities to
management. They identify opportunities for quality improvement and establish
funding priorities by means of Pareto analysis. This analysis allows the quality
improvement program to concentrate on the vital few quality problem areas.
Once corrective action has been completed, the quality costs will measure the
effectiveness of that action in monetary terms. Quality improvement is synonymous
with a reduction in the cost of poor quality. Every amount saved on quality cost has a
positive effect on profits.

1.16 LESSON END ACTIVITY


Write a note on the concepts, evolution and determinants of quality.

1.17 KEYWORDS
Quality: Defined as that aspect of things under which they are considered in thinking
or speaking of their nature, condition, or properties.
Aesthetics: How a product looks, feels, tastes or smells.
Durability: Useful life or life span of the product.
Persuasiveness: Good leaders are able to use their power and communication skills to
good use. They convert their power into influence.

1.18 QUESTIONS FOR DISCUSSION


1. Define the concept of quality and what are its determinants.
2. What are the various dimensions of quality?
3. Describe the various costs of quality and its process.

Check Your Progress: Model Answers


CYP 1
1. Quality can be defined as the degree to which a product is fit for the
specific use.
2. Quality mission of a company can be defined through its quality mission
statement, which may state it as the companys mission.
CYP 2
1. Information system costs
2. Total Quality Management (TQM) process
3. Employees

1.19 SUGGESTED READINGS


Sundara Raju, S.M., Total Quality Management: A Primer, Tata McGraw-Hill, 1995.
Sreenivasan, N.S and V. Narayana, Managing Quality Concepts and Tasks, New Age
International, 1996.
Kume, H., Management of Quality, Productivity Press, 1996.
Dennis, Lock, Handbook of Quality Management, 1992.
Hammer, M. and Spect, Business Process Reengineering, 1995.
ISQUA Journal.
MCB Journal of Quality Management.

23
Aspects of Quality

24
Total Quality Service Management

LESSON

2
BASIC CONCEPTS OF TOTAL QUALITY MANAGEMENT
CONTENTS
2.0

Aims and Objectives

2.1

Introduction

2.2

Characteristics of Good Leaders


2.2.1

Leadership for Quality

2.2.2

Styles of Leadership

2.3

Quality Control

2.4

Costs of Quality

2.5

The Process Model


2.5.1

The PAF Model

2.6

Life Cycle Model

2.7

Economics of Quality

2.8

2.9

2.7.1

Economic Cost of Quality

2.7.2

Organisations and the Economic Cost of Quality

Contribution of Quality Gurus


2.8.1

Walter A. Shewhart (1891-1967)

2.8.2

Joseph M. Juran (born in 1904)

2.8.3

Armand V. Feigenbaum

2.8.4

Kaoru Ishikawa (1915-1989)

2.8.5

W. Edwards Deming (1900-1993)

2.8.6

Dr. Genichi Taguchi (born in 1924)

Statistical Process Control (SPC)


2.9.1

2.10

Benefits

Statistical Quality Control (SQC)


2.10.1

Advantage of Statistical Quality Control

2.11

Company Wide Quality Control (CWQC)

2.12

Total Productive Maintenance (TPM)

2.13

Total Quality Control (TQC)

2.14

Let us Sum up

2.15

Lesson End Activity

2.16

Keywords

2.17

Questions for Discussion

2.18

Suggested Readings

2.0 AIMS AND OBJECTIVES


After studying this lesson, you should be able to:
z

Know the basic concepts of TQM

Understand the quality objectives

Study the quality process mode

2.1 INTRODUCTION
Leadership is the ability to motivate people to make a total and voluntary commitment
to attain or exceed organizational goals. Leadership is the ability to inspire confidence
and support, with an aim to achieve organizational goals. The concept of leadership
can be defined as the ability of top management to lead the firm in continuously
pursuing long-term overall business success.
Leadership plays a crucial role in creating the goals, values and systems that guide the
pursuit of continuous performance improvement. The European Quality Award and
the Malcolm Baldrige Quality Award recognize this.
Leaders have to address the values, direction, and expectations of all stakeholders.
The leaders need to ensure the creation of strategies, systems, and methods for
achieving excellence.

2.2 CHARACTERISTICS OF GOOD LEADERS


Good leaders have the following characteristics:
z

Balanced commitment: Good leaders are committed to the jobs and the people
who must do it.

Positive influence: Good leaders set positive examples at all times. They practice
what they preach. They help people to achieve their goals.

Good communication skills: Good leaders communicate effectively. They are


good listeners. They are able to understand their followers well. They are able to
establish rapport with the followers.

Positive role model: Good leaders have positive traits. They are always positive in
their thinking and action. They are able to form a positive aura around them. They
use their hold over the followers in a positive manner. They are dependable and
they are able to influence people. They excel and are thus able to make others
excel.

Persuasiveness: Good leaders are able to use their power and communication
skills to good use. They convert their power into influence. They use this
influence to persuade people.

2.2.1 Leadership for Quality


Leadership for quality is the leadership from perspective of total quality. It involves
the following:
z

Customer Focus: Customer is the king. The prime reason for an organization is
delighting the customer. Leadership for quality requires customer focus. Customer
includes both external and internal customer. An organizations senior leaders
need to set directions. They must create clear customer orientation and make
quality values visible.

25
Basic Concepts of
Total Quality Management

26
Total Quality Service Management

Obsession with quality: Leaders obsessed with quality will be breathing and
talking of quality. They can influence the people and make the organization
quality oriented.

Recognizing structure of work: Quality involves continuous improvement. Work


processes need to be recognized with appropriate structure. When the optimum
structure is in place, work processes must be analyzed and evaluated for
continuous improvement. Achieving Total Quality is a journey and not a
destination.

Freedom through control: Quality means reduction in variation of output. The


variations in how work is done have to be eliminated. Leaders must ensure that
mangers and employees take control of the work processes and methods by
working together. People must be running the machines and not otherwise.

Unity of purpose: Unity of purpose is key to a leadership system. Core values and
concepts provide the unity of purpose. The core values and concepts enable a
framework for leaders throughout the organization to make right decisions. They
foster TQM behavior and define the culture. Each organization will need to
develop its own values. The behavior of an organizations leader must create a
clarity and unity of purpose within the organization and an environment in which
the organization and its people can excel.

Finding fault: The aim of leadership is not to point fingers at individuals or to


keep records of failures. The leaders job is to remove barriers and create a
positive culture. Such a culture values helping others to do a better job and to feel
pride in workmanship.

Team work: Leadership of quality requires teams work and team building.
Teamwork is the fundamental principle in total quality. A team of people working
together toward a common goal can outperform a group of individuals working
towards their own goals. More can be achieved by co-operation than competition.

Continuous education and training: To be an effective leader in most modern


firms, the top manager must continue to develop and learn. Knowledge of the
business and continual learning are essential prerequisites to effective leadership.
Continued learning at all levels are required. Technology is changing every day.
Smart work is more important than handwork.

2.2.2 Styles of Leadership


The three basic styles of leadership are:
z

Authoritative or Autocratic: An autocratic leader dominates. He has complete


control over his subordinates. He takes all decisions himself. He does consult his
followers. He loves power. He uses rewards and penalties to get work done. He
expects his subordinates to follow his commands without questioning . He does
not delegate the authority. Communication follows only in the down ward
direction. This style is task oriented. There is no scope for the followers to show
initiative or creativity.

Democratic or Participative style: A democratic leader takes decisions after


consulting his subordinates. He takes all decisions himself. He does not consult
his followers. He loves power. He uses rewards and penalties to get work done.
He expects his subordinates to follow his commands without questioning. He does
not delegate the authority. Communication follows only in the down ward
direction. This style is task oriented. There is no scope for the followers to show
initiative or creativity.

Free rein or Laissez-faire leadership: Free rein leadership as the name suggests
involves complete delegation of authority. Subordinates themselves take

decisions. The leader here avoids power. He relinquishes the leadership position.
He serves, as a contact to bring the information needed by the subordinates. Free
flow of communication occurs. Control is by self-discipline. There is full scope
for creativity and development of the subordinates.
Participative or democratic leadership style is more suited in total quality setup.
Quality is the responsibility of everyone in the organization. Top commitment is the
foundation of an effective leadership effort. This is exemplified by:
z

Clarity of vision,

Top management participation,

Coaching management style,

Employee empowerment,

Top management learning,

Top management commitment to employee education and training, and

Top management pursuit of product quality and long-term orientation

Managers can be good leaders only when they have the trust of the people whom they
lead. Managers sometimes, have to make unpopular decisions. If it is seen that the
decision has been taken after due consideration and in an impartial way, it will not
alienate the people from the leader. Good leaders may be popular but they will be
respected always. All good leaders are not popular. However, they are all respected.
Leaders build and maintain follower ship to earn respect. Some of the essential
characteristics, which would earn respect of the people, are:
z

Sense of purpose: Successful leaders have a strong sense of purpose. They know
what they are capable of and the areas where they can contribute for improving
the organization.

Self-discipline: Successful leaders have good self-discipline. It helps them to give


a positive image. They are able to control their emotions like anger, nervousness
etc. They able to handle problems and pressures with poise and dignity.

Honesty: Successful leaders are trusted by their followers. They are open and
trustworthy. They are seen dealing with other members of organization with
openness and straightforwardness.

Credibility: Successful leaders have credibility. They are knowledgeable and are
consistent, fair and impartial. They adhere to the same standards in their
performance and behaviour.

Common sense: Successful leaders must have good common sense. They must be
able to distinguish between what is important and what is not. They must know
when to be flexible.

Stamina: Successful leaders must have good health and stamina to cope up with
all these.

Commitment: Successful leaders are committed to the goals of the organization.


A commitment to total quality means a willingness to change the style (and
culture) in which the company operates, Lack of top management commitment is
one of the reasons for the failure of TQM EFFORTS. Strong commitment from
top management is vital for Quality demonstrating such commitment is a primary
leadership principle for achieving TQM.

Steadfastness: Successful leaders are steadfast and resolute. They get going when
it becomes tough also. Their commitment keeps them going.

27
Basic Concepts of
Total Quality Management

28
Total Quality Service Management

Quality gurus as Deming Juran and Crosby have also stressed the role of leadership in
pursuit of continuous quality improvement. Top management must be committed to
allocating sufficient resources to prevent and solve quality problems. They must
provide sufficient resources for employees education and training. They must be
committed to building trustful relationships with employees, and regard them as
valuable resources of the firm.
Top management must train and coach employees to assess, analyze, and improve
work processes. Leadership in quality can only be accomplished by ongoing
improvements and through the active participation of all employees.
Top management should discuss quality frequently. Giving speeches on the topic and
asking questions about quality at every staff meeting can do this. People make things
happen.
Leadership covers the following four sub-criteria that should be addressed:
z

Leaders develop the mission, vision and values and are role models of a culture of
excellence;

Leaders are personally involved in ensuring the organizations management


system is developed, implemented and continuously improved;

Leaders are involved with customers, partners and representatives of society;

Leaders motivate, support and recognize the organizations people.

It is essential that top management focus on product quality rather than yields alone.
More importantly, it is critical for the firm to pursue long-term business success.
Pursuing short-term business success places quality behind yield, costs and meeting
delivery schedules.
To effectively lead the firm, top management must empower employees to solve the
problems they encounter. Employees can have then the authority to fix problems and
prevent their further occurrence. Empowerment is the process of delegating decisionmaking authority to lower levels within the firm. Particularly dramatic is
empowerment of the workforce.
Check Your Progress 1
1. Define leadership.
.
.
2. Define free rein.
.
.

2.3 QUALITY CONTROL


The quality control has overall responsibility for continuous improvement. Quality
Council is a group of senior managers appointed to plan, administer, facilitate and
monitor the entire Quality Process. The quality council consists of the key people in
the top management team. It is better that the CEO is a part of it. The quality council
at management level is a good tool to initiate, institutionalize, facilitate and evaluate
quality improvement in a company.
Quality councils should be established at the corporate, division & product line levels.
The strategic planning process must be initiated by the organizations management
and make sure it continues. A team is the best for carrying out actual planning.

Ideally, such a team must have a diagonal cross-section of people within the
organization to ensure that all interests are met.
The council sets quality policy and reviews performance goals within the
organization, and it is responsible for the continuous improvement effort, and provides
the best information about what is really happening in the organization.
Both Juran and Crosby have made the establishment of quality control as one of the
steps in TQM. In general, the duties of the quality council are to:
z

Formulate the core values, vision statement, mission statement, quality


improvement policy etc.

Strategic planning of quality improvement projects with goals and the annual
quality improvement program with objectives.

Establishing the quality multifunctional project and departmental or work group


teams.

Allocating sufficient resources to each quality improvement project.

Providing adequate education and training for teams.

Monitoring the progress of the teams and supporting them to do their work and
provide a periodic critical review process for each project.

Facilitating implementation of project results.

Establishing quality metrics to measure progress for the organization, approve


those for the functional areas, and monitor them.

Continually determine those projects that improve the processes, particularly


those that affect external and internal customer satisfaction.

Provide for team & individual recognition to account for the new way of doing
business.

Establish an appropriate reward system that reinforces teamwork.

Most organizations establish a leadership group that will guide and direct the quality
effort. The quality council meets regularly to deal with the major issues that arise
governing the deployment of TQM throughout the organization. The chairperson of
the council at all levels should be a manager having overall responsibility and
authority for that level.
A coordinator is necessary to assume some of the added duties that a quality
improvement activity requires. He must report directly to the CEO. He has lots of
responsibilities that include
z

Building trust among the people.

Co-ordinate the activities of various teams and council.

Share the expectations of the council with the teams.

Brief the council on the progress of the teams.

He has to play an active role in making the teams aware of their responsibilities,
helping the team leaders to have regular meetings, share lessons learned among teams
etc.
The Quality Council (QC) is the focal point of the Total Quality Management (TQM)
process. Its important to include perspectives from men and women, newcomers and
established employees, people from different racial or ethnic backgrounds, and
different age groups. The plans validity is strengthened by the assurance that all
perspectives are involved in the creative process.

29
Basic Concepts of
Total Quality Management

30
Total Quality Service Management

A planning team consisting of only top-level managers is not effective. Vital


information and perspectives from other levels is likely to be filtered out. Hence, such
team also must have people who perform hands-on work or have direct contact with
customers. The team must have people senior-level people who can provide a broad
view of the organizations situation.
The quality of the planning process is enhanced by the planning groups diversity. An
effective team will offer a balance of perspectives from within and without the
organization. Quality council helps to build quality into the culture. It also helps to
provide over all direction. It is the driver for the TQM engine.
The Quality Control shall promote and coordinate continuous improvement efforts by
supporting all employees in carrying out the mission statement of the organization to
ensure exceptional customer service through involvement, communication and
commitment.
The council may use the group problem solving techniques, such as brainstorming and
consensus decision-making for identifying barriers and driving forces to the quality
effort. It must stress the importance of relying on the knowledge, talents and skills of
everyone in the group. The council also uses some of the structured tools such as data
gathering, simple statistical analysis, and structured problem solving techniques.
The Quality Council initiate change for global problems as well as specific problems
by preparing charters and suggesting team members. It further assists by offering
guidance when teams get stuck on issues or require facilitation.
Once the quality manager obtains and agreement to initiate a strategic planning
process, he or she must assemble the right mix of people to form a planning team. The
quality manager must obtain assurance from other managers that team members will
be given adequate time to work on this process.
The quality manager will either facilitate the process or ensure that an experienced
facilitator leads it. Often, the manager needs to participate as a team member, in which
case its advisable to employ a neutral facilitator who will focus on the planning
process.
Many CEOs are aware that a quality council alone cannot bring about the attitude
changes necessary to sustain continuous quality improvements. People resist the
demands of continuous change because it creates uncertainty. Top management
support is definitely needed.
In a typical organization, the council is composed of CEO, the senior managers of the
functional areas, such as design, marketing, finance, production, and quality and a
coordinator or consultant. If there is a union, its representative must also be made on
the council.
Ideally, it is better that the CEO is the chairperson of the quality council. Practicality
suggests that there is a limit on the CEOs time. Therefore, a senior Vice President
may chair the council; the CEOs time can be thus used effectively for reinforcement
and recognition programs after the council becomes operational.
In large organizations, quality council is also established at lower level of the
corporation. Their duties are similar but related to that particular level in the
organization. The quality council is expected to operate as any other team formed in a
quality context.
Hence, initially these activities will require additional work by council members. In
the lone term, their jobs will be easier. These councils are the instruments for
perpetuating the idea of never-ending quality improvement.
Once the TQM program is well established, a typical meeting agenda might have
following items.

Progress report on teams.

Customer satisfaction report.

Progress on meeting goals.

New project teams.

Recognition dinner.

Benchmarking report.

The quality council activities will become part of the culture of the organization in 3
to 5 years. Then they will become a regular part of the executive meeting. When this
state is achieved, a separate quality council is no longer needed. Quality becomes the
first item on the executive meeting agenda.
TQM has a universal appeal because it is an ongoing, long-term system to achieve
customer satisfaction by continuously improving the quality of a firms goods and
services.

2.4 COSTS OF QUALITY


Costs are not incurred or allocated, but rather caused. Cost information does not solve
quality problems. It also does not suggest specific solutions. Tracing the cause of a
quality deficiency solves problems.
The cost of Quality is defined as the sum of the costs that would not have been
required had everything been done right the first time. It is considered to be any cost
that the company would not have incurred if the quality of the product or service were
perfect.
Quality is more than meeting a product specification because a specification only
provides a minimum set of requirements. it has been estimated that the costs of poor
quality account for anything from 15% to 50% of all business costs. As most
businessmen do not keep reliable statistics, they do not know the actual amount of
their quality costs.
Feigenbaum proposed categorization of quality costs into prevention, appraisal and
failure costs. Crosby took an economic approach by evaluation of quality costs
associated with the production, identification and rectification of non-conforming
product.
Following are some of the approaches to the classification of costs.
z

The process model

The PAF model

The life cycle model

2.5 THE PROCESS MODEL


The process model groups the costs as cost of conformity and cost of nonconformity.
Cost of conformity is the cot to fulfill all of the stated and implied needs of customers
in the absence of failure of the existing process. Cost of nonconformity is the cost
incurred due to failure of the existing process. The cost of quality is generally the sum
of conformance and nonconformance costs.

2.5.1 The PAF Model


The PAF model groups the cost under the four primary cost categories:
z

Prevention,

Appraisal,

31
Basic Concepts of
Total Quality Management

32
Total Quality Service Management

Internal failure, and

External failure.

Prevention cost
The experience gained from the identification and elimination of specific cause of
failure and their costs is utilized to prevent the recurrence of the same or similar
failures in other products or services. The prevention costs of poor quality have been
defined to include the cost of all activities specifically designed for this purpose.
Corrective action that is directed toward elimination of the problem in the future may
be classified as prevention. They are investments made to keep nonconforming
products from occurring and reaching the customer. These could be:
z

Quality planning costs such as salaries of individuals associated with quality


planning and problem-solving teams, the development of new procedures, new
equipment design, and reliability studies.

Process control costs which include costs spent on analyzing production


processes and implementing process control plans.

Information system costs expended to develop data requirements and


measurements.

Training and general management costsincluding internal and external training


programs, clerical staff expenses, and miscellaneous supplies

Costs associated with trying to prevent defects and errors in


Training for quality
Educating suppliers
Designing product for quality
Designing production system for quality
Preventive maintenance

Appraisal Costs
Appraisal costs of poor quality have been defined to include all costs incurred in the
planned conduct of product or service appraisals to determine compliance to
requirements. They are associated with efforts to ensure conformance to requirements,
generally through measurement and analysis of data to detect nonconformance. These
are
z

Test and inspection costs associated with incoming materials, WIP, and
finished goods, including equipment costs and salaries.

Instruments maintenance costs arising from calibration and repair of measuring


instruments.

Process measurement and control costs which involve the time spent by
workers to gather and analyze quality measurements.

The first responsibility of a quality management system is assurance of the


acceptability of product or service as delivered to customers.

Internal Costs of Defects


Internal failure cost includes all the material and labor expenses that are lost or wasted
due to non-conforming or otherwise unacceptable work affecting the quality of end
products or service. It is the cost to fix a problem found internally when defects are
found before shipment/delivery to customer as:
z

Labor and materials going into scrap

Reworking and re-testing to correct defects

Downtime of equipment and labor while waiting for repairs

Yield losses.

External Costs of Defects


External failure cost includes all costs incurred due to actual or suspected nonconforming product or service after delivery to the customer. These costs consist
primarily of costs associated with the product or service not meeting customers or user
requirements. it is the cost to fix a problem found after receipt by customer as
z

Loss of customer goodwill

Recalls to correct problem

Warranty, insurance, and legal suit settlements

Lost sales

Other indirect costs

Generally, internal failure costs are less expensive than external failure costs.
Conformance costs include the costs of testing and measuring the environment to
determine whether it conforms to the expected quality standards. Nonconformance
costs are the costs associated with mistakes.
Total quality costs are the sum of Prevention costs, Appraisal costs, Failure costs, and
Intangible costs.
The life cycle model: In the life cycle model, the costs are grouped under different
phases of the life cycle of the product. Quality costs increase over time.

2.6 LIFE CYCLE MODEL


Measuring the quality costs is important in order to manage them.
We must measure it first. Measures of quality costs provide the information needed to
analyze where the excess costs are occurring. We can then target improvement
projects to reduce them.
It can be seen from the above graph that quality costs increase over time. Hence it is
better to make the corrections at the earliest stage. That is Prevention.
Failure costs usually account for the major proportion of quality costs in companies
that do not have an effective quality program. Prevention costs are typically quite low.
When Quality Management is introduced one would expect prevention costs are to
increase and failure costs and appraisal costs to go down.
Quality measurement should begin with a system for documenting non-conformances.
Every time an item fails a test, a purchased item is rejected, a statistically controlled
process exceeds its limits, or a product is returned from a customer, the nonconformance must be documented.
Quality costs help to show the importance of quality related activities to
management. They identify opportunities for quality improvement and establish
funding priorities by means of Pareto analysis. This analysis allows the quality
improvement program to concentrate on the vital few quality problem areas.
Once corrective action has been completed, the quality costs will measure the
effectiveness of that action in monetary terms. Quality improvement is synonymous
with a reduction in the cost of poor quality. Every amount saved on quality cost has a
positive effect on profits.
Traditional systems do not measure quality costs. So management may not realize the
size and importance of these costs. Quality costs are part of a firms quality

33
Basic Concepts of
Total Quality Management

34
Total Quality Service Management

management system. They require understanding customer requirements and


translating them into appropriate defect rates.
Check Your Progress 2
1. Define costs of quality.
.
.
2. Define internal failure cost.
.
.

2.7 ECONOMICS OF QUALITY


Although the terms "economics of quality" and "quality costs" are often considered to
be synonymous, but there is the clear distinction between the two. The first we
interpret as economic analysis applied to Quality Control and the second we interpret
as the specific cost items attributable to quality improvement activities.
Generally speaking, there are two main approaches to dealing with the economics of
quality. Firstly, there are models which are supposed to reflect the 'economic cost of
quality'. Secondly, emerging developments have a basis in systems approaches to
quality costs. This paper seeks to illustrate the problems which arise in collecting
appropriate data for a "cost of quality" exercise and evaluating the economic cost of
quality. The practical measurement of quality costs involves dealing with the attitudes
and approaches by management to exactly what constitutes a quality cost. Many
components of quality costs can only be estimated and this adds to the difficulty in
applying the economic models of analysis in an organisation. Turner (1969) explained
that there were too many variables to illustrate the situation graphically. Other writers
have commented on factors which have a bearing on the determination and use of
quality costs. For example, Bajpai and Willey (1989) indicated that since data on
quality costs are elusive, many companies are unable to identify real benefits which
can accrue from improving quality.
Organisations are likely to use accounting cost principles rather than economic cost
principles in deciding on their quality level. For example, opportunity costs will
generally not be taken into account. In quality terms, activities such as doing things
twice could be included as opportunity costs as the staff concerned are not available
for other tasks (there will be lost production) whilst they are correcting failures.
However, before the practitioner can use the model as a management tool, it is
essential that the subject organisation (department or company) is geared to providing
information. The problems identified in the two organisations featured in this paper
include consistency in data collection, verification of the data collected and adding a
'real' value to the data.

2.7.1 Economic Cost of Quality


Juran (1951, p8) discussed the 'economics of quality of conformance' when he first
offered a model which showed the 'economics of quality'. He fully recognised the
economic dilemma:
"...the basic quality problem ... is to strike the optimum balance between cost of
quality and value of quality for each quality characteristic ...."
He argued that increased conformance reduces the losses due to defectives and states
that "the cost of the controls needed for greater conformance rises geometrically as

perfection is approached". This reflects the economist's perception of falling marginal


returns (to added quality effort) and from this we can deduce (when we also consider
that marginal benefits from added quality effort are likely also to decline) that
perfection will not be achievable - let alone optimal! Since Juran's paper there has
been a great proliferation of notional or conceptual models based on Juran's work and
these very often relate costs in dollars to the quality of conformance from 100%
defective up to no defectives at all. There are , however, very few explanations as to
how the economic models are supposed to work in practice.
Gryna analyses the differences between Juran's early model and his later (1988)
model. Gryna's model suggests that perfection can almost be reached in an economic
manner in that the costs of appraisal plus prevention are finite not infinite.
Sittig (1963) not only explained 'the economics of quality', he also dealt with 'the
problem of optimal quality' and introduced aspects of 'the dynamics of quality'. He
says: ".... the difference between 'production costs' and 'quality costs' is entirely
artificial. Quality costs do not exist as a category opposed to production costs and
therefore strictly speaking, do not exist at all. This does not mean that it is
unimportant to analyse the relationship between cost and quality. On the contrary this
relationship has been the pivot of our theoretical discussion ......"
A number of issues emerge from this investigation of the literature, including the lack
of real economic models of quality and cost - as most tend to be notional models
without supporting evidence.
Turner (1969), following methodologies from economics, illustrated the relationships
between 'quality of conformance' and 'dollars' as well as 'the amount of inspection and
quality control for operations' and 'unit cost - dollars'. Both of these illustrate that the
"optimum" point at maximum total cost is not the same as the break even point of the
other curves. Turner 's key contribution was to discuss quality costs in economic terms
such as marginal cost and marginal revenue but the quality cost curves, although
depicted this way, are rarely supported by evidence.
As can be seen from Juran's initial models, the costs of improvement continue to rise
whilst the costs of failure continue to fall (again this illustrates the principle of
diminishing marginal returns in both benefits and effort). For a regular decision about
how much to produce, the Marginal Cost curve illustrates the additional cost incurred
by the firm to produce one more unit of output. (In practice, the output units do not
have to be single and judgements have to be made in relation to unit or batch size.) A
firm should produce where Marginal Revenue is equal to Marginal Cost but when
profit is less than zero it may be preferable to shut down rather than continue. The
shut down rule is "if for every choice of output level the firm's average revenue is less
than its average cost, the firm should shut down" (Katz and Rosen, 1994).
The key point to this decision is, of course, the distinction that needs to be made
between short- and long-run costs and revenues. In the short-run losses may be
tolerated because of the expectation of making long-run profits but long-run losses
can be expected to lead to shut down.

2.7.2 Organisations and the Economic Cost of Quality


Aspects of the economics of quality include the attitudes and approaches by
management to the quality problem and this section outlines some of the
organisational factors which contribute to determining the optimal quality decision.
Gupta and Campbell (1995) explained that not all companies measure the costs of
quality. They showed that only five out of the 22 companies in the final round of the
1991 Malcolm Baldrige National Quality Award calculated quality costs. Most
importantly, they stressed that the barriers to introducing prevention programmes were

35
Basic Concepts of
Total Quality Management

36
Total Quality Service Management

behavioural rather than economic because they "require vision, innovation and a
break from the status quo."
One underlying principle in dealing with the economic side of quality is that failure
costs are assumed to be higher than prevention (and appraisal) costs. Elshazly (1999)
dealt with accounting for quality costs and provided an outline of seven lessons from
the accounting aspect. One key lesson is that if a company wants to reduce its quality
costs and enhance its product and service quality, then it must be willing to spend
more money on prevention, because there is an obvious trade-off between prevention
and appraisal along with the internal and external failure costs. Elshazly explains that
the underlying premise that failure costs exceed prevention costs means that, as
prevention costs increase failure costs will drop. The main thrust of the argument is
that the accountant can help provide company-wide costs of quality in a number of
different ways, including management involvement and adapting accounting systems
meaningfully.
In his 1998 paper Kume states that "many companies treat the economic problems
pertaining to quality asquality costs". Kume explains that this is not the way things
happen in practice and management should not be concerned with these costs but
should try to minimise the loss using quality management. For example, changes in
what the workers were actually doing in a sub-process in a car manufacturer rendered
the whole process was sub-optimal. His view is that when loss prevention and the
development of new business and sales (which are just two parts of a company) are
well balanced, a company can maximise long-run profit.

2.8. CONTRIBUTION OF QUALITY GURUS


2.8.1 Walter A. Shewhart (1891-1967)
Born in Illinois, USA, Shewhart graduated University of Illinois and then he obtained
the doctorate in physics at University of California in 1917. Working at Western
Electric Company as an engineer, he was able to make a serious contribution to a
major problem: reliability of the equipment buried underground. Control charts
created by him were use to differentiate between assignable sources of variation and
pure chances of variation. Shewhart studied randomness and recognized variability
which exists in all manufacturing processes. In his opinion, reducing variability is
equivalent to quality improvement. Later Shewhart worked for Bell Telephone
Laboratories until his retirement in 1956. He wrote several articles and books, most
representative being Economic Control of Quality of Manufactured Product in 1931,
Statistical Method from the Viewpoint of Quality Control in 1939. On more thing
about Shewhart: he is considered to be the grandfather of quality control.

2.8.2 Joseph M. Juran (born in 1904)


Architect of Quality: The Autobiography of Joseph M. Juran (McGraw-Hill, 2003)...
"Juran, now 99 years old, begins his tale with his humble beginnings as a Romanian
peasant and his families immigration to the United States. He recounts how he
overcame poverty, anti-Semitism, bitterness and despair... This is a tale of how
education wins over ignorance, persistence prevails over complacence and, more than
anything else, how faith (in God, in family, in humanity and in the American dream)
is rewarded."
The pattern for Jurans life of hard work and dedication was set at an early age. "We
grew up with no fear of long hours or hard work," he writes. "We learned to seek out
opportunities and to use ingenuity to gain from them. We accepted the responsibility
for building our own safety nets. By enduring the heat of the fiery furnace, we
acquired a work ethic that served us the rest of our lives."

As a child, Juran endured the loss of his beloved mother, an indifferent father, bitter
winters, the terror of anti-Semitism. Many residents of his native village in Romania
perished in Nazi death camps - and grinding poverty. Consequently, he entered the
working world bitter and socially inept, yet he was driven to succeed.
Jurans story parallels many of the great events of the 20th century. He landed his first
job at Western Electric, which was the hot growth company of the 1920s. He
weathered the Great Depression, he served his adopted country during World War II
by working in the Lend-Lease Administration, he helped Japan rebuild its devastated
economy and he showed U.S. manufacturers how to compete successfully in the
world market...
Also remarkable is the success of Jurans siblings. They, too, overcame their humble
beginnings and led successful lives. For example, his brother, Rudy, became a
successful bond trader; his brother, Nat, had a successful career in Hollywood, earning
an Academy Award; his sister, Minerva, earned a doctorate degree and became a
college professor - no small feat for a female Romanian immigrant."
Quality Digest issued an article which can be found at here. "No one in the last
hundred years has had more influence on the worldwide practice of quality in business
than Dr. Joseph Juran.. In Architect of Quality, Juran recounts his fascinating life
story, revealing how he overcame dire poverty and childhood tragedy to make a
profound impact on business and society. Juran retraces his inspiring life journey from an impoverished, tragic childhood in a tar-papered shack to his career as the
revered man who helped invent and champion quality management systems, quality
tools, and teams long before they became standard practice. Architect of Quality
delves deep into Jurans motivations, sharing for the first time how the early hardships
he faced and his relentless, aggressive spirit shaped his character and fueled his
determination to succeed."
Juran is considered to be after Deming the most important contributor to quality
management. He became well know after his book publishing Quality Control
Handbook in 1951. In Japan, Juran worked with manufacturers and taught classes on
quality. Even his philosophy is very similar to Deming's philosophy, there exists some
differences: while Deming emphasized the need for organizational transformation,
Juran believed that implementation of quality initiatives does not need dramatic
changes. Juran is the author of definition for quality: fitness for use, rather than
simply conformance to specifications. This way, Juran took into account the client,
in terms of his needs. Quality trilogy "quality planning, quality control and
quality improvement" represents another large contribution to quality. First part of
trilogy is concerned with identification of customers, product requirements and
override of business goals. The second part of trilogy implies the use of statistical
control methods. As for the third part, Juran believe is that improvement should be
continual, as well as breakthrough.

2.8.3 Armand V. Feigenbaum


Initiator of the concept of Total Quality Control, Feigenbaum published in 1961 one
of his referencing book, named Total Quality Control. An interesting aspect regarding
this book is that it was wrote when he was a doctoral student at MIT. The power of his
ideas were discovered by Japanese in 1950s, about the same time Juran visited Japan.
Quality principles set by Feigenbaum lay down on 40 keys. He promoted the concept
of a working environment where quality developments cover entire organization;
every single person in organization must have a truly commitment to improve the
quality. Learning from other's success story is essential.
In his book Quality Control: Principles, Practices and Administration, Feigenbaum
strove to move away from the then primary concern with technical methods of quality
control, to quality control as a business method. Thus he emphasized the

37
Basic Concepts of
Total Quality Management

38
Total Quality Service Management

administrative viewpoint and considered human relations as a basic issue in quality


control activities. Individual methods, such as statistics or preventive maintenance, are
seen as only segments of a comprehensive quality control program.
Quality control itself is defined as: "An effective system for coordinating the quality
maintenance and quality improvement efforts of the various groups in an organization
so as to enable production at the most economical levels which allow for full customer
satisfaction". He stresses that quality does not mean "best" but "best for the customer
use and selling price". The word "control" in quality control represents a management
tool with 4 steps: Setting quality standards, Appraising conformance to these
standards, Acting when standards are exceeded and Planning for improvements in the
standards.
Quality control is seen as entering into all phases of the industrial production process,
from customer specification and sale through design, engineering and assembly, and
ending with shipment of product to a customer who is happy with it. Effective control
over the factors affecting product quality is regarded as requiring controls at all
important stages of the production process. These controls or jobs of quality control
can be classified as:
z

New-design control,

Incoming material control,

Product control,

Special process studies.

Feigenbaum argues that statistical methods are used in an overall quality control
program whenever and wherever they may be useful. However such methods are only
part of the overall administrative quality control system, they are not the system itself.
The statistical point of view, however, is seen as having a profound effect upon
Modern Quality Control at the concept level. Particularly, there is the recognition that
variation in product quality must be constantly studied within batches of product, on
processing equipment and between different lots of the same article by monitoring and
critical quality characteristics.
Modern Quality Control is seen by Feigenbaum as stimulating and building up
operator responsibility and interest in quality. The need for quality-mindedness
throughout all levels is emphasized, as is the need to "sell" the program to the entire
plant organization and the need for the complete support of top management.
Management must recognize that it is not a temporary quality cost-reduction activity.
From the human relations point of view, the quality control organization is seen as
both:
z

A channel for communication for product-quality information,

A means of participation in the overall plant quality program.

Finally, Feigenbaum argues that the program should be allowed to develop gradually
within a given plant or company. Feigenbaums preface to the third edition of Total
Quality Control in 1983 emphasizes the increased importance of buyers perceptions of
variation in quality between companies and also the variation in effectiveness between
the quality programs of companies. Quality is seen as having become the single most
important force leading to organizational success and company growth in national and
international markets. Further, it is argued that: "Quality is in its essence a way of
managing the organization" and that, like finance and marketing, quality has now
become an essential element of modern management.
Against this background, Total Quality Control is seen as providing the structure and
tools for managing quality so that there is a continuous emphasis throughout the
organization on quality leadership:

genuine investment in, and implementation of, modern technology for quality
throughout sales,

engineering and production: and top-to-bottom human commitment to quality and


productivity.

As Feigenbaum says: "In effect, quality and its costs are managed and engineered and
motivated throughout the organization with the same thoroughness and depth with
which successful products and services are themselves managed and engineered and
produced and sold and serviced". Such Total Quality Control programs are highly
cost-effective because of their results in improved levels of customer satisfaction,
reduced operating costs, reduced operating losses and field service costs, and
improved utilization of resources. By-products such as sounder setting of time
standards for labor may also be most valuable. Thus a Total Quality System is defined
as: The agreed company-wide and plantwide operating work structure, documented
in effective, integrated technical and managerial procedures, for guiding the
coordinated actions of the people, the machines and the information of the company
and plant in the best and most practical ways to assure customer quality satisfaction
and economical costs of quality. Operating quality costs are divided into:
z

Prevention costs including quality planning

Appraisal costs including inspection

Internal failure costs including scrap and rework

External failure costs including warranty costs, complaints, etc.

Reductions in operating quality costs result from setting up a total quality system for
two reasons:
z

Lack of existing effective customer-orientated customer standards may mean


current quality of products is not optimal given use,

Expenditure on prevention costs can lead to a several fold reduction in internal


and external failure costs.

2.8.4 Kaoru Ishikawa (1915-1989)


Ishikawa was a Japanese consultant, father of the scientific analysis of causes of
problems in industrial processes. One of his greatest contributions to quality was the
diagram which has his name "Ishikawa diagram" or Fishbone Diagram.
Professor Ishikawa was born in 1915 and graduated in 1939 from the Engineering
Department of Tokyo University having majored in applied chemistry. In 1947 he was
made an Assistant Professor at the University. He obtained his Doctorate of
Engineering and was promoted to Professor in 1960. He has been awarded the
Deming Prize and the Nihon Keizai Press Prize, the Industrial Standardization Prize
for his writings on Quality Control, and the Grant Award in 1971 from the American
Society for Quality Control for his education program on Quality Control.
While, perhaps ironically, the early origins of the now famous Quality Circles can be
traced to the United States in the 1950s, Professor Ishikawa is best known as a pioneer
of the Quality Circle movement in Japan in the early 1960s, which has now been reexported to the West. In a speech to mark the 1000th quality circle convention in
Japan in 1981, he described how his work took him in this direction. "I first
considered how best to get grassroots workers to understand and practice Quality
Control. The idea was to educate all people working at factories throughout the
country but this was asking too much. Therefore I thought of educating factory
foremen or on-the-spot leaders in the first place." In 1968, in his role as Chairman of
the Editorial Committee of Genba-To-QC (Quality Control for the Foreman)
magazine, Dr Ishikawa built upon quality control articles and exercises written by the

39
Basic Concepts of
Total Quality Management

40
Total Quality Service Management

editorial committee for the magazine, to produce a "non-sophisticated" quality


analysis textbook for quality circle members. The book Guide to Quality Control was
subsequently translated into English in 1971, the most recent (2nd) edition being
published by the Asian Productivity Organization in 1986. Amongst other books, he
subsequently published What is Total Quality Control? The Japanese Way which was
again translated into English (Prentice Hall, 1985).
As with the other Japanese quality gurus, such as Genichi Taguchi, Kaoru Ishikawa
has paid particular attention to making technical statistical techniques used in quality
attainment accessible to those in industry. At the simplest technical level, his work has
emphasized good data collection and presentation, the use of Pareto Diagrams to
prioritize quality improvements and Cause-and-Effect (or Ishikawa or Fishbone)
Diagrams. Ishikawa sees the cause-and-effect diagram, like other tools, as a device to
assist groups or quality circles in quality improvement. As such, he emphasizes open
group communication as critical to the construction of the diagrams. Ishikawa
diagrams are useful as systematic tools for finding, sorting out and documenting the
causes of variation of quality in production and organizing mutual relationships
between them. Other techniques Ishikawa has emphasized include control charts,
scatter diagrams, Binomial probability paper and sampling inspection.
Turning to organizational, rather than technical contributions to quality, Ishikawa is
associated with the Company-wide Quality Control movement that started in Japan in
the years 1955-1960 following the visits of Deming and Juran. Under this, quality
control in Japan is characterized by company-wide participation from top
management to the lower-ranking employees. Further, all study statistical methods. As
well as participation by the engineering, design, research and manufacturing
departments, also sales, materials and clerical or management departments (such as
planning, accounting, business and personnel) are involved. Quality control concepts
and methods are used for problem solving in the production process, for incoming
material control and new product design control, and also for analysis to help top
management decide policy, to verify policy is being carried out and for solving
problems in sales, personnel, labor management and in clerical departments. Quality
Control Audits, internal as well as external, form part of this activity.
To quote Ishikawa: "The results of these company-wide Quality Control activities are
remarkable, not only in ensuring the quality of industrial products but also in their
great contribution to the companys overall business." Thus Ishikawa sees the
Company-wide Quality Control movement as implying 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 being. This has the effect that:
z

Product quality is improved and becomes uniform. Defects are reduced.

Reliability of goods is improved.

Cost is reduced.

Quantity of production is increased, and it becomes possible to make rational


production schedules.

Wasteful work and rework are reduced.

Technique is established and improved.

Expenses for inspection and testing are reduced.

Contracts between vendor and vendee are rationalized.

The sales market is enlarged.

Better relationships are established between departments.

False data and reports are reduced.

Discussions are carried out more freely and democratically.

Meetings are operated more smoothly.

Repairs and installation of equipment and facilities are done more rationally.

Human relations are improved.

One major characteristic of Japanese Company-Wide Quality Control is the Quality


Control Circle Movement started in 1962, with the first circle being registered with
the Nippon Telegraph and Telephone Public Corporation. Starting in industry in
Japan, these have now spread to banks and retailing, and been exported world-wide.
Success in the West has not been so extensive as in Japan, however, although even
there have been limitations too. The nature and role of quality circles varies between
companies. In Japan a quality circle is a typically voluntary group of some 5-10
workers from the same workshop, who meet regularly and are led by a foreman,
assistant foreman, work leader or one of the workers. The aims of the quality circle
activities are:
z

To contribute to the improvement and development of the enterprise,

To respect human relations and build a happy workshop offering job satisfaction,

To deploy human capabilities fully and draw out infinite potential.

These aims are broader than is consistent with a narrow definition of quality as often
used in the West, and Circle activities reflect this. The members of the circle have
mastered statistical quality control and related methods and all utilize them to achieve
significant results in quality improvement, cost reduction, productivity and safety. The
seven tools of quality control are taught to all employees:
z

Pareto charts

Cause and effects diagrams

Stratification

Check sheets

Histograms

Scatter diagrams

Shewharts control charts and graphs.

All members of the circle are continuously engaged in self-and-mutual development,


control and improvement whenever possible, the circles implement solutions
themselves, otherwise they put strong pressure on management to introduce them.
Since management is already committed to the circles, it is ready to listen or act.
Circle members receive no direct financial reward for their improvements.
The Japanese experience of quality circles itself provides an insight into the problems
of implementation in the West. Strangely enough, however, many companies in the
West have attempted to minimize or even cover up the Japanese origins, apparently to
avoid cultural rejection on antagonism to "Japanese workaholics" grounds. Even in
Japan many quality circles have collapsed, usually because of managements lack of
interest or excessive intervention. However, many have worked. There are now more
than 10 million circle members there. The benefits are typically seen as being minor
from any one improvement introduced by a quality circle, but that added together they
represent substantial improvements to the company.
Perhaps more importantly, greater worker involvement and motivation is created
through:
z

An atmosphere where employees are continuously looking to resolve problems,

41
Basic Concepts of
Total Quality Management

42
Total Quality Service Management

Greater commercial awareness

A change of shopfloor attitude in aiming forever increasing goals.

Quality circles have been vigorously marketed in the West as a means of improving
quality. There seems to be agreement, however, that they cannot be used naively, and
take careful adoption for use in Western companies. Adoptions have been various and
of varying effectiveness; in some companies circles have been successful, or regarded
as such, in others they have failed. Many commentators, such as Philip Crosby, have
warned against the fashion for quality circles as a cure-all for poor employee
motivation or inadequate quality and productivity in either white-collar areas or on the
shopfloor. The senior American Quality Guru Joseph Juran, in particular, has gone
further, in throwing doubts on their likely effectiveness in the West at all where few
company hierarchies are permitted with executives trained in quality management.

2.8.5 W. Edwards Deming (1900-1993)


Known as the father of quality, Deming was a statistics professor at New York
University during the 40s. He studied for several years with Walter Shewhart; this was
the base of his contribution to quality. After World War II, Deming was involved in
assisting Japanese companies to reborn from their own ashes. His contribution was in
improving quality, by setting a 14 points principles which should be the foundation
for achieving quality improvements. Japanese companies applied extensively these
principles; today's power of Japan and quality of their products has a strong root in
this matter. Deming emphasized on the role of management in achieving quality. He
noted that around 15% of poor quality was because of workers, and the rest of 85%
was due to bad management, improper systems and processes. In his opinion,
managers should involve employees in solving the problems, not simply to blame
them for poor quality. Deming's 14 principles are:
z

Create constancy of purpose (short term reactions has to be replaced by long-term


planning),

Adopt the new philosophy (management should adopt his philosophy, rather than
to expect the employees to do that),

Cease dependence on inspection (it concerns to variation in other words, if there is


no variation, no inspection is needed because all products shows no defects),

Move towards a single supplier for any one item (working with several suppliers,
automatically involves variation in raw materials),

Improve constantly and forever (it refers to decreasing variation, as a key to better
quality),

Institute training on the job (another source of variation is the lack of training of
workers; train them properly to do a certain job, and they will do it with far less
variation),

Institute leadership (distinction between leadership and supervising),

Drive out fear (eliminate fear at worker's level to get their support for
improvements. Fear is counter productive),

Break down barriers between departments (here comes the concept of "internal
customer" which is found in TQM; a department is a supplier for next one. The
second one is the client for the first one),

Eliminate slogans (usually, it's not the employee who did it wrong, but it's the
system who allowed that. No need to create tension on worker, as long as the
system fails to prevent problems),

Eliminate management by objectives (as long as workers had to achieve an


established production level, quality will be a secondary target),

Remove barriers to pride of workmanship (bringing problems all the time to


worker's ears, will create a discomfort for them. Lower satisfaction of workers
equals a lower interest for doing good items),

Institute education and self improvement (education is an asset. Everyone has to


improve themselves),

Transformation is everyone's job (improvements exists at every level).

The most important book he wrote among other is Out of the Crisis in 1987. What is
relevant to this book along these 14 principles is that he initiated the movement
toward Total Quality Management, even he didn't used this expression. Nowadays,
there exists Deming Prize, introduced by JUSE (Japanese Union of scientists
Engineers); this prize is awarded annually for best proponent of TQM.

2.8.6 Dr. Genichi Taguchi (born in 1924)


Raised in textile town of Takamachi, Japan, Taguchi studied textile engineering. WW
II found him in Astronomical Department of navigation Institute. After several years
in Ministry of Public health and Welfare of Japan, where he met Matosaburo
Masuyama, a statistician who supported him, he was hired at Electrical
Communication Laboratory, a rival of Bell Laboratories. Here, Taguchi worked to
find ways of improving quality and reliability. Taguchi collaborated with Shewhart
and Fisher.
Taguchi's contribution to quality consists in what is called Taguchi Loss Functions,
also design of experiment to product design. His estimation was that 80% of all
defective items are caused by poor design. Therefore, emphasis should be on design
stage. Design of experiment is an engineering approach which is based on developing
robust design; this is a design which results in a product which can perform over a
wide range of conditions. In other words, it's easier to design a product which would
operate under a large range of conditions, than to control these conditions so that the
product to work as intended.
Loss function has implication to quality costs. Traditionally, if a product characteristic
falls outside specification limits, it will increase the cost of poor quality. However, if
that characteristic is closer to specifications and not to intended target, the quality of
that product is poorer, even if it stills satisfy the requirements. This may lead to lower
customer satisfaction. Taguchi proposed that as conformance values moves away from
the target, loss increases as a quadratic function. This means that smaller differences
from the target result in smaller costs.

2.9 STATISTICAL PROCESS CONTROL (SPC)


The application of statistical techniques to control a process; often used
interchangeably with the term statistical quality control.
Statistical process control (SPC) involves using statistical techniques to measure and
analyze the variation in processes. Most often used for manufacturing processes, the
intent of SPC is to monitor product quality and maintain processes to fixed targets.
Statistical quality control refers to using statistical techniques for measuring and
improving the quality of processes and includes SPC in addition to other techniques,
such as sampling plans, experimental design, variation reduction, process capability
analysis, and process improvement plans.
SPC is used to monitor the consistency of processes used to manufacture a product as
designed. It aims to get and keep processes under control. No matter how good or
bad the design, SPC can ensure that the product is being manufactured as designed

43
Basic Concepts of
Total Quality Management

44
Total Quality Service Management

and intended. Thus, SPC will not improve a poorly designed product's reliability, but
can be used to maintain the consistency of how the product is made and, therefore, of
the manufactured product itself and its as-designed reliability.
A primary tool used for SPC is the control chart, a graphical representation of certain
descriptive statistics for specific quantitative measurements of the manufacturing
process. These descriptive statistics are displayed in the control chart in comparison
to their "in-control" sampling distributions. The comparison detects any unusual
variation in the manufacturing process, which could indicate a problem with the
process. Several different descriptive statistics can be used in control charts and there
are several different types of control charts that can test for different causes, such as
how quickly major vs. minor shifts in process means are detected. Control charts are
also used with product measurements to analyze process capability and for continuous
process improvement efforts.

2.9.1 Benefits
z

Provides surveillance and feedback for keeping processes in control

Signals when a problem with the process has occurred

Detects assignable causes of variation

Accomplishes process characterization

Reduces need for inspection

Monitors process quality

Provides mechanism to make process changes and track effects of those changes

Once a process is stable (assignable causes of variation have been eliminated),


provides process capability analysis with comparison to the product tolerance.

2.10 STATISTICAL QUALITY CONTROL (SQC)


The application of statistical techniques to control quality. Often used interchangeably
with the term statistical process control, although statistical quality control includes
acceptance sampling, which statistical process control does not. It provides the
methods and tools for the manufacturing manager to improve quality, increase
productivity, and enhance the competitive position of the manufacturing line.
Proposes potentially controversial methods of performance appraisals, operation
certification, line qualification, vendor certification, and just-in-time manufacturing.
Statistical quality control provides the statistical techniques necessary to assure and
improve the quality of products. Most of the statistical quality techniques used now
have been developed during the last century. Basic steps in statistical quality control
methodology are represented in Figure 2.1, which also lists the output of each step.

45
Basic Concepts of
Total Quality Management

Figure 2.1: Statistical Quality Control

2.10.1 Advantage of Statistical Quality Control


1. When the quality of a product is tested by destructive testing, then 100% testing
will spoil all the products. Under statistical quality control very few products will
be destructed in testing.
2. It ensures control, maintenance and improvement in the quality standards.
3. It provides better quality assurance at lower inspection cost.
4. It reduces the wastage of time and material to the minimum. It reduces the
inspection and manufacturing cost and enhances profits.

2.11 COMPANY WIDE QUALITY CONTROL (CWQC)


CWQC is a system of activities to assure that quality products and services required
by customers are economically designed, produced and supplied while respecting the
principle of customer-orientation and the overall public well-being. These quality
assurance activities involve market research, research and development, design,
purchasing, production, inspection and sales, as well as other related activities inside
and outside the company. Through everyone in the company understanding both the
statistical concepts and methods, through their application to all the aspects of quality
assurance and through the repeating cycle of rational planning, implementation,
evaluation and action, CWQC aims to accomplish business objectives.
This definition will come as a surprise to people who consider that the Deming Prize
is just based on the application of statistical techniques to manufacturing processes.
Whereas the Baldrige Award and European Quality Award take a much deeper look at
customer satisfaction and service quality as excellence criteria, there is no doubt that
some of these principles are embedded in the Deming framework. The most recent
(1994) version of the framework has significant change of language away from
quality control to total quality management. It also introduces some of the features
of the Baldrige and EFQM frameworks, such as corporate social responsibility.

46
Total Quality Service Management

It is true, however, that the main strengths of the Deming Prize criteria are the focus
they have on top management leadership, process control, Kaizen improvement
activities and on future planning to ensure that the gains will be sustained. Kaizen is a
philosophy of continuous improvement of all the organizations employees, so that
they can make an incremental contribution to continuous improvement each day.
The framework looks specifically at the role and effectiveness of the senior
management team. The term control in Japanese implies management, and hence
Japanese quality control really means quality management. In the Western world we
have a different perception of the term quality control.
The purpose of the award, as first defined by JUSE, is:
To award prizes to those companies that are recognized us having successfully
applied Company-wide Quality Control based on statistical control and are likely to
keep it up in the future.
Consequently, criteria such as company policy and planning, results and future plans
are primarily concerned with quality assurance activities and quality results, especially
the elimination of defects.

2.12 TOTAL PRODUCTIVE MAINTENANCE (TPM)


A series of methods, originally pioneered by Nippondenso (a member of the Toyota
group), to ensure every machine in a production process is always able to perform its
required tasks so production is never interrupted.
Total Productive Maintenance is a new way of looking at maintenance, or conversely,
a reversion to old ways but on a mass scale. In TPM the machine operator performs
much, and sometimes all, of the routine maintenance tasks themselves. This
automaintenance ensures appropriate and effective efforts are expended since the
machine is wholly the domain of one person or team. TPM is a critical adjunct to lean
manufacturing. If machine uptime is not predictable and if process capability is not
sustained, the process must keep extra stocks to buffer against this uncertainty and
flow through the process will be interrupted.. One way to think of TPM is
"deterioration prevention" and "maintenance reduction", not fixing machines. For this
reason many people refer to TPM as "Total Productive Manufacturing" or "Total
Process Management". TPM is a proactive approach that essentially aims to prevent
any kind of slack before occurrence. Its motto is "zero error, zero work-related
accident, and zero loss."
TPM is a Japanese idea that can be traced back to 1951 when preventive maintenance
was introduced into Japan from the USA. Nippondenso, part of Toyota, was the first
company in Japan to introduce plant wide preventive maintenance in 1960. In
preventive maintenance operators produced goods using machines and the
maintenance group was dedicated to the work of maintaining those machines.
However with the high level of automation of Nippondenso maintenance became a
problem as so many more maintenance personnel were now required. So the
management decided that the routine maintenance of equipment would now be carried
out by the operators themselves (This is Autonomous maintenance, one of the features
of TPM). The maintenance group then focussed only on 'maintenance' works for
upgrades.
The maintenance group performed equipment modification that would improve its
reliability. These modifications were then made or incorporated into new equipment.
The work of the maintenance group is then to make changes that lead to maintenance
prevention. Thus preventive maintenance along with Maintenance prevention and
Maintainability Improvement were grouped as Productive maintenance. The aim of
productive maintenance was to maximize plant and equipment effectiveness to
achieve the optimum life cycle cost of production equipment.

Nippondenso already had quality circles which involved the employees in changes.
Therefore, now, all employees took part in implementing Productive maintenance.
Based on these developments Nippondenso was awarded the distinguished plant prize
for developing and implementing TPM, by the Japanese Institute of Plant Engineers
(JIPE). This Nippondenso of the Toyota group became the first company to obtain the
TPM certifications.
Implementation
TPM has five goals:
1. Maximize equipment effectiveness.
2. Develop a system of productive maintenance for the life of the equipment.
3. Involve all departments that plan, design, use, or maintain equipment in
implementing TPM.
4. Actively involve all employees.
5. Promote TPM through motivational management.
TPM identifies the 16 types of waste (Muda) and then works systematically to
eliminate them by making improvements (Kaizen). TPM has 8 pillars of activity, each
being set to achieve a zero target. These pillars are:
1. Focused improvement (Kobetsu-Kaizen): for eliminating waste.
2. Autonomous maintenance (Jishu-Hozen): in autonomous maintenance, the
operator is the key player. It involves daily maintenance activities carried out by
the operators themselves that prevent the deterioration of the equipment.
3. Planned maintenance: for achieving zero breakdowns.
4. Education and training: for increasing productivity.
5. Early equipment/product management: to reduce waste occurring during the implementation of a new machine or the production of a new product.
6. Quality maintenance (Hinshitsu-Hozen): This is actually maintenance for
quality. It includes the most effective quality tool of TPM: poka-yoke, which
aims to achieve zero loss by taking necessary measures to prevent loss.
7. Safety, hygiene, and environment: for achieving zero work-related accidents and
for protecting the environment.
8. Office TPM: for involvement of all parties to TPM since office processes can be
improved in a similar manner as well.
TPM Success Measurement - A set of performance metrics, which is considered to fit
well in a Lean/TPM environment, is Overall Equipment Effectiveness, or OEE.
Check Your Progress 3
Fill in the blanks:
1. ______________________ cost is expended to develop data requirements
and measurements.
2. The Quality Council (QC) is the focal point of the __________________.
3. Leadership in quality can only be accomplished by ongoing improvements
and through the active participation of all ___________________.
4. Quality is in its essence a way of managing the ____________________.

47
Basic Concepts of
Total Quality Management

48
Total Quality Service Management

2.13 TOTAL QUALITY CONTROL (TQC)


A system that integrates quality development, maintenance and improvement of the
parts of an organization. It helps a company economically manufacture its product and
deliver its services.
Total Quality Control (TQC) is not a new concept, nor was it invented by the
Japanese. The orginal book entitled 'Total Quality Control' was written by Armand
Feigenbaum, in 1951, where he noted the universal importance of quality to
customers:
"Quality is the basic customer decision factor for an explosively growing number of
products and services today--whether the buyer is a housewife, an industrial
corporation, a government agency, a department store chain or a military defense
program."
As a result, he proposed that quality be move out of the factory floor, where it mostly
lived then, and into the rest of the company. In his words:
"Quality is in its essence a way of managing the organization."
It was thus an extension of Quality Control (QC) to the totality of the whole company.
The term TQC was not, however, a term that sat well with American management, so
some kind soul converted it into TQM, or Total Quality Management. The American
Management described it as:
'A management philosophy embracing all activities through which the needs and
expectations of the customer and the community and the objectives of the
organization are satisfied in the most efficient and cost effective way by maximizing
the potential of all employees in a continuing drive for improvement.'

2.14 LET US SUM UP


Quality measurement should begin with a system for documenting non-conformances.
Every time an item fails a test, a purchased item is rejected, a statistically controlled
process exceeds its limits, or a product is returned from a customer, the nonconformance must be documented.
Quality costs help to show the importance of quality related activities to
management . They identify opportunities for quality improvement and establish
funding priorities by means of Pareto analysis. This analysis allows the quality
improvement program to concentrate on the vital few quality problem areas.
Once corrective action has been completed, the quality costs will measure the
effectiveness of that action in monetary terms. Quality improvement is synonymous
with a reduction in the cost of poor quality. Every amount saved on quality cost has a
positive effect on profits.

2.15 LESSON END ACTIVITY


Write a study note on the different types of costs of quality and its processes.

2.16 KEYWORDS
Total Quality Costs: Total quality costs are the sum of Prevention costs, Appraisal
costs, Failure costs, and Intangible costs.
The Life Cycle Model: In the life cycle model, the costs are grouped under different
phases of the life cycle of the product. Quality costs increase over time.

Quality: Defined as that aspect of things under which they are considered in thinking
or speaking of their nature, condition, or properties.
Aesthetics: How a product looks, feels, tastes or smells.
Durability: Useful life or life span of the product.
Persuasiveness: Good leaders are able to use their power and communication skills to
good use. They convert their power into influence.
Statistical Process Control (SPC): The application of Statistical Process Control
(SPC) involves using statistical techniques to measure and analyze the variation in
processes.
Total Quality Control (TQC): A system that integrates quality development,
maintenance and improvement of the parts of an organization. It helps a company
economically manufacture its product and deliver its services.
Statistical Quality Control (SQC): The application of statistical techniques to control
quality. Often used interchangeably with the term statistical process control,
although statistical quality control includes acceptance sampling, which statistical
process control does not.

2.17 QUESTIONS FOR DISCUSSION


1. Describe the quality process mode.
2. What are the various objectives of quality?
3. Describe the various costs of quality and its process.

Check Your Progress: Model Answers


CYP 1
1. Leadership is the ability to motivate people to make a total and voluntary
commitment to attain or exceed organizational goals.
2. Free rein leadership as the name suggests involves complete delegation of
authority. Subordinates themselves takes decisions.
CYP 2
1. The cost of Quality is defined as the sum of the costs that would not have
been required had everything been done right the first time.
2. Internal failure cost includes all the material and labor expenses that are lost
or wasted due to non-conforming or otherwise unacceptable work affecting
the quality of end products or service.
CYP 3
1. Information system costs
2. Total Quality Management (TQM) process
3. Employees,
4. Organization

49
Basic Concepts of
Total Quality Management

50
Total Quality Service Management

2.18 SUGGESTED READINGS


Sundara Raju, S.M., Total Quality Management: A Primer, Tata McGraw-Hill, 1995.
Sreenivasan, N.S and V. Narayana, Managing Quality Concepts and Tasks, New Age
International, 1996.
Kume, H., Management of Quality, Productivity Press, 1996.
Dennis, Lock, Handbook of Quality Management, 1992.
Hammer, M. and Spect, Business Process Reengineering, 1995.
ISQUA Journal.
MCB Journal of Quality Management.

51
Total Quality Management

UNIT 1

UNIT II

52
Total Quality Service Management

53
Total Quality Management

LESSON

3
TOTAL QUALITY MANAGEMENT
CONTENTS
3.0

Aims and Objectives

3.1

Introduction

3.2

Definition

3.3

3.2.1

TQM is composed of three Paradigms

3.2.2

As Defined by the International Organization for Standardization (ISO)

3.2.3

A Comprehensive Definition

Process Steps in TQM


3.3.1

TQM as a Foundation

3.4

TQM in Manufacturing

3.5

The Principles of TQM

3.6

3.7

TQM Framework to Quality Improvement


3.6.1

Leadership

3.6.2

Customer Focus

3.6.3

Teamwork

3.6.4

Measurement

3.6.5

Benchmarking

3.6.6

Continuous Improvement

3.6.7

A Triple Level Hierarchical Organization

3.6.8

Operations on IQ Customer Needs and Metrics

The Infoqual Methodology


3.7.1

Objective of the Methodology

3.7.2

Methodology's Users and Use Scenarios

3.7.3

Tools

3.8

Let us Sum up

3.9

Lesson End Activity

3.10

Keywords

3.11

Questions for Discussion

3.12

Suggested Readings

3.0 AIMS AND OBJECTIVES


After studying this lesson, you should be able to:
z

Understand the TQM Concept

Attempt an analysis of the improvement process

The principles of the total quality management

Know about the implementation and measurement of TQM

54
Total Quality Service Management

3.1 INTRODUCTION
Total Quality Management (TQM), a buzzword phrase of the 1980's, has been killed
and resurrected on a number of occasions. The concept and principles, though simple
seem to be creeping back into existence by "bits and pieces" through the evolution of
the ISO9001 Management Quality System standard.
"Total Quality Control" was the key concept of Armand Feigenbaum's 1951 book,
Quality Control: Principles, Practice, and Administration, in a chapter titled "Total
Quality Control" Feigenbaum grabs on to an idea that sparked many scholars interest
in the following decades, that would later be catapulted from Total Quality Control to
Total Quality Management. W. Edwards Deming, Joseph Juran, Philip B. Crosby, and
Kaoru Ishikawa, known as the big four, also contributed to the body of knowledge
now known as Total Quality Management.
The American Society for Quality says that the term Total Quality Management was
used by the U.S. Naval Air Systems Command "to describe its Japanese-style
management approach to quality improvement." This is consistent with the story that
the United States Navy Personnel Research and Development Center began
researching the use of statistical process control (SPC); the work of Juran, Crosby, and
Ishikawa; and the philosophy of W. Edwards Deming to make performance
improvements in 1984. This approach was first tested at the North Island Naval
Aviation Depot.
Companies who have implemented TQM include Ford Motor Company, Phillips
Semiconductor, SGL Carbon, Motorola and Toyota Motor Company.
The latest changes coming up for the ISO 9001:2000 standards "Process Model"
seem to complete the embodiment. TQM is the concept that quality can be managed
and that it is a process.
Total Quality Management (TQM) is a management strategy aimed at embedding
awareness of quality in all organizational processes. TQM has been widely used in
manufacturing, education, government, and service industries, as well as NASA space
and science programs.

Total Quality Management (TQM)


Total = Quality involves everyone and all activities in the company.
Quality = Conformance to Requirements (Meeting Customer Requirements).
Management = Quality can and must be managed.
TQM = A process for managing quality; it must be a continuous way of life; a
philosophy of perpetual improvement in everything we do.

3.2 DEFINITION
3.2.1 TQM is composed of Three Paradigms
z

Total: Involving the entire organization, supply chain, and/or product life cycle

Quality: With its usual Definitions, with all its complexities (External Definition)

Management: The system of managing with steps like Plan, Organize, Control,
Lead, Staff, provisioning and the likes.

3.2.2 As Defined by the International Organization for


Standardization (ISO)
"TQM is a management approach for an organization, centered on quality, based on
the participation of all its members and aiming at long-term success through customer
satisfaction, and benefits to all members of the organization and to society."

One major aim is to reduce variation from every process so that greater consistency of
effort is obtained.

3.2.3 A Comprehensive Definition


TQM Total Quality Management is the organization wide management of quality. We
know that management consists of planning, organizing, directing, control, and
assurance. Then, one has to define "total quality". Total quality is called total because
it consists of 3 qualities: Quality of return to satisfy the needs of the shareholders.

3.3 PROCESS STEPS IN TQM


TQM comprises four process steps, namely:
1. Kaizen: Focuses on "Continuous Process Improvement", to make processes
visible, repeatable and measurable.
2. Atarimae Hinshitsu: The idea that "things will work as they are supposed to" (for
example, a pen will write).
3. Kansei: Examining the way the user applies the product leads to improvement in
the product itself.
4. Miryokuteki Hinshitsu: The idea that "things should have an aesthetic quality"
(for example, a pen will write in a way that is pleasing to the writer).
TQM requires that the company maintain this quality standard in all aspects of its
business. This requires ensuring that things are done right the first time and that
defects and waste are eliminated from operations.

3.3.1 TQM as a Foundation


TQM is the foundation for activities, which include:
z

Meeting Customer Requirements

Reducing Development Cycle Times

Just in Time/Demand Flow Manufacturing

Improvement Teams

Reducing Product and Service Costs

Improving Administrative Systems Training

3.4 TQM IN MANUFACTURING


Quality assurance through statistical methods is a key component in a manufacturing
organization, where TQM generally starts by sampling a random selection of the
product. The sample can then be tested for things that matter most to the end users.
The causes of any failures are isolated, secondary measures of the production process
are designed, and then the causes of the failure are corrected. The statistical
distributions of important measurements are tracked. When parts' measures drift into a
defined "error band", the process is fixed. The error band has usually a tighter
distribution than the "failure band", so that the production process is fixed before
failing parts can be produced.
It is important to record not just the measurement ranges, but what failures caused
them to be chosen. In that way, cheaper fixes can be substituted later (say, when the
product is redesigned) with no loss of quality. After TQM has been in use, it's very
common for parts to be redesigned so that critical measurements either cease to exist,
or become much wider.

55
Total Quality Management

56
Total Quality Service Management

It took people a while to develop tests to find emergent problems. One popular test is
a "life test" in which the sample product is operated until a part fails. Another popular
test is called "shake and bake", in which the product is mounted on a vibrator in an
environmental oven, and operated at progressively more extreme vibration and
temperatures until something fails. The failure is then isolated and engineers design an
improvement.
A commonly-discovered failure is for the product to disintegrate. If fasteners fail, the
improvements might be to use measured-tension nut drivers to ensure that screws
don't come off, or improved adhesives to ensure that parts remain glued.
If a gearbox wears out first, a typical engineering design improvement might be to
substitute a brushless stepper motor for a DC motor with a gearbox.

3.5 THE PRINCIPLES OF TQM


The Principles of TQM are as follows:
1. Quality can and must be managed.
2. Everyone has a customer and is a supplier.
3. Processes, not people are the problem.
4. Every employee is responsible for quality.
5. Problems must be prevented, not just fixed.
6. Quality must be measured.
7. Quality improvements must be continuous.
8. The quality standard is defect free.
9. Goals are based on requirements, not negotiated.
10. Life cycle costs, not front end costs.
11. Management must be involved and lead.
12. Plan and organize for quality improvement.
Check Your Progress 1
1. Define TQM concept.
.
.
2. Define use of TQM in manufacturing.
.
.

3.6 TQM FRAMEWORK TO QUALITY IMPROVEMENT


Total Quality Management (TQM) is a management approach aimed at satisfying all
customer requirements, needs and expectations using a Continuous Improvement
approach. The TQM principles can be grouped into the following practical and
common sense concepts:
1. Customer Focus (internal and external customers)
2. Leadership (management role changes to active leadership)

3. Teamwork (multi-disciplinary teams, including involvement of customers and


suppliers)
4. Continuous Improvement of processes
5. Measurement (the improvement process is based on quantitative and qualitative
metrics)
6. Benchmarking as a driver to improvement in a competitive environment.
The framework is outlined in Figure 3.1. Its components are described in the
following section.
z

The need to improve the quality of a certain portion of the company information is
identified, and an improvement process is INITIATED (1). This is activated by
any of the following information stakeholders: customers (users), providers,
solutions' suppliers, MIS organization, or company management.

A TEAM (2) is formed. It includes representatives of the information customers


(users), information providers, information suppliers, information organization
and other stakeholders.

The team uses the CONTINUOUS IMPROVEMENT cycle of PDCA (Plan Do


Check Act) as the backbone of the improvement process.

In the PLAN phase (3), the customer needs are examined and translated into IQ
dimensions and then into IQ METRICS specifications (4), which become a
critical part of the information solution specification.

The team BENCHMARKS (5) IQ performance in external organizations/


functions/ information domains. This allows the team to set world - class and at
the same time realistic and achievable targets and has a motivational effect on the
team.

In the DO (6) phase, information specifications are translated into a solution. IQ


targets, expressed as quantitative METRICS, are designed into the solution.

In the CHECK (7) phase, the team uses the METRICS to compare solution
performance with a pre-defined target. Gaps between customer needs/expectations
and actual IQ are identified.

In the ACT (8) phase, activities to close these gaps are agreed and implemented.

A new PDCA cycle begins (9), in order to further improve the same information
or handle a different portion of the information used by the company.

The process contributes to the organization IQ metrics and dimensions


KNOWLEDGE BASE (10). IQ dimensions, metrics' and performance
specifications are documented in order to be used in future PDCA cycles.

The process is CUSTOMER FOCUSED (11), meaning that satisfaction of the


customer needs serves as the overall objective of the framework. The customer
plays an active role throughout the process.

The LEADERSHIP (12) role is to deploy an IQ culture in which the


improvement process can flourish. Its responsibility includes: resource provision,
improvement process initiation, example setting in demanding, using and
providing high quality information.

57
Total Quality Management

Deploy IQ
culture

58
Total Quality Service Management

Figure 3.1: TQM Framework to IQ

TQM concepts in context of IQ improvement


This section describes briefly the role of each concept in the proposed IQ
improvement process. A case study about Project Status Information accompanies this
section in order to demonstrate the relevance of each TQM concept to IQ. Project
Status Information should provide a clear and updated picture of the status of all
project activities. The information therein is critical to all of the project stakeholders.
In the case study, all opportunities to employ the TQM concepts to IQ were missed. It
is argued that the lack of disciplined IQ approach has resulted in unsatisfactory
results, namely no improvement in the quality of the Project Status information.

3.6.1 Leadership
Concept: management should demonstrate leadership by:
a) recognizing IQ as a strategic issue,
b) Allocating the appropriate resources to IQ improvement- capital, management
attention, vision and priorities.
c) Setting an example as the first to require, use or provide better quality
information. This role is the responsibility of all management levels, from the
company president down to team leaders.

3.6.2 Customer Focus


The modern quality paradigms emphasize the importance of customer satisfaction as a
driver to the improvement process. IQ improvement efforts should focus on the
identification of users, specification of their true IQ needs, and fulfillment of these
requirements. The voice of the customer should lead the entire improvement
process.

3.6.3 Teamwork
Specification of IQ needs and metrics, as well as fulfillment control are based on
teamwork operation. All stakeholders are included in the team. A typical team hosts
representatives from the information users' group, information providers, information
solutions' suppliers, information organization and other relevant parties. A certain
level of management participation is required as well. All the above functions are
responsible for higher quality of information.

3.6.4 Measurement
IQ metrics are used to translate the information user needs into measurable
specifications. These specifications should be designed into the information solution.
Once the solution is provided, IQ metrics are used to asses the solution's actual
performance against the requirements, and effectively against user needs. Due to the
special importance of this concept to the InfoQual methodology.

3.6.5 Benchmarking
In order to achieve "world class" IQ, it is necessary to explore what IQ levels are
achieved in the "external world". We refer here to other functions in your
organization, other organizations in your industry or even other industries and
professional domains. Benchmarking supports the IQ improvement team in setting
high but realistic targets that energize the process. Benchmarking is also a useful tool
to discover new and practicable metrics and methods to measure IQ.

3.6.6 Continuous Improvement


In the field of IQ, quality improvement efforts are not a one time effort. There are two
aspects to this concept: cultural and methodological.
a) The cultural aspect: In a culture that promotes IQ continuous improvement, each
member deals with the following questions: What is the meaning of high quality
information? How is it defined and measured? Do I require, obtain and use high
quality information? Do I provide such information? What must I do in order to
get or provide better information?
b) The methodology aspect: The cultural aspects of IQ are beyond this paper's
scope. However, it should be noted that IQ culture cannot be achieved by having
the company president stating "Information is critical, lets improve it
continuously." Rather, it should be deployed via a series of practicable
improvement activities. Implementing a methodology such as InfoQual can help
create the common language and behavioral habits of an IQ culture. The InfoQual
methodology is based on the PDCA (Plan Do Check Act) cycle, a popular model
to organize the improvement process (Hari, 1995). The cycle is based on 4 phases:

PLAN: Improvement objectives are identified, scope is agreed, metrics are


specified and targets are set.

DO: Here the actual improvement activities are conducted (e.g., introduction
of a new information solution)

CHECK: The performance of the new solution (i.e., the quality of


information) is checked against the pre-defined metrics.

ACT: The actions required to close the gaps between the required and actual
IQ performance are designed and conducted.

Once completed, the cycle is reiterated in order to achieve further improvements.

59
Total Quality Management

60
Total Quality Service Management

3.6.7 A Triple Level Hierarchical Organization


A triple level hierarchical organization is proposed here (figure 3.2).
z

Level A: User satisfaction, as the ultimate criteria to information quality. User


satisfaction can and should be measured directly, through customer satisfaction
surveys (Bailey and Pearson, 1983).

Level B: IQ Users Needs, which reflect users' expectations. They are specified by
the user, in his words (voice of the customer). "Ease of Use" is a common
example. When there are many stated customer needs, they can be grouped in
order to allow easier manipulation.

Level C: IQ Metrics, which translate the customer needs into technical


characteristics of the desired information solution. Ideally, but not in all cases,
they can be directly quantified (e.g., Number of Steps Required to Complete
operation X).

Figure 3.2: Hierarchical organization of IQ dimensions

3.6.8 Operations on IQ Customer Needs and Metrics


The InfoQual methodology is designed to support the team in defining, prioritizing
and performing other operations on these two object types, namely IQ Users Needs
and IQ Metrics. These operations are listed in Table 3.1.
Table 3.1: Operations on IQ needs & metrics
Operation

Description

Output Examples

EXTRACT needs

Find out what are the users' IQ


needs, expressed in his words (voice Timeliness, Relevancy, Accuracy
of customer)

TRANSLATE needs

Translate abstract
concrete metrics.

needs

into

Need= Accuracy
Metrics= error rate, precision

DEFINE metrics

Define how the metric will be


Error rate, defined as % of documents
measured (definition, unit, scale,
with at least one erroneous field
data source)

ANALYZE metrics

Explore interdependencies between Tradeoff between


metrics (tradeoffs, synergy)
Response time

Completeness

&

PRIORITIZE metrics Rank metrics by importance, In application X importance order is:


according to user needs and other Response time, error rate, format
considerations
standardization

Contd

MEASURE current
Measure the current IQ performance Response time= 8 days (average)
performance
BENCHMARK
performance

Explore IQ performance in other


In company Y: Response time= 4 hours.
organizations.

SET
values

Determine target values

TARGETS

NORMALIZE
metrics

Response Time= 3 hours

Each metric has different scale and Performance Scale:


unit. This operation creates a
common scale, in order to enable 5-outstanding 4-good,
the evaluation of the overall IQ
performance (integrated IQ index) 3-acceptable 2-poor

COMMUNICATE
Communication
of
metrics
performance
and information to all stakeholders, Graphical report
targets
including management

Check Your Progress 2


Fill in the blanks:
1. ___________________
translate the customer needs into technical
characteristics of the desired information solution.
2. Total Quality Management (TQM) is a management approach aimed at
satisfying all customer requirements, needs and expectations using a
____________________________.

3.7 THE INFOQUAL METHODOLOGY


This section sets the objective of the Info Qual methodology, identifies its users and
presents its tools.

3.7.1 Objective of the Methodology


The objective is to facilitate the PLAN and CHECK phases of an IQ improvement
project. The goal is to enable superior completion of the customers IQ needs and
expectations.
InfoQual is an organized improvement process in which all customer needs are
identified and translated into IQ metrics that are tracked throughout the project.
The scope of the methodology is limited to the IQ "WHAT" issues: what IQ needs are
to be treated, and what are the required performance levels. It does not specify HOW
these improvements can be achieved.

3.7.2 Methodology's Users and Use Scenarios


In order to design a practicable methodology, it is essential to define its potential
users. Then, the special needs and concerns of each group must be identified.
Appropriate implementation of the methodology involves a teamwork operation, with
representatives from several groups. Each can initiate the process, facilitate and lead
it, or play an active team role. In the following section, the potential users are defined:
z

Information users: the ultimate customers of the improvement process. When


facing an IQ problem, they should initiate an improvement project in order to
resolve it.

Information providers: can initiate an improvement process in order to improve


the quality of the product they provide to external or internal customers.

61
Total Quality Management

62
Total Quality Service Management

Information solution suppliers: Can use the methodology in order to identify the
critical IQ factors and performance required for a winning information product.

MIS function: can use the methodology to aid the rational selection of solutions
to their internal customers.

Management: can initiate an IQ mapping process in order to identify and


prioritize information improvement projects.

IQ researchers: can use the methodology to investigate global or domain-specific


IQ dimensions and metrics.

3.7.3 Tools
The process used in InfoQual is based on the TQM framework to IQ improvement. IQ
needs and metrics are at the centre of the framework. Three tools to manipulate these
objects are integrated into the TQM framework in order to form the methodology.
These tools are QFD, Metrics database and IQ graphical presentation. Table 3.2 maps
these tools onto InfoQual operations. Then, the following sections briefly describe
these tools.
Table 3.2: InfoQual tools and operations
Operation

Tool

Notes

EXTRACT needs

QFD

This is the first stage of a QFD workshop.

TRANSLATE needs

QFD,
DATABASE

DEFINE metrics

METRICS DATABASE

The database facilitates the precise definition of the


selected metrics (units, scales, etc.).

ANALYZE metrics

QFD

This is where the QFD methodology is used to


analyze the correlation between needs and metrics
(positive strong, positive medium, positive weak,
negative strong, negative medium, negative weak).

PRIORITIZE metrics QFD

The QFD process prioritizes the metrics according to


their overall contribution to customer needs
satisfaction.

MEASURE current Standard


performance
tools
BENCHMARK
performance

METRICS

The database is used as reference to available and


pre-defined metrics in order to facilitate selection of
IQ metrics reflecting the customer needs.

Measurement tools should be selected according to


measurement the metric. The metric definition in the database
specifies the appropriate measurement tools (i.e.,
customer satisfaction surveys, SPC charts, etc.).

METRICS DATABASE

Benchmarking data on some metrics is included in


the database.

SET
TARGETS
QFD
(target values)

The stakeholders use the QFD data (benchmarks,


priorities etc.) in order to rationally set target values
for each metric.

NORMALIZE
metrics

The database specifies normalization scales and


formulas for each metric

METRICS DATABASE

COMMUNICATE
IQ
GRAPHICAL
Used throughout the improvement project cycle life
performance
and
PRESENTATION
targets

3.8 LET US SUM UP


TQM based framework is designed for IQ improvement projects. Six TQM concepts
are integrated into an organized process that translates IQ customer needs into IQ
metrics and ensures their fulfillment. Metrics and measurement of information quality

are at the heart of the process. These metrics are manipulated through a set of
operations like selection, prioritization and presentation. Three tools that facilitate
these operations are integrated into the TQM framework, creating the InfoQual
methodology.
The methodology represents an explicit and manageable approach to the improvement
of information quality. It suggests that the stakeholders should invest meaningful
effort in explicitly defining and tracking IQ needs and metrics, using a formal and
structured process. More research is required in order to test its usefulness. The
following questions arise: what is the cost of implementation? How can effort be
minimized, in order to make it acceptable to all stakeholders? What are the direct
effects on information quality? What are the side effects and benefits? In what
information domains is the methodology more practical?
Many quality approaches are added on top of the regular business processes without
eliminating or replacing any existing activity. The pre-quality way hangs around with
some extra work in the form of the new way .Such redundancy must be avoided.
Therefore, the InfoQual methodology is designed to be integrated into common and
existing operational approaches to information systems specifications. The next phase
of this research will test the practicality of InfoQual in real-life implementations.

3.9 LESSON END ACTIVITY


Write a note on the TQM framework to quality improvement.

3.10 KEYWORDS
Total Quality Management (TQM): is a management approach aimed at satisfying all
customer requirements, needs and expectations using a Continuous Improvement
approach.
Metrics: translate the customer needs into technical characteristics of the desired
information solution.

3.11 QUESTIONS FOR DISCUSSION


1. Explain the TQM framework to quality improvement.
2. Determine the steps in TQM process.
3. Define the TQM and explain its principles.
4. What is QFD?

Check Your Progress: Model Answers


CYP 1
1. TQM is the concept that quality can be managed and that it is a process.
2. Quality assurance through statistical methods is a key component in a
manufacturing organization, where TQM generally starts by sampling a
random selection of the product.
CYP 2
1. METRICS
2. Continuous Improvement approach

63
Total Quality Management

64
Total Quality Service Management

3.12 SUGGESTED READINGS


Bailey, J. E., Pearson, S. W., Development of a Tool for Measuring and Analyzing Computer
user Satisfaction, Management Science.
Delen, G.P.A.J. and Rijsenbrij, D.B. B., A specification, Engineering and Measurement of
Information Systems Quality.
Drucker, P.E., The Information Executives Truly Need, Harvard Business Review.
Fox, C., Levitin, A. and Redman, T., The Notion of Data and its Quality Dimensions,
Information Processing & Management.
Greene, R.T., Global Quality A Synthesis of the World Best Management Methods, 1993,
New York, ASQC Quality Press.
Hari, A. (editor), The Quality Terms Lexicon, 1995, Israel, Quality and Excellence Center,
Prime minister Office (Hebrew text).
Rolph, P. and Bartram, P., The Information Agenda: Harnessing Relevant Information in a
Changing Business Environment, 1994, London, Management Books.

LESSON

4
CUSTOMER - SUPPLIER RELATIONSHIP
CONTENTS
4.0
4.1
4.2
4.3
4.4

4.5
4.6

4.7

4.8

4.9
4.10
4.11
4.12

4.13
4.14
4.15
4.16
4.17

Aims and Objectives


Introduction
Important Factors Affecting the Decision to Make or Buy
Ten Principles to Ensure Quality Products and Services
Relationship Development
4.4.1
Inspection
4.4.2
Training
4.4.3
Team Approach
4.4.4
Recognition and Reward
Future Trends in Purchasing and Supply Management
Quality Function Deployment [QFD]
4.6.1
Metrics Database
4.6.2
IQ Graphical Presentation
4.6.3
Processes must be Managed and Improved
4.6.4
Planning a Change
Quality Function Development (QFD)
4.7.1
Factors for Successful Implementation of QFD
4.7.2
Steps for Successful Implementation of QFD
Quality Circles
4.8.1
Key Elements of Quality Circles
4.8.2
Benefits of Quality Circles
4.8.3
Impediments to the Effective Working of Quality Circles
4.8.4
Quality Circles and the Trade Unions
4.8.5
Quality Circles in India
4.8.6
Areas of Success Due to Quality Circle activities in BHEL
Voice of the Customer
Team and Motivation in TQM
4.10.1 Groups
Implementation of TQM
4.11.1 Commitment throughout the Organization
Barriers to TQM Implementation
4.12.1 Organizational Barriers
4.12.2 Behavioral Barriers
Let us Sum up
Lesson End Activity
Keywords
Questions for Discussion
Suggested Readings

65
Customer - Supplier Relationship

66
Total Quality Service Management

4.0 AIMS AND OBJECTIVES


After studying this lesson, you should be able to:
z

Explain the Suppliers relationship concept

Understand need for relationship

Learn about the concept of quality circles

Know the implementation and barriers to TQM process.

4.1 INTRODUCTION
Suppliers have strong and important impacts on the products, services work processes
and distribution. Suppliers are at the beginning of the chain of process steps for
product or service. The quality of the raw material will have an impact on the quality
of the end product.
Purchases account for more than 60% costs to most companies and they are the source
of more than 50% of the quality problems. Therefore, it is essential that the delivery
and quality of suppliers be actively managed.
The make or buy decision is one of the fundamental and strategic decisions that the
top management has to take. Theoretically every item currently purchased can be
considered for making and every item that is being made currently can be considered
for purchase from outside.
Make or buy decisions are complex, time consuming and affect many parts of the
organizations. Majority of them are made on the basis of cost, but there are many
non-cost factors that are important.
Make or buy decisions are made by the organizations when
z

The organization introduces new products

There is fluctuation in the demand of its products

The organization carries out value analysis or cost reduction programme

There is a deterioration in the quality of the product/material supplied

The supplier is not keeping his delivery commitments

There is scarcity of funds for investments in additional plant or equipment.

4.2 IMPORTANT FACTORS AFFECTING


THE DECISION TO MAKE OR BUY
The important factors affecting the decision to make or buy are:
z

Volume of production

Expected casts of buying or making etc.

Capacity utilization

Integration of production system

Availability of Manpower with the required skills and competency

Availability of the required materials

Availability of the needed facilities

Protection of patent right

Fixed cost

Forward or backward integration

Availability of infrastructure

Availability of competent suppliers or vendors

Quality and reliability of vendors

Competitive Advantage based on the critically of the item

All these factors need to be considered and analyzed in terms of cost,


Quality, delivery, safety, acquisition of technical knowledge etc. under different
aspects like
z

Financial: The make decisions usually involve investments in plants, machinery,


equipment etc., unless they are being used to make use of the capacity already
available. Buying decision generally will be associated with variable cost only.
Since the bottom line is finance, a thorough and comparative analysis is made and
qualifying all factors in monetary terms to arrive at the decision to make or buy.

Technological: Technological aspects looks on the

Feasibility of making/ buying

Accessibility of the technology needed

Availability of the competency required

Product life cycle

Change of technology etc.

Marketing: This depends on the demand, margin, competition, sales potential etc.
for the item in the market

Purchasing: This aspect is influence

Availability of the items or components for the product

Delivery commitments

Quality levels

Cost

Transportation costs and time

Competency and reliability of vendors etc.

Strategic: This aspect takes into considered of the overall objectives of the
organization giving due importance to economy, secrecy and flexibility.

Intangible aspects: Environmental factors. Acceptance by labour unions, Helping


vendors, Goodwill etc., are some of the of the intangible aspects.

Customers and suppliers have the same goal of satisfying the end user. Every one is a
supplier as well as a customer. Both the supplier and customer have limited resources.
Hence they must work together to maximize their return on investment.
Customer Satisfaction is the prime goal of all business or job situations. External
suppliers are at the beginning of the chain of process steps for the product or service.
Each step is a supplier for the next process step. There is a long chain of internal
suppliers and customers as we trace from the external supplier before the finished
product or service reaches the ultimate external customer.
To satisfy and delight our customer, it is essential that our suppliers provide us with
quality parts and services. This includes both internal and external suppliers.

67
Customer - Supplier Relationship

68
Total Quality Service Management

This is because at each stage we can add value only what has come to us. If there is a
problem in the product that we receive, we cannot add value to it, or it may go to our
customer at least with the same problem.
The nine primary activities needed for purchase are:
1. Define product and program quality requirements,
2. Evaluate alternative suppliers,
3. Select suppliers,
4. Conduct joint quality planning,
5. Cooperate with the supplier during the execution of the contract,
6. Obtain proof of conformance to requirements,
7. Certify qualified suppliers,
8. Conduct quality improvement program as required, and
9. Create and use supplier quality ratings.
In modern industrial production, the interdependence of buyers and suppliers has
increased dramatically. The supplier becomes an extension of the buyers organization
to a certain extent.

4.3 TEN PRINCIPLES TO ENSURE QUALITY PRODUCTS


AND SERVICES
The ten principles to ensure quality products and services and to eliminate
unsatisfactory conditions between customer and supplier suggested by Ishikawa are:
z

Both supplier and customer are equally responsible for the control of quality.

Both supplier and customer must be independent and respect each others
independence.

Customer is responsible to provide the supplier the correct and clear requirements
so that the supplier is able to understand the exact requirements of the customer.

The supplier is responsible to provide the quality desired by the customer and
must submit necessary data on customers request.

There must be a non-adversarial contract agreement between customer and


supplier with respect to Quality, Quantity, Price, Method of delivery and Payment
terms.

This contract between the customer and supplier must also spell out the method of
settlement of any disputes that might arise in an amicable way.

Both customer and supplier must decide jointly the methods to evaluate the
quality of the product or service to the satisfaction of both parties.

Both the customer and supplier must exchange information continuously for
improving the product or service by using multifunctional teams etc.

Both supplier and customer must perform business activities of procurement,


production and inventory planning, clerical works, and systems to ensure and
amicable relationship between them.

The best interest of the end user must be in the mind of the customer and supplier
in their business transactions.

The way to be sure that the supplier will provide quality goods and services is to form
customer-supplier partnership with him. The long-term objective should be to develop

a relationship with a supplier based on trust. A long-term relationship between


purchaser and supplier is necessary for good best economy.
Most procurement managers value suppliers who are capable of fulfilling their
companys needs. They recognize the relevance of trust, satisfaction and commitment,
but some other factors also count.
Very often there is an asymmetry between the beliefs of the suppliers and the needs of
the customers. This frustrates both participants and prevents the relationship from
further development.
Most customer companies, desperate for cost reductions, squeeze costs out of
suppliers with no quid pro quo. There is no mutual trust or help on either side. Worst
of all, carefully built relationships have been set back by the evil of electronic bidding.
Since supplier relationships vary from company-to-company, the challenge is to
accommodate the differences while managing each opportunity. The key word is
Relationship. Relationships mean collaboration, which in the end leads to providing
better performance.
Check Your Progress 1
1. Define external suppliers.
.
.
2. What is buyers and suppliers relation in modern industrial production?
.
.

4.4 RELATIONSHIP DEVELOPMENT


To achieve a long-term relationship it is important that both parties are inherently
stable, that management is of a high caliber and that there are mutual objectives.
An important aspect of an alliance is that the sales team of the supplier is not just
asked to deliver the product on time, he is also required to understand in great detail
the customers application of the product.
The main supply objectives are Quality, Quantity, Delivery, Price, and Service. The
activities that are to be identified and responsibilities assigned for achieving these
objectives including the first 6 objectives already discussed are as under:
1. Defining the product and its quality requirements
2. Deciding as to make or buy
3. Evaluating alternate suppliers
4. Selection of suppliers
5. Creating and utilizing supplier ratings
6. Certifying qualified suppliers
7. Conducting joint quality planning
z

Economic Planning optimizing quality costs and buying value rather than
conformance to specifications

Technological planning consists of the following elements

Agreement of the performance requirements

69
Customer - Supplier Relationship

70
Total Quality Service Management

Quantification of quality, reliability and maintainability requirements

Preparation of process control plan

Definition of special tasks to be done by supplier

Seriousness classification of defects

Establishments of sensory standards

Standardization of test methods and test conditions.

Establishment of sampling plans

Establishment of quality level

Establishment of Identification and trace ability system

Establishment of timely response and alarm system

8. Cooperating with the supplier during the execution of the contract


z

Evaluation of the initial samples of product

Design information and changes

Surveillance of supplier quality

Evaluating delivered product

Action on nonconforming product

Improvement of supplier quality

9. Obtaining the proof of conformance to requirements


10. Conducting quality programmes as required.
To achieve customer satisfaction it is important to have some form of customer
supplier alliance with the motivation lying not necessarily in the short term, but in the
projected long-term benefits derived from the skills of the supplier and the strengths
of the customer.
Customer supplier alliances can demand a significant investment in resources but the
benefits can be mutually beneficial. To achieve a profitable and successful customersupplier alliance the following criteria should be met:
z

Common grounds for entering into an alliance,

Commitment,

Competency of people,

Agreement on the format of the alliance and

Good communication

To maintain and develop the relationship into higher levels the following areas also
need to be addressed.
z

Inspection

Training

Team Approach

Recognition and Reward

4.4.1 Inspection
Inspection is done to confirm that the product supplied is as per requirement.
Inspection is to be reduced and finally eliminated in about five years. These can be
done in four phases as given below:
z

Tightened: The supplier and customer do both 100% inspection of the critical
characteristics of items. When the supplier gains confidence it goes to the next
phase.

Sampling: In this phase the supplier uses Statistical process control for the
process using control charts and process capability. The customer does audit
using R and D sampling methods.

Audit: The supplier continues with the use of statistical process control of the
process. He also initiates his own auditing. The customer now has complete
confidence in the supplier and customer performs only the identity checks.

4.4.2 Training
Training is also imparted to the supplier. This will help him to understand the
requirement of the customer. The training may be provided at the suppliers place or
at the customers place. Such training can improve the quality of the product. Further
it will strengthen relationships between the supplier and customer.

4.4.3 Team Approach


Suppliers should be involved in quality improvement teams. They should be consulted
during the development of a new product. Suppliers can offer valuable insights. They
can suggest what will and what will not work. They can also bring the benefit of their
experience with other customers. Such team effort can take the relationship to greater
heights.

4.4.4 Recognition and Reward


Suppliers need to be recognized and reward for their efforts. That would motivate
them to be committed. It could be in the form of preferred category of suppliers with
its rewards. Letter of appreciation and recognition must be sent to the suppliers on a
regular basis. This can be taken the form of plaque that can be kept in a prominent
place by the supplier.

4.5 FUTURE TRENDS IN PURCHASING AND SUPPLY


MANAGEMENT
z

Greater involvement in TQM

More suppliers will offer ancillary services, like storage, accounting, etc.

Design engineering and purchasing capitalize on their potential synergy

Supplier development single sourcing JIT

Trust electronic data interchange with major suppliers

International sourcing will experience slower, or no, growth

Core competency greater focus on design and assembly

Consortium buying

71
Customer - Supplier Relationship

72
Total Quality Service Management

4.6 QUALITY FUNCTION DEPLOYMENT [QFD]


QFD (Quality Function Deployment) is a structured process to design products or
services based on the customer needs. A detailed description of the method is beyond
the scope of this paper. It is given, for example, in a classic article that has uncovered
the beauty and rationale behind this Japanese method. During the process, the design
team members walk through the elements of a matrix called "The House of Quality".
This method executes many of the operations on performance metrics. In particular, it
is strong in translating the customer needs into concrete product attributes. The
method facilitates the identification of tradeoffs between attributes and also allows
their prioritization. Therefore QFD was selected to perform IQ needs and metrics'
manipulation.
Example:
Glasgow Gun Company Example
The following fictional example will help to explain the processes for combining the
requirements of separate groups into a unified voice of the customer:
The Glasgow Gun Company manufactures rifles. They market primarily to 3 different
consumer groups: the U.S. military, U.S. civilians, and various U.S. police
departments. In addition to manufacturing rifles, they also manufacture rifle scopes
(both infrared and traditional), gun cases, trigger locks, rifle racks, ammunition, and
other rifle accessories.
In speaking with their business executives, their chief priorities for their A Class
rifle line breaks down as follows:

Note that the first requirement has nothing to do with any external consumer groups,
but is rather a purely internal initiative. In fact, this initiative might cause the company
to do things that would conflict with the wants and desires of consumer groups. For
example, in an effort to increase accessory sales, the company might make
modifications on their rifles that require the use of their own proprietary scopes (even
though certain customers may prefer Bushnell or other scope manufacturers
equipment).
The companys second business requirement (Comply with U.S. Federal & State
regulations) does not reference a consumer of Glasgows goods either. However, it
does refer to a customer of sorts who has the ability to impose requirements that can
stop Glasgow from being able to sell their product to other consumer groups. The
following table lists some of the government requirements that Glasgow has to keep in
mind when producing rifles and ammunition for general civilian ownership. Since
none of these regulations are any more important (or any less-enforceable) than
another, each of them is granted the same relative weighting.

73
Customer - Supplier Relationship

The third through fifth Business Requirements in the first table are essentially rating
the relative priority of different consumer groups for Glasgow. Imagine that Glasgow
surveys each of the different customer groups and comes back with the following lists
of requirements:

4.6.1 Metrics Database


In QFD, it is common to use brainstorming techniques in order to identify attributes
(IQ metrics in our case). This exercise becomes very difficult when dealing with
abstract needs related to the information field. How would you measure "Information
shareability" or "Relevance" for example? The challenge is to specify a metric that is
relevant, significant and measurable. In many QFD cases, unsatisfactory metrics are
used, leading to sub-optimal results. Thus, it makes sense to create a mechanism that
documents IQ metrics once the improvement project is completed. In future
improvement projects, these metrics can be extracted and reused.
The proposed company-wide database holds a record for each successful metric that
was specified and used in IQ improvement projects. Each record includes complete

74
Total Quality Service Management

information on the metric in order to support its implementation. Indexing mechanism


supports the searching operation.
The metrics database does not replace the necessary team discussion devoted to
metrics' identification during the QFD process. Rather, it supports this discussion by
suggesting candidate metrics, shortening the time invested on this phase and, most
importantly, improves the quality of the selected metrics. Similar idea is presented in a
research listing about 180 candidate data quality attributes. These are used to stimulate
thinking by a design team that specifies data quality requirements. It is further
suggested that the same approach can apply to an inter-company IQ metrics' database.
The concept is outlined in Figure 4.1.

* Correlation to IQ need X
* Benchmarks (values +
context)

(Phase:
metric
specificat
ion)

Figure 4.1: IQ Metrics Database

4.6.2 IQ Graphical Presentation


Information on IQ performance should be effectively communicated within the
improvement team, as well as to external functions such as management. It is
necessary to report four values for each IQ metric:
z

baseline performance (measured before the implementation of the improved


solution)

benchmarks values

target values

actual performance, once solutions are implemented

Furthermore, it is desired to visualize an index of the integrated quality of


information. A graphical presentation, based on spider charts, is selected. This
presentation can be produced automatically from the values stored in the QFD's
matrix.

75
Customer - Supplier Relationship

Figure 4.2: IQ Spider Chart

4.6.3 Processes must be Managed and Improved


Processes must be managed and improved! This involves:
z

Defining the process

Measuring process performance (metrics)

Reviewing process performance

Identifying process shortcomings

Analyzing process problems

Making a process change

Measuring the effects of the process change

Communicating both ways between supervisor and user

4.6.4 Planning a Change

What are the


causes effect
relationships?

Figure 4.3: Planning a Change

76
Total Quality Service Management

Table 4.1: TQM Process Improvement and Problem Solving Sequence

DO
(IMPLEMENT
THE CHANGE)

PLAN (PLAN A CHANGE)

DEFINE
THE
PROBLEM

IDENTIFY
POSSIBLE
CAUSES

EVALUATE MAKE
POSSIBLE A
CAUSES
CHANGE

1. Recognize
that what you
are doing is a
"PROCESS"

6."BRAINSTORM" 8. Determine
what is causing the the
problem.
relationship
between
7. Determine what cause and
2. Identify the past data shows.
effect
commodity
o Frequency
o Scatter
being
distribution
diagrams
processed.
o Pareto charts
o Regression
- Process
o Control charts
analysis
Inference
- sampling
9. Determine
what the
3. Define some
process is
measurable
doing now
characteristics
o Control
of value to the
charts
commodity.
- sampling
4. Describe the
"PROCESS"
o Process Flow
Analysis's
o Flow charts
o List of steps

CHECK
(OBSERVE
THE
EFFECTS)

ACTION
(EMBED THE
FIX INTO
THE
PROCESS
FOR GOOD)

TEST
THE
CHANGE

TAKE
PERMANENT
ACTION

10. Determine
what change
would help

Your
knowledge
of the process

Scatter
diagrams

Control Charts
- sampling

Pareto analysis
****Then make
the change.

5. Identify the
"Big" problem
Brainstorming
o Checklists
o Pareto
analysis

4.7 QUALITY FUNCTION DEVELOPMENT (QFD)


Quality in Japan can be seen to have evolved through seven stages. These seven
stages in increasing order of quality levels.
z

Product,

Process,

Systems,

Humanistic,

Society,

Cost-oriented, and

Quality function development

QFD is the mechanism to achieve primary objective of any manufacturer of bring new
products to the market faster than the competition, with lower costs and improved
quality. It is a team-based management tool in which customer expectations are used

to drive the product development process. It focuses on implementing business


strategies and tactics especially lean thinking.
QFD is multi-disciplinary tool. It requires marketing, design, production and sales to
work together. It ensures that the needs of the customer are deployed into the product
design. The analysis uses a graphic method to portray the information in the form of a
matrix. The matrix looks like a house with a peaked roof. For this reason it is
sometimes called the House of Quality.
QFD was developed by Prof. Yoji Akron and Prof. Shigeru Mizuno in 1966 to show
the connections between true quality, quality characteristics and process
characteristics and to reduce the growing distance between producers and users in
todays industrial society. It links the needs of the customer with marketing, design,
development, engineering, manufacturing and service functions. It can be used for
service and software products as well.
QFD enables a business to bring a new product to the market faster. The product is
likely to address the requirements of the target market. Thus it helps the organization
to build market share and stay ahead of the competition. While it provides a method
for showing where trade offs must be made, it does not take away the need for
exercising technical and commercial judgment to make the trade offs.
Traditional quality systems aim at minimizing negative quality. The best can be
achieved is zero defects. This is not competitive when all the players are good.
Eliminating defects alone does not create value.
Only by maximizing positive quality such as ease of use, fun, luxury etc can create
values. QFD provides a structured approach to quality the relative importance of these
values.
QFD is a planning tool used to fulfill customer expectations. Market Research is a
prerequisite to QFD as it is impossible to consistently provide that will attract
customers unless there is very good understanding of what they want. Market
Research is the process of understanding:
z

What the customer wants?

How important these benefits are? and

How well different providers of products that address benefits are perceived to
perform?

QFD usually focuses on implementing business strategies and tactics especially lean
thinking. It extends the, measurement concept from implementation on the shop floor
to the design of the whole production process. Conflicting characteristics or
requirements that are identified early in the QFD process can be resolved before
production.
QFD is a disciplined approach to product design, engineering and production and
provides in-depth evaluation of a product. It is particularly the less tangible customer
requirements such as responsiveness and individualized attention. It makes invisible
requirements and strategic advantages visible, and then allows prioritizing and
delivering on them.

4.7.1 Factors for Successful Implementation of QFD


Factors for successful implementation of QFD are:
z

Commitment of senior management to make QFD a priority.

Understanding the concept and terms used in QFD

Commitment to make decisions that are based upon customer requirements

77
Customer - Supplier Relationship

78
Total Quality Service Management

Setting clear priorities for QFD activities

Allocation of resources for execution of market research and Technical


Competitive Assessment etc.

Giving of QFD training to employees

Creation of cross-functional team who have commitment for participation.

QFD is really a common sense process. It often is perceived to be very complex


because it deals with so much data and complex issues. Some practitioners believe
that QFD is the House of Quality a matrix for mapping the voice of the customer into
the voice of the engineer.
Some practitioners call any matrix a House of Quality. The application of the QFD
process is an art that varies somewhat from practitioner to practitioner and hence QFD
has many formats.

4.7.2 Steps for Successful Implementation of QFD


Quality Function Development consists of four main steps:
z

Identify the customers vital requirements for the product or service and translate
them into design requirements.

Develop a service blueprint of an elegant, effective and efficient delivery process

Evaluate alternative designs

Implement the newly designed process for delivery of the product or service.

A comprehensive QFD would include at least the deployments of:


1. Quality
2. Functions
3. Reliability
4. Concepts
5. Manufacturing
6. Cost
7. Kansei
8. Gemba
9. Next generation
Critical to Quality requirements (CTQs) are determined first. Then improvements
targets are set. CTQs can then be determined in sequence for the various components
of the product, the processes to make the components, and the process controls.
QFD, as applied under Kaizen and within total quality control, is by far the most
highly developed form of integrated product and process development in existence.
An organization that correctly implements QFD can improve engineering knowledge,
productivity, and quality and reduce costs, product development time, and engineering
changes.
QFD has helped organizations like 3M; Ford Motor Co. and AT&T improve customer
satisfaction, reduce product development time, and reduce start-up problems.
QFD is applied in the early stages of the design phase so that the customer wants are
incorporated into the final product. Furthermore, it can be used as a planning tool as it
identifies the most important areas in which the effort should focus in relation to our
technical capabilities.

4.8 QUALITY CIRCLES


Quality Circle is a participative philosophy woven around Quality Control and
Problem solving at the grass root level. Employer normally takes the initiative for the
same by setting aside a room for the sole use of the circle, equipped with noticeboards, flip charts, audio-visual equipment, and so on.
Quality circles consistent of around 4-12 people from the same work area, who hold
1-2 hour meetings voluntarily on a regular basis to solve their work-related problems.
Meetings are held in paid time and the circle leader is often the supervisor of the work
group involved.
Teamwork among the human resources is a critical factor in performance
effectiveness of any Organization. Quality circles were the first step to develop teams
as permanent parts of organizations. Dr. Shigeo credited quality circle activities for
the quality improvement in Japan.
The quality circles started with the objectives of improving quality of services, good
working conditions and job satisfaction to all employees, reducing stress, strain and
cost reduction. It recognizes the Fact that the workers know their job best. They can
better contribute in finding solutions to the routine work-related problems.
The main aim was to reduce human errors, enhance quality, inspire an effective
teamwork, increase employee motivation, leadership quality, communication building
and finally top develop greater safety awareness

4.8.1 Key Elements of Quality Circles


The key elements of Quality Circles are:
1. A people-Building Philosophy: In quality circles people know each other and
there is a feeling of togetherness. It inculcates group or teamwork.
2. Voluntary in Nature: As the membership is voluntary it is left to the members to
take advantage of it or not. It is the workers own initiative which makes him join
the group. It is a way of life, and a continuous process.
3. Participative nature: Everyone in the group Participates.
4. Encourages creativity: Quality circle infuses among its members confidence, a
Problem preventing and problem solving attitude. Hence people are able to
present their ideas freely.
5. Training is a must: Members need to be trained for using problem solving
techniques like Pareto diagram, cause and effect analysis, check sheets, etc.
6. Management Support: Quality circles require support from top management in
the form of advice and commitment.
7. Problems related to work: Problems have to be related to members own
department or work area.
Quality Circle has a progressive and systematic approach towards soling a problem
based on Identify, Select, Analyze and Solve using the following techniques.
1. Brain storming
2. Data collection
3. Pareto analysis
4. Cause and effect or Ishikawa Diagram.

79
Customer - Supplier Relationship

80
Total Quality Service Management

4.8.2 Benefits of Quality Circles


1. Changes in attitude at all levels.
2. Spreads of problem-solving ethic throughout the whole Organization.
3. Develops supervisory performance especially in the areas of man-management
and communication.
4. Optimum utilization of Human Resources.
5. Reduction of Absenteeism and Grievances.
6. Development of Quality Consciousness.
7. Encourages leadership quality and personal development.
8. Promote issues like Cost-reduction, Safety of workers and other Day-to-Day
work-related Problems.

4.8.3 Impediments to the Effective Working of Quality Circles


1. Lack of Management support
2. Lack of enthusiasm from employees and their rigid attitudes
3. Caliber of members and leaders of Quality circle.
4. Apathetic attitude of Trade unions
5. Structural defects and operational impediments
6. Lack of training to members as well as top management
7. Lack of planning and co-ordination when starting new projects
8. Running out of ideas to work on

4.8.4 Quality Circles and the Trade Unions


Quality circles do not threaten unions as their membership is voluntary and they
discuss only work related problems within a specific area. They can in a way bring
unity among workers due to better understanding and thus pave way for better
relationship with the union as well as between union and management.

4.8.5 Quality Circles in India


Professional bodies like the Quality Circle Forum of India and Indian Association for
quality and Reliability had been formed to create an awareness of quality circle
movement in India as early as in 1970s. The first National Convention on Quality
Circle was held in India in 1987.
Bharat Heavy Electricals Ltd., at Ramachandrapuram, Hyderabad Unit introduced the
first quality circle in India in January 1981. There are over 500 organizations that
have set up quality circles all over the country.

4.8.6 Areas of Success due to Quality Circle Activities in BHEL


1. Increased productivity and Production
2. Improved quality
3. Reduction in the percentage of absenteeism
4. Increased motivation and support from employees
5. Reduction in organizational hierarchies and red tapism.

4.9 VOICE OF THE CUSTOMER


QFD requires the development of knowledge of processes within the context of
customer definitions of quality, and integrates the application of this knowledge for
the improvement of quality.
Customer is not satisfied with elimination of defects alone. Customers perception of
quality also changes for the better over time. They want maximum of positive quality
such as ease of use, fun and luxury. This creates value.
QFD focuses on understanding customer needs, requirements or expectations and
interpreting them into specific plans to produce products to meet them. Customers
requirements are identified and documented in the customers own language. The
Voice of the customer is the term to describe these stated and unstated customer needs
or requirements.
Voice of customer data can be solicited or unsolicited. It may be quantitative or
qualitative. It can be structured or random.
The customer is familiar enough with the product that they can describe what they
like, dislike and what benefits they seek from the product. All customer requirements
are not of equal importance to the customer. They can prioritize the benefits they are
seeking and also give their perceptions of how well different competitors address the
benefits. The voice of the customer is captured in a variety of ways like: (1) Direct
discussion or interviews, (2) Customer Surveys, (3) Market Surveys, (4) Trade trails,
(5) Focus groups,
(6) Customer visits, (7) Trade visits, (8) Consultants,
(9) Observation, (10) Warranty data, (11) Customer complaints, (12) Field report, etc.
In QFD, Measures of compliance with the Customers Voice are monitored in order to
determine that the Product Development Process is defining the product correctly.
Because the products produced using a QFD process tie the products design to what
Customers want, these products tend o be very successful in the marketplace.
QFD provides a systematic method for unearthing the customers and using that
information into design requirements. It is employed to translate customer
expectations, in terms of specific requirements, into directions and actions, in terms of
engineering or technical characteristics that can be deployed through: (1) Product
planning, (2) Part Development, (3) Process Planning, (4) Production planning,
(5) Service industries.
QFD focuses on delighting the customer. It aims at delivering value by seeking out
both spoken and unspoken needs. It converts these needs into design targets, and the
same is communicated throughout the organization. It allows customers to prioritize
their requirements after comparison with the products and service of their competitors.
It directs to optimize those features that will bring the greatest competitive advantage.
When products are designed using customer needs, value and sales go up. When
start-up problems are reduced and cycle time is shortened, costs go down. Increased
sales and lower costs means greater profits. With QFD, VOC data is reduced into a
set of critical customer needs using techniques such as affinity diagram, function
analysis, etc.
QFD is designed top deploy customer input throughout the design, production,
marketing, and delivery facets of a given product or service. It is the only
comprehensive quality system aimed specifically at satisfying the customer.
It concentrates on maximizing customer satisfaction measured by metrics, such as
repeat business and market share. It is a structured approach that summarizes the
customer needs into a product planning matrix or house of quality.

81
Customer - Supplier Relationship

82
Total Quality Service Management

4.10 TEAM AND MOTIVATION IN TQM


The team concept continues to evolve and is recognized by many industry-leading
organizations as the key ingredient to increased productivity and reduced staff
turnover. Team Building means to develop the team and the individuals in it to be
stronger and work more closely as a unit.

4.10.1 Groups
In most organizations there are groups. Groups can be divided as under:
1. Strategic focus group/standing committees,
2. Project groups, and
3. Natural work groups.
1. Strategic focus groups and standing committees: These groups represent the
most sensitive and critical situation for facilitation. Strategic focus groups live a
short life, and work on a particular project that has a defined beginning and end.
These groups deal with the implementation of major organizational change, such
as Total Quality, Just in Time, World-class Manufacturing and the like.
2. Project groups: Project groups like strategic focus groups have a short life. They
have a single purpose, such as reduction of set-up time, or process improvements
of certain work operations. They can be called Quality Improvement Teams,
Process Improvement Teams, or Problem Action Teams.
Group members usually come from many functions. Supervisors and line workers
usually make up the group, and higher management often delegates the task o
them.
Because the problems they deal with are technical rather than
organizational, this type of group may need subject-matter knowledge in the
processes they are improving
3. Natural work groups: Natural work groups report to the same on a permanent
basis. These groups live a long time and have supervisors who are appraisal.
Because of these factors, facilitation provides special opportunities.
Unfortunately, the usual meeting management skills of charting, creating an
agenda and keeping the meeting focused on the task are not enough to take
advantage of this situation.
Team building involves assessing of a groups functioning, feedback of this
assessment to the group and its head, and problem solving by the group on the
issue raised. Team Building is a facilitated process consisting of the following set
of behaviors that helps a group:

Define its goals, roles and relationships;

Provide on-going feedback on its own functioning;

Improve how it works together;

Increase its capability.

Facilitation must define who their customers are, find out their needs, and delight
them. Facilitation is needed because the group needs a neutral third party to assure,
members follow group norms, and to provide impartial feedback on group processes
and management style. Behaviors such as charting, active listening, flowcharting,
problem solving they cannot do themselves. Knowledge of group dynamics,
organizational development and implementation of change.
A team involves the coordinated activities of two or more persons who are organized
cooperatively for the attainment of a recognizable organizational goal(s). TQM
implementation is accomplished through team building and problem solving. The

formation and effective functioning of teams is crucial to successful implementation.


Teams flourish when top management learns to walk what they talk.
Team building aims in combining and integrating the talents, skills and energy of
individual employees to solve problems and accomplish goals and objectives that may
be difficult or impossible to achieve by management or other individual efforts alone.
Some of the common characteristics in the definition of a team include:
z

More than one person,

An achievement of common goal, and

Coordination.

Teams are made up of individuals with diverse skills and talents. Each team member
has a clearly defined skill set that needs to be identified and measured against the skill
sets of other team members.
Some of the characteristics of a team are that a team is composed of a highly
communicative group of people. Poor communication means no team. A team must
have members with different backgrounds, skills and abilities, so that the team can
pool these things to be effective. A team with no diversity in it will be unlikely to
work in an innovative fashion. A team must have a shared sense of mission. Whether
it is a temporary work improvement team, or a branch, all members must share the
sense of mission. A team must have clearly identified goals. A team must be able to
gauge its success, and know what it is trying to accomplish.
In terms of direction, teams generally come in two categories, leader-directed and
self-directed.
The leader directed team has the following characteristics:
z

The agenda is set by the leader,

The meeting is led by the leader,

Tasks are delegated to team members,

Members are usually hand-picked based on expertise by the leader from the
various departments, and

The leader normally is an executive who heads a department or a senior manager


from within a specific department.

A self-directed team has following characteristics:


z

Members come from multiple areas of a system such as finance, development,


operations, marketing, sales, administration and others

Members are of varies skill levels and talents

The driving force is the internal leadership

Commitment of senior management is required but involvement on a regular basis


may not be required.

It is of crucial importance that the members within a team as well as the teams within
a system collaborate with each other. To create teams that value high collaboration is
a must.
Teams have proven to be more responsive to demands of a competitive market place
than traditional hierarchies. Teamwork involves the entire organization. The team
concept gives employees an opportunity to be involved in meaningful decisionmaking.

83
Customer - Supplier Relationship

84
Total Quality Service Management

The best results are obtained when people work together with a sense of commitment
to one another as well as to the organization. Teamwork is the essence of teams
where collaboration, cooperation and coordination among and within team members
are effective.
Building an effective team brings about tremendous improvements in employee
performance, satisfaction and retention. When employees begin working together as a
team, the company benefits from a corresponding increase in productivity, sales,
responsiveness, and overall customer satisfaction.
Teams that are empowered become the building blocks of truly empowered system.
Empowerment is based upon a trusting relationship.
Disagreements happen in even the best of teams, and sometimes theyre quite sharp.
Managing disagreements requires the active commitment of ll sides, especially the
winners. Team unity must be placed above short-term victory. Creatively managed,
they can become occasions for growth and learning.
Conflicts are not a disaster but an Opportunity. Effective teams seize on conflicts to
reinforce their on-going win-win ethic. They try to generate as many alternatives by
brainstorming. The more creative options available, the more likely the group is to
reach a mutual solution.

4.11 IMPLEMENTATION OF TQM


The implementation of total quality management is similar to that of other
decentralized control methods. In developing TQM, companies need to understand
how consumers define quality in both the goods and services offered. If a company
pays more attention to quality in its production process, fewer problems will occur
later when the product is in the consumer's hands. One way to measure product
performance and quality is through customer surveys, which can help managers
identify design or manufacturing problems.
According to quality consultant Armand V. Feigenbaum, the end user best defines
quality, which means that quality is open to subjective interpretations. Consumer
perceptions have to be changed if a company wants to change a product's quality
image. Extended service programs and improved warranties can help accomplish this
feat. As examples, Whirlpool Corporation promises that parts for all models will be
available for 15 years, and Mercedes-Benz provides technical roadside assistance after
service hours.
Another means of ensuring a commitment to quality after the sale is via a product or
service guarantee. Wal-Mart is known for its no-hassles return policy for any
productwith or without a receipt. Mail-order house L. L. Bean will replace a pair of
hunting boots purchased ten years earlier with new boots. Saturn automobile retailers
provide total refunds for vehicles within 30 days if the customer is not fully satisfied.
However, many companies are not willing to incur the short-run costs associated with
such guarantees.
Implementation of TQM in an organization requires:
1. Strategic leadership
2. Financial resources
3. Employee involvement and empowerment
4. Streamlining of operational activities
5. Commitment at the top-level management
6. Changing organizational structure to reduce bottlenecks of line and staff conflict

7. Developing a work culture for continuous learning and improvement so that it is


conducive to implementation of TQM.

4.11.1 Commitment throughout the Organization


To be effective, the TQM philosophy must begin at the top. From the board of
directors to the hourly line employees, TQM must be supported at all levels if the firm
is to realize any real improvements in quality. In addition to commitment from the
top, the organization must meet these requirements if TQM is to succeed:
1. A change in corporate culture about the importance of quality.
2. Forging of internal team partnerships to achieve quality, process, and project
improvements, and the creation of external partnerships with customers and
suppliers.
3. Audits to assure quality techniques.
4. Removal of obstacles to successful implementation, such as lack of time or money
in the short run.
Typically, two to ten years are needed to reap the benefits of a successful TQM
program.
Check Your Progress 2
Fill in the blanks:
1. QFD is a planning tool used to fulfill _________________.
2. _____________ is concerned with continuous improvement in organization
methods.
3. Project groups are called as _______________.

4.12 BARRIERS TO TQM IMPLEMENTATION


TQM is not just another fashionable management theory. It is not a quick fix to solve
the problems overnight. There are many barriers to implementing Total Quality
Management. They show themselves in all business sectors-manufacturing, services,
government and even education.
Therefore, it is important for all organizations to understand and avoid these barriers
both before and during TQM implementation. It takes a long time to build the
appropriate emphasis and techniques into the culture. Overemphasis on short-term
results and profits has to be avoided.
These barriers can be divided into two categories:
1. Organizational barriers
2. Behavioral barriers

4.12.1 Organizational Barriers


These are the most visible barriers of TQM implementation and are spread all over
organization.
1. Lack of Commitment by Top Management: The primary responsibility of TQM
rests with the top management. Therefore, there must be substantial commitment
by top management for TQM. This commitment must be manifest by the
management time and organizational resources they keep for implementation of
TQM. In some organizations, the quality initiative is delegated to an outside
expert. When top management commitment is missing, it passes on to other levels

85
Customer - Supplier Relationship

86
Total Quality Service Management

easily. All such organizations experience employee participation and interest in


TQM programs.
2.

Lack of continuous Training and Education: Lack of training is the next most
important obstacle. This gives rise to confusion about the various aspects of the
programme. This is like building walls and ceiling without laying the foundation.
Naturally, such a structure would collapse. Training and education is an ongoing
process for everyone in the organization. When senior management conducts the
training on the principles of TQM, it s effectiveness increases. Needs must be
determined and a plan must be developed to achieve those needs. They could be a
lack of training in group discussion and communication techniques, quality
improvement skills, problem identification, for problem solving affects
implementation of TQM.

3.

Improper Planning: Planning accounts for more than 50% of the job. Planning
works well all the concerned people are involved. TQM is no exception. TQM is
about empowerment of people and participative management. All constituents of
the organization should be the goal. Financial or sales goals take a back seat.

4. Inadequate use of empowerment and teamwork: TQM is all about teamwork,


participative management and empowerment of employees. However, working in
teams is an approach that has to be learned. The Team members need to have
proper training. Supervision must learn how to be effective coaches. Further
employees need to be empowered to take decisions that affect the efficiency of
their process. The lacks of these result in frustration.
5. Inability to change organizational culture: The organization must undergo
cultural change before teamwork can succeed. Individuals resist change. The
resistance has to be overcome. It is very difficult to change an organizations
culture and it takes time. It may take around five years for individuals to unlearn
the old ways and learn the new ways. Once they are accustomed to doing a
particular process it becomes the preferred way.
People change only when they want to and only to meet their own needs. Nobody
would change for the organization unless adequate reason is given and accepted
by him or her. Management must understand and utilize these basic concepts of
change. Further people must be moved from a state of fear to trust for accepting a
change.
Lack of effective communication and emphasis on short-term results are the main
reasons for this. Sufficient time has to be spent by organizations for planning for
the cultural aspects of implementing a TQM program.
6. Incompatible Organizational Structure and Isolated Individuals and
Departments: More often, the organizational structure may not be conducive to
team building. It can create differences between various departments and between
individuals. These differences may create implementation problems. Use of
multifunctional terms can help to rectify this. The whole organization has to be
made customer oriented to make it more responsive to customer needs. The
organization will have to be structured for the same.
7.

Ineffective Measurement Techniques and Lack of Access to Data and Results:


Effective Measurement acts as a booster to the improvements made. It would also
inspire and encourage the participants to achieve more on the hand and to rectify
and improve on the other hand. It is equally important that the progress is known
within a reasonable period of time. Other wise people loose interest and become
frustrated. Access to relevant and quick retrieval is necessary for this. Effective
decisions cannot be made in their absence.

8. Paying inadequate attention to internal and external Customers: The needs and
expectations of customers will be changing over time. There are internal suppliers
and internal customers. If we want to take care of the ultimate external customer,
it is essential that the internal customers enroute have to be properly attended to.
Organization needs to understand this through effective feedback mechanisms.
9. Failure to Continually Improve: One of the cardinal principles of TQM is
continuous improvement. This continuous improvement is a journey and not a
destination. A lack of continuous improvements of the process, product, and/or
service is bound to make the implementation a failure.
10. Apparent lack of business experience and knowledge: This aspect of continuous
improvement in all the activities of an organization implies continuous learning
and improving knowledge and experience. Every mistake is a valuable lesson in
experience. People have to upgrade not only their knowledge about the product
and process but also about customers perception changes.
11. Taking narrow dogmatic approach: Some organizations are determined to follow
the Deming approach or Juran approach or Crosby approach etc. It must be
remembered that the each of the quality gurus and other experts have made
valuable contribution. For TQM to be successful, it is imperative that organization
has to assimilate from all these philosophies and create a blue print for their
success.

4.12.2 Behavioral Barriers


Some people do not want the implementation of TQM in the organization the negative
attitude and dislike for it. This arises due to:
z

Attitudes

Lack of training needed

Management styles

Level of success and

Artificial organizational structure

Other important obstacles are:


z

Insufficient empowerment of workers

Lack of cross-functional, cross-disciplinary efforts

Lack of continuous training

Lack of proper delegation of responsibility and authority

Lack of cost-of-quality measurement, performance reporting and reward/formal


recognition systems

Emphasis on quick fixes and low-level reforms, short-term performance at the


expense of long-term improvements

Misdirected focus emphasis on the trivial many problems facing the company
rather than a critical few

Emphasis on internal processes to the neglect of external customer focused


results

Limitation of financial as well as human resources

87
Customer - Supplier Relationship

88
Total Quality Service Management

4.13 LET US SUM UP


Customer Satisfaction is the prime goal of all business or job situations. External
suppliers are at the beginning of the chain of process steps for the product or service.
Each step is a supplier for the next process step. There is a long chain of internal
suppliers and customers as we trace from the external supplier before the finished
product or service reaches the ultimate external customer.
To satisfy and delight our customer, it is essential that our suppliers provide us with
quality parts and services. This includes both internal and external suppliers.
This is because at each stage we can add value only what has come to us. If there is a
problem in the product that we receive, we cannot add value to it, or it may go to our
customer at least with the same problem.

4.14 LESSON END ACTIVITY


Write a note on the barriers to TQM implementation.

4.15 KEYWORDS
Suppliers: are at the beginning of the chain of process steps for product or service.
Quality Circles: are a participative philosophy woven around Quality Control and
Problem solving at the grass root level.
Team Building: means to develop the team and the individuals in it to be stronger and
work more closely as a unit.

4.16 QUESTIONS FOR DISCUSSION


1. Explain the concept of Customer Relationship.
2. How to develop the relationship with customer?
3. Explain the process of TQM implementation.

Check Your Progress: Model Answers


CYP 1
1. External suppliers are at the beginning of the chain of process steps for the
product or service.
2. In modern industrial production, the interdependence of buyers and
suppliers has increased dramatically. The supplier becomes an extension of
the buyers organization to a certain extent.
CYP 2
1. Customer expectations
2. TQM
3. Quality improvement Team.

4.17 SUGGESTED READINGS


Sundara Raju, S.M., Total Quality Management: A Primer, Tata McGraw-Hill, 1995.
Sreenivasan, N.S and V. Narayana, Managing Quality Concepts and Tasks, New Age
International, 1996.
Kume, H., Management of Quality, Productivity Press, 1996.
Dennis, Lock, Handbook of Quality Management, 1992.
Hammer, M. and Spect, Business Process Reengineering, 1995.

89
Customer - Supplier Relationship

91
Management Process - 1

UNIT 1

UNIT III

92
Total Quality Service Management

LESSON

5
MANAGEMENT PROCESS - 1
CONTENTS
5.0

Aims and Objectives

5.1

Introduction

5.2

Technical Systems Analysis in Service

5.3

Social Systems Analysis in Service

5.4

Controls in Service Organisation

5.5

Let us Sum up

5.6

Lesson End Activity

5.7

Keywords

5.8

Questions for Discussion

5.9

Suggested Readings

5.0 AIMS AND OBJECTIVES


After studying this lesson, you should be able to:
z

Understand concept of service in the organization

Learn about the processes in service organisation and their control

Know the various analysis of service

5.1 INTRODUCTION
Similarly to manufacturing organizations, service organizations are challenged to
continuous productivity improvement. Both in the case of globally operating and
competing companies as well as in locally operating public welfare organizations,
there is a need to make sure that service production is effective and efficient and that
resources are optimized, properly allocated and exploited. This means that a key target
for service organizations is the improvement of service operations productivity. This
poses different issues, such as in particular:
z

How to link the management of knowledge resources to the improvement of the


services quality and to the outcomes of service delivery?

How to measure service productivity when the output is intangible and cannot be
counted similarly to goods (physical products)?

Indeed, by definition, service is something intangible and its production is


fundamentally based on knowledge processes and resources. Managing service
production may require different approaches, models and tools than those designed for
manufacturing organizations. In order to explore how service operations productivity
can be improved, a particularly useful approach appears to be intellectual capital
management.

93
Management Process - 1

94
Total Quality Service Management

Intellectual capital has been an active research theme during the past decade.
Significant research efforts have been used to develop frameworks and tools for
understanding, analyzing, measuring and managing the intangible and knowledge
assets of organizations. There are many different services and service organizations,
and probably as many different ways to improve productivity. This issue aims to
investigate the contribution of the intellectual capital research stream to service
productivity improvement.
The unique qualities of serviceMany of the core processes of a service organization
are not linear and even processes which are repeated from one customer to the next
are typically tailored to specific customers and their unique expectations and
requirements. Service employees are often less interdependent with one another than
employees in manufacturing. And their activities do not always lend themselves to
collaborative or team approaches.
Servicerelated jobs can be more meaningful and whole in nature, inherently
providing service employees with greater skill variety, task identity, task significance,
autonomy and feedback than is characteristically found in manufacturing settings.
Even more routine service jobs, such as grocery or department store clerks or bank
tellers, are more meaningful and satisfying because they require a variety of
interpersonal skills to effectively interact with a diverse set of customers, involve
some level of decision-making and receive direct feedback from customers.
Work redesign in the service world is differentThese unique qualities mean that work
redesign efforts in service organizations must be approached from a different
perspective.
The true service organization cannot be effectively redesigned using either traditional
linear or non-linear socio-technical systems approaches. It requires an integration of
fundamental service quality principles and frameworks with traditional work redesign
structures and processes.
Work redesign in service, requires the application of some design principles unique to
service. In addition, there are some specific ways of approaching work redesign in
service organizations that differ from those used in other settings. The examples in
this lesson will help you to illustrate the usefulness of the approaches and improve the
redesign of work in service organizations.

5.2 TECHNICAL SYSTEMS ANALYSIS IN SERVICE


The non-linear and interactive characteristics of most service processes require a
different framework for the technical analysis phase of work redesign. The
participative or interactive nature of the customer's role in the service production and
delivery process requires a different way of analyzing process work flow and
variances.
Viewing the service provided by an organization as a series of customer interactions,
or moments of truth, provides a systematic structure for analyzing and designing the
service process.
The whole length of the service cycle can be surprising...In their stellar book, Service
America, Zemke and Albrecht explain that the composite of these moments of truth
make up what can be identified as the cycle of service. They define the cycle of
service as: "...a repeatable sequence of events in which various people try to meet the
customer's needs and expectations at each point. The cycle begins at the very first
point of contact between the customer and your organization...It ends, only
temporarily, when the customer considers the service complete."
This means that the cycle of service can begin with a customer seeing a billboard or
hearing about a positive or negative experience their friend has had with the

organization. It includes everything from visual impressions of a company's literature,


facilities and people, to the tone of voice the receptionist has over the phone, to the
amount of time a customer has to spend waiting to receive a service.
Looking at the whole cycle is keyThis cycle of service, or series of customer
interactions, becomes the framework for assessment during the technical analysis of a
service organization. By identifying the key customer interactions, assessing current
variances or gaps in performance, and mapping out the processes used to deliver these
key interactions, a service organization is able to design itself around its core purpose-meeting or exceeding customer expectations.
Here's a way of getting your arms around the process. Grappling with the entire cycle
of service can be an intimidating prospect. One way to manage this challenge is to
narrow the number of customer interactions being considered during technical
analysis. This can be accomplished in the following ways:
1. Identify the organization's critical customers: Many service organizations earn
80 percent of their income from 20 percent of their customers. Identifying this 20
percent and concentrating on the commonalties n their cycles of service can
greatly reduce the necessary focus of the technical analysis.
2. Identify the key interactions: Here again, the 80/20 rule is a good one to follow.
Identify those customer interactions which occur most frequently, have the
greatest impact on customer satisfaction, and are of greatest significance to the
organization's critical customers
3. Identifying and focusing on the organization's critical customers' key:
Interactions then allow you to determine which core processes will have the
greatest impact on these key interactions. These core processes are then analyzed
to identify performance gaps and opportunities for improvement.
Performance gaps...These are situations where core processes are performing below
required standards. An example of this would be a retail optical store consistently not
having glasses completed in the one hour time frame they have promised to their
customers
Areas of opportunity...These are situations where core processes are performing to
required standards, but standards are either misaligned with customer expectations or
have potential to be significantly raised. Until one chain of optical stores began
making and keeping a one hour pledge, other optical stores' next day, or next week,
delivery times were usually well within customer expectations.
Once the one hour pledge was made and kept by the competition, the traditional
standards quickly became misaligned with customer expectations. Information on
performance gaps and areas of opportunity becomes an important resource during the
design phase of the work redesign process.
Check Your Progress 1
1. Define service.
.
.
2. What are performance gaps?
.
.

95
Management Process - 1

96
Total Quality Service Management

5.3 SOCIAL SYSTEMS ANALYSIS IN SERVICE


Service is a people intense process and not one that is easily managed, as these two
management styles illustrate:
z

Many managers and supervisors attempt to control the organization's customer


interactions by controlling front line employees who interact with customers.
They have the illusion that they can be all places at all times to oversee, direct,
and monitor their employees' behavior, and thereby manage the cycle of service.

Other managers and supervisors futility attempt to regulate their employees'


behavior through complex policies and procedures which cover every possible
situation or circumstance that might arise.

Compliant employees can't give quality service: The attempt to control employees
results in an atmosphere of compliance. People comply to management directives, or
policies and procedures, out of fear, a sense of duty, or the desire for financial reward.
The problem with that approach is that the ambiguous, intangible service world
demands employees who use their minds and hearts to meet the ever changing needs
and expectations of their unique and very human customers and go the extra mile to
create moments of truth for the customer that ensure satisfaction and loyalty.
Empowered employees can give quality service: Front line people must be
empowered to make effective decisions, act in ways which will inspire customer
confidence and quickly resolve problems as they arise. They need to be directed and
guided through a clear strategy and an empowering culture that provides employees
with standards or guidelines for their decision making and actions.
What are the values now and what do we want them to be tomorrow...The intense
nature of the service process requires a thorough understanding of the shared values of
the current culture before initiating work redesign in service organizations.
Auditing the culture: An audit of the organizational culture, therefore, becomes a
critical piece during the social systems analysis phase of work redesign in a service
organization. It can be described as a three part process:
1. An organization's culture is assessed through interviews with key organizational
leaders, focus group sessions with additional employees and other data gathering
techniques.
2. This information is then analyzed to determine the key values which drive the
decision making and behavior of people in the organization.
3. These values are reviewed with members of the organization for validity and then
assessed to determine their impact upon organizational performance.
An insurance company culture audit...As a part of the social systems analysis
completed during the redesign of a large policy processing office of a major auto and
homeowners insurance carrier, design team members did an audit of the organization's
existing values.
Identifying current core values...Team members identified the five core values which
were dominating the decisions and behavior of the employees in the organization.
Identifying and understanding these core cultural values provided the design team
with valuable information. As the values were assessed, it became obvious that many
of them not only hindered front line employees' ability to meet or exceed customer
expectations, but were also potential barriers to implementing the redesign
recommendations. Following this analysis, key organizational leaders agreed upon a
new set of core values and guiding principles and then shared these with all
employees.

These new values and operating guidelines became design criteria for work done by
the design team during the rest of the redesign process.
Surveying employees about the climate, or culture...Understanding the current climate
of the organization is a key step in designing a high performing service organization.
Numerous research studies have shown that employees' feelings of satisfaction and
commitment are directly mirrored in their interactions with customers. When these
needs are met, they are free to focus on customer needs rather than their own. Another
way of stating this concept is: employees model the service they provide to customers
after the service they receive from the organization and its leaders.
To accurately describe and analyze the social systems in an organization, it is
important, therefore, to assess the satisfaction levels of the employees and the climate
they perceive is being supported, or created by their leaders. This type of assessment
highlights gaps between employees' current perceptions and those expected if the new
values were in place and provide important data for designing the new organization.
Check Your Progress 2
Fill in the blanks:
1. Service is considered as _______________ source.
2. The person who reports on the user organization's financial statements is
known as ___________________ .
3. The _____________ report on controls placed in operation.

5.4 CONTROLS IN SERVICE ORGANISATION


Consideration of Internal Control in a Financial Statement Audit, defines "internal
control" as a process effected by an entity's board of directors, management, and other
personneldesigned to provide reasonable assurance regarding the achievement of
objectives in the following categories:
z

Control environment

Risk assessment

Control activities

Information and communication

Monitoring.

Restricted-use report: is a "restricted-use" report intended for use by the service


organization, user organizations and user auditors. SAS no. 70 reports are not
appropriate for use by prospective customers.

Service organization: The entity (or segment of an entity) that provides services
to a user organization, which are part of the user's information system.

Service auditor: The auditor who reports on controls of a service organization that
may be relevant to a user organization's internal control as it relates to a financial
statement audit.

Service organization controls: Controls at a service organization that may be a


part of a user organization's information system in the context of an audit of the
user's financial statements. They do not include service organization controls that
are not relevant to a user organization's information system.

Type I report: (A report on controls placed in operation.) A service auditor's


report on (1) a service organization's description of controls that may be relevant
to user organizations' internal control as it relates to an audit of financial

97
Management Process - 1

98
Total Quality Service Management

statements, (2) on whether such controls were suitably designed to achieve


specified control objectives, and (3) on whether the controls had been placed in
operation as of a specific date.
z

Type II report: (A report on controls placed in operation and tests of operating


effectiveness. The service auditor's report addresses:

The same conclusions addressed in a Type I report, and

Whether the tested controls were operating with sufficient effectiveness to


provide reasonable, but not absolute, assurance that the control objectives
were achieved during the specified period.

User organization: The entity that has engaged a service organization and whose
financial statements are being audited.

User auditor: The auditor who reports on the user organization's financial
statements.

5.5 LET US SUM UP


Service is something intangible and its production is fundamentally based on
knowledge processes and resources. Managing service production may require
different approaches, models and tools than those designed for manufacturing organizations. In order to explore how service operations productivity can be improved, a
particularly useful approach appears to be intellectual capital management.

5.6 LESSON END ACTIVITY


Prepare a study note on different types of controls followed in the service
organization.

5.7 KEYWORDS
User organization: The entity that has engaged a service organization and whose
financial statements are being audited.
User auditor: The auditor who reports on the user organization's financial statements.
Service organization: The entity (or segment of an entity) that provides services to a
user organization, which are part of the user's information system.
Service auditor: The auditor who reports on controls of a service organization that
may be relevant to a user organization's internal control as it relates to a financial
statement audit.
Service organization controls: Controls at a service organization that may be a part of
a user organization's information system in the context of an audit of the user's
financial statements.

5.8 QUESTIONS FOR DISCUSSION


1. Explain the concept of service in the service organization.
2. What are the various analysis followed in service organization?

Check Your Progress: Model Answers


CYP 1
1. Service is something intangible and its production is fundamentally based
on knowledge processes and resources.
2. These are situations where core processes are performing below required
standards.
CYP 2
1. Intangible
2. Auditor
3. Type I report

5.9 SUGGESTED READINGS


Sundara Raju, S.M., Total Quality Management: A Primer, Tata McGraw-Hill, 1995.
Sreenivasan, N.S and V. Narayana, Managing Quality Concepts and Tasks, New Age
International, 1996.
Kume, H., Management of Quality, Productivity Press, 1996.
Dennis, Lock, Handbook of Quality Management, 1992.
Hammer, M. and Spect, Business Process Reengineering, 1995.

99
Management Process - 1

100
Total Quality Service Management

LESSON

6
THE SEVEN TOOLS OF QUALITY
CONTENTS
6.0
6.1
6.2
6.3

6.4

6.5
6.6
6.7

6.8
6.9

6.10

6.11
6.12
6.13
6.14
6.15

Aims and Objectives


Introduction
Check Sheet
6.2.1
Steps to Create a Check Sheet
Histograms
6.3.1
Steps in Constructing a Histogram
6.3.2
Uses of Histogram Chart
6.3.3
Examples of Typical Distributions
6.3.4
Limitations of Technique
Scatter Diagrams
6.4.1
Steps in Constructing a Scatter Diagram
6.4.2
Interpret the Data
6.4.3
Use of Scatter Diagram
Flow Charts
6.5.1
Steps for Creating a Flow Chart
Process Mapping
Cause and Effect Diagrams
6.7.1
Steps in Constructing a Cause and Effect Diagram
6.7.2
Uses of Cause and Effect Diagram
6.7.3
Advantages of Cause and Effect Diagram
Pareto Diagrams
6.8.1
Steps in Constructing a Pareto Chart
Control Charts
6.9.1
Steps for Developing Control Charts
6.9.2
Control Chart Properties
6.9.3
Patterns in Control Charts
Advanced Tools of Quality (Six Sigma)
6.10.1 Historical Overview
6.10.2 Origin and Meaning of the Term "Six Sigma Process"
6.10.3 Methodology
6.10.4 Implementation Roles
6.10.5 Quality Management Methods Used in Six Sigma
Let us Sum up
Lesson End Activity
Keywords
Questions for Discussion
Suggested Readings

101
The Seven Tools of Quality

6.0 AIMS AND OBJECTIVES


After studying this lesson, you should be able to:
z

Know different tools of quality assurance

Study the pros and cons of quality assurance

Learn about the advanced tools of quality assurance

6.1 INTRODUCTION
One of the basic principles of TQM is management by facts. Management by facts
call for decisions based on relevant data and appropriate analysis and not by
institution, gut feeling and experience.
Management cannot expect employees to effectively participate in problem solving
and continuous improvement programs (i.e. to be empowered) unless they are
provided training in how to address problems.
The seven tools of quality make it easy for the collection and analysis of the data for
management by facts. They can assist the quality professional in root cause analysis.
They help organizations understand their processes in order to improve them.
A picture can convey ideas better than many words. The seven tools of quality are the
cause-and-effect diagram, check sheet, control chart, flowchart, histogram, Pareto
chart, and scatter diagram. They are simple but powerful tools that can be of
significant value throughout the problem solving and continuous improvements
processes.
The seven classical tools for Quality and process improvements and their use are
given below:
Tool

Use

Check sheet

Tabulates frequency of occurrence

Histogram

Portrays the frequency of occurrence

Scatter Diagram

Helps determine if two variables are related

Flow chart

Flow charts are pictorial representations of a process. By flowcharts the


process down into its constituent steps, flowcharts can be useful in
identifying where errors are likely to be found in the system

Pareto Diagram

Visually portrays problems and cause in order of severity or frequency.


Helps determine which problem or cause to tackle first.

Control Chart

Shows if a process has too much variation

Cause and Effect Diagram

Portrays possible causes of a process problem. Helps determine root


cause.

These tools, like physical tools exist to help to do a job. Each of them is some form of
chart for the collection and display of specific kind of data. They make the data
collected usefully by making them as information that can be used for problem
solving and enhance decision-making. They keep track of the work done and can even
anticipate future performance and problems.

102
Total Quality Service Management

These tools can be used at various stages of problem solving as under:


Stage

Tools used

Flow chart

Process identification and objectives

II Measurements

Checks, histograms, Control Charts

III Identifying problem area

Flow charts, Pareto Analysis and Scatter diagram

IV Finding root causes

Cause and effect diagram, Scatter diagram

With the exception of process control charts, they do not require any knowledge of
statistics to be used effectively. And these tools are equally effective in both service
and manufacturing environments. Training in the use of these tools is often
incorporated into the early phases of employee empowerment training programs.
Each of these quality tools is simple and do not require any special theoretical
education to implement them. They organize data so nicely that the message can be
comprehended easily. These tools are usually used to complement each other, rather
than employed as stand-alone techniques.

6.2 CHECK SHEET


The check sheet is one of the seven tools of quality and is customized form, or tally
sheet, designed by the user. It is a data gathering and interpretation tool. It is a
simple data-recording device custom-designed by the user that allows him or her to
readily interpret the results.
It is defined as a simple data collection form consisting of multiple categories with
definitions. Data are entered on the form with a simple tally mark each time one of the
categories occurs. It is a tool used to ensure that all important steps or actions in an
operation have been taken. Checklists contain items that are important or relevant to
an issue or situation.
The check sheet is set up to accept that data vary easily and at the same time display
useful information. It is a special data collection form from which results can be
interpreted directly without additional processing. Number of non-confirming items
can be observed easily if we include information like specification limits.
The main purpose of check sheets is to facilitate the collection and analysis of data by
operating personnel carefully and accurately. Operators need to be trained and
empowered to use them.
Data should be collected in such a manner that it can be quickly and easily used and
analyzed. The form of the check sheet is individualized for each situation and is
designed by the project team.
A check sheet is s simple means of data collection. The most straightforward check
sheet is simply to make a list of items that you expect will appear in a process and to
mark a check beside each item when it does appear.
This type of data collection can be used for almost anything, from checking off the
occurrence of particular types of defects to the counting of expected item (e.g. the
number of times the telephone rings before being answered).
Check sheet is used to physically track one or more specific events or problems.
Usually one mark is made per occurrence. They are simple to use visually display the
data to reveal underlying patterns. They are used top find the frequency and location
of area of failure. A simple check sheet is given below:

III

IIII

III

IIII

IIII

IIII

III

IIII

IIII

IIII

IIII

IIII

IIII

II

103
The Seven Tools of Quality

II

IIII
Check Sheet

Creatively plays a major role in the design of a check sheet. It should be user-friendly
and, whenever possible, include information on time and allocation. Whenever
possible, check sheets are also designed to show location.

6.2.1 Steps to Create a Check Sheet


z

Clearly define the objective of the collection.

Determine other information about the source of the data that should be recorded,
such as shift, date, or machine.

Determine and define all categories of data to be collected.

Determine the time period for data collected and who will collect the data.

Determine how instructions will be given to those involved in data collection.

Design a check sheet by listing categories to be counted.

Pilot the check sheet to determine ease of use and reliability of results.

Modify the check sheet based on results of the pilot.

A check Sheet is used for:


z

Distinguishing between fact and opinion.

Gathering data about how often a problem is occurring.

Tips for constructing Sheets


z

Use Ishikawa diagrams or Brainstorming to determine categories to be used on the


check sheet.

Construct an operational definition of each category to ensure data collected is


consistent.

Make check sheet as clear and easy to use as possible.

Spend adequate time explaining the objective of the data collections to those
involved in recording the data to ensure the data will be reliable.

Data collected in this format facilitates easy Pareto analysis.

Check sheets are often confused with data sheets and checklists. Checklist is a tool
used to ensure that all important steps or actions in an operation have been taken.
Checklists contain items that are important or relevant to an issue or situation.

6.3 HISTOGRAMS
Histogram is a fundamental statistical tool of SPC. It is a very effective graphical and
easily interpreted method for summarizing data.

104
Total Quality Service Management

A histogram is a graphic summary of variation in a set of data. The pictorial nature of


the histogram lets people see patterns that are difficult to see in a simple table of
numbers.
A histogram is a graphical representation of individual measured values according of
frequency or relative frequency of occurrence. Hence, they are also known as
frequency distribution diagrams. It is a type of Bar Chart a graph where a discrete
variable (categories, items, ranges of data, etc.), on one axis (usually horizontal
X-axis) is compared to one or more values on the other axis.
Depending upon the particular variable, all of the data values may be represented.
Otherwise the values may be grouped into classes. The width of the bars are
proportional to the classes and the heights are proportional to the class frequencies.
The pictorial nature of histogram lets people see patterns that are difficult to see in a
simple table of numbers. It enables to find out useful information about the data, such
as:
z

The average (mean) of the data

The variation present in the data

The pattern of variation

Whether the process is within specifications

Histogram is useful tool for estimating the density (for random variables) or
probability mass function (for discrete random variables) of the population.
Histogram provides clues about the characteristics of the population from which the
samples are taken.
Before constructing frequency distribution one must determine the number of classes
to be used. Though this is purely arbitrary, too few or two many classes will not
provide a clear a picture as can be obtained with some nearly optimum number of
classes.
Sturges rule may be used as a useful guide to determine the optimal numbers of
classes (K) given by
K = the smallest integer greater than or equal to 1 + 3.332 Log(n)
Where K is the number of classes, Log is in base 10, and n is the total number of the
numerical values which comprise the data set.
Therefore, class width is : [highest value lowest value) / (1 + 3.332 Log (n)] where n
is the total number of item in the data set.

6.3.1 Steps in Constructing a Histogram


1. Collect and tabulate data on a process, product or procedure.
2. Calculate the range of the data by subtracting the smallest number in the data set
from the larges. This is the range. Call this value R.
3. Decide on the number of bars to be displayed in the histogram. This is the number
of classes. Call this number K. This number should never be less than four and
seldom exceeds 12.
4. Determine the fixed width of each class by dividing the range, R by the number of
classes K. Round off this to a number ending in a zero. Let this be i.
5. Create a table of upper and lower class limits.
6. Sort, organize, or categorize the data in the way it is done for check sheet. These
are the frequency counts and will be plotted on the Y-axis of the histogram.

7. Create the framework for the horizontal and vertical axes of the histogram. On
the horizontal axis plot the lower and upper limits of each class determined above.
The scale on the vertical axis should run from zero to the number greater than the
largest than the largest frequency count determined above.
8. Plot the frequency data on the histogram framework by drawing vertical bars each
class. The height of each bar represents the number or frequency of values
occurring between the lower and upper limits of the class.
9. Interpret the histogram for skew and clustering problems:
The shape shows the nature of the distribution of the data.
The central tendency (average) and variability are easily seen.
Specification limits can be used to display the capability of the process.
Example: The data below are the number of defectives pieces from 20 samples (each
containing 200 units): 48,49,50,46,47,47,35,38,40,42,45,47,48,44,43,46,45,42,43,47.
The largest number is 50 and the smallest is 35. Thus, the range, R = 15. Using 5
classes, so K=5. The interval width I = R/K = 15/5 = 3.
Making the lowest value as the lower limit, the lower limit for the first class 35.
Thus the first upper limit is 35 + 3 or 38. The second class will , have a lower limit of
38 and as upper limit of 41. The completed table (with frequencies tabulated) will
look like the following.
Lower Limit

Upper Limit

Frequency

35

38

38

41

41

44

44

47

47

50

Frequency

Class

Figure 6.1: Histogram Chart

6.3.2 Uses of Histogram Chart


A histogram is used for:
1. Making decisions about a process, product, or procedure that could be improved
after examining the variation.
2. Displays easily the variation the variation in the process.

105
The Seven Tools of Quality

106
Total Quality Service Management

3. Compare distributions.
4. Determine means and modes.
5. Identify population control limits mixtures, abnormally, or errors.
It is used for interpreting skew problems. Data may be skewed to the left or right. If
the histogram shows a long on the left side of the histogram, the data is termed left or
negatively skewed. If a tail appears on the right side, the data is termed right or
positively skewed. Decisions may need to be made to determine the appropriateness
of the direction of the skew.
It is used for interpreting clusters problems. Data may be clustered on opposite ends
of the scale or display two or more peaks indicating serious inconsistencies in the
process or procedure.

6.3.3 Examples of Typical Distributions


1. Normal
z

Depicted by a bell shaped curve

Most frequent measurement appears as center of distribution

Less frequent measurements taper gradually at both ends of distribution

Indicates that a process is running normally (only common causes are present

2. Bi-Modal
z

Distribution appears to have two peaks

Many indicate that data from more than process are mixed together

Materials may come from two separate vendors

Sample may have come from two separate machines.

3. Cliff-lake
z

Appears to end sharply or abruptly at one end.

Indicates possible sorting or inspection of non-conforming parts.

4. Saw-Toothed
z

Also commonly referred to as a comb distribution, appears as an alternating


jagged pattern

Often indicates a measuring problem

Improper gauge readings

Gauge not sensitive enough for readings.

5. Skewed
Appears as an uneven with values tapering to one side. The two types are skewed left
and skewed right.

6.3.4 Limitations of Technique


Histograms are limited in their use due to the random order in which samples are
taken and lack of information about the state of control of the process. Because
samples are gathered without regard to order, the time dependent or time-related
trends in the process are not captured. So, what may appear to be the central tendency
of the data may be deceiving.

Histogram gives no indication whether the process was operating at its best when the
data was collected. This lack of information on process control may lead to incorrect
conclusions being drawn and, hence, inappropriate decisions being made.
Histograms are effective only when the data is representative of typical process
conditions and the sample size is large enough to provide good conclusions.
Histograms are only effective for data that come from a process that is in a state of
statistical control (because trends can be masked).
Inspite of all these limitations the histograms simplicity of construction and ease of
use make it an invaluable tool in the elementary stage of data analysis.
Check Your Progress 1
1. Define check sheet.
.
.
2. What is a histogram chart used for?
.
.

6.4 SCATTER DIAGRAMS


A Scatter Diagram is the simplest of the seven tools and is used to interpret data by
graphically displaying the relationship between two variables. It is the graphical
component of regression analysis.
A common diagram of this type usually displays points representing the observed
value of another variable. It is a plot of two variables that can be used to identify any
potential relationship between them. The shape of the scatter diagram indicates the
type of relationship. It cannot determine the cause of such a relationship.
A cluster of points resembling a straight line indicates the strongest correlation
between the variables. The analysis produced by the Scatter Diagram is called
Regression Analysis.
Scatter Diagram is able to quantify the degree of co-variation between the variables
called correlation. The word correlation does not imply or mean causation. A
correlation simply means that two measures tend to vary another.
A perfect positive, one-to-one (1:1) correlation has s correlation of +1. A perfect 1:1
negative correlation has a correlation of -1. Since everything varies, one rarely sees a
perfect correlation.
Two sets of data are plotted on a graph, with the y-axis being used for the variable to
be predicted and the x-axis being used for the variable to make the prediction. The
graph will show possible relationship (although two variables might appear to be
related, they might not be: those who know most about the variables must make that
evolution). The scatter diagram one of the seven tools of quality.

6.4.1 Steps in Constructing a Scatter Diagram


1. Collect two pieces of data (a pair of numbers) on a process, or product. Create a
summary table of the data.
2. Draw a diagram labeling the horizontal and vertical axes. It is common that the
cause variable is labeled the horizontal (X) axis and the effect variable
labeled as the vertical (Y) axis. The scale on both the X and Y axes should be
sufficient to include both the largest and the smallest X and Y values in the table.

107
The Seven Tools of Quality

108
Total Quality Service Management

3. Plot the data pairs on the diagram by placing a dot at the intersections of the X
and Y coordinates for each data pair.

6.4.2 Interpret the Data


Scatter diagrams will generally show one of six possible correlations between the
variables:

Figure 6.2: Scatter Diagrams

Strong Positive Correlation The value of Y clearly increases as the value of X


increases.
Strong Negative Correlation The value of Y clearly decreases as the value of X
increases.
Weak Positive Correlation The value of Y increases slightly as the value of X
increases.
Weak Negative Correlation The value of Y decreases slightly as the value of X
increases.
Complex Correlation

The value of Y seems to be related to the value of X, but


the relationship is not easily determined.

No Correlation There is no demonstrated connection between the two variables.


Interpreting the direction: Data patterns may be positive, negative, or display no
relationship. An ellipse of points that slopes upward indicates a positive relationship.
That means an increase in the cause variable also increases the effect variable.
An ellipse of points that slopes downward indicates a negative relationship. This
indicates that an increase in the cause variable results in a decrease in the effect
variable. When it is difficult or impossible to determine the trend, it indicates that this
is no relationship between the two variables.
Interpreting the strength: Data patterns should also be interpreted for strength by
examining the tightness of the clustered points. The more the points are clustered to
look like a straight line, the stronger is the relationship

6.4.3 Use of Scatter Diagram


z

Used to visualize relationship (correlation) between two variables.

Displaying the direction of the relationship (positive, negative, etc.)

Displaying the strength of the relationship

6.5 FLOW CHARTS


Flow charts are excellent visualization tools though they have no statistical basis.
They are graphical description of how work is done and are used to describe processes
that are to be improved.
These charts and diagrams may be examined using questioning techniques to
determine: purpose, place, sequence, people, and method, to eliminate, combine,
rearrange, or simplify process steps.
Flowcharts document processes and are useful in troubleshooting and in process
improvement. It is a graphical representation of the steps in a process. Flowcharts are
drawn to better understand processes.
Most flow charts are made up of three main types of symbol:
z

Elongated circles, which signify the start or end of a process;

Rectangles, which show instructions or actions; and

109
The Seven Tools of Quality

110
Total Quality Service Management

Diamonds, which show decisions that must be made

Within each symbol, write down what the symbol represents. This could be the start
or finish of the process, the action to be taken, or the decision to be made.
Symbols are connected one to the other by arrows, showing the flow of the process.
Example:
The example below shows part of a simple flow chart which helps receptionists route
incoming phone calls to the correct department in a company:

Figure 6.3: Part of an example flow chart showing how to


route incoming phone calls

Flow charts show the progress of work like the flow of material or information
through a sequence of operations. Flow charts or process maps were used to visualize
the flow of product or documents through a series of process steps. It is a pictorial
representation showing all of the steps of a process. It is used for:
1. Defining and analyzing processes
2. Building a step-by-step picture of the process for analysis, discussion, or
communication purposes
3. Defining, standardizing, or finding areas for improvements in a process.

6.5.1 Steps for Creating a Flow Chart


Steps for creating a Flowchart are:
1. Familiarize the people with the flowchart symbols.
2. Brainstorm major process tasks
3. Draw the process flowchart using the symbols on a flip chart or overhead
transparency. Every process will have a start and an end (shown by elongated
circles). All processes will have tasks and most will have decision points (shown
by a diamond).
4. Analyze the flowchart for such items as :

Time per-event (reducing cycle time)

Process repeats (preventing rework)

Duplication of effort (identifying and eliminating duplicated tasks)

Unnecessary tasks (eliminating tasks that are in the process for no apparent
reason)

Value-added versus non-value-added tasks

Flow charts are useful in an initial process analysis and should be complemented by
process flow sheets or process flow diagrams (more detailed) if available. Everyone
involved in the project should draw a flow chart of the process being studied so as to
reveal the different perceptions of how the process operated
Structured flow diagrams are created using a single entry (with inputs), a single exit
(with outputs), and a combination of three building structure:
z

Sequence any series of 1 - n sequential steps can be represented as s single step

Choice a decision between two or mire paths (structured sub paths) [e.g., ifthen, case/select]

Loop structured sub path (single entry and single exit) that is executed 0 n
times.

6.6 PROCESS MAPPING


A process Map is an adaptation of the Flow Diagram to document a process where
steps are aligned by role (or department). Usually the vertical axis defines the role
and the horizontal axis displays increasing time.

6.7 CAUSE AND EFFECT DIAGRAMS


Cause and effect diagram is systematic arrangement of all possible causes and the
effects that results from them. It is also known as Ishikawa diagram after its
originator, Dr. Kaoru Ishikawa or Fish-bone diagram as the complete diagram
resembles a fish Skelton.

111
The Seven Tools of Quality

112
Total Quality Service Management

Cause-and-effect diagrams can reveal important relationships among various variables


and possible causes and provide additional insight into process behavior. They do not
have a statistical basis, but are excellent aids for problem solving and troubleshooting.
Teams of people widely divergent in expertise normally create the Cause and effect
diagram. They do so after brainstorming and developing the list of possible factors.
Missing links can be added and superfluous items are discarded as the diagram
develops.
The cause are derived either from brainstorming or checklists or checklists (or other
data collection mechanisms).
There are to major formats:
z

Dispersion Analysis Type Place cause within a major cause and applying the 5
Whys.

Process Classification Type uses the major steps of the process in palce of the
major cause

The cause-and-effect diagram (or fishbone diagram or also Ishikawa diagram) are
diagrams, that shows the causes of a certain event. A common use of the Ishikawa
diagram is in product design, to identify desirable factors leading to an overall effect.

People

Machine

Milieu

Effect

Material

Methods

Message

Figure 6.4: Cause and Effect Diagram

6.7.1 Steps in Constructing a Cause and Effect Diagram


1. Have a project team
2. Prepare a flip chart as above
3. Write the issue (problem or process condition) on the right side of the Cause and
Effect Diagram.
4. Identify the major cause categories and write them in the four boxes on the Cause
and Effect Diagram. Summarize causes under categories likeMethods, Machines,
Materials, People, Milieu, message, etc.

5. Brainstorm potential cause of the problem. Decide as a group where to place them
on the Cause and Effect Diagram. It is acceptable to list a possible cause under
more than one major cause category.
6. Review each major cause category. Circle the most likely cause on the diagram.
7.

Review the causes that rate circled and ask, Why is this cause? Asking Why
will help get to the root cause of the problem.

8. Reach an agreement on the most probable cause(s).

6.7.2. Uses of Cause and Effect Diagram


A cause and effect diagram is used for:
1. Identifying potential causes of a problem or issue in an orderly way (example:
Why has membership in the band decreased? Why isnt the phone being answered
on time? Why is the production process suddenly producing so many defect?)
2. Summarizing major causes under four categories (e.g. People, Machines,
Methods, and Materials or Policies, Procedures, People, and Plant)

6.7.3 Advantages of Cause and Effect Diagram


Advantages of CE diagram are:
z

Making the diagram educates and trains personnel to make decisions and correct
problems autonomously.

Results in active searches for causes and eliminate unwanted causes.

Provides a guide for process analysis

Allows tracking of errors, efficient use of resources, lowers costs.

Standardization of existing and proposed operations.


Check Your Progress 2
1. What is the use of scatter diagram?
.
.
2. Define cause and effect diagram.
.
.

6.8 PARETO DIAGRAMS


A Pareto Chart is a vertical bar graph showing problems in a prioritized order.
It is based on the Pareto principle, named after 19th century economist Vilfredo Pareto,
was first defined by J.M. Juran in 1950. The principle, suggests that most effects come
from relatively few causes; that is, 80% of the effects come from 20% of the possible
causes (the significant few). The Pareto chart is one of the important seven tool of
quality.
All the resources are limited and need to be utilized effectively to get the maximum
benefit. Pareto charts helps to achieve the same by revealing the significant few from
the useful many.
Pareto charts show the most frequently occurring factors. This diagram graphically
depicts Paretos empirical law of 80-20 rule. They are also called as Juran Diagrams

113
The Seven Tools of Quality

114
Total Quality Service Management

or Pareto (pah-ray-toe) Diagrams. They are histograms (i.e. bar charts) that help to
identify and prioritize problem areas.
Analysis of Pareto charts help to make best use of limited resources by targeting the
most important problems to tackle.

6.8.1 Steps in Constructing a Pareto Chart


1. Use a check sheet or brainstorm to obtain data.
2. Determine the categories of problems or causes to be compared. Arrange the data
in order from the largest category to the smallest into a narrowed down list of 8 or
less categories.
3. Select a Standard Unit of Measurement and the Time Period to be studied.
Collect and summarize the Data. Create a four column table with the headings of
Problem category, Frequency, and Percent of total, and the cumulative
percentage as given in the example below.
List the problems identified in first column. In the second column write the totals for
each of the categories over the designated period of time. In the third column, divide
each number in the frequency column by the total number of measurement. This
will provide the percentage of the total. Record the cumulative value in the last
column.
1.

Create the horizontal and vertical axes of the Pareto Chart as under. The
horizontal axis will be the categories of problems ion descending order with the
most frequently occurring category on the far left.
The chart has two vertical axes. The one on the left shows frequency (as in a
histogram). The one on the right hand shows the cumulative percentage of
frequency curve identifies the few vital factors that warrant immediate managerial
attention.

Figure 6.5: Pareto Chart

2. Plot the bars on the Pareto Chart. Draw the corresponding bars in decreasing
height from left to right using the frequency scale on the left vertical axis.
To plot the cumulative percentage line, place a dot above each bar at a height.
Corresponding to the scale on the right vertical axis. The connect these dots from
left to right, ending with the 100% point at the top of the right vertical axis.
3. Interpret the Pareto Chart. The most frequent event is not always the most
important. Find out what has the most impact on the goals of the business and
customers. Investigate from all angles to help solve the problems.

4. Draw a vertical scale on the right and add a percentage (0 to 100 percent scale).
5. Plot a cumulativepercentage line.
Pareto analysis is often used as the first step of a quality improvement programme. It
can be used for many applications like identifying quality costs, customer complaint
analysis, supplier analysis, formulating specifications and so on. With the use of
computers, this has become all the more easier.

6.9 CONTROL CHARTS


Statistical Quality Control (SQC) or Statistical Process Control (SPC) for repetitive,
high volume production began in the 1930s when Shewart developed control charts.
The control chart is the fundamental tool of statistical process control, as it indicates
the range of variability that is built into a system (known as common cause variation).
Thus, it helps determine whether or not a process is operating consistently or if a
special cause has occurred to change the process mean or variance.
The principles behind the application of control charts are very simple and are based
on the combined use of run charts and hypothesis testing. Control charts are used to
detect whether a process is statistically stable. Control charts differentiate variations.
Control charts are decision-making tools. They provide an economic basis for
deciding whether to alter a process or leave it alone. Control charts are problemsolving tools and provide a basis to formulate improvements actions.
They are trend charts with statistically determined upper and lower limits on either
side of the process average. The bounds of the control chart are marked by upper and
lower control limits that are calculated applying statistical formulas to data from the
process.
Data points that fall outside these bounds represent variations due to special cause,
which can typically be found and eliminated. On the other hand, improvements in
common cause variation require fundamental changes in the process.
Control charts are powerful aids to understanding the performance of a process over
time. They identify variation. They are time plots that also indicate the range of
variation built into the system. They are used to monitor a process to see whether it is
in statistical control.
Control charts help us learn more about process variation. They determine whether a
process is in a state of statistical control or out-of-control. They are used to estimate
the process parameters (mean, variation) and assess the performance of a process or
its capability.
Control charts are outgrowth of run charts. Run chart records the output result of a
process over time and shows the trends. But they do not distinguish the type of
variations.
Walter Shewhart proposed Control Charts in 1924 that helps distinguish process
variations. There are two types of variation as under:
Types of Variation

Variation Characteristics

Assignable Cause, also known as Special Cause

Meaningful factors of process. Not always


present. Cause can be avoided and should be
investigated.

Unassignable Cause, also known as Common


Cause or Chance Cause

Factor caused by chance. Always present.


Unavoidable and inherent in a process. Normal
and expected with process.

115
The Seven Tools of Quality

116
Total Quality Service Management

Variations due to common causes


z

Have small effect on the process

Are inherent to the process because of:

The nature of the system

The way the system is managed

The way the process is organized and operated

Can only be removed by

Making modifications to the process

Changing the process

Are the responsibility of higher management


Variations due to special causes are

Localized in nature

Exceptions to the system

Considered abnormalities

Often specific to a

Certain operator

Certain machine

Certain batch of material, etc

Investigation and removal of variations due to special causes are key to process
improvement.
On a control chart, random points inside the chart indicate common cause variation. It
can only be changed by changing one of the 5 Ms (Men (includes women also),
Materials, Measuring Devices, Machinery, or Methods.
Elements of a Control Chart: A control chart consists of:
z

A central line,

An upper control limit,

A lower control limit, and

Process values plotted on the chart.

6.9.1 Steps for Developing Control Charts


Steps required for developing and using control charts are as follows:
1. Preparation

Choose the variable or attribute to be measured

Determine the basis, size and frequency of sampling

Set up the control charts

2. Data Collection

Record the data

Calculate relevant statistics: averages, ranges, proportions, and so on

Plot the statistics on the chart

3.

Determination of trial control limit

Draw the center line (process average) on the chart

Compute the upper and lower control limits

4. Analysis and interpretation

Investigate the chart for lack of control

Eliminate out-of-control points

Recompute control limits if necessary

5. Use as a problem-solving tool

Continue data collection and plotting

Identify out-of-control situations and take corrective action

6. The chart may contain other optional features, including


z

Upper and lower warning limits, drawn as separate lines, typically two
standard deviations above and below the centre line

Division into zones, with the addition of rules governing frequencies of


observations in each zone

Annotation with events of interest, as determined by the Quality Engineer in


charge of the process's quality

However in the early stages of use the inclusion of these items may confuse
inexperienced chart interpreters.

Figure 6.6: Control Chart

In general, the chart contains a Centerline that represents the mean value for the incontrol process. Two other horizontal lines, called the upper control limit (UCL) and
the Lower Limit (LCL), are also shown on the chart. These control limits are chosen
so that almost all of the data points will fall within these limits as long as the process
remains in-control.
Control limits are lines on the charts that represent the current acceptable level of
variation in the process. They are functions of the natural variability of the process.
They describe the process spread. They are usually chosen so that nearly all of the
sample points would fall between them in the absence of any special causes of
variation affecting the process.
The control limits represent the maximum amount that the average or range should
vary if the process does not change. A point outside the control limits indicates that

117
The Seven Tools of Quality

118
Total Quality Service Management

the process has changed. When the control chart identifies a change, an investigation
should be made as to the cause of the change.
If all process values are plotted within the upper and lower control limits and no
particular tendency is noted, the process is referred to as In Control. If the process
values are plotted outside the control limits or show a particular tendency the process
is referred to as Out Of Control.
The determination of the control limits, along with the sample size and the sampling
frequency, is one of the most important tasks in designing a control chart.
If a single quality characteristic has been measured or computed from a sample, the
control chart shows the value of the quality characteristics versus the sample number
or versus time.
To monitor a process, we typically use two control charts (1) mean (or some other
central tendency measure) and (2) variation (typically using range or standard
deviation). To monitor output, we use a control chart to check things like the mean,
range, standard deviation.
In a control chart, control limits are calculated by the following formula:
(Average Process Value) (3 X (Standard Deviation which represented by ))
Where the standard deviation is due to unassigned variation only.
Control charts make assumptions about the plotted static, namely.
z

It is independent, i.e., A value is not influenced by its past value and will not
affect future values.

It is normally distributed, i.e. the data has a normal probability density function.

Control charts work on the basis of 6 sigma control. The six-sigma value is derived
from looking at distance 3 from the mean (), for a range of 6 total.
When applying control charts it is common practice to establish the control limits
based on the process capability study and then use fix limits on the chart during
production. They should be reevaluated regularly depending on production volume,
but at least once every 3 months to minimize error in control chart analysis.
Control limits can be managed to prioritize the efforts of operators and help allocate
limited resources on the shop floor. This is done by setting control limits at 3 sigma
for critical characteristics and perhaps 4 or 5 sigma for less critical characteristics.

6.9.2 Control Chart Properties


All control charts may be defined as having the following properties:
1. The x-axis is sequential. Usually a unit denoted the evolution of time.
2. The y-axis is the statistic that is being charted for each point in time.
3. Limits are defined for the statistic that is being plotted. These Control Limits are
statistically determined. Observing process behavior, providing an indication of
the bounds of expected process behavior, does this. They are never determined
using customer specifications or goals.
4. There may be variation in any process. The fluctuation of the points between the
control limits is due to the variation that is intrinsic (built in) to the process. This
variation is due to common causes. What causes them is not known. Their
effect on the process seems to be consistent over time. The process is in control.
The location (or measured value) of any of the points that lie between the control
limits is not useful information. To reduce this variation, or re-locate the process
centerline to a new location the process need to be redesigned.

5. When points go out of the control limits, the process must have shifted. Such
points outside the control limits can be attributed to a special cause. The control
chart is used to identify the occurrence of these special causes.
6. The limits are determined by estimating the short-term variation in the process.
The process stability (or process control) is defined when the short-term variation
is used to estimate the longer-term variation.
When a process is in statistical control, the points on a control chart fluctuate
randomly between the control limits with no recognizable pattern.
General rules for examining a process to determine if it is in control:
z

No points are outside control limits.

The number of points above and below the center line are about the same

The points seem to fill randomly above and below the center line

Most points, but not all, are near the centerline, and only a few close to the control
limits.

These rules are based assuming that the distribution of sample means is normal. For
small sample sizes, the distribution of the original data must be reasonably normal for
this assumption to hold.
The upper and lower control limits are computed to be three standard deviations from
the overall mean. Thus the probability that any sample mean falls outside control
limits is very small.
A process is said to be out of control if
z

A single point falls outside the 3 Sigma limit (beyond UCL and LCL)

Two out of three successive points fall in between 2 sigma and UCL or beyond or
-2sigma and LCL or beyond, the odd point may be anywhere

Find out of Five successive points fall in between 1 sigma and 2 sigma or
beyond, or between 1 sigma and 2 sigma or beyond the odd point may be
anywhere

Eight successive points fall in between sigma and sigma or beyond.

The seven run rule: The seven run rule is also used with control charts. Any seven
consecutive varying data points indicate a need to investigate the process being
monitored. Any seven consecutive increasing or decreasing measurements, regardless
of where they begin or end relative to the mean, indicates a need to inspect the
process.
Also, any seven consecutive measurement that all above the mean or below the mean,
even if they are not all increasing or decreasing, indicate a need to inspect the process.
Depending on the number of process characteristics to be monitored, there are two
basic types of control charts.
z

Univariate control chart is a graphical display (chart) of one quality characteristic.

Multivariate control chart is a graphical display of a statistic that summarizes or


represents more than one quality characteristic.

Control charts are constructed with two different basic types of measurements:

Measured or continuous data(lengths, temperature, volume, pressure, voltage)

Counted or discrete data (defects, typographical errors, mislabeled items,


occurrences).

119
The Seven Tools of Quality

120
Total Quality Service Management

6.9.3 Patterns in Control Charts


z

One point outside control limits: indicates variation due to a special cause like a
sudden power surge, a broken tool, measurement error, or an incomplete or
omitted operation in the process.

Sudden shifts in the process average: indicates sudden shifting of the process
average.

Cycle: Short and repeated patterns in the chart with alternating high peaks and
how valleys called cycles are the result of cause that come and go on a regular
basis.

Trends: A trend is the result of some cause that gradually affects the quality
characteristics of the product and causes the point on a control chart to gradually
move up or down from the center line.

Hugging the center line: It occurs when nearly all the points fall close to the
center line indicating that the control limits are too wide.

Hugging the control limits: The pattern shows up when many points are near the
control limits with few in between.

Control charts are designed to be used by production operators rather than by


inspectors or quality control personnel. The use of control charts allows the operators
to react quickly to special cause of variation.
Control charts help to identify key input variables causing the process to shift and aid
in the reduction of the variation. Control charts are used to detect changes in the
process. They are also used as part of a capability study to demonstrate that the
process is stable or consistent.
Check Your Progress 3
Fill in the blanks:
1. The seven tools of quality make it easy for the collection and analysis of the
data for _______________________.
2. The _________ sheet is set up to accept that data vary easily and at the same
time display useful information.
3. _______________ charts show the most frequently occurring factors.
4.

______________ records the output result of a process over time and shows
the trends.

6.10 ADVANCED TOOLS OF QUALITY (SIX SIGMA)


Six Sigma is a widely used methodology for measuring and improving an
organizations operational performance through a rigorous analysis of its practices and
systems.
Six Sigma is a business management strategy, originally developed by Motorola that
today enjoys wide-spread application in many sectors of industry.
Six Sigma seeks to identify and remove the causes of defects and errors in
manufacturing and business processes. It uses a set of quality management methods,
including statistical methods, and creates a special infrastructure of people within the
organization ("Black Belts" etc.) who are experts in these methods. Each Six Sigma
project carried out within an organization follows a defined sequence of steps and has
quantified financial targets (cost reduction or profit increase).

6.10.1 Historical Overview


Six Sigma was originally developed as a set of practices designed to improve
manufacturing processes and eliminate defects, but its application was subsequently
extended to other types of business processes as well In Six Sigma, a defect is defined
as anything that could lead to customer dissatisfaction.
The particulars of the methodology were first formulated by Bill Smith at Motorola in
1986. Six Sigma was heavily inspired by six preceding decades of quality
improvement methodologies such as quality control, TQM, and Zero Defects, based
on the work of pioneers such as Shewhart, Deming, Juran, Ishikawa, Taguchi and
others.
Like its predecessors, Six Sigma asserts that
z

Continuous efforts to achieve stable and predictable process results (i.e. reduce
process variation) are of vital importance to business success.

Manufacturing and business processes have characteristics that can be measured,


analyzed, improved and controlled.

Achieving sustained quality improvement requires commitment from the entire


organization, particularly from top-level management.

Features that set Six Sigma apart from previous quality improvement initiatives
include
z

A clear focus on achieving measurable and quantifiable financial returns from any
Six Sigma project.

An increased emphasis on strong and passionate management leadership and


support.

A special infrastructure of "Champions", "Master Black Belts", "Black Belts" etc.


to lead and implement the Six Sigma approach.

A clear commitment to making decisions on the basis of verifiable data, rather


than assumptions and guesswork.

The term "Six Sigma" derives from a field of statistics known as process capability
studies. Originally, it referred to the ability of manufacturing processes to produce a
very high proportion of output within specification. Processes that operate with "six
sigma quality" are assumed to produce defect levels below defects per million
opportunities (DPMO). Six Sigma's implicit goal is to improve all processes to that
level of quality or better.
Six Sigma is a registered service mark and trademark of Motorola, Inc. Motorola has
reported over US$17 billion in savings from Six Sigma as of 2006.
Other early adopters of Six Sigma who achieved well-publicized success include
Honeywell International (previously known as Allied Signal) and General Electric,
where the method was introduced by Jack Welch. By the late 1990s, about two-thirds
of the Fortune 500 organizations had begun Six Sigma initiatives with the aim of
reducing costs and improving quality.
In recent years, Six Sigma has sometimes been combined with lean manufacturing to
yield a methodology named Lean Six Sigma.
Graph of the normal distribution, which underlies the statistical assumptions of the Six
Sigma model. The Greek letter marks the distance on the horizontal axis between
the mean, , and the curve's point of inflection. The greater this distance is, the greater
is the spread of values encountered. For the curve shown in red above, = 0 and
= 1. The other curves illustrate different values of and .

121
The Seven Tools of Quality

122
Total Quality Service Management

6.10.2 Origin and Meaning of the Term "Six Sigma Process"


The following outlines the statistical background of the term Six Sigma:
Sigma (the lower-case Greek letter ) is used to represent the standard deviation
(a measure of variation) of a statistical population. The term "six sigma process"
comes from the notion that if one has six standard deviations between the mean of a
process and the nearest specification limit, there will be practically no items that fail
to meet the specifications. This is based on the calculation method employed in a
process capability study.
In a capability study, the number of standard deviations between the process mean and
the nearest specification limit is given in sigma units. As process standard deviation
goes up, or the mean of the process moves away from the center of the tolerance,
fewer standard deviations will fit between the mean and the nearest specification limit,
decreasing the sigma number.
Experience has shown that in the long term, processes usually do not perform as well
as they do in the short. As a result, the number of sigmas that will fit between the
process mean and the nearest specification limit is likely to drop over time, compared
to an initial short-term study. To account for this real-life increase in process variation
over time, an empirically-based 1.5 sigma shift is introduced into the calculation.
According to this idea, a process that fits six sigmas between the process mean and the
nearest specification limit in a short-term study will in the long term only fit 4.5
sigmas either because the process mean will move over time, or because the longterm standard deviation of the process will be greater than that observed in the short
term, or both.
Hence the widely accepted definition of a six sigma process is one that produces 3.4
defective parts per million opportunities (DPMO). This is based on the fact that a
process that is normally distributed will have 3.4 parts per million beyond a point that
is 4.5 standard deviations above or below the mean (one-sided capability study). So
the 3.4 DPMO of a "Six Sigma" process in fact corresponds to 4.5 sigmas, namely 6
sigmas minus the 1.5 sigma shift introduced to account for long-term variation. This is
designed to prevent overestimation of real-life process capability.

6.10.3 Methodology
Six Sigma has two key methodologies: DMAIC and DMADV, both inspired by
Deming's Plan-Do-Check-Act Cycle. DMAIC is used to improve an existing business
process; DMADV is used to create new product or process designs.

1. DMAIC
The basic methodology consists of the following five steps:
z

Define process improvement goals that are consistent with customer demands and
the enterprise strategy.

Measure key aspects of the current process and collect relevant data.

Analyze the data to verify cause-and-effect relationships. Determine what the


relationships are, and attempt to ensure that all factors have been considered.

Improve or optimize the process based upon data analysis using techniques like
Design of Experiments.

Control to ensure that any deviations from target are corrected before they result
in defects. Set up pilot runs to establish process capability, move on to production,
set up control mechanisms and continuously monitor the process.

2. DMADV
The basic methodology consists of the following five steps:
z

Define design goals that are consistent with customer demands and the enterprise
strategy.

Measure and identify CTQs (characteristics that are Critical To Quality), product
capabilities, production process capability, and risks.

Analyze to develop and design alternatives, create a high-level design and


evaluate design capability to select the best design.

Design details, optimize the design, and plan for design verification. This phase
may require simulations.

Verify the design, set up pilot runs, implement the production process and hand it
over to the process owners.

DMADV is also known as DFSS, an abbreviation of "Design For Six Sigma".

6.10.4 Implementation Roles


One of the key innovations of Six Sigma is the professionalizing of quality
management functions. Prior to Six Sigma, quality management in practice was
largely relegated to the production floor and to statisticians in a separate quality
department. Six Sigma borrows martial arts ranking terminology to define a hierarchy
(and career path) that cuts across all business functions and a promotion path straight
into the executive suite.
Six Sigma identifies several key roles for its successful implementation.
z

Executive Leadership includes the CEO and other members of top management.
They are responsible for setting up a vision for Six Sigma implementation. They
also empower the other role holders with the freedom and resources to explore
new ideas for breakthrough improvements.

Champions are responsible for Six Sigma implementation across the organization
in an integrated manner. The Executive Leadership draws them from upper
management. Champions also act as mentors to Black Belts.

Master Black Belts, identified by champions, act as in-house coaches on Six


Sigma. They devote 100% of their time to Six Sigma. They assist champions and
guide Black Belts and Green Belts. Apart from statistical tasks, their time is spent
on ensuring consistent application of Six Sigma across various functions and
departments.

Black Belts operate under Master Black Belts to apply Six Sigma methodology to
specific projects. They devote 100% of their time to Six Sigma. They primarily
focus on Six Sigma project execution, whereas Champions and Master Black
Belts focus on identifying projects/functions for Six Sigma.

Green Belts are the employees who take up Six Sigma implementation along with
their other job responsibilities. They operate under the guidance of Black Belts
and support them in achieving the overall objectives.

Yellow Belts are employees who have been trained in Six Sigma techniques as
part of a corporate-wide initiative, but have not completed a Six Sigma project
and are not expected to actively engage in quality improvement activities.

123
The Seven Tools of Quality

124
Total Quality Service Management

6.10.5 Quality Management Methods Used In Six Sigma


Six Sigma makes use of a great number of established quality management methods
that are also used outside of Six Sigma. The following table shows an overview of the
main methods used.

5 Whys

Failure mode and effects analysis

Analysis of variance

General linear model

ANOVA Gage R&R

Histograms

Axiomatic design

Homogeneity of variance

Business process mapping

Pareto chart

Catapult exercise on variability

Pick chart

Cause & effects diagram (also


known as fishbone or Ishikawa
diagram)

Process capability

Regression analysis

Run charts

SIPOC analysis (Suppliers,


Inputs, Process, Outputs,
Customers)

Chi-square test of independence


and fits

Control chart

Correlation

Stratification

Cost-benefit analysis

Taguchi methods

CTQ tree

Thought process map

Customer survey

TRIZ

Design of experiments

6.11 LET US SUM UP


Management cannot expect employees to effectively participate in problem solving
and continuous improvement programs (i.e. to be empowered) unless they are
provided training in how to address problems.
The seven tools of quality make it easy for the collection and analysis of the data for
management by facts. They can assist the quality professional in root cause analysis.
They help organizations understand their processes in order to improve them.
A picture can convey ideas better than many words. The seven tools of quality are the
cause-and-effect diagram, check sheet, control chart, flowchart, histogram, Pareto
chart, and scatter diagram. They are simple but powerful tools that can be of
significant value throughout the problem solving and continuous improvements
processes.

6.12 LESSON END ACTIVITY


What are the quality management methods used in six sigma?

6.13 KEYWORDS
Restricted-use Report: is a "restricted-use" report intended for use by the service
organization, user organizations and user auditors.
Service Auditor: The auditor who reports on controls of a service organization that
may be relevant to a user organization's internal control as it relates to a financial
statement audit.

Service: is something intangible and its production is fundamentally based on


knowledge processes and resources.

6.14 QUESTIONS FOR DISCUSSION


1. Explain the six sigma concept.
2. What are the seven tools of quality assurance?

Check Your Progress: Model Answers


CYP 1
1. The check sheet is one of the seven tools of quality and is customized form,
or tally sheet, designed by the user. It is a data gathering and
interpretation tool.
2. A histogram is used for making decisions about a process, product, or
procedure that could be improved after examining the variation.
CYP2
1. A Scatter Diagram is the simplest of the seven tools and is used to interpret
data by graphically displaying the relationship between two variables. It is
the graphical component of regression analysis.
2. Cause and effect diagram is systematic arrangement of all possible causes
and the effects that results from them. It is also known as Ishikawa diagram
after its originator, Dr. Kaoru Ishikawa or Fish-bone diagram as the
complete diagram resembles a fish Skelton.
CYP 3
1. Management by facts, 2. Check, 3. Pareto, 4. Run chart

6.15 SUGGESTED READINGS


Sundara Raju, S.M., Total Quality Management: A Primer, Tata McGraw-Hill, 1995.
Sreenivasan, N.S and V. Narayana, Managing Quality Concepts and Tasks, New Age
International, 1996.
Kume, H., Management of Quality, Productivity Press, 1996.
Dennis, Lock, Handbook of Quality Management, 1992.
Hammer, M. and Spect, Business Process Reengineering, 1995.

125
The Seven Tools of Quality

126
Total Quality Service Management

LESSON

7
MANAGEMENT PROCESS - 2
CONTENTS
7.0

Aims and Objectives

7.1

Introduction

7.2

Control Chart

7.3

Performance of Control Charts

7.4

Types of Charts

7.5

X-Bar/R Chart

7.6

X-Bar-S Charts

7.7

P-Chart

7.8

NP-Chart

7.9

CUSUM
7.9.1

Method

7.10

Acceptance Sampling

7.11

Acceptance Sampling Plan


7.11.1

Sampling Plans

7.11.2

Characteristics of a Good Sampling Plan

7.11.3

Points to Remember while Using Acceptance Sampling

7.12

Vendor Selection

7.13

Vendor Rating
7.13.1

Pricing

7.13.2

Sales/Distribution

7.14

Let us Sum up

7.15

Lesson End Activity

7.16

Keywords

7.17

Questions for Discussion

7.18

Suggested Readings

7.0 AIMS AND OBJECTIVES


After studying this lesson, you should be able to:
z

Know the various types of control charts

Study the advantages and limitation of control charts

Know the sampling procedure

Know the characteristics of sampling procedure

7.1 INTRODUCTION
The control chart was invented by Walter A. Shewhart while working for Bell Labs in
the 1920s. The company's engineers had been seeking to improve the reliability of
their telephony transmission systems. Because amplifiers and other equipment had to
be buried underground, there was a business need to reduce the frequency of failures
and repairs. By 1920 they had already realized the importance of reducing variation in
a manufacturing process. Moreover, they had realized that continual processadjustment in reaction to non-conformance actually increased variation and degraded
quality. Shewhart framed the problem in terms of Common- and special-causes of
variation and, on May 16, 1924, wrote an internal memo introducing the control chart
as a tool for distinguishing between the two. Dr. Shewhart's boss, George Edwards,
recalled: "Dr. Shewhart prepared a little memorandum only about a page in length.
About a third of that page was given over to a simple diagram which we would all
recognize today as a schematic control chart. That diagram, and the short text which
preceded and followed it, set forth all of the essential principles and considerations
which are involved in what we know today as process quality control." Shewhart
stressed that bringing a production process into a state of statistical control, where
there is only common-cause variation, and keeping it in control, is necessary to predict
future output and to manage a process economically.
Dr. Shewhart created the basis for the control chart and the concept of a state of
statistical control by carefully designed experiments. While Dr. Shewhart drew from
pure mathematical statistical theories, he understood data from physical processes
never produce a "normal distribution curve" (a Gaussian distribution, also commonly
referred to as a "bell curve"). He discovered that observed variation in manufacturing
data did not always behave the same way as data in nature (Brownian motion of
particles). Dr. Shewhart concluded that while every process displays variation, some
processes display controlled variation that is natural to the process, while others
display uncontrolled variation that is not present in the process causal system at all
times.
In 1924 or 1925, Shewhart's innovation came to the attention of W. Edwards Deming,
then working at the Hawthorne facility. Deming later worked at the United States
Department of Agriculture and then became the mathematical advisor to the United
States Census Bureau. Over the next half a century, Deming became the foremost
champion and exponent of Shewhart's work. After the defeat of Japan at the close of
World War II, Deming served as statistical consultant to the Supreme Commander of
the Allied Powers. His ensuing involvement in Japanese life, and long career as an
industrial consultant there, spread Shewhart's thinking, and the use of the control
chart, widely in Japanese manufacturing industry throughout the 1950s and 1960s.

7.2 CONTROL CHART


In statistical process control, the control chart, also known as the 'Shewhart chart'
or 'process-behaviour chart' is a tool used to determine whether a manufacturing or
business process is in a state of statistical control or not. If the chart indicates that the
process is currently under control then it can be used with confidence to predict the
future performance of the process. If the chart indicates that the process being
monitored is not in control, the pattern it reveals can help determine the source of
variation to be eliminated to bring the process back into control. A control chart is a
specific kind of run chart that allows significant change to be differentiated from the
natural variability of the process. This is key to effective process control and
improvement.

127
Management Process - 2

128
Total Quality Service Management

The control chart is one of the seven basic tools of quality control (along with the
histogram, Pareto chart, check sheet, cause-and-effect diagram, flowchart, and scatter
diagram).
A control chart consists of the following:
z

Points representing measurements of a quality characteristic in samples taken


from the process at different times [the data]

A centre line, drawn at the process characteristic mean which is calculated from
the data

Upper and lower control limits (sometimes called "natural process limits") that
indicate the threshold at which the process output is considered statistically
'unlikely'

The chart may contain other optional features, including:


z

Upper and lower warning limits, drawn as separate lines, typically two standard
deviations above and below the centre line

Division into zones, with the addition of rules governing frequencies of


observations in each zone

Annotation with events of interest, as determined by the Quality Engineer in


charge of the process's quality

However in the early stages of use the inclusion of these items may confuse
inexperienced chart interpreters.
If the process is in control, all points will plot within the control limits. Any
observations outside the limits, or systematic patterns within, suggest the introduction
of a new (and likely unanticipated) source of variation, known as a special-cause
variation. Since increased variation means increased costs, a control chart "signaling"
the presence of a special-cause requires immediate investigation.
The control limits tell you about process behaviour and have no intrinsic relationship
to any specification targets or engineering tolerance. In practice, the long-term process
mean (and hence the centre line) may not coincide exactly with the ideal value (or
target) of the quality characteristic because equipment simply can't deliver the process
characteristic at the desired level or because it's too costly to put the process on target.
Control charts omit specification limits or targets because of the tendency of those
involved with the process (e.g., machine operators) to focus on performing to
specification when in fact the least-cost course of action is to keep process variation as
low as possible. Attempting to make a process whose natural centre is not the same as
the target increases process variability and costs significantly and is the cause of much
inefficiency in operations. Process capability studies do examine the relationship
between the natural process limits (the control limits) and specifications, however.
The purpose of control charts is to allow simple detection of events that are indicative
of actual process change. This can be difficult where the process characteristic is
continuously varying, the control chart provides statistically objective criteria of
change. When change is detected then if the change is good its cause should be
identified and possibly become the new way of working, where the change is bad then
its cause should be identified and eliminated. The purpose in adding warning limits or
subdividing the control chart into zones is to provide early notification if something is
amiss. Instead of immediately launching a process improvement effort to determine
whether special causes are present, the Quality Engineer may temporarily increase the
rate at which samples are taken from the process output until it's clear that the process
is truly in control. Note that with three sigma limits, one expects to be signaled
approximately once out of every 370 points on average, just due to common-causes.

129
Management Process - 2

7.3 PERFORMANCE OF CONTROL CHARTS


When a point falls outside of the limits established for a given control chart, those
responsible for the underlying process are expected to determine whether a special
cause has occurred. If one has, then that cause should be eliminated if possible. It is
known that even when a process is in control (that is, no special causes are present in
the system), there is approximately a 0.27% probability of a point exceeding 3-sigma
control limits. Since the control limits are evaluated each time a point is added to the
chart, it readily follows that every control chart will eventually signal the possible
presence of a special cause, even though one may not have actually occurred. For a
Shewhart control chart using 3-sigma limits, this false alarm occurs on average once
every 1/0.0027 or 370.4 observations. Therefore, the in-control average run length (or
in-control ARL) of a Shewhart chart is 370.4.
Meanwhile, if a special cause does occur, it may not be of sufficient magnitude for the
chart to produce an immediate alarm condition. If a special cause occurs, one can
describe that cause by measuring the change in the mean and/or variance of the
process in question. When those changes are quantified, it is possible to determine the
out-of-control ARL for the chart.
It turns out that Shewhart charts are quite good at detecting large changes in the
process mean or variance, as their out-of-control ARLs are fairly short in these cases.
However, for smaller changes (such as a 1- or 2-sigma change in the mean), the
Shewhart chart does not detect these changes efficiently. Other types of control charts
have been developed, such as the EWMA chart and the CUSUM chart, which detect
smaller changes more efficiently by making use of information from observations
collected prior to the most recent data point.
7.4 TYPES OF CHARTS
Process
observations
type

Size of
shift to
detect

characteristic
within
one Independent

Variables

Large (
1.5)

characteristic
within
one Independent

Variables

Large (
1.5)

characteristic
for
one Independent

Variables

Large (
1.5)

characteristic
within
one Independent

Variables

Large (
1.5)

Chart

Process observation

XbarR chart

Quality
measurement
subgroup

XbarS chart

Quality
measurement
subgroup

Shewhart
Quality
individuals control
measurement
chart (ImR chart
observation
or XmR chart)

Process
observations
relationships

Three-way chart

Quality
measurement
subgroup

p-chart

Fraction
nonconforming
Independent
within one subgroup

Attributes

Large (
1.5)

Number nonconforming within


Independent
one subgroup

Attributes

Large (
1.5)

Number of nonconformances
Independent
within one subgroup

Attributes

Large (
1.5)

np-chart

c-chart

Contd

130
Total Quality Service Management

u-chart

Nonconformances per
within one subgroup

Independent

Attributes

Large (
1.5)

EWMA chart

Exponentially
weighted
moving average of quality
Independent
characteristic
measurement
within one subgroup

Attributes
variables

or Small (<
1.5)

CUSUM chart

Cumulative sum of quality


characteristic
measurement Independent
within one subgroup

Attributes
variables

or Small (<
1.5)

Attributes
variables

or

Quality
Time series model measurement
subgroup

unit

characteristic
within
one Autocorrelated

N/A

Check Your Progress 1


1. Define Control Chart.
.
.
2. Who invented Control Chart?
.
.

7.5 X-BAR/R CHART


It is a specific member of a family of control charts. A control chart is a tool used in
quality control, specifically SPC or statistical process control, as originally developed
by Walter A. Shewhart at Western Electric in 1924 to improve the quality of
telephones.
A control chart is a plot of measurements of a product on two special scales, usually
located above and below each other and running horizontally. X-Bar/R charts consist
of two charts, both with the same horizontal axis denoting the sample number.
The vertical axis on the top chart depicts the sample means (X-Bar) for a series of lots
or subgroup samples. It has a centerline represented by Xdoublebar, which is simply
the overall process average, as well as two horizontal lines, one above and one below
the centerline, known as the upper control limit or UCL and lower control limit or
LCL, respectively. These lines are drawn at a distance of plus and minus three
standard deviations (that is, standard deviations of the sampling distribution of sample
means) from the process average. In practice, tabulated constants are available to
determine the control limits, or they are automatically calculated by the SPC software
used.
The bottom chart has the range (R) of each subgroup plotted on the vertical axis. Like
an X-Bar chart, R charts have a centerline and two control limits. However, for
sample sizes below 7, the LCL is zero.
The purpose of any control chart is to help determine if variations in measurements of
a product are caused by small, normal variations that cannot be acted upon ("common
causes"), or by some larger "special cause" that can be acted upon or fixed. The type
of chart to be used is based on the nature of the data.
The X-bar/R chart is normally used for numerical data that is captured in subgroups in
some logical manner for example 3 production parts measured every hour. A special

cause such as a broken tool will then show up as an abnormal pattern of points on the
chart.
Xbar-R chart is used for plotting variability when sub-group size is less than 10.

7.6 X BAR-S CHARTS


An Xbar-S chart is a specific type of control chart that depicts the variability of
average characteristics of a process over time when variables are collected in subgroups. Xbar-S charts are generally employed for plotting variability of sub-groups
with sizes greater than 10.
X bar charts plot, the process mean (the Xbar chart) and process standard deviation
(the S chart) over time for variables in sub-groups. Both the Xbar and S chart must be
seen together to interpret the stability of the process. The S chart must be examined
first as the control limits of the Xbar chart are determined considering both the
process spread and center. Process variation, which is a characteristic of spread, must
be in control to correctly interpret the Xbart chart. If data-points in the S chart are
outside control limits, then the limits on the Xbart chart may be inaccurate and may
falsely indicate an out-of-control condition. As in other types of control charts, datapoints outside of control limits in a Xbar-S chart indicate special causes.

7.7 P-CHART
In industrial statistics, the p-chart is a type of control chart that is very similar to the
X-bar chart except that the statistic being plotted is the sample proportion rather than
the sample mean. Since the proportion deals with the percentage of successes, clearly
the appropriate data for p-charts needs to be attribute data where the outcomes for
each trial can be classified as either a success or a failure (conform or non-conform,
yes or no, etc.). The subgroup size should ideally be equal, although unequal sample
sizes can be accommodated. The features of the p-chart can be enumerated as under:
1. The "p" in the p-chart comes from use of the proportion of nonconforming items
2. P-chart needs a good definition of nonconforming items usually a categorical
definition
3. P-chart can be of equal or unequal subgroups
4. Normally p-charts need large subgroups can even be up to total for the period
Control limits for the p-chart are calculated on the basis of the binomial distribution
and an approximation based on the central limit theorem.

7.8 NP-CHART
In industrial statistics, the NP-chart is a type of control chart that is very similar to the
p-chart except that the statistic being plotted is a number count rather than a sample
proportion of items. For example, an np-chart often shows the number of
nonconforming items in each sample. Since we are counting failures or successes,
clearly the appropriate data for np-charts need to be attribute data. The subgroup size
must be constant, as comparisons of counts would otherwise be meaningless.
NP-chart
1. The "np" stands for the number of nonforming items, which can be expressed as n
(sample size) times p (proportion of nonconforming items)
2. Need a good definition of nonconforming items usually a categorical definition
3. Subgroup size must be constant

131
Management Process - 2

132
Total Quality Service Management

4. Normally need large subgroups can even be up to total for the period
Control limits for the NP-chart are calculated on the basis of the binomial distribution
and an approximation based on the central limit theorem.

7.9 CUSUM
CUSUM is a sequential analysis technique due to E. S. Page of the University of
Cambridge. It is typically used for monitoring change detection. CUSUM was
announced in Biometrika a few years after the publication of Wald's SPRT algorithm.
Page referred to a "quality number" , by which he meant a parameter of the
probability distribution; for example, the mean. He devised CUSUM as a method to
determine changes in it, and proposed a criterion for deciding when to take corrective
action.
A few years later, Barnard developed a visualization method, the V-mask chart, to
detect both increases and decreases in
7.9.1 Method
As its name implies, CUSUM involves the calculation of a cumulative sum (which is
what makes it "sequential"). Samples from a process xn are assigned weights Wn, and
summed as follows:
Sn = max(0,Sn 1 + Wn)
Page did not explicitly say that W represents the likelihood function, but this is
common usage. Monitoring stops and action is taken when the sum exceeds a certain
threshold, h. Note that this differs from SPRT by always using zero function as the
lower "holding barrier" rather than a lower "holding barrier". Also, CUSUM does not
require the use of the likelihood function.
As a means of assess CUSUM's performance, Page defined the average run length
(A.R.L.) metric; "the expected number of articles sampled before action is taken." He
further wrote:
When the quality of the output is satisfactory the A.R.L. is a measure of the expense
incurred by the scheme when it gives false alarms, i.e. Type I errors (Neyman &
Pearson, 1936). On the other hand, for constant poor quality the A.R.L. measures the
delay and thus the amount of scrap produced before the rectifying action is taken, i.e.
Type II errors.

7.10 ACCEPTANCE SAMPLING


Acceptance sampling is a quality assurance technique used for inspecting incoming
material and outgoing (finished) products. It is a technique where decisions to accept
or reject products or services are taken on the basis of sampling inspection. It provides
only an indirect means for quality improvement.
Acceptance sampling is an important field of statistical quality control that was
popularized by Dodge and Roming and originally applied by the U.S. military to the
testing of bullets during World War II. If every bullet were tested in advance, no
bullets would be left to ship. If, on the other hand, none were tested, malfunctions
might occur in the filed of battle, with potentially disastrous results.
Dodge reasoned that a sample should be picked at random from the lot, and on the
basis of information that was yielded by the sample, a decision should be made
regarding the disposition of the lot. In general, the decision is either to accept or reject
the lot. This process is called Lot Acceptance Sampling or just Acceptance Sampling.

It is used to minimize the average total inspection (ATI) per lot product for a given
process average.
Acceptance sampling involves a system of principles and methods to define decision
rules to accept or reject product based on sample data. It depends on
1. The quality requirements of the product in the marketable place
2. The capability of the process
3. The cost and logistics of sample taken
Acceptance sampling is the middle of the road approach between no inspection and
100% inspection. There are two major classifications of acceptance plans: by
attributes and by variables. The attributes case is the most common for acceptance
sampling, and will be assumed for the rest of this section.
Acceptance sampling plans can be applied for inspection of
z

End items,

Components,

Raw materials,

Operations,

Materials in process,

Supplies in storage,

Maintenance operations,

Data or record and administrative procedures.

Acceptance sampling plans are commonly used in manufacturing to decide whether to


accept or to reject lots of product. However, they can also be used during validation
to accept or to reject the [process.
Acceptance sampling will require the selection of a sampling plan. Sampling plans
are used to make product disposition decisions. A sampling plan will determine the
size of a sample and the number of defectives permitted in the sample top determine
the acceptance or rejection of the population.
The two parameters of sampling plans are:
N = sample size (number of units in the sample)
C = Acceptance number (maximum number of defective units allowed in a sample to
decide the acceptance or rejection of the population)
Types of acceptance sampling plans: This categorization depends on when the
inspection takes place. Outgoing inspection happens when the batches are inspected
before the product is shipped to the consumer. If the inspection is done by the
consumer, after they were received from the supplier, it is called incoming inspection.
Rectifying vs Outgoing inspections: This determines what is done with
nonconforming items that were found during the inspection. The cost of replacing
faulty items with new ones, or reworking them is accounted for, the sampling plan is
rectifying.
Sampling by attributes vs sampling by variables: Sampling by attributes occurs when
the inspection of an item is done for an attribute and leads to binary result or the
numbers of nonconformities in an item are counted. When inspection is done to a
continuous measurement, then we are sampling by variables.
Single, double, and multiple plans: The sampling procedure may consist of drawing a
single sample, or it may be done in two or more steps. A double sampling procedure

133
Management Process - 2

134
Total Quality Service Management

means that if the sample taken from the batch is not informative enough, another
sample is taken. In multiple sampling, additional samples can be drawn after the
second sample.
Following the acceptance by a sampling plan, one can make confidence statement
such as: With 95% confidence, the defect rate is below 1% defective. A point to
remember is that the main purpose of acceptance sampling is to decide whether or not
the lot is likely to be acceptable, not to estimate the quality of the lot.
For selecting statistically valid sampling plans, one must clearly define the objective
of the inspection and one must demonstrate that the sampling plan allows this
objective to be met.
The selection of a sampling plan must be guided by
z

Cost of the inspection that will be incurred

Protection provided to the producer and customer by the high efficiency of the
sampling.

Ideally, a sampling plan should reject all bad lots while accepting all good lots.
However, because the sampling plan bases it decisions on a sample of the lot and not
the entire lot, these is always a chance of making an incorrect decision.
A well-designed sampling plan would help to achieve
z

Higher productivity

Avoiding production losses

Reducing inspection cost

Maintaining smooth business relations and

Healthy growth of business

The behavior of a sampling of a sampling plan is described by the sampling plans


Operating Characteristic (OC) curve. Acceptance sampling makes use of standard
table such as the Dodge-Rowing Sampling Tables of Military Standards 105D (MIL
STD-105D).
Check Your Progress 2
1. Define P-chart.
.
.
2. What is NP-chart?
.
.

7.11 ACCEPTANCE SAMPLING PLAN


Acceptance control charts are acceptance -sampling plans that are converted into chart
form for implementation. They control he producers point and the consumers point
of the Operating Curve (OC-curve).
Harold Dodge pointed in 1969 that Acceptance Quality Control is not the same as
Acceptance Sampling. The latter depends on specific sampling plans, which when
implemented indicate the conditions for acceptance or rejection of the immediate lot
that is being inspected. The former may be implemented in the form of an Acceptance
Control Chart.

The control limits for the Acceptance Control Chart are computed using the
specification limits and the standard deviation of what is being monitored.
Acceptance charts provide a valid visible means for making acceptance-sampling
decisions. They can be in the case of variable (actual Measurements) data.

7.11.1 Sampling Plans


Sampling plans are used to make product disposition decisions. They decide which
lots of product to accept and release and which lots to reject and either rework or
discard. Ideally, a sampling plan should reject all bad lots while accepting all
good lots.
However, because the sampling plan bases it decision on a sample of the lot and not
the entire lot, there is always a chance of making an incorrect decision. The behavior
of a sampling plan is described by the sampling plans Operating Characteristic (OC)
curve.
On the other side of the OC curve, the customer wishes to be protected from accepting
poor quality from the producer. So the consumer establishes a criterion, the lot
tolerance percent defective or LTPD. Here the idea is to only accept poor quality
product with a very low probability. MILSTD. Plans has been used for over 50 years
to achieve these goals. Sampling risks are affected by lot size, sample size and the
acceptance number.

7.11.2 Characteristics of a Good Sampling Plan


1. The index AQL, used to define quality should reflect the needs of the consumer
and producer and not be chosen primarily for statistical convenience.
2. The sampling risks should be quantified (OC Curve). The producer should have
adequate protection against rejection of good lots and the consumer should be
protected against acceptance of bad lots.
3. Plan should minimize the total cost of inspection.
4. The plan should make use of other knowledge of process capability, vendor
details etc.
5. The plan should have a built in flexibility to change in lot size etc.
6. The measurement required by the plans should prove to be useful in estimating
individual lot quantity and long-term requirements.
7. The plan should be simple to explain and administer

7.11.3 Points to Remember while Using Acceptance Sampling


z

The protection level provided by a sampling plan is described by what it accepts


its AQL - and what it rejectsits LTPD.

Selecting a statistically valid sampling plan requires stating the objective of the
inspection, selecting the appropriate AQL and LTPD, and then choosing a
sampling plan that provides the desired protection.

Companies must know the AQL and LTPD are substantially equivalent
procedures, so costs can sometimes be reduced by using equivalent double,
multiple, or variables sampling plans as alternative to single sampling plans.

SPC cannot serve as a replacement for a acceptance sampling. The two techniques
should be combined by using the same data to control the process and to make
product disposition decisions.

SPC does not eliminate the need for acceptance sampling. In Statistical Process
Control Charts are used to make process control and process improvement decisions,

135
Management Process - 2

136
Total Quality Service Management

and actions are taken on the process to ensure that future products are good. In
contrast, sampling plans are used to make product disposition decisions, and actions
are taken on previously produced lots to ensure the quality of released product.
In an ideal situation with SPC in place no defectives will ever be made and
Acceptance sampling will become unnecessary. However, in practice all processes
have some risk of failure, and thus quality of released product.

7.12 VENDOR SELECTION


Vendor selection and evaluation are arguably some of the most critical functions for
the success of an organisation. The competitive international business environment
has forced many organisations to focus on supply chain management to cope with
highly increasing competition. The proposed model provides a methodology called the
'green channel concept' for establishing a vendor performance rating and cost
reduction. Those suppliers who pass the devised guideline will be termed as 'green
channel suppliers' and their supplies will be inspected very rarely. This leads to the
reduction of inspection costs, since some components from some of the suppliers need
not be inspected. Moreover, this will minimise the inventory of the organisation by
having a Just-in-Time (JIT) supply of such materials from those suppliers. The
objective of this paper is to develop a model for the performance rating on the
suppliers and identify the green channel suppliers. The application process has been
accomplished in a tyre manufacturing company established in India.
Check Your Progress 3
Fill in the blanks:
1. The _____________ chart, also known as the 'Shewhart chart' or 'processbehaviour chart.
2. A control chart is a tool used in ____________________.
3. ____________________ charts are generally employed for plotting
variability of sub-groups with sizes greater than 10.
4. ________________is used for plotting variability when sub-group size is
less than 10.

7.13 VENDOR RATING


A successful vendor needs strong senior management, and key divisions must be
committed to the vendor's long-term goals. The vendor's organizational structure must
allow for future growth, and its workforce must have the necessary skills to fulfill the
vendor's strategic ambitions.
A vendor rating evaluator considers the following points:
z

How well-run and defined are the vendor's organization and divisional structures?

Has the organization been defined to enable growth, or is it fragmented and


disjointed?

How well-equipped is the vendor's senior management able to lead the company?

Does the vendor's senior management have the breadth and depth to provide
leadership?

Does the vendor have the "people architecture" (skill sets and best practices) to
fulfill its strategic ambitions?

Evaluator looks into the major product lines and how the vendor delivers, supports
and markets its major products. Vendors may provide products (for example,

hardware, software and networking) and services (for example, implementation,


consulting and integration).
Vendor ratings consider various factors regarding vendor products. Some are as
simple as whether Evaluator has heard of success with or complaints about a vendors
products from Evaluator clients. We also consider how well a product fits into a
vendor's overall strategy, and whether it is "complete" that is, whether there are
holes in the depth and breadth of offerings. Support is also an important issue.
If the vendor offering is a service, ratings will consider whether the vendor is
recognized for delivering high-quality services and whether the vendor is clearly
positioned in the services market. Other considerations are whether the vendor has
demonstrated the ability to manage IT assets and deliver consistent technology
performance through outsourcing. Does the vendor have a track record of delivering
projects on time and on budget?
A successful vendor generally invests in and manages its services with specific
objectives for performance, business outcome and quality. To evaluate how well a
vendor measures these objectives, vendor ratings will consider what type of metrics
the vendor employs.
Technology considerations are based on whether a vendor is being proactive or
reactive with regard to technology in its products.
Evaluator evaluates:
z

Is the vendor offering new technology solutions or is it just reacting to marketing


hype?

Is the vendor's technology architecture contemporary?

Is the vendor's technology truly innovative?

Is the vendor leveraging R&D toward its products' growth?

If the vendor's product is a suite, is it based on a common architecture?

Is the vendor tied to specific applications or technologies, and does it allow its
customers to build their own solutions using best-of-breed technologies?

Is the technology extendible and flexible to be able to adapt to changing


environments?

7.13.1 Pricing
Pricing considerations include basic components of competitiveness and fairness.
Prices should be fair, and pricing policies should be made public, with clear terms and
conditions. An evaluator will note a vendor's established pricing practices and
discounting policies. He will also consider whether a vendor is trying to buy its
business (for example, engaging in pricing practices that it cannot sustain in the
future). Low prices do a customer little good if the vendor's pricing strategies are
endangering the vendor's long-term financial health. Without sufficient profit margins
on products and services, customers may go to a vendor for support to find out that the
vendor is no longer there or that its ability to support its products has deteriorated to
the point of uselessness.

7.13.2 Sales/Distribution
Successful vendors will have sales channels that are specifically focused on a vendor's
target, with partnerships that are strong enough to sustain profitable relationships. The
sales strategy will minimize channel conflict while providing enough diversity
through original equipment manufacturer agreements, value-added resellers, and
direct and online sales. Evaluator evaluates the impact of partnerships on sales

137
Management Process - 2

138
Total Quality Service Management

strategies. We also consider whether a vendor's offerings are tailored specifically


toward enterprises of a specific size or vertical market, or whether the vendor is taking
a "one-size-fits-all" approach.
To get a good rating, vendors must have the ability to support their legacy products
and new products. Vendors must also be sufficiently familiar with their partners'
products to have them step in when necessary. Enterprises should pay particular
attention to links between product support and development, and whether a vendor has
the depth of skills to support a new product line. We report on issues that Evaluator
clients have had with vendors concerning support of specific products or services.
Another important consideration with regard to support is whether a vendor uses
services to grow its business as opposed to using services to support its business. For
example, does the vendor have service customers who are not customers of its product
divisions?

7.14 LET US SUM UP


The control chart, also known as the 'Shewhart chart' or 'process-behaviour chart'
is a tool used to determine whether a manufacturing or business process is in a state of
statistical control or not. If the chart indicates that the process is currently under
control then it can be used with confidence to predict the future performance of the
process. If the chart indicates that the process being monitored is not in control, the
pattern it reveals can help determine the source of variation to be eliminated to bring
the process back into control. A control chart is a specific kind of run chart that allows
significant change to be differentiated from the natural variability of the process. This
is a key to effective process control and improvement.

7.15 LESSON END ACTIVITY


Write a note on the concept of acceptance sampling plan.

7.16 KEYWORDS
Acceptance Sampling:Acceptance sampling is a quality assurance technique used for
inspecting incoming material and outgoing (finished) products.
Control Chart: In statistical process control, the control chart, also known as the
'Shewhart chart' or 'process-behaviour chart' is a tool used to determine whether a
manufacturing or business process is in a state of statistical control or not.
Check Sheet: It is one of the seven tools of quality and is customized form, or tally
sheet, designed by the user.
Vendor Rating: Vendor rating is a process having strategic implications for managing
a supply chain.

7.17 QUESTIONS FOR DISCUSSION


1. Briefly explain the different types of charts.
2. Describe the characteristic of good sampling plan.
3. Explain about the any charts with its advantages and limitations.

Check Your Progress: Model Answers


CYP 1
1. It is a tool used to determine whether a manufacturing or business process is
in a state of statistical control or not.
2. The control chart was invented by Walter A. Shewhart while working for
Bell Labs in the 1920s.
CYP 2
1. In industrial statistics, the p-chart is a type of control chart that is very
similar to the X-bar chart except that the statistic being plotted is the sample
proportion rather than the sample mean.
2. In industrial statistics, the NP-chart is a type of control chart that is very
similar to the p-chart except that the statistic being plotted is a number count
rather than a sample proportion of items.
CYP 3
1. Control
2. Quality control
3. Xbar-S
4. Xbar-R chart

7.18 SUGGESTED READINGS


Deming, W. E. (1975), On Probability as a Basis for Action. The American Statistician.
29(4), pp146-152.
Deming, W. E. (1982), Out of the Crisis: Quality, Productivity and Competitive
Oakland, J. (2002) Statistical Process Control.
Shewhart, W. A. (1931), Economic Control of Quality of Manufactured Product.
Shewhart, W. A. (1939), Statistical Method from the Viewpoint of Quality Control.
Wheeler, D. J. (2000), Normality and the Process-Behaviour Chart.
Wheeler, D. J. & Chambers, D. S. (1992), Understanding Statistical Process Control.
Wheeler, Donald J. (1999). Understanding Variation: The Key to Managing Chaos - 2nd
Edition. SPC Press, Inc.

139
Management Process - 2

141
Management of Quality

UNIT 1

UNIT IV

142
Total Quality Service Management

143
Management of Quality

LESSON

8
MANAGEMENT OF QUALITY
CONTENTS
8.0

Aims and Objectives

8.1

Introduction

8.2

Quality Improvement Methods

8.3

Quality Improvement Tools

8.4

8.3.1

Control Charts

8.3.2

Deming PDCA

8.3.3

Juran

8.3.4

Value Analysis Teams

8.3.5

Teams

8.3.6

TQM

8.3.7

ISO/QS9000

8.3.8

Design of Experiments (DOE)

8.3.9

Brecker Process Improvement

Quality Improvement Steps


8.4.1

Understand Processes and Pinpoint Critical Problems

8.4.2

Establish Control and Reduce Variation

8.4.3

Determine Process Capability

8.4.4

Design Experiments to Improve Products or Processes

8.4.5

Assess Product Reliability

8.5

Let us Sum up

8.6

Lesson End Activity

8.7

Keywords

8.8

Questions for Discussion

8.9

Suggested Readings

8.0 AIMS AND OBJECTIVES


After studying this lesson, you should be able to:
z

Know the Quality management concepts

Study the various quality management methods

Learn about the advanced quality methods

Describe the advantages and limitation of each methods

144
Total Quality Service Management

8.1 INTRODUCTION
Quality management is not a recent phenomenon. Advanced civilizations that
supported the arts and crafts allowed clients to choose goods meeting higher quality
standards than normal goods. In societies where art and craft (and craftsmanship) were
valued, one of the responsibilities of a master craftsman (and similarly for artists) was
to lead their studio, train and supervise the work of their craftsmen and apprentices.
The master craftsman set standards, reviewed the work of others and ordered rework
and revision as necessary. One of the limitations of the craft approach was that
relatively few goods could be produced, on the other hand an advantage was that each
item produced could be individually shaped to suit the client. This craft based
approach to quality and the practices used were major inputs when quality
management was created as a management science.
During the industrial revolution, the importance of craftsmen was diminished as mass
production and repetitive work practices were instituted. The aim was to produce large
numbers of the same goods. The first proponent in the US for this approach was Eli
Whitney who proposed (interchangeable) parts manufacture for muskets, hence
producing the identical components and creating a musket assembly line. The next
step forward was promoted by several people including Frederick Winslow Taylor a
mechanical engineer who sought to improve industrial efficiency. He is sometimes
called "the father of scientific management." He was one of the intellectual leaders of
the Efficiency Movement and part of his approach laid a further foundation for quality
management, including aspects like standardization and adopting improved practices.
Henry Ford also was important in bringing process and quality management practices
into operation in his assembly lines. In Germany, Karl Friedrich Benz, often called the
inventor of the motor car, was pursuing similar assembly and production practices,
although real mass production was properly initiated in Volkswagen after world war
two. From this period onwards, north American companies focused predominantly
upon production against lower cost with increased efficiency.
Walter A. Shewhart made a major step in the evolution towards quality management
by creating a method for quality control for production, using statistical methods, first
proposed in 1924. This became the foundation for his ongoing work on statistical
quality control. W. Edwards Deming later applied statistical process control methods
in the United States during World War II, thereby successfully improving quality in
the manufacture of munitions and other strategically important products.
Quality leadership from a national perspective has changed over the past five to six
decades. After the second world war, Japan decided to make quality improvement a
national imperative as part of rebuilding their economy, and sought the help of
Shewhart, Deming and Juran, amongst others. W. Edwards Deming championed
Shewhart's ideas in Japan from 1950 onwards. He is probably best known for his
management philosophy establishing quality, productivity, and competitive position.
He has formulated 14 points of attention for managers, which are a high level
abstraction of many of his deep insights. They should be interpreted by learning and
understanding the deeper insights and include:
z

Break down barriers between departments

Management should learn their responsibilities, and take on leadership

Improve constantly

Institute a programme of education and self-improvement

In the 1950s and 1960s, Japanese goods were synonymous with cheapness and low
quality, but over time their quality initiatives began to be successful, with Japan
achieving very high levels of quality in products from the 1970s onward. For example,
Japanese cars regularly top the J.D. Power customer satisfaction ratings. In the 1980s

Deming was asked by Ford Motor Company to start a quality initiative after they
realized that they were falling behind Japanese manufacturers. A number of highly
successful quality initiatives have been invented by the Japanese (see for example on
this page: Taguchi, QFD, Toyota Production System. Many of the methods not only
provide techniques but also have associated quality culture aspects (i.e. people
factors). These methods are now adopted by the same western countries that decades
earlier derided Japanese methods.
Customers recognize that quality is an important attribute in products and services.
Suppliers recognize that quality can be an important differentiator between their own
offerings and those of competitors (quality differentiation is also called the quality
gap). In the past two decades this quality gap has been greatly reduced between
competitive products and services. This is partly due to the contracting (also called
outsourcing) of manufacture to countries like India and China, as well
internationalization of trade and competition. These countries amongst many others
have raised their own standards of quality in order to meet International standards and
customer demands. The ISO 9000 series of standards are probably the best known
International standards for quality management.
Quality management is a method for ensuring that all the activities necessary to
design, develop and implement a product or service are effective and efficient with
respect to the system and its performance. Quality management can be considered to
have three main components: quality control, quality assurance and quality
improvement. Quality management is focused not only on product quality, but also
the means to achieve it. Quality management therefore uses quality assurance and
control of processes as well as products to achieve more consistent quality. Quality
Management is all activities of the overall management function that determine the
quality policy, objectives and responsibilities and implement them by means such as
quality control and quality improvements within a quality system.

8.2 QUALITY IMPROVEMENT METHODS


There are many methods for quality improvement. These cover product improvement,
process improvement and people based improvement. In the following list are
methods of quality management and techniques that incorporate and drive quality
improvement.
1. ISO 9004:2000 - Guidelines for performance improvement.
2. ISO 15504-4: 2005 - Information technology Process assessment Part 4:
Guidance on use for process improvement and process capability determination.
3. QFD - Quality Function Deployment, also known as the House of Quality
approach.
4. Kaizen - Japanese for change for the better; the common English usage is
continual improvement.
5. Zero Defect Program - created by NEC Corporation of Japan, based upon
Statistical Process Control and one of the inputs for the inventors of Six Sigma.
6. Six Sigma - Six Sigma is based upon Statistical Process Control.
7. PDCA - Plan Do Check Act cycle for quality control purposes.
8. Six Sigma's DMAIC method (Design, Measure, Analyze, Improve, Control) for
more general improvement purposes.
9. Quality circle - a group (people oriented) approach to improvement.
10. Taguchi methods - statistical oriented methods including Quality robustness,
Quality loss function and Target specifications.

145
Management of Quality

146
Total Quality Service Management

11. The Toyota Production System reworked in the west into Lean Manufacturing.
12. Kansei Engineering, an approach that focuses on capturing customer emotional
feedback about products to drive improvement.
13. TQM - Total Quality Management is a management strategy aimed at embedding
awareness of quality in all organizational processes. First promoted in Japan with
the Deming prize which was adopted and adapted in USA as the Malcolm
Baldrige National Quality Award and in Europe as the European Foundation for
Quality Management award (each with their own variations).
14. TRIZ meaning "Theory of inventive problem solving".
15. BPR - Business process reengineering, a management approach aiming at 'clean
slate' improvements (i.e. ignoring existing practices).
Proponents of each approach have sought to improve them as well as apply them to
enterprise types not originally targeted. For example, Six Sigma was designed for
manufacturing but has spread to service enterprises. Each of these approaches and
methods has met with success but also with failures. Some of the common
differentiators between success and failure include commitment, knowledge and
expertise to guide improvement, scope of change/improvement desired (Big Bang
type changes tend to fail more often compared to smaller changes) and adaption to
enterprise cultures. For example, quality circles do not work well in every enterprise
(and are even discouraged by some managers), and relatively few TQM participating
enterprises have won the national quality awards. There has been well publicized
failures of BPR, as well as Six Sigma. Enterprises therefore need to consider carefully
which quality improvement methods to adopt, and certainly should not adopt all those
listed here. It is important not to underestimate the people factors, such as culture, in
selecting a quality improvement approach. Any improvement (change) takes time to
implement, gain acceptance and stabilize as accepted practice. Improvement must
allow pauses between implementing new changes so that the change is stabilized and
assessed as a real improvement, before the next improvement is made (hence
continual improvement, not continuous improvement). Improvements that change the
culture take longer as they have to overcome greater resistance to change. It is easier
and often more effective to work within the existing cultural boundaries and make
small improvements (i.e. Kaizen) than to make major transformational changes. Use
of Kaizen in Japan was a major reason for the creation of Japanese industrial and
economic strength. On the other hand, transformational change works best when an
enterprise faces a crisis and needs to make major changes in order to survive. In
Japan, the land of Kaizen, Carlos Ghosn led a transformational change at Nissan
Motor Company which was in a financial and operational crisis. Well organized
quality improvement programs take all these factors into account when selecting the
quality improvement methods.
Check Your Progress 1
1. Define quality.
.
.
2. Define BPR.
.
.

8.3 QUALITY IMPROVEMENT TOOLS


Many of today's problem solving and quality improvement tools are:
z

Control charts

Lot sampling

Process capability

Value Analysis (VA)

Were first used extensively in World War II in response to the need for tremendous
volumes of high quality, lower cost materials. More recently, Quality Circles, TQM,
and Kaizen have demonstrated the power of team-base process improvement. Process
Capability and Design of Experiments (DOE) have come to the fore in Six Sigma.
Brecker Associates has combined Value Analysis and QS9000 techniques with Six
Sigma in a more powerful Process Improvement methodology.

8.3.1 Control Charts


Statistical Quality Control (SQC) or Statistical Process Control (SPC) for repetitive,
high volume production began in the 1930's when Shewhart developed control charts.
Small production samples were measured periodically to monitor quality. Sample
mean (Xbar) and range (R) charts were used to detect when a process was going out
of "economic control."

Figure 8.1: Sample Mean and Range Charts

The causes of variations that exceed the upper and lower control limits (UCL and
LCL respectively), such as at "A", must be eliminated in order to bring the process
back into statistical control.

8.3.2 Deming PDCA


The Deming / Shewhart Cycle was especially useful in solving these quality problems.
The PDCA Circle denotes continuous improvement by repeating the basic cycle of

147
Management of Quality

148
Total Quality Service Management

Figure 8.2: The Carnegie Plan (1948)


z

Enter the data

Analyze the problem

Plan the solution

"Do" It

Check Measure the change

odify as needed

As long as significant improvements are obtained.


Since 1948, engineers at Carnegie Tech (now Carnegie Mellon University) have been
trained to apply the Carnegie problem solving methodology in design. This
methodology parallels the Deming PDCA cycle with the addition of an initial step to
"Define the Problem."
In the last 20 years, many companies have adopted similar problem-solving models
often with 8-10 steps or more. Special attention is given to solving process problems.
Problems that occur repetitively. Process improvement models add such steps as
assigning process owners, forming teams, and establishing process measures.

8.3.3 Juran
Juran focused on quality control with the "trilogy" planning

Figure 8.3: Juran Quality Control

quality control.

An SPC representation of the trilogy is used in the figure at the right. A spec is
developed usually with a tolerance. A control chart is used to get the process
under control. As special causes are removed to improve the process , variation is
reduced. These are the basic steps in Six Sigma process improvement.
When the total quality management movement (TQM) gained prominence in the
1980's, the product planning step was expanded to include a broader evaluation of
customer needs (similar to VA and QFD ).

8.3.4 Value Analysis Teams


In Value Analysis, developed by Larry Miles at GE during WWII, multi-functional
teams (design, production engineering, purchasing, quality) use a formalized process
to identify alternative materials, manufacturing processes, and designs to improve
function while reducing costs. Changes
The very structured function diagramming and costing techniques provide data for
quantified (cost and value) decision-making. The whole VA process is a precursor of
the MAI Measure, Analyze, and Improvein the broad based Six Sigma
improvement process. Six Sigma adds the C or Control step.
The brainstorming methodology in VA has been widely emulated in process
improvement teams. Ideas are generated in a non-critical, free-flowing process. Then,
ideas are grouped using affinity diagramming techniques and refined as needed for
practicality.

8.3.5 Teams
Japanese Quality Circles demonstrated the effectiveness of worker teams in
identifying and solving process problems in their work area. However, most serious
quality problems in non-manufacturing (as well as manufacturing) organizations arise
in activities that involve more than one department/function.
Quality Circles has evolved into Kaizen, which utilizes multi-functional worker and
production engineering teams to improve quality and productivity in a given process.
The teams use TQM techniques in implementing "Lean" manufacturing methods.

8.3.6 TQM
Total Quality Management (TQM) emphasized using multi-functional teams
(professional staff and workers from all departments involved) to solve problems. The
teams were trained to use basic statistical tools to collect and analyze data.
z

Check sheets

Pareto diagrams

Histograms

Run charts

Flow charts

Cause and effect diagrams

Force field analysis

Scatter diagrams

Flow charts or process maps were used to visualize the flow of product or documents
through a series of process steps. The predominant goal of Process Improvement
Teams was to eliminate the non-value adding steps and to resolve quality problems in
order to reduce the (cycle) time needed to complete the process.

149
Management of Quality

150
Total Quality Service Management

Figure 8.4: Preparing the Report

8.3.7 ISO/QS9000
ISO9000 was developed as a standard for business quality systems. To be certified,
businesses needed to document their quality system and insure adherence to it with
reviews and audits. A key element was the identification of non-conformances and a
Corrective Action System to prevent reoccurences. Specific quality improvement
methodologies were not prescribed.
The automotive industry adopted the QS9000 standard for their suppliers to require
the use of specific practices in quality planning and in production operations.
z

Advanced Product Quality Plans

Design/Process Failure Mode and Effects Analysis (FMEA)

Production Part Approval Process

Control Plans (for production)

Measurement Systems Analysis

The Juran methodology was central to maintaining control of special product and
process characteristics (CTQs).

8.3.8 Design of Experiments (DOE)


Six Sigma process improvement emphasizes getting quantitative data on the effect of
key variables in production, service, or administrative processes. Many process
improvement efforts go astray because people assume they know all of the key
variables key variables and especially interactions between variables are not always
obvious. Simple statistical data gathering or testing can be used to verify or determine
these key variables.
In DOE, a series of experiments (tests) are conducted to determine the relative
importance of the key variables and to assist in selecting optimum operating values.
The number of variables is usually limited so that the time, effort, and cost of testing
is not excessive. After the array of tests (experiments) are complete, graphical
techniques such as at the right can be used to illustrate the results.
DOE is especially useful in simplifying the improvement process for complex
technical and administrative processes.

151
Management of Quality

Figure 8.5: The Diagram illustrating significance of a direct effect


and a first-order interaction

8.3.9 Brecker Process Improvement


Brecker Associates integrated the into a more powerful Process Improvement
methodology that gets better results, faster, and with less effort. Identifying the most
promising and rewarding process improvement opportunities and re-designing the
products and processes involved are the focus of workshops in Phases 2 and 3 of the
Brecker Six Sigma Improvement Methodology.

Figure 8.6: Brecker Six Sigma Improvement Methodology

Phase 2: Process improvement solutions are identified and quantified


Value Analysis techniques are used to collect business, product, and process data on
productivity, quality, and costs. Workshop participants include marketing, design,
operations, quality, purchasing, service personnel as well as suppliers, workers, and
customers as appropriate. Customer requirements are determined and quantified using
QFD techniques. Process mapping (from TQM) is used to develop an understanding
of the product / service and the processes used to produce and deliver it. Quality
issues are raised and root causes are sought. VA brainstorming is used to identify
potential improvements. Ideas are refined and the benefits of the most promising
improvements are quantified. Specific product and process re-design projects are
selected for Six Sigma Leaders and/or teams to undertake in Phase 3.
Phase 3: Multi-functional teams improve key products and processes
Design and operations teams (with other members as appropriate) are charged with redesigning specific components and/or processes. They examine the product and
process information in detail. Critical-To-Quality parameters are determined for
products and for processes. DOEs may be run to identify CTQ parameters and assign
target values. Process capability data is obtained. Additional productivity and quality
tools, such as et-are used as appropriate to identify specific improvement
opportunities. VA brainstorming may be used to identify and refine specific design
changes. Specific re-design recommendations are quantified. When approved,
implementation plans are made and executed. The PDCA cycle is used until the
desired improvements are obtained.

152
Total Quality Service Management

Check Your Progress 2


Fill in the blanks:
1. NABL stands for _____________________.
2. JIT stands for __________________________.
3. Statistical Process Control (SPC) is a scientific and inexpensive way to
prevent defects and is an effective check against assignable causes of
________________.
4. A ______________ audit is an assessment of the final product or service.

8.4 QUALITY IMPROVEMENT STEPS


The following are the quality improvement steps:

8.4.1 Understand Processes and Pinpoint Critical Problems


The dynamic graphics environment in SAS/QC makes it easy to prioritize quality
improvement activities. Pareto charts based on a single set of quality problems, or
classified by multiple variables of interest allow for quick identification of those
causes that require focused improvement efforts. Analysis of means techniques allows
the graphical comparison of response measurements from a number of groups to
determine which are different.

8.4.2 Establish Control and Reduce Variation


You can monitor process data with a variety of control charts, including Shewhart
chartsthe most popular method for studying process variation. You can reuse
control limits created during a previous analysis, automatically adjust control limits
for varying sample sizes and perform tests for special causes (Western Electric rules,
runs tests). You can also create cumulative sum control charts for means or individual
measurements, generate control charts for uniformly or exponentially weighted
moving averages and produce historical control charts to display the evolution of a
process over time.

8.4.3 Determine Process Capability


After establishing statistical control, calculate capability indices and use histograms
(optionally superimposed with specification limits and fitted curves), quantile-quantile
plots and probability plots to determine how well your product meets design
specifications.

8.4.4 Design Experiments to Improve Products or Processes


The ADX Interface guides you through the entire process of designing and analyzing
statistical experiments. You can generate factorial, fractional factorial, and mixedlevel designs, with or without blocking. And, for situations where standard designs are
not appropriate, you can construct A-, G-, and D-optimal designs.

8.4.5 Assess Product Reliability


Understanding the risk of product or component failure allows for the formulation of
warranty plans for future products and the schedule maintenance actions to assure a
quality customer experience. Reliability engineers and statisticians can construct
probability plots and fit life distributions with right and interval censored data, fit
regression models, including accelerated life test models and analyze recurrence data
from repairable systems.

Powerful and versatile with a wide range of statistical and graphical methods, SAS
provides software for quality improvement activities across organizations.

8.5 LET US SUM UP


Quality management can be considered to have three main components: quality
control, quality assurance and quality improvement. Quality management is focused
not only on product quality, but also the means to achieve it. Quality management
therefore uses quality assurance and control of processes as well as products to
achieve more consistent quality. Quality Management is all activities of the overall
management function that determine the quality policy, objectives and responsibilities
and implement them by means such as quality control and quality improvements
within a quality system.

8.6 LESSON END ACTIVITY


Visit a limited company engaged in the manufacturing of FMCGs and study the
techniques of quality management used by it.

8.7 KEYWORDS
Quality Management: It is a method for ensuring that all the activities necessary to
design, develop and implement a product or service are effective and efficient with
respect to the system and its performance.
TQM: Total Quality Management (TQM) emphasized using multi-functional teams
(professional staff and workers from all departments involved) to solve problems.
Kaizen: Japanese for change for the better; the common English usage is continual
improvement.
QFD: Quality Function Deployment, also known as the House of Quality approach.

8.8 QUESTIONS FOR DISCUSSION


1. Briefly explain the concept of quality management.
2. Write the steps followed for improvement of quality.
3. Answer the following questions:
a) JIT
b) Quality auditing

Check Your Progress: Model Answers


CYP 1
1. Quality is an important attribute in products and services.
2. BPR - Business process reengineering, a management approach aiming at
'clean slate' improvements (i.e. ignoring existing practices).
CYP 2
1. National Accreditation Board for Testing and Calibration Laboratories.
2. Just in Time
3. process variation
4. product

153
Management of Quality

154
Total Quality Service Management

8.9 SUGGESTED READINGS


Deming, W. E. (1975), On Probability as a Basis for Action. The American Statistician.
29(4), pp146-152.
Deming, W. E. (1982), Out of the Crisis: Quality, Productivity and Competitive.
Oakland, J. (2002) Statistical Process Control.
Shewhart, W. A. (1931), Economic Control of Quality of Manufactured Product.
Shewhart, W. A. (1939), Statistical Method from the Viewpoint of Quality Control.
Wheeler, D. J. (2000), Normality and the Process-Behaviour Chart.
Wheeler, D. J. & Chambers, D. S. (1992), Understanding Statistical Process Control.
Wheeler, Donald J. (1999). Understanding Variation: The Key to Managing Chaos - 2nd
Edition. SPC Press, Inc.

155
Quality Improvement Methods

LESSON

9
QUALITY IMPROVEMENT METHODS
CONTENTS
9.0

Aims and Objectives

9.1

Introduction

9.2

Kaizen Policy
9.2.1

9.3

Tools used In Kaizen

Quality Audits
9.3.1

Types of Quality Audit

9.4

Medical Audit

9.5

Accredition

9.6

Nursing Care Standards

9.7

Six Sigma

9.8

9.7.1

Significant Elements of Six Sigma Methodology

9.7.2

Six Sigma Methodology

9.7.3

DMAIC

Just-in-Time
9.8.1

Philosophy

9.8.2

Stocks

9.8.3

Transaction Cost Approach

9.8.4

Environmental Concerns

9.8.5

Price Volatility

9.8.6

Quality Volatility

9.8.7

Demand Stability

9.9

NABL

9.10

Let us Sum up

9.11

Lesson End Activity

9.12

Keywords

9.13

Questions for Discussion

9.14

Suggested Readings

156
Total Quality Service Management

9.0 AIMS AND OBJECTIVES


After studying this lesson, you should be able to:
z

Know the various methods of quality

Study the concept of Just in time

Understand the use and importance of the NABL concept

9.1 INTRODUCTION
Kaizen is management concept originated by the Japanese in order to continuously
effect incremental changes for the better, involving everybody within the
organization. In Japanese Kai means change, and Zen means good or for the
better. Kaizen requires no or little investment. The term Kaizen was made famous by
Masaaki Imai in his book, Kaizeno - The Key to Japans Competitive Success.
Kaizen means continuing improvement involving everyone managers and workers
alike. Kaizen improvements are small and incremental. But the Kaizen process brings
about dramatic results over time. The Kaizen concept explains why companies cannot
remain static for long in Japan.
The philosophy of Kaizen is perhaps the most representative contribution of Japanese
management thinking in the eighties and nineties. It assumes that our way life be it
our working life, our social life, or our home lifeshould be the focus of constant
improvement efforts.
Kaizen is aimed at producing more and more value with less and less wastage (higher
efficiency), attaining better working environment, and developing stable processes by
standardization. Three things required for Kaizen are:
z

Operating Practices: Expose new improvement opportunities. Practice such as


JIT reveal waste and inefficiency as well as poor quality.

Total Involvement: Every employee strives for improvement. Greater coordination and communication between departments.

Training: Develop problem-solving skills through training.

Everyone in the organization must genuinely believe in the idea of Kaizen and must
be given education and training for contributing to continuously improve. Everyone
must be willing to:
z

Learn

Communication

Be disciplined

Get involved and

Change in order to maximize gains from Kaizen.

Kaizen focuses on small, gradual, and frequent improvements over the long term.
Kaizen has shown that business can and should have a human face.
Kaizen Events when repeated have three effects equally beneficial. They generate
z

Profit

Savings and

A habit of Success

Habits create a culture: Lean manufacturing and other best practices are the results of
this. Kaizen is the emphasis on satisfying the consumer and society in general.

Kaizen concentrates at improving the process rather than at achieving certain results.
Such managerial attitudes make a major difference in how an organization masters
change and achieves improvements.
Kaizen implementation operates on the following principles:
z

That human resources are the companys most important asset;

That success can not be achieved by some occasional radical changes alone, but
by incremental yet consistently arriving improvements; and

That improvement must be based on a statistical or quantitative study of the


performance of the process.

9.2 KAIZEN POLICY


z

Practice concepts of zero losses in every sphere of activity.

Relentless pursuit to achieve cost reduction targets in all resources.

Relentless pursuit to improve over all plant equipment effectiveness.

Extensive use of Preventive Maintenance analysis as a tool for eliminating losses.

Focus on easy handling of operators.

Kaizen activities try to thoroughly eliminate the following 16 major losses in an


organization:
Category

Losses

Losses that impede

Failure losses Breakdowns

Equipment efficiency

Setup/adjustment losses

Cutting blade loss

Start up loss

Minor stoppage/Idling loss

Speed loss operating at low speeds.

Defect /rework loss

Scheduled downtime loss

Management loss

Operating motion loss

Line organization loss

Logistic loss

Measurement and adjustment loss

Energy loss

Die, Jig and tool breakage loss

Yield loss.

Losses that impede human work efficiency

Losses that improve impede effective use of


production resources

These losses can also be grouped as sporadic and chronic losses.


Sporadic Loss refers to losses due to sporadic problem, which is sudden adverse
change. The remedy for this is to restore the status quo by taking corrective action or
repairing.
Chronic loss on the other hand refers to losses due to chronic problems. Chronic
problems are long standing adverse situation. The remedy here is not corrective action
or repair but refinement or renovation and even reinvention.

157
Quality Improvement Methods

158
Total Quality Service Management

Aspect

Sporadic Loss

Chronic Loss

Causation

Causes for this failure are


easily traceable. Cause-effect
relationship is simple to trace.

This loss cannot be easily


identified and solved, inspite of
application of various counter
measures.

Remedy

Easy to establish a remedial


measure.

Impact/Loss

A single loss can be costly.

Loss is caused due to hidden


defects in machine, equipment
and methods.
A single cause is rare. Usually
a combination of causes.

Frequency

The frequency of occurrence is


low and occasional.

The frequency of occurrence is


more.

Corrective action

Line personnel in the


production can attend to this
problem.

Specialists in process
engineering, quality assurance
and maintenance people are
required.

9.2.1 Tools used in Kaizen are


z

Preventive Maintenance analysis

Why Why analysis

Summary of losses

Kaizen register

Kaizen summary sheet.

9.3 QUALITY AUDITS


Audit is the mechanism by which an organization can check whether or not its
operations are complying with all standards defined to meet its charter and objectives.
It is performed by a person (the auditor) or a group of persons (the audit team).
Audit is a planned, independent and documented assessment to determine whether
agreed-upon requirements are met. The purpose of audit is to collect objective
evidence to permit an informed judgment about the status of the systems or product
being audited.
Quality audit forms an important part of the Quality management system. The purpose
of Quality audits is:
z

To ensure that the company has documented standards or specifications on how to


do things, and

That these standards are complied with at all times.

Quality Audit can be defined as a systematic and independent examination to


determine whether quality activities and related results comply with planned
arrangements and whether these arrangements are implemented effectively and are
suitable to achieve the stated objectives.
A quality audit consists of
z

Preparing a list items (procedures, equipment set-ups, quality records,


measurements, etc.)

To check and going to the areas responsible for these items for an actual check or
audit of these items.

Audits should be planned on a regular so that each activity is audited at lease once in
the audit cycle. High-risk areas should be audited more often to ensure conformance.
An audit can also be carried out if a particular problem has risen, to establish the
source of the problem and document any corrective actions.
Reasons for Audits
z

Requirement by standards like ISO etc.

As a Control Mechanism Used By Management

As a tool For Continuous Improvement

To Correct Nonconformities in Systems

To assure ongoing systems operate as intended and required

The auditor proceeds using the audit plan or checklist as basis:


z

By asking questions,

Reviewing documents,

Checking record against specs,

Making measurements, etc.

To ensure that all audit items have adequate documentation and are implemented in
accordance with the documentation.
The Four Phases of Auditing
z

Planning and preparing for the audit

Collection of Information

Record and Grade Non-conformances

Evaluation of Number and Significance of Non-conformances

Assessment of Compliance to Requirements

Preparation of Findings

Closing Meeting Review

The Quality Audits need to be documented. It is important that auditing is done with
reference to the Quality Management System. Hence Audits should be constructed
against procedures from the Quality Manual. If it is not in the manual, then it should
not be audited.
Audits can be a positive tool for improving of all staff in the quality system. It helps
an organization accomplish its objectives by bringing a systematic, disciplined
approach to evaluate and improve the effectiveness of risk management, control, and
governance processes.

9.3.1 Types of Quality Audit


Basic Types of Audit: Audits can be considered as
z

Internal (First-party or self audits) and

External

Second-party audits; and

Third-party audits.

1. First-party Audits or Internal Audits: These audits [pertain to audits wherein the
auditors themselves are employees of the company being audited. It includes

159
Quality Improvement Methods

160
Total Quality Service Management

audits by the company employees, consultants and contractors. Internal auditing


is an independent, objective assurance and consulting activity designed to add
value and improve an organizations operations.
Some companies let people directly audit the areas they responsible for, while
some companies ask people to audit areas that are not under their jurisdiction.
Self-audit teams are usually composed of three or four people.
Internal Quality Audits are required to ensure that the quality system is working
effectively and is in conformance with the ISO 9001:2000 standard>Internal
Audits are key components of the QMS as they provide a means for measuring,
analyzing and improving the management system. Audits are also a very
important input to the Management Review process.
Regular internal Quality Audits is a powerful tool for any business to measure the
effectiveness of the Quality Management System. It is also a good management
tool that can be used to review processes and identify any weaknesses, risks and
areas of improvement.
2. External: Outsiders do external audit. It is called second-party audit when a direct
customer audits. When auditing by an independent person like an auditor of the
certifying agency is called third-party audit.
3. Second-party Audits involve a direct customer of the company being audited as
the auditor. A second party auditor has a direct interest in how well the auditee
adheres to the standard, even if he or she is not an employee of the auditee.
4.

Third-party Audits pertain to audits wherein the auditor is an independent, third


party entity not related in any way to the company and the companys customers.
Third-party auditors are usually hired by the company to conduct audits that will
help the company get certified a certain quality standard, such as ISO 9000. They
are also conducted on a regular basis to confirm that the organization continues to
follow the documented procedure.

Audits can also be categorized as:


z

Compliance Audits: A Compliance audit is typically an audit that compares a


companys defined systems against those required by the standard being audited
against.

System Audit: A System Audit is an audit where high-level company systems are
reviewed. Systems audits typically probe the interactivity (communication) of the
inter-related company systems and as such often cross functional area
boundaries. Typical Systems Audit includes.

Document Control

Nonconformance

Control of Measuring and Test Equipment

Process Audit: A process Audit is where the companys procedures are validated.
Processes are sub-parts of a system. As such, they are typically a part of a system
audit.

Product Audit: A product audit is an assessment of the final product or service.


Its fitness for use is evaluated against its intended purpose. It may be done
internally as Final Inspection. Externally customers may perform it.

External product audits are typically oriented to a specific customer.


A company most commonly does Product audits on its supplier. In some product
audits dimensional, electrical or other measurements may be taken and test results
may reviewed.

All the audits are useful only if the organization is able to learn from it. The nonconformities that come out of every audit have to be addressed. Efforts have to be
made to see that the same is eliminated. Audit can thus be considered as a journey
towards perfection.

9.4 MEDICAL AUDIT


Medical Audit is defined as the evaluation of medical care in retrospect thorough
analysis of medical records. It involves assessing current performance against set
standards and hence, in contrast to research, does not generate new knowledge. An
audit is a cyclical process which consists of defining standards, collecting data,
identifying areas for improvement, making necessary changes and back round to
defining new standards.
Medical Audit (MA) has a more specific meaning, and this is vital for the
measurement of the quality of care given to the practice population. MA requires
standard setting, data collection, comparison with standard's, review of data and
standards, review of current practice, change in that practice and further data
collection and comparison with the original data.
Check Your Progress 1
1. What do you mean by Kaizen?
.
.
2. Define Quality Audit.
.
.

9.5 ACCREDITION
Accreditation is a process in which, certification of competency, authority, or
credibility is presented.
Organizations that issue credentials or certify third parties against official standards
are themselves formally accredited by accreditation bodies; hence they are sometimes
known as "accredited certification bodies". The accreditation process ensures that
their certification practices are acceptable, typically meaning that they are competent
to test and certify third parties, behave ethically, and employ suitable quality
assurance.
One example of accreditation is the accreditation of testing laboratories and
certification specialists that are permitted to issue official certificates of compliance
with established standards, such as physical, chemical, forensic, quality, and security
standards.

9.6 NURSING CARE STANDARDS


Standards of Nursing Care = Standards of Care + Standards of Practice
To accomplish these objectives, a definition and format were developed. An SNC at
CMH includes standards of care and standards of practice.
The standard of care focuses on the recipient of care the patient. It states what the
patient can expect from the nurse. Progress toward expected outcomes is monitored.

161
Quality Improvement Methods

162
Total Quality Service Management

The standard of practice focuses on the provider of care the nurse. It describes what
the nurse does or how the nurse provides patient care to assist the patient to move
toward expected outcomes. It defines and describes how nurse practice at CMH.
Nurse are evaluated by the standard of practice.
The SNC is developed for a group of patients having common problems and needs. It
reflects a current level of practice within the community and national organization
standards. It is applied to a patient in a given population by the nurse providing care
for the patient.

9.7 SIX SIGMA


Six Sigma is the structures application of the tools and techniques of TQM applied on
a project basis to achieve strategic business goals with maximum efficiency. Sigma is
the Greek letter used to represent standard deviation in statistics and Six Sigma stands
for Six Standard Deviations from mean. It provides the techniques and tools to
improve the capability and reduce the defects in any process.
Sigma is a statistical unit of measure that reflects process capability. The sigma scale
of measure is perfectly correlated to such characteristics as defects-per-unit, parts per
million defective (PPM), and a probability of a failure/error.
The sigma value indicates how often defects are likely to occur. The higher the sigma
value, the less likely a process will produce defects. As sigma increases, costs go
down, cycle time goes down, and customer satisfaction goes up. These are indicated
in the table below:
Sigma

Yield%

DPM

Cost of quality

93.3

66807

25-40

99.379

6210

15-25

99.9767

233

5-15

99.99966

3.4

Less than 1

Bills Smith of Motorola pioneered the concept of Six-Sigma in 1985. He


demonstrated a correlation between the number of time a product was repaired during
manufacture and its life in the field. Another six sigma devotee is General Electric.
Motorola needed to improve the reliability of semiconductors and electronic products
in order to survive after being consistently beaten in the competitive marketplace by
the Japanese. Defect levels has to be reduced in the parts per million (ppm) rather
than in parts per hundred (%). Six Sigma revolutions was on after Motorola won the
Malcom Baldrige National Quality Award in 1988 and the secret of their success
became public knowledge.
The objective of Six Sigma Quality is to reduce process output variation so that six
Sigma revolutions lie between the mean and the nearest specification limit. The SixSigma means a measure of quality that strives for near perfection. Its main objective
is the implementation of a measurement based strategy that focuses on process
improvement.
Six Sigma is:
z

A measurement and management philosophy

Metrics for world-class organization

Customer focused

Eliminate variation

A tool set to make that change practical

Empowered people

A common language for discussing, measuring and comparing process


performance

Exponential improvement

A powerful; competitive advantage

The primary unit measure is Process sigma. It is determined from an analysis of the
number of defects observed in a process. Performance is compared to the Best-InClass sigma for that process. This is done to determine whether the process needs to
be improved or the product/service needs to be re-designed.
Achieving Six-Sigma in a process corresponds of not having more than 3.4 Defect
Parts Per Million (PPM) opportunities, also known as Defects Per Million
Opportunities (DPMO), to be produced.
It was intended to improve the quality of process that are already under control. The
output of these processes usually flows a Normal distribution with the process
capability defined as 3 sigma. It would give a six-sigma value of 2 defects per
billion opportunities.
It has been observed that any process in control also will shift from its target over
time. The process mean will vary each time a process is executed using different
equipment, different personnel, different materials etc.
Six Sigma has different meanings depending upon the context.
z

Six Sigma is a management philosophy: It is a customer-based approach. It


realize that defects are expensive. Fewer defects mean lower costs and improved
customer loyality. The most competitive provider of goods and services must
produce the highest quality at the lowest cost. It is thus a way to achieve strategic
business results.

Six Sigma is a statistic: Six sigma processes will produce less than 3.4 defects or
mistakes per million opportunities. Many successful six sigma projects do not
achieve a 3.4-ppm or less defect rate. That just indicates that there is still
opportunity.

Six sigma is process: It is the process used to implement the six sigma
management philosophy and achieve the six sigma level of 3.4 defects per million
opportunities or less. This process is a more quantitative version of Demings
PDCA (Plan-Do-Check-Act) Process. It is known as DMAIC/DMADV

The core elements of Six Sigma comes by incorporating the basic principles and
techniques used in
z

Business,

Statistics, and

Engineering.

Six Sigma means excellent finished products but excellent processes, services, and
administration. Six Sigma improves the process performance, decreases variation and
maintains consistent quality of the process output. This leads to defect reduction and
improvement in profits, product quality and customer satisfaction. Six Sigma
revolves around the following key concepts.
z

Critical to Quality: Attributes most important to the customer.

Defect: Failing to deliver what the customer wants.

Process Capability: What your process can deliver.

163
Quality Improvement Methods

164
Total Quality Service Management

Variation: What the customer sees and feels.

Stable Operation: Ensuring consistent, predictable processes to improve what the


customer sees and feels.

Design for Six Sigma: Designing processes to meet customer needs and process
capability.

Six Sigma encourages leanness, simplicity, and doing things right the first time
resulting in reducing wastes and corresponding costs. It uses statistics-based problem
solving, results-orientation, and quantifiable top and bottom-line returns and is driven
by the voice of the customer.
Six sigma is used for eliminating defects to achieve six sigma between lower and
upper specification limits. Thus a Six-Sigma defect is defined for not meeting the
customers specifications. It is the total quantity of chances for a defect.
Six Sigma is a data-driven approach and methodology with the aim of reduction in
variation. It started with a focus on manufacturing process. Now it has been extended
to marketing, purchasing, customer order, finance, health care etc.
All the tools and techniques of six sigma are found in TQM. It is the application of the
tools on selected important projects at the appropriate time.
Many TQM efforts failed due lack of commitment to the specific improvement action
and to their effective implementation. Six Sigma overcomes that weakness by
focusing on:
z

The common commitment to meeting customer requirements,

Developing a consensus set of improvement actions,

Prioritizing those actions, and

Establishing measures that assure accountability in implementation.

Six Sigma methodology improves any existing business process by constantly


reviewing and retuning the process. It provides a new methodology for measuring
process performance and refines earlier methodologies for making process
improvements. These process improvements methodologies are data driven and make
use of statistics.
The immediate goal of Six Sigma is defect reduction. Reduced defects cause yield
improvement. Higher yields improve customer satisfaction. The ultimate goal is
enhanced net income.
Six sigma is a customer based approach realizing that defects are expensive. Fewer
defects mean lower costs and improved customer loyality. The lowest cost, high value
producer is the most competitive provider of goods and services and is a way to
achieve results.
Six sigma is a process improvement methodology that has its foundation in Total
Quality Management philosophies and incorporates concepts from other approaches
such as:
z

Re-Engineering

Balanced Scorecard

Voice of the Customer

Design of Experiments

Process Variation Control

9.7.1 Significant Elements of Six Sigma Methodology


z

Standardized Process Improvement Methodology.

Use of Descriptive Statistics to Describe and Analyze Process Data.

Measurement Systems Analysis to Identify Measurement System Contributions to


Total Process Variation.

Six Sigma Measures (Metrics) to Standardize the Improvements Methodology


Across an Organization.

Design of experiments (DOE) to Screen for Improvement Factors and Optimize


Process Performance.

Statistical Process Control (SPC) and Capability (Cpk).

9.7.2 Six Sigma Methodology


The Six Sigma is a disciplined method of using extremely rigorous data-gathering and
statistical analysis to pinpoint sources of errors and ways of eliminating them. It has
evolved into a continuous, disciplines, and structured process of improving operations
to make products that are consistently meeting customer requirements. There are two
Six Sigma processes.
z

Six Sigma DMAIC and

Six Sigma DMADV

Six Sigma DMAIC is a process that defines measures, analyzes, improves, and
controls existing processes that fall below the Six Sigma specification. It is employed
in situations wherein a producer or process already exists but is not meeting customer
specifications. It improves any existing business process by constantly reviewing and
re-tuning the process.

9.7.3 DMAIC
z

Define opportunities: This first phase involves the definition of the


project/assignment goals in relation to customer requirements. It uses process
map, application area, desired improvement, likely benefits, etc.
At the top level the goals will be the strategic objectives of the organization, such
as a higher ROI or market share. At the operations level, a goal might be to
increase the throughout of a production department.
At the project level goals might be to reduce the defect level and increase
throughout. Apply data mining methods to identify potential improvement
opportunities. Defining the problem would involve

Define customers and requirements

Develop problem statement, goals and benefits

Identify champion, process owner and team

Define resources

Evaluate key organizational support

Develop resources

Evaluate key organizational support

Develop project plan and milestones

Develop high-level process map

165
Quality Improvement Methods

166
Total Quality Service Management

Measure performance: Measure the existing system. Establish valid and reliable
metrics to help monitor progress towards the goal(s) defined at the previous step.
Begin by determining the current baseline. Use exploratory and descriptive data
analysis to help you understand the data. This phase involves collection of data to
measure the current performance of the process.

Improve performance: Improve the system. Be creative in finding new ways to


do things better, cheaper, or faster. Use project management and other planning
and management tools to implement the new approach. Use statistical methods to
validate the improvement. This phase looks at the ways of improving the
performance on the weak areas identified. This may involve better forecasting,
better scheduling, better procedures or equipment etc.

Control performance: Control the new system. Institutionalize the improved


system by modifying compensation and incentive systems, policies, procedures,
MRP, budgets, operating instructions and other management systems. You may
wish to utilize systems such as ISO 9000 to assure that documentation is correct.
This phase involves the control of the improved process to sustain its gains.

The DMAIC process is a variation of PDCA that many people find helpful. The
leaders chosen by the company go through rigorous training to be able to implement
these tools to seek out defects and eliminate them.
The DMAIC approach allows the company to address the variability of the testing
process with a prescription for success. The phase allow for
z

Resource identification, knowledge and availability,

Processes to test to assure that the customer request is fulfilled, and

Channel implications: Something well known (low risk) or something new (higher
risk).

Six Sigma DMADV defines measures, analyzes, designs, and verifies new processes
or products that are trying to achieve Six Sigma quality. The DMADV method is
employed in situations wherein there is no existing process or product yet catering to a
certain customer requirement, and the company wants to develop one for that purpose.
DMADV stands for:
1. Define opportunities (project goals in relation to customer requirements);
2. Design the process to met these customer needs; and
3. Verify the performance of the process, particularly in terms of its ability to meet
customer requirements
Key product-process performance variables are measured, analyzed, improved, and
controlled using statistical methods. When improvements is necessary, Design of
Experiments (DOE) is used. This is to determine which product or process parameters
are most important. It would also find the specific parameter values that will give the
best performance. SPC is used to continually monitor product and process
performance.
Six Sigma initiatives aim at reduction of process variation and defects. SPC and EPC
are two important techniques for achieving these goals. SPC charts provide a good
check against assignable causes of variation while EPC charts can be used for
prediction and run-on-run adjustment of process average.
Statistical Process control (SPC) is a scientific and inexpensive way to prevent defects
and is an effective check against assignable causes of process variation. SPC is a timetested and effective control scheme used for process capability analysis and process
monitoring. SPC technique consists mainly of
z

Pareto Analysis,

Scatter Diagram and Regression Analysis, and

Statistical Control Charts

Engineering Process Control (EPC) helps in run process adjustments and reducing
process variability and adds extra power to Statistical Process Control schemes. Both
SPC and EPC are very essential for achieving Six Sigma target of PPM (parts per
million) defect levels.
There are six steps to Six Sigma Quality:
z

Determine what your product is

Determine who the customer for the product is

Identify suppliers

Map out the process required

Eliminate errors and waste in the process

Establish measurement to feed continuous improvement

9.8 JUST-IN-TIME
Just-in-time (JIT) is an inventory strategy implemented to improve the return on
investment of a business by reducing in-process inventory and its associated carrying
costs. In order to achieve JIT the process must have signals of what is going on
elsewhere within the process. This means that the process is often driven by a series of
signals, which can be Kanban ,that tell production processes when to make the next
part. Kanban are usually 'tickets' but can be simple visual signals, such as the presence
or absence of a part on a shelf. When implemented correctly, JIT can lead to dramatic
improvements in a manufacturing organization's return on investment, quality, and
efficiency. Some have suggested that "Just on Time" would be a more appropriate
name since it emphasizes that production should create items that arrive when needed
and neither earlier nor later.
Quick communication of the consumption of old stock which triggers new stock to be
ordered is key to JIT and inventory reduction. This saves warehouse space and costs.
However since stock levels are determined by historical demand any sudden demand
rises above the historical average demand, the firm will deplete inventory faster than
usual and cause customer service issues. Some. Have suggested that recycling Kanban
faster can also help flex the system by as much as 10-30%. In recent years
manufacturers have touted a trailing 13 week average as a better predictor for JIT
planning than most forecasters could provide.

9.8.1 Philosophy
The philosophy of JIT is simple - inventory is defined to be waste. JIT inventory
systems expose the hidden causes of inventory keeping and are therefore not a simple
solution a company can adopt; there is a whole new way of working the company
must follow in order to manage its consequences. The ideas in this way of working
come from many different disciplines including statistics, industrial engineering,
production management and behavioral science. In the JIT inventory philosophy there
are views with respect to how inventory is looked upon, what it says about the
management within the company, and the main principle behind JIT.
Inventory is seen as incurring costs, or waste, instead of adding value, contrary to
traditional accounting. This does not mean to say JIT is implemented without an
awareness that removing inventory exposes pre-existing manufacturing issues. Under
this way of working, businesses are encouraged to eliminate inventory that does not
compensate for manufacturing issues, and then to constantly improve processes so

167
Quality Improvement Methods

168
Total Quality Service Management

that less inventory can be kept. Secondly, allowing any stock habituates the
management to stock keeping and it can then be a bit like a narcotic. Management are
then tempted to keep stock there to hide problems within the production system.
These problems include backups at work centres, machine reliability, process
variability, lack of flexibility of employees and equipment, and inadequate capacity
among other things.
In short, the just-in-time inventory system is all about having the right material, at
the right time, at the right place, and in the exact amount, without the safety net of
inventory. The JIT system has implications of which are broad for the implementors.

9.8.2 Stocks
JIT emphasises inventory as one of the seven wastes (overproduction, waiting time,
transportation, inventory, processing, motion and product defect), and as such its
practice involves the philosophical aim of reducing input buffer inventory to zero.
Zero buffer inventory means that production is not protected from exogenous
(external) shocks. As a result, exogenous shocks reducing the supply of input can
easily slow or stop production with significant negative consequences. For example,
Toyota suffered a major supplier failure as a result of the 1997 Aisin fire which
rendered one of its suppliers incapable of fulfilling Toyota's orders. In the U.S., the
1992 railway strikes resulted in General Motors having to idle a 75,000-worker plant
because they had no supplies coming in.

9.8.3 Transaction Cost Approach


JIT reduces inventory in a firm. However, unless it is used throughout the supply
chain, it can be hypothesized that firms are simply outsourcing their input inventory to
suppliers (Naj 1993). This effect was investigated by Newman (1993), who found, on
average, suppliers in Japan charged JIT customers a 5% price premium.

9.8.4 Environmental Concerns


During the birth of JIT, multiple daily deliveries were often made by bicycle; with
increases in scale has come the adoption of vans and lorries (trucks) for these
deliveries. Cusumano (1994) has highlighted the potential and actual problems this
causes with regard to gridlock and the burning of fossil fuels. This violates three JIT
wastes:
1. Time; wasted in traffic jams
2. Inventory; specifically pipeline (in transport) inventory and
3. Scrap; with respect to petrol or diesel burned while not physically moving.

9.8.5 Price Volatility


JIT implicitly assumes a level of input price stability such that it is desirable to
inventory inputs at today's prices. Where input prices are expected to rise storing
inputs may be desirable.

9.8.6 Quality Volatility


JIT implicitly assumes the quality of available inputs remains constant over time. If
not, firms may benefit from hoarding high quality inputs.

9.8.7 Demand Stability


Karmarker (1989) highlights the importance of relatively stable demand which can
help ensure efficient capital utilisation rates. Karmarker argues without a significant
stable component of demand, JIT becomes untenable in high capital cost production.

Check Your Progress 2


Fill in the blanks:
1. NABL stands for _____________________.
2. JIT stands for __________________________.
3. Statistical Process control (SPC) is a scientific and inexpensive way to
prevent defects and is an effective check against assignable causes of
________________.
4. A ______________ audit is an assessment of the final product or service.

9.9 NABL
National Accreditation Board for Testing and Calibration Laboratories (NABL) is an
autonomous body under the aegis of Department of Science & Technology,
Government of India, and is registered under the Societies Act. NABL has been
established with the objective to provide Government, Industry Associations and
Industry in general with a scheme for third-party assessment of the quality and
technical competence of testing and calibration laboratories. Government of India has
authorized NABL as the sole accreditation body for Testing and Calibration
laboratories.
In order to achieve this objective, NABL provides laboratory accreditation services to
laboratories that are performing tests / calibrations in accordance with ISO/IEC 17025
and ISO 15189:2003 for medical laboratories. These services are offered in a nondiscriminatory manner and are accessible to all testing and calibration laboratories in
India and abroad, regardless of their ownership, legal status, size and degree of
independence.
NABL has established its Accreditation System in accordance with ISO/IEC
17011:2004, which is followed internationally. In addition NABL has to also comply
with the requirements of APLAC MR001, which requires the applicant and the
accredited laboratories to take part in recognized Proficiency Testing Programmes in
accordance with ISO/IEC Guide 43. An applicant laboratory has to satisfactorily
participate in at least one Proficiency Testing programme, while the accredited
laboratories are expected to cover the major scopes of accreditation in a cycle time of
four years. Towards this objective, NABL has been conducting Proficiency Testing
with the help of selected accredited laboratories as nodal laboratories in different
fields. The performance remains confidential between NABL and each participating
laboratory by using laboratory code numbers. In case of unsatisfactory performance,
laboratory is expected to investigate and take the necessary corrective actions. In case
of repeated failure or gross failure indicated by Z factor, En ratio etc. scope of
accreditation is reduced by NABL
NABL also satisfies the requirements of APLAC MR001. NABL had undergone the
first peer evaluation by a 4 member team of APLAC in July 2000, based on which
NABL qualified as an APLAC MRA (Mutual Recognition Arrangement) Partner as
well as a Signatory to ILAC Arrangements. NABL was reassessed in July 2004 and as
stated earlier the signatory status of NABL within APLAC MRA has been confirmed
for further four years i.e. October 2008. This distinction has brought additional
responsibility on NABL and its accredited laboratories. Annual Surveillance is carried
out to ensure that the accredited laboratories are continuing to comply the
accreditation criteria. NABL and its accredited laboratories are also required to meet
the new challenges arising out of requirements such as satisfactory participation in a
recognized Proficiency Testing Programme and the requirement of estimating the
Uncertainty in Measurements even by the testing laboratories. NABL has already

169
Quality Improvement Methods

170
Total Quality Service Management

published the revised guideline on Estimation of Uncertainty in Measurement for


Calibration Laboratories. NABL also conducts One-Day Awareness Programmes on
key issues such as Uncertainty in Measurement, Proficiency Testing, Validation etc. at
different parts of India so that applicant and accredited laboratories can take the
appropriate action.

9.10 LET US SUM UP


Quality management can be considered to have three main components: quality
control, quality assurance and quality improvement. Quality management is focused
not only on product quality, but also the means to achieve it. Quality management
therefore uses quality assurance and control of processes as well as products to
achieve more consistent quality. Quality Management is all activities of the overall
management function that determine the quality policy, objectives and responsibilities
and implement them by means such as quality control and quality improvements
within a quality system.

9.11 LESSON END ACTIVITY


Prepare a case study on the concept of quality management.

9.12 KEYWORDS
Six Sigma Methodology: The Six Sigma is a disciplined method of using extremely
rigorous data-gathering and statistical analysis to pinpoint sources of errors and ways
of eliminating them.
Defect: Failing to deliver what the customer wants.
Process Capability: What your process can deliver.
Variation: What the customer sees and feels.
Stable Operation: Ensuring consistent, predictable processes to improve what the
customer sees and feels.
Design for Six Sigma: Designing processes to meet customer needs and process
capability.
NABL: National Accreditation Board for Testing and Calibration Laboratories
(NABL) is an autonomous body under the aegis of Department of Science &
Technology, Government of India, and is registered under the Societies Act.

9.13 QUESTIONS FOR DISCUSSION


1. Briefly explain the concept of quality management.
2. Explain about the quality improvement methods.
3. Explain about the quality improvement steps.
4. Answer the following questions:
(a) JIT
(b) Quality auditing
(c) NABL

Check Your Progress: Model Answers


CYP 1
1. Kaizen means continuing improvement involving everyone managers and
workers alike.
2. Quality Audit can be defined as a systematic and independent examination to
determine whether quality activities and related results comply with planned
arrangements and whether these arrangements are implemented effectively
and are suitable to achieve the stated objectives.
CYP 2
1. National Accreditation Board for Testing and Calibration Laboratories.
2. Just in Time
3. process variation
4. product

9.14 SUGGESTED READINGS


Deming, W. E. (1975), On Probability as a Basis for Action. The American Statistician.
29(4), pp146-152.
Deming, W. E. (1982), Out of the Crisis: Quality, Productivity and Competitive.
Oakland, J. (2002) Statistical Process Control.
Shewhart, W. A. (1931), Economic Control of Quality of Manufactured Product.
Shewhart, W. A. (1939), Statistical Method from the Viewpoint of Quality Control.
Wheeler, D. J. (2000), Normality and the Process-Behaviour Chart.
Wheeler, D. J. & Chambers, D. S. (1992), Understanding Statistical Process Control.
Wheeler, Donald J. (1999). Understanding Variation: The Key to Managing Chaos - 2nd
Edition. SPC Press, Inc.

171
Quality Improvement Methods

173
Systems Approach to Quality

UNIT 1

UNIT V

174
Total Quality Service Management

175
Systems Approach to Quality

LESSON

10
SYSTEMS APPROACH TO QUALITY
CONTENTS
10.0

Aims and Objectives

10.1

Introduction

10.2

ISO 9000 Family

10.3

ISO 14000
10.3.1

10.4

OHSAS (ISO 18000)


10.4.1

10.5

10.6

Standards

Advantages

Reengineering
10.5.1

Characteristics of Reengineering

10.5.2

Methodology of Reengineering

10.5.3

Advantages of Reengineering

10.5.4

Criticism of Reengineering

Documentation of Quality System


10.6.1

Quality Manual

10.6.2

Quality Procedures

10.6.3

Quality Records

10.6.4

Controlled Documents

10.7

Implementing ISO 9001: 2000

10.8

Let us Sum up

10.9

Lesson End Activity

10.10 Keywords
10.11 Questions for Discussion
10.12 Suggested Readings

10.0 AIMS AND OBJECTIVES


After studying this lesson, you should be able to:
z

Describe the various ISO-standards

Understand advantages of implementation of various standards

Learn about the documentation procedure of various ISO-certificates

176
Total Quality Service Management

10.1 INTRODUCTION
Introduction to ISO 9000 is a family of standards for quality management systems.
ISO 9000 is maintained by ISO, the International Organization for Standardization
and is administered by accreditation and certification bodies. Some of the
requirements in ISO 9001 (which is one of the standards in the ISO 9000 family)
include:
z

a set of procedures that cover all key processes in the business;

monitoring processes to ensure they are effective;

keeping adequate records;

checking output for defects, with appropriate and corrective action where
necessary;

regularly reviewing individual processes and the quality system itself for
effectiveness; and

facilitating continual improvement

A company or organization that has been independently audited and certified to be in


conformance with ISO 9001 may publicly state that it is "ISO 9001 certified" or "ISO
9001 registered." Certification to an ISO 9000 standard does not guarantee the
compliance (and therefore the quality) of end products and services; rather, it certifies
that consistent business processes are being applied.
Although the standards originated in manufacturing, they are now employed across a
wide range of other types of organizations. A "product", in ISO vocabulary, can mean
a physical object, or services, or software. In fact, according to ISO in 2004, "service
sectors now account by far for the highest number of ISO 9001:2000 certificates about 31% of the total."
ISO 9001 certification does not guarantee that the company delivers products of
superior (or even decent) quality. It just certifies that the company engages internally
in paperwork prescribed by the standard. Indeed, some companies enter the ISO 9001
certification as a marketing tool.

10.2 ISO 9000 FAMILY


ISO 9000 includes the following standards:
z

ISO 9000:2000, Quality management systemsFundamentals and


vocabulary. Covers the basics of what quality management systems are and also
contains the core language of the ISO 9000 series of standards. A guidance
document, not used for certification purposes.

ISO 9001:2000 Quality management systemsRequirements is intended for


use in any organization which designs, develops, manufactures, installs and/or
services any product or provides any form of service. It provides a number of
requirements which an organization needs to fulfill if it is to achieve customer
satisfaction through consistent products and services which meet customer
expectations. It includes a requirement for the continual (i.e. planned)
improvement of the Quality Management System, for which ISO 9004:2000
provides many hints.

This is the only implementation for which third-party auditors may grant certification.
It should be noted that certification is not described as any of the 'needs' of an
organization as a driver for using ISO 9001 (see ISO 9001:2000 section 1 'Scope') but
does recognise that it may be used for such a purpose (see ISO 9001:2000 section 0.1
'Introduction').

ISO 9004:2000 Quality management systems-Guidelines for performance


improvements. covers continual improvement. This gives you advice on what
you could do to enhance a mature system. This standard very specifically states
that it is not intended as a guide to implementation.

There are many more standards in the ISO 9001 family, one of many may be Leicester
University which also found out the electronic fingerprinting, but for other standard
see( "List of ISO 9000 standards" from ISO), many of them not even carrying "ISO
900x" numbers. For example, some standards in the 10,000 range are considered part
of the 9000 family: ISO 10007:1995 discusses Configuration management, which for
most organizations is just one element of a complete management system. ISO notes:
"The emphasis on certification tends to overshadow the fact that there is an entire
family of ISO 9000 standards ... Organizations stand to obtain the greatest value when
the standards in the new core series are used in an integrated manner, both with each
other and with the other standards making up the ISO 9000 family as a whole".
Note that the previous members of the ISO 9000 family, 9001, 9002 and 9003, have
all been integrated into 9001. In most cases, an organization claiming to be "ISO 9000
registered" is referring to ISO 9001

10.3 ISO 14000


Environmental management standards exist to help organizations minimize how their
operations negatively affect the environment (cause adverse changes to air, water, or
land), comply with applicable laws and regulations).
ISO 14001 is the international specification for an environmental management system
(EMS). It specifies requirements for establishing an environmental policy,
determining environmental aspects and impacts of products/activities/services,
planning environmental objectives and measurable targets, implementation and
operation of programs to meet objectives and targets, checking and corrective action,
and management review.
ISO 14000 is similar to ISO 9000 quality management in that both pertain to the
process (the comprehensive outcome of how a product is produced) rather than to the
product itself. The overall idea is to establish an organized approach to systematically
reduce the impact of the environmental aspects which an organization can control.
Effective tools for the analysis of environmental aspects of an organization and for the
generation of options for improvement are provided by the concept of Cleaner
Production.
As with ISO 9000, certification is performed by third-party organizations rather than
being awarded by ISO directly. The ISO 19011 audit standard applies when auditing
for both 9000 and 14000 compliance at once.

10.3.1 Standards
The material included in this family of specifications is very broad. The major parts of
ISO 14000 are:
z

ISO 14001 is the standard against which organizations are assessed. ISO 14001 is
generic and flexible enough to apply to any organization producing and/or
manufacturing any product, or even providing a service anywhere in the world.

ISO 14004 is a guidance document that explains the 14001 requirements in more
detail. These present a structured approach to setting environmental objectives
and targets and to establishing and monitoring operational controls.

These are further expanded upon by the following:

177
Systems Approach to Quality

178
Total Quality Service Management

ISO 14020 series (14020 to 14025), Environmental Labeling, covers labels and
declarations.

ISO 14030 discusses post-production environmental assessment.

ISO 14031 Evaluation of Environmental Performance.

ISO 14040 series (14040 to 14044), Life Cycle Assessment, LCA, discusses preproduction planning and environment goal setting.

ISO 14050 terms and definitions.

ISO 14062 discusses making improvements to environmental impact goals.

ISO 14063 is an addendum to 14020, discussing further communications on


environmental impact.

ISO 14064-1:2006 is Greenhouse gases Part 1: Specification with guidance at


the organization level for the description, quantification and reporting of
greenhouse gas emissions and removals.

ISO 14064-2:2006 is Greenhouse gases Part 2: Specification with guidance at


the project level for the description, quantification, monitoring and reporting of
greenhouse gas emission reductions and removal enhancements.

ISO 14064-3:2006 is Greenhouse gases Part 3: Specification with guidance for


the validation and verification of greenhouse gas assertion.

ISO 19011 which specifies one audit protocol for both 14000 and 9000 series
standards together. This replaces ISO 14011 meta-evaluationhow to tell if your
intended regulatory tools worked. 19011 is now the only recommended way to
determine this.
Check Your Progress 1
1. Which company can state that it is ISO 9001 certified?
.
.
2. What does ISO certification does not guarantee?
.
.

10.4 OHSAS (ISO 18000)


Maintenance of occupational health and safety has important human aspect, which
presents the ethics and social level of organization. Increasing of safety and
occupational health has important economic meaning because solving of questions
connected with occupational and safety management system, with creation of
favourable working conditions and working relations bring optimization of a working
process with positive economic effect.

10.4.1 Advantages
z

Higher productivity and working quality.

Minimizing of fees and penalties in occupational health and safety performance

Improvement of working conditions for workers.

Increasing of satisfaction and loyalty of workers.

A tool for information obtaining important for planning and objectives


establishment.

Risk minimizing of accidents and occupational diseases.

Increasing of organization ethics.

The co-operation result of several accreditation and certification organizations all over
the world there is creation of International Standard OHSAS 18001-Occupational
health and safety management systems. This set guideline of occupational health and
safety management assessment (OHSAS) specifies requirements for occupational
healthy and safety management system to enable to manage risks of OH&S
management system and to improve its efficiency.
The guideline OHSAS is effective/ applicable for an organization, which calculates to
certify its OH&S management system.

10.5 REENGINEERING
Reengineering is about achieving dramatic, breakthrough improvements often by the
application of new technologies. It is the opposite of Kaizen. This revolutionary
approach was developed by Hammer and Champy.
Reengineering is the fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in critical contemporary measures of
performance, such as cost, quality, services, and speed. It involves identifying and
abandoning outdated rules and fundamental assumptions.
Reengineering capitalizes on the characteristics of Individualism, Self-reliance,
Willingness to accept risk and a propensity for change. The three emerging forces
that will hasten change are Customers, Competition, and Change:
z

Customers are now in charge, determining what to buy and when.

Competition now involves global companies, competing in both home markets


and foreign. Currency and rate of pay differences intensity the competition. Best
price, highest quality, and best service providers set the standard for all other.
New companies enter markets with compelled to play by the rules.

Change is the only constant. Not only do more things change, but also they
change faster than at any time in the past. Careers and rules change quickly.
Inflexibility, unresponsiveness, the absence of customer focus, and obsession with
activity rather than result, bureaucratic paralysis, lack of innovation, and high
overhead are the legacies of industrial leadership. These things must be changed.

Reengineering focuses on changing existing business practices. It involves asking


basic questions about business process like why is this done this way or why do we do
it. It means reinvesting the process and not just incrementally improving it.

10.5.1 Characteristics of Reengineering


z

Process centered

Redesign governed

Dramatic

Radical

Customer oriented

Creative use of information technology

Technology can either enable or disable reengineering efforts. Reengineering will not
work for:

179
Systems Approach to Quality

180
Total Quality Service Management

A company that cannot change the way it thinks about information technology

A company that equates technology with automation

A company that looks for problems first and then seeks technology solutions.

At the macro level, the environmental factors and globalization of economies points to
a need to subject all processes for engineering for survival due to the crisis factors of
z

Energy

Conflict

Confusion

Stress and

Culture

At the organizational level the factors that favor reengineering are


z

Competition

Environmental demands

Advancement of Technology

Reduction of profitability

Decline of market share and

Declining of share price

Companies do not reengineer, people do. There are five roles that need to be
addressed to allow reengineering to proceed:
z

Leaderthe senior executive who is authorized and motivates that overall effort.

Process Ownerthe manager for the specific process the reengineering effort will
address.

Reengineering Teama group of individuals dedicated to the reengineering of a


particular process.

Steering committeethe policymaking body of senior manager who develop the


organizations overall reengineering strategy.

Reengineering Czarthe person responsible for developing reengineering


techniques and tools within the company.

10.5.2 Methodology of Reengineering


It consists of:
z

Development process vision and determining process objectives

Defining the process to be reengineered

Understanding and measuring existing process

Identifying information technology leverage

Designing, building and implementing a prototype of the new process.

The success of reengineering can take place only when the following are present:
z

Fundamental understanding of the processes

Creative thinking to break from old assumptions and traditions leading to


rethinking of basic organizational and people issues.

Use of information technology

An aggressive by top management

Picking up the right process

Empowering people and getting them to take initiative.

Precise vision

Focused values on customer needs.

Reorganization of business into cross-functional teams with end-to-end


responsibility for a process.

Redesign of core processes using information technology to enable improvements.

Improvement of business processes across the organization using Benchmarking.

Business Process Reengineering involves the radical redesign of core business


processes to achieve dramatic improvements in productivity, cycle times, and quality.
It means starting from scratch and rethink existing processes to deliver more value to
the customer. They typically adopt a new value system that places increased emphasis
on customer needs.
Companies reduce organizational layers and eliminate unproductive actitivities in two
key areas.
z

First, they redesign functional organizations into cross-functional teams

Second, they use technology to improve data dissemination and decision-making.

Business process redesign relies primarily on the accumulated know-how of existing


employees to find conditions that will support the creation of new jobs, even if that
means that in the short run many of the existing jobs will have to cease to exist.

10.5.3 Advantages of Reengineering


z

Reduced cost and cycle time

Improved quality

Reduction of waste

Improved use of technology

Improved customer satisfaction

Better Plant utilization

Reduction in paperwork

Reduction in non value adding activities

Improvements in entire organization

Reengineering does not always work. It fails a significant amount of the time. The
key to success lies in knowledge and ability, not in luck.

10.5.4 Criticism of Reengineering


Reengineering calls for throwing out everything that exists and recommends
reconstituting a workable organization on the basis of completely fresh ideas. The
new business model is expected to spring forth from the inspired insights of new
leadership team.
In reengineering, participation by most of the existing management is superfluous.
Reengineering offers neither the time nor the opportunities for n organization to adapt
smoothly to changing conditions. It imposes changes swiftly from consultants or
experts.

181
Systems Approach to Quality

182
Total Quality Service Management

Lasting improvements in business processes can be made only with the support of
those who know the business. Leaderships primary task is creating conditions for
continuous, incremental, and adaptive change. Getting rid of people whose skills have
become obsolete reflects the organizations failure to innovate and learn.
To be successful, business redesign depends on the commitment and imaginative
cooperation of your employees. Business process redesign must demonstrate that only
by working together they can improve their long-term opportunities.
A relatively slow and deliberate process-improvement effort is more in tune with the
approach that people normally use to cope with major changes. Only evolutionary
improvements will be effective in the long run. Reengineering offers neither the time
nor the opportunities for an organization to adapt smoothly to changing conditions.

10.6 DOCUMENTATION OF QUALITY SYSTEM


The first step in setting up a quality management system within a company is to
generate a quality manual. This should be done even before any quality procedures or
specifications are written.
Effective documentation and records produces development. The quality manual is the
companys quality bible or constitution. It is a document that states in a concise and
brief format the high-level policies and objectives of the company required to achieve
its desired level of quality. This is enhanced by a management system operating with
the concept.
Once the quality system plan of the company has been completed, the quality system
must undergo full documentation that comprehends
z

The complexity of the production process.

The manpower skills required for production, and

The training requirements to achieve these manpower skills.

Some of the main objectives of an organizations documentation are


z

As a tool for information transmission and communication

Evidence of conformity to confirm what was planned, has actually been done

Knowledge sharing by disseminating and preserving the organizations


experiences

Documentation requirements documents may be in any form or type of medium like


z

Paper

Magnetic

Electronic or optical Computer Disc

Photograph

Master Sample etc

The extent of the QMS documentation may differ from one organization to another
due to:
z

The size of organization and type of activities;

The complexity of processes and their interactions, and

The competence of personnel.

At the minimum, quality system documentation should include the companys quality
manual and specifications showing the company processes, work instructions in

support of these processes, and production/quality records required by these work


instructions.
Processes exist within the organization and the initial approach should be limited to
identifying and managing them in the most appropriate way. In determining which
processes should be documented the organization may wish to consider factors such
as:
z

Effect of quality

Risk of customer dissatisfaction

Statutory and/or regulatory requirements

Economic risk

Effectiveness and efficiency

Competence of personnel

Complexity of processes

Where it is found necessary to document processes, a number of different methods


can be used, such as graphical representations, written instructions, checklists, flow
charts, visual media, or electronic methods.
Documentation is the heart of the QMS system. It shall include
z

Statement of quality policy and quality objectives,

A quality manual

Required documented procedures,

Documents like Work Instructions needed to ensure

Effective planning,

Operation, and

Control of processes, and

Required records

Quality policy refers to the statements from Top management regarding their
commitment relative to quality products and services. They are basically the purpose
and vision of the organization. This must be expanded in the quality objectives.
It is essential that the Top management is able to define the quality policy and quality
objectives with clarity that all the employees are able to understand and strive for it.
These are displayed prominently in the work area to act as motivators for all.
Requirements for the quality policy and quality objectives and defined in clauses 5.3
and 5.4.1 of ISO 9001:2000 respectively. These documented quality objectives and
quality policy are subject to document control requirements of clauses 4.2.3.
The next four types of documentation are usually referred as the four levels of ISO
9000 documentation
z

Level 1: Quality manual

Level 2: Quality Procedures

Level 3: Quality documents

Level 4: Quality Records

183
Systems Approach to Quality

184
Total Quality Service Management

10.6.1 Quality Manual


Quality manual states the organizations philosophy and vision. The quality manual
represents the strategic plan for an organizations quality system and contains its
mission statement.
Clause 4.2.2 of ISO 9001:2000 specifies the minimum content fort a quality manual.
The format and structure of the manual is a decision for each organization, and will
depend on the organizations size, culture and complexity. The quality manual is a
document that has to be controlled in accordance with requirements clauses 4.2.3.

10.6.2 Quality Procedures


This documentation describes the actions that have to take place. It also spells out the
actual steps must be followed. The level of detail should be sufficient for a new
person to read the document and understand what has to be done. It also states who is
responsible for each ISO 9000 section. They outline the workflow between
departments, suppliers, and the customer.
ISO 9001:2000 specially requires the organization to have documented procedures
for the following activities:
z

4.2.3.Control of Documents

4.2.4.Control of records

8.2.2.Internal audit

8.3 Control of nonconforming product

8.5.2. Corrective action

8.5.3.Preventive action

There are also to be controlled in accordance with the requirements of clauses 4.2.3.
Quality Documents: In order for an organization to demonstrate the effective
implementation of its QMS, it may be necessary to develop documents other than
documented procedures even though the only documents specially mentioned in ISO:
2000 are:
z

Quality policy (clause 4.2.1.a)

Quality objectives (clause 4.2.1.a)

Quality manual (clause 4.2.1.b)

Quality documents the process. These documents represent how tasks are executed
such as design specifications, operating instructions and assembly instructions. They
involve the details of how individual or group is to perform specific task or job. This
is very important to maintain uniformity. It also ensures that the job can still be done
even if key employee is unavailable.
Examples of these documents are:
z

Organization charts

Specifications

Drawings

Blueprints

Process maps, process flow charts and /or process descriptions

Work and/or test instructions

Documents containing internal communications

Production schedules

Approved supplier lists

Test and inspection plans

Test procedures

Quality plans

Operation sheets

Inspection instructions

Quality documents tell what to do For example, work instructions would be a


quality document. They can also be the specifications for a new product design, which
list engineering requirements for the design and govern the product development
cycle.
Documents are a unique type of data and are important as:
z

They can be unpredictable, created on an as-needed basis in virtually any form.

Theyre dynamic. They can be changed, modified and enhanced within very short
time periods, or over long life cycles.

Theyre complex. Documents can be structured on a logical basis, a temporal axis


or almost any configuration.

They may contain other documents. They can include vital and volatile source
information from CAD, spreadsheets or MRP that needs to be updated regularly.

They may contain technical drawing and images.

They can be developed using pencil and paper, a CAD system, a spreadsheet or a
word processor.

They are the circulatory system of an organization. And they must be managed to
be effective.

10.6.3 Quality Records


They document the results of actions specified in level 3. A Quality record is evidence
that the organization has fulfilled the actions described in quality documents.
Records required by ISO 9001:2000 are
Examples of Quality Record are
z

Inspection reports

Test data

Qualification reports

Defect checklist

Validation reports

Audit reports

Calibration data

Audit reports

Factory log

These records shall be legible, readily identifiable, and retrievable. Using the example
of product testing, the quality record would describe who did the test and would
include the data, location, time which product, test result and then the actions taken.

185
Systems Approach to Quality

186
Total Quality Service Management

A documented procedure shall be established to define the controls needed for the
identification, storage, protect6ion, retrieval, retention time, and disposition of
records. can be used to document tractability and to provide evidence of verification,
preventive action, and corrective action.
Documentation is thus the heart of the ISO 9000 standards. It may be in any form or
type of medium. Many companies fail because important process information does not
reside in documents, but rather in management.
The quality manual drives the ISO 9000 quality system implementation. Policies and
procedures describe the quality practiceswhat each department must do. Quality
documents describe the processhow procedures are to be done, at an individual level.
Quality records report the outcome of processes and support the results.
Managers know what to do. They just do it. Why should we keep records for
everything we do? The answer is that the ISO 9000 standards require you to create
and maintain quality records. Thee quality documents and quality records represent
the work instructions and records that instructions have been followed in your
organization.
These are the vital elements of any ISO 9000 project. Because these documents are
dynamic, the document control is critical to ensure that the right version of these
documents are used and maintained.

10.6.4 Controlled Documents


Documents required by the QMS shall be controlled. ISO stipulates a documented
procedure to define the control needed to
z

Approve documents prior to use,

Review, update, and re approve as necessary,

Identify the current revision status,

Ensure that current versions are available at the point of use,

Ensure that documents are legible and readily identified,

Identify and distribute documents of external origin, and

Provide for the prompt removal of obsolete documents and identify suitably what
may be retained

Documented procedure means that the QMS shall be controlled. ISO stipulates a
documented procedure to define the control needed to
z

Approve documents prior to use,

Review, update, and re approve as necessary,

Identify the current revision status,

Ensure that current versions are available at the point of use,

Ensure that documents are legible and readily identified,

Identify and distribute documents of external origin, and

Provide for the prompt removal of obsolete documents and identify suitably what
may be retained

Documented procedure means that procedure is established, documented,


implemented, and maintained. It also makes it mandatory to document the revisions
with its unique system of versions.

A controlled document is a document that, if changed, affects some part of the process
or product. These can be procedures, process documents, product or part drawings
(prints) or other similar documents. Forms a typically controlled document.
z

Typically there will be one or more list(s) of master documents.

If a controlled document is changed, a record of the change has to be made. This


means these must be a History of All Changes.

If a document is changed, people who use it must know about the change. This
means thee has to be a distribution list or other effective way to let everyone who
uses it know the document has changed (read Communicate the changes).

Every employee must know how to check to see if documentation they are using
is the most current version.
Check Your Progress 2
Fill in the blanks:
1. OHSAS 18001 is issued for _______________________ purpose.
2. ISO 14001 is the international specification for an ___________________
system.
3. Business Process Reengineering involves the radical redesign of core
business processes to achieve dramatic improvements in
__________________.
4. ISO 19011 is issued for ___________.

10.7 IMPLEMENTING ISO 9001: 2000


Quality management system involves the following preparations:
1. Identify the goals the organization wants to achieve. Typical goals may be:

Be more efficient and profitable

Produce products and services that consistently meet customer requirements

Achieve customer satisfaction

Increase market share

Maintain market share

Improve communications and morale in the organization

Reduce costs and liabilities

Increase confidence in the production system

2. Identify what others expect of the organization. These are the expectations of
interested parties (stakeholders) such as:

Customer and end users

Employees

Suppliers

Shareholders

Society

3. Obtain information about the ISO 9000 family

187
Systems Approach to Quality

188
Total Quality Service Management

4. Decide the type of certification of the quality management system required like

5.

Using ISO 9001:2000 as the basis for certification

Using ISO 9004:2000 in conjunction with the national quality award criteria
to prepare for a national quality award

Obtain guidance on specific topics within the quality management system. These
topic-specific standards are:

ISO 10006 for project management

ISO 10007 for configuration management

ISO 10012 for measurement systems

ISO10013 for quality documentation

ISO/TR 10014 for managing the economics of quality

ISO 10015 for training

ISO/TS 16949 for automotive suppliers

ISO 19011 for auditing

6. Establish the current status and determine the gaps between the current quality
management system and the requirements of ISO 9001: 2000 by

Self-assessment

Assessment by an external organization

7. Determine the process that is needed to supply products to your customers.


Review the requirements of the ISO 9001: 2000 section on Product Realization to
determine how they apply or do not apply to your quality management system
including;

Customer related processes

Design and/or development

Purchasing

Production and service operations

Control of measuring and monitoring devices

8. Develop a plan to close the gaps in step 6 and to develop the processes in step 7.
Identify actions needed to close the gaps, allocate resources to perform these
actions, assign responsibilities and establish a schedule to complete the needed
actions. ISO 9001:2000 Paragraphs 4.1 and 7.1 provide the information needed to
consider when developing the plan.
9. Carry out the plan: Proceed to implement the identified actions and track progress
to your schedule.
10. Undergo periodic internal assessment. Use ISO 19011 for guidance in auditing,
auditor qualification and managing audit programmes.
11. Is there a need to demonstrate conformance?
If yes, go to step 12
If no, go to step 13
The need or wish to show conformance (certification/registration) can be for
various purposes, like

Contractual requirements

Market reasons or customer preference

Regulatory requirements

Risk management

To set clear goal for the internal quality development (motivation)

12. Undergo independent audit. Engange an accredited registration/certification body


to perform an audit and certify that your quality management system complies
with the requirements of ISO 9001:2000
13. Continue to improve the business. Review the effectiveness and suitability of the
quality management system. ISO 9004:2000 provides a methodology for
improvement.
The processes involved in the implementation are given below:
1. The Management Commitment: For a successful implementation the top
management must support it and must be committed to it.
2. Appointment the Management Representative (MR): A management representative is to be appointed. MR can be a senior manager. He will co-ordinate the
implementation activities.
3. Awareness: The implementation of the quality system should involve everyone in
the organization. Hence everyone should understand the quality system. They
should know how it would affect day-to-day operations. They also must know
about the potential benefits.
4. Assembling of an implementation Team: Since it is teamwork, and implementation team has to be assembled. It must contain people from all departments and
from all levels. The team should identify the QMS processes and their sequence
and interaction.
5. Training: Members of the implementation team, supervisors, and internal audit
team should be trained. The training can be done in house for all.
6. Time schedule: A time schedule must be developed for the implementation and
registration of the system. This schedule must be further divided for the various
tasks within the same.
7. Select Element Owners: Selection of owners for each of the system element is the
next step. These owners would make up teams to assist them.
8. Review the Present System: Review the current system is done by the element
owners
9. Write the Documents: Prepare the Quality Policy, Quality manual, Work
instructions etc. The documentation must be simple and easily understandable.
10. Install the New System: Install the new system. Train all the people in the use of
the various procedures etc.
11. Internal Audit: Conduct an internal audit of the quality system. Make the
necessary corrections as they occur. The audit people must be different from
those who have made it.
12. Management Review: The management review is done to judge the effectiveness
for the system in achieving the stated quality. Revise of needed.
13. Pre assessment: This step may not be necessary. But it serves as a rehearsal.
14. Registration: This is the final step towards certification. The Policy and procedure
manuals are reviewed by the certifying agency. They then conduct the system
audit.

189
Systems Approach to Quality

190
Total Quality Service Management

15. The audit would start with an opening meeting where the auditors would explain
the process of auditing. This will be followed by the audit itself. In the closing
meeting the auditors would discuss the findings of the audit.
16. Any minor non-conformity would be corrected. Once the auditors are satisfied,
they would issue the certification.
Some pitfalls to successful implementation are:
z

Over documentation of documentation that is too complex

Using external consultants without internal ownership and involvement.

Lack of top managements involvement.

Developing a system that odes not represent the actual system.

10.8 LET US SUM UP


There are many more standards in the ISO 9001 family, one of many may be Leicester
University which also found out the electronic fingerprinting, but for other standard
see ("List of ISO 9000 standards" from ISO), many of them not even carrying "ISO
900x" numbers. For example, some standards in the 10,000 range are considered part
of the 9000 family: ISO 10007:1995 discusses Configuration management, which for
most organizations is just one element of a complete management system. ISO notes:
"The emphasis on certification tends to overshadow the fact that there is an entire
family of ISO 9000 standards ... Organizations stand to obtain the greatest value when
the standards in the new core series are used in an integrated manner, both with each
other and with the other standards making up the ISO 9000 family as a whole".

10.9 LESSON END ACTIVITY


Write a note on the documentation of quality systems, quality manual, and procedure
manuals.

10.10 KEYWORDS
ISO 9000: It is a family of standards for quality management systems.
ISO 14000: The environmental management standards exist to help organizations
minimize how their operations negatively affect the environment (cause adverse
changes to air, water, or land), comply with applicable laws and regulations).
OHSAS 18001: It is occupational health and safety management systems.

10.11 QUESTIONS FOR DISCUSSION


1. Explain the concept of Business Process Reengineering System.
2. Describe about the ISO standards and what are its advantages.
3. Explain the procedure for documentation of quality system.

Check Your Progress: Model Answers


CYP 1
1. A company or organization that has been independently audited and
certified to be in conformance with ISO 9001 may publicly state that it is
"ISO 9001 certified" or "ISO 9001 registered."
2. ISO 9001 certification does not guarantee that the company delivers
products of superior (or even decent) quality.
Contd

CYP 2
1. Occupational health and safety management systems
2. Environmental management system
3. Productivity
4. Auditing

10.12 SUGGESTED READINGS


Deming, W. E. (1975), On Probability as a Basis for Action. The American Statistician.
29(4), pp146-152.
Deming, W. E. (1982), Out of the Crisis: Quality, Productivity and Competitive.
Oakland, J. (2002) Statistical Process Control.
Shewhart, W. A. (1931), Economic Control of Quality of Manufactured Product.
Shewhart, W. A. (1939), Statistical Method from the Viewpoint of Quality Control.
Wheeler, D. J. (2000), Normality and the Process-Behaviour Chart.
Wheeler, D. J. & Chambers, D. S. (1992), Understanding Statistical Process Control.
Wheeler, Donald J. (1999). Understanding Variation: The Key to Managing Chaos - 2nd
Edition. SPC Press, Inc.

191
Systems Approach to Quality

192
Total Quality Service Management

LESSON

11
BENCHMARKING
CONTENTS
11.0

Aims and Objectives

11.1

Introduction

11.2

Definition of Benchmarking

11.3

Typical Steps for Benchmarking

11.4

11.3.1

Identify a Critical Process that Needs Improvement

11.3.2

Identify an Organization that Excels in the Process, Preferably the Best

11.3.3

Contact the Benchmark Organization, Visit it, and Study


the Benchmark Activity

11.3.4

Analyze the Data

11.3.5

Improve the Critical Process at your Own Organization

11.3.6

Continue to Monitor the Results and Complete On-going Benchmarking


Studies

Types of Benchmarking
11.4.1

Levels of Benchmarking

11.4.2

Strategic Benchmarking

11.4.3

Operational Benchmarking

11.4.4

Product Benchmarking

11.4.5

Performance Benchmarking

11.4.6

Process Benchmarking

11.4.7

Functional Benchmarking

11.4.8

Best Practices Benchmarking

11.4.9

Cooperative Benchmarking

11.4.10 Collaborative Benchmarking


11.4.11 Competitive Benchmarking
11.5

11.6

Benchmarking Process
11.5.1

Xerox Twelve-Step Process

11.5.2

AT&T and Other Processes

11.5.3

Motorolas Five-step Process

Benefits and Shortcomings of Benchmarking


11.6.1

Benefits of Benchmarking

11.7

Let us Sum up

11.8

Lesson End Activity

11.9

Keywords

11.10 Questions for Discussion


11.11 Suggested Readings

11.0 AIMS AND OBJECTIVES


After studying this lesson, you should be able to:
z

Understand the concept of benchmarking

Learn about various steps in benchmarking

Discuss the benefits of benchmarking

Analyze various types of benchmarking.

11.1 INTRODUCTION
Bench marking is the process of identifying, understandings and adopting outstanding
practices and process from organization anywhere in the world, in order to help an
Organization to improve its performance.
The term benchmark refers to the reference point by which performance is measured
against. It is the indicator of what can and is being achieved. The term benchmarking
refers to the actual activity of establishing benchmarks and best practices.
Taiichi Ohro, who developed the just-in-time (JIT) inventory system in Totota,
invented this process. The term benchmarking refers to the actual activity of
establishing benchmarks and vest practices.

11.2 DEFINITION OF BENCHMARKING


Benchmarking can be defined as:
z

Educate leaders and employees of new possibilities;

Improve management practices, work process and services;

Accelerate continuous improvement;

Promote networking;

Stimulate others to actions;

Minimize re-inventing the wheel;

Recognize creative leaders, employees and teams.

It is often stated that those who benchmark do not have to reinvent the wheel. By
following others one can make improvements and not focus on stale ideas.
Benchmarking at first glance may be mistaken for a copycat form of developing
strategic plans and for making improvements within an organization. This is not true.
Benchmarking is an ongoing task at all levels of business and its purpose is to delight
the customer by continuous improvement. It is finding the secrets of success of any
given function or process and using the information to improve them.
Benchmarking means examining the methods of another business that is doing things
right and establishing its methods as the minimum standard. It involves studying the
best practices of another organizations to learn, how to do things better and as a means
of setting goals.
Benchmarking as a tactical planning tool originated with Xerox Business Systems in
the late 1970s Japanese affiliates were selling better quality copiers for less then the
manufacturing costs of similar products in the USA.
Benchmarking typically involves two organizations that have agreed to share
information about processes and operation. Benchmarking partners provide a working

193
Benchmarking

194
Total Quality Service Management

model of an improved process that reduces some of the planning, testing and
prototyping effort.
Benchmarking goes beyond the mere setting of goals. It focuses on practices that
produce superior performance. Benchmarking involves setting up partnerships that
allow both parties to learn from one another. Both organizations anticipate some gain
from the exchange of information. Either organization is free to withhold information
that it considers as proprietary.
Direct competitors are the benchmarking candidates normally. Competitors can also
engage in benchmarking, provided they avoid proprietary issues. Persuading the
benchmark partner to discuss their strategy is really difficult. But information can be
obtained from customers, common suppliers, and public domain information.
Some of the sources to identify benchmarking partners are:
z

National and International Quality award winners (Like Golden Peacock,


Malcolm Baldrige Award, Deming Prize)

Articles from business newspaper and magazine

Articles from Trade journals

Industry and professional associations

Consultants etc.

Benchmarking experts trace the origins of the technique to the rise of quality circles in
Japan in the 1950s. Identifying industry best practice for use by researching the
practices of other companies is a vital part of total quality management (TQM).
Benchmarking allows goals to be set objectively, based on external information
It is time and cost efficient as the process involves imitation and adaptation rather than
pure invention. It forces an organization to set goals and objectives based on external
reality.
Benchmarking is a popular method for developing requirements and settings goals.
An organization can discover its strengths and weaknesses and those of other industry
leaders through benchmarking. It can motivate employees to achieve goals by helping
them to see what others can accomplish.
An organization may decide to engage in benchmarking for several reasons. The most
important of these are:
z

Benchmarking is a more efficient way to make improvement. Managers can


eliminate trial and error process improvements. Practicing benchmarking focuses
on tailoring existing processes to fit within the organization.

Benchmarking speeds up organizations ability to make improvements.

Benchmarking has the ability to bring corporate performance up as a whole


significantly skills then every company will have world-class standards.

Benchmarking is not just making changes and improvements for the sake of making
changes. It is about value addition. No organization should make changes to their
products, processes, or their organization if the changes do not bring benefits.
Organizations need to determine the strengths that will enable them to gain
competitive advantage. Benchmarking is a tool that can help organization develop
those strengths. The success stories can inspire and instill confidence.
Benchmarking is the continuous search and adaptation of significantly better practices
that leads to superior performance by investigating the performance and practices of
other organizations (benchmark partners).

Irrespective of the type and scope of benchmarking, it will be important to ensure that
z

Senor managers support bench marking and are committed to continuous


improvements;

The objectives are clearly defined at the outset;

The scope of the work is appropriate in the light of the objectives, resources, time
available and the experience level of those involved;

Sufficient resources are available to complete projects within the required time
scale;

Benchmarking teams have a clear picture of their organizations performance


before approaching others for comparisons;

Benchmarking teams have the right skills and competencies and have access to
training, advice and guidance over the course of projects;

Stakeholders, particularly staff and their representatives, are kept informed of the
reasons for benchmarking and the progress made throughout the course of
projects. Where practicable, staff should be involved in undertaking benchmarking to make the most of the opportunities for learning from others; and

The development of recommendations is an inclusive process and that proposed


improvements and realistic in the context of local circumstances and other
initiatives.

The development of recommendations is an inclusive process and that proposed


improvements are realistic in the context of local circumstances and other
initiatives.

Opportunities are likely to arise for making the most of benchmarking when it is used
widely across organizations for example, through the:
z

Cultural change programme;

Data and information on performance and good practice gathered; and

Knowledge-creating networks established across traditional boundaries.

11.3 TYPICAL STEPS FOR BENCHMARKING


1. Identify a critical process that needs improvement.
2. Identify an organization that excels in the process, preferably the best.
3. Contact the benchmark organization, visit it, and study the benchmark acitivity.
4. Analyze the data.
5. Improve the critical process at your own organization.
6. Continue to monitor the results and complete on-going benchmarking studies

11.3.1 Identify a Critical Process that Needs Improvement


This first step lays a strong foundation for Benchmarking Success. Select the process
(e.g., order entry, distribution, service after sale) to benchmark. Then analyze the
process, calculate metrics and define performance gaps. It would involve 25% of the
total time.

11.3.2 Identify an Organization that Excels in the Process, Preferably


the Best
Select Benchmark Partners with Best-in-Class Processes. Create the benchmark team.
Then, based on the process(es) selected, conduct research to determine the benchmark

195
Benchmarking

196
Total Quality Service Management

partners. Contact the potential partners, narrow the lists. Develop briefing packages
and questionnaires, and set benchmark meeting dates and times with the final partners.
This may be another 25% of the total time.

11.3.3 Contact the Benchmark Organization, Visit it, and Study the
Benchmark Activity
In this step plan for productive Benchmark Sessions. Develop plans; train the
benchmark teams on their responsibilities, complete travel plans and logistics. This
should take 20% of the time.

11.3.4 Analyze the Data


Gather data on best-in-class companies. Define the practices in use in both
organizations. Compare and contrast them. Debrief after each benchmark meeting to
ensure all information was received and recorded accurately. This would take 15% of
the total time.

11.3.5 Improve the Critical Process at your Own Organization


Analyze the Benchmark Results. Plan to Create a Best in Class Process. Quantify the
differences in practices and metrics between the organizations. Determine those
practices that will help in improving the benchmarking process. Finally create a plan
to implement the desired improvement in the benchmarking process. Implement it.
This would take the last 15% of the total time allocated to reach that level.

11.3.6 Continue to Monitor the Results and Complete On-going


Benchmarking Studies
Monitor the improvement at regular intervals. Identify the causes for any differences
between the expected level of improvement and the actual level attained. Take
corrective action. Continue with the plan to improve further.
Benchmarking is a process that allows organizations to improve upon existing ideas.
It goes beyond a determination of the industry standard. It breaks the firms
activities down to process operations and looks for the best in class for a particular
operation.
Benchmarking is an integral component of a performance management process, where
the relative comparisons to the benchmarks become some of the indicators for
performances. Metrics is the units of measure user for measuring performances. They
are usually expressed numerically.
Benchmarking requires measurement of the performances of the both the
organizations and the reasons as to why their performance differs. A though and indepth knowledge of the tow performance are required for finding these.
It involves the establishment of service standards, performance levels, performance
indication, baseline measurements or benchmarks as comparisons against what to
measure future performance, within or outside the organization, to sustain competitive
advantage and to encourage of force.
Check Your Progress 1
Define benchmarking.
.
.

11.4 TYPES OF BENCHMARKING


Benchmarking is a tool to achieve business and competitive objectives. It can inspire
managers and organizations to compete. It is powerful and extremely effective when
used for the right reasons and aligned with organization strategy.

11.4.1 Levels of Benchmarking


The two levels of benchmarking are:
1. Strategic Benchmarking and
2. Operational Benchmarking

11.4.2 Strategic Benchmarking


Strategic benchmarking deals with to management and looks at what strategies the
organizations are using to make them successful. It focuses on how companies
compete and deals with long-term results. It is using best practices to develop
corporate, program, product strategies and results. Most Japanese firms use this
technique as they focus on long-term results.
Strategic Benchmarking involves studying of corporate level strategies of successful
organizations and comparing it with the organizational strategy to get the additional
insights. These strategies are analyzed with particular reference to:
z

Strategic intent

Core competencies

Process line

Strategic alliances and

Technology portfolio etc.

Strategic Benchmarking must begin with the assessment of the needs and expectations
of the customer. Customer Surveys may be conducted to measure customer
satisfaction and the gaps between a companys performance and its customers
standards.
Identifying the process outputs most important to the customers (key quality
characteristics) of that process is the first step. This step applies to every
organizational function, since each one has outputs and customers. The QFD /
customer needs assessment is a natural precursor to benchmarking activities.
Strategic Benchmarking includes:
z

The strategic study of the characteristics of effective continuous improvement


strategies of public and private organizations, of change processes, of leadership
styles, etc, to establish a vision, strategies, leadership competencies, client benefit
results;

Specific studies of the strategies and approaches of high performing


organizations;

Studies of trends and orientations as guide to actions, e.g., technological trends.

11.4.3 Operational Benchmarking


Operational Benchmarking is assessing and implementing the best practices of
industry or public service leaders to improve processes to the extent possible to meet
organizational goals.

197
Benchmarking

198
Total Quality Service Management

It includes:
z

Creating awareness and support at the senior executive level, and establishing
dedicated benchmarking resources;

Building benchmarking into business planning and continuous improvement;

Establishing operational performance levels to sustain competitive advantages;

Using a systematic, multi-step benchmarking process to improve business and


work processes, and internal and external customer satisfaction.

After a benchmark has been identified, the goal is to meet or exceed that standard
through improvements in appropriate process. One of the early steps in any effort is
to understand the current performance. The tools commonly used for benchmarking
are;
z

Process study and analysis

Process re-engineering

Quality costs analysis

Quality function deployment

Value engineering and value analysis

There are many types of benchmarking. They are not mutually exclusive and
companies can choose any one or a combination to meet their objectives. It is better
that strategic benchmarking is conducted first to create a context and rationale that
will enhance all other benchmarking efforts.

11.4.4 Product Benchmarking


Product benchmarking is simply comparing the performance, features and customer
acceptance of competing products. It involves a comparison between difference
features and attributes of competing products. It assesses the various important factors
and identifies activities where there can be improvements though engineering analysis
or customer perception analysis: These important factors are
z

Competitor costs,

Product concepts,

Strength and weaknesses of alternative designs, and

Competitor design trade-offs.

Product benchmarking is commonly known as reverse engineering or competitive


product analysis or customer satisfaction benchmarking.

11.4.5 Performance Benchmarking


Performance benchmarking is an important technique secures external involved in the
processes or feedback to the concerned persons involved in the processes or activities.
It focuses on assessing competitive positions through comparing the products and
services of other competitors.
It investigates the performance of core business functions but does not need to focus
on direct competition. However, depending on the function to be benchmarked, the
benchmark partner may need to be in a similarly characterized industry for useful
comparisons to be made.
Performance benchmarking is a comparison indicator of a business as a whole, or
divided into critical functions and processes. It usually focuses on elements of price,
technical quality ancillary product or service features, speed, reliability, and other
performance characteristics.

When dealing with performance benchmarking, organizations want to look at where


their product or services are in relation to competitors on the basis of things such as
reliability, quality, speed, and other product or service characteristics.
Reverse engineering, direct product or service comparisons, and analysis of operating
statistics are the primary techniques applied during performance benchmarking. All
system performance variables like efficient, effectiveness, productivity, quality of
work life, and innovativeness can be measured.

11.4.6 Process Benchmarking


Process benchmarking involves seeking out the best potentially applicable practices
for an organization, both internally and externally, studying and evaluating them, and
then implementing the ones that will produce a competitive advantage.
Process benchmarking seeks to identify the most effective operating practices form
many companies that perform similar work functions. It is a comparison aimed at
business, support services and management process processes aimed at facilitating the
redesigning of the existing process. Its power lies in its ability to produce bottom line
results.
Process benchmarking focuses on the day-to-day operations of the organization. It is
the task of improving the way daily processes are performed. To make it effective,
personal mindsets have to be changed. It focuses on discrete work process and
operating system, such as
z

The customer complaint process

The billing process,

The order-and-fulfillment process,

The recruitment process, and

The strategic planning process.

Most of the processes are in the lower levels of the organization. Performance
improvements are quickly realized by making improvements at this level. This type of
benchmarking results in quick improvements to the organization.

11.4.7 Functional Benchmarking


Functional benchmarking investigates the performance of core business functions.
The focus need not be on direct competition but the benchmark partner needed to be
in a similarly characterized industry.

11.4.8 Best Practices Benchmarking


It applies to business process. It breaks the function down into discrete areas as the
targets for benchmarking. It is more focused study then functional benchmarking it
takes that some business processes are common for all industries. It attempts to
benchmark work processes and the management practices behind them.

11.4.9 Cooperative Benchmarking


Cooperative benchmarking in cooperative benchmarking, organizations invite best in
class organizations to meet with their benchmarking team to share knowledge. This is
usually done without much controversy because these organizations are not direct
competitors. During this process information flows one-way from the best in class
organization to the benchmarking team organizations.
Cooperative benchmarking is the measurement of key production functions of another
organizations like inputs, outputs, and outcomes with the aim of improving them. It is
done with the consent of organization chosen for study (the benchmark partner).

199
Benchmarking

200
Total Quality Service Management

The partner can be one that has best practices in the area of interest or has won a
major national or international quality award.

11.4.10 Collaborative Benchmarking


Collaborative benchmarking is a version of cooperative benchmarking. Here, both
entities study each other and work together to improve. With collaborative
benchmarking, information is shared between groups of firms. It is a brainstorming
session among organizations on their processes.

11.4.11 Competitive Benchmarking


Competitive benchmarking is the most difficult type of benchmarking to practice.
Organizations are not interested in sharing information and helping a competitor for
an organization against its direct or indirect competitors in its own industry.
Competitive benchmarking starts as basic reverse engineering and then expands into
benchmarking. Reverse engineering is a competitive tool used in benchmarking. It
looks at all aspects of the competitions strategy. This does not just the disassembly
and examination of the product but it analyzes the entire customers path of the
organizations competitor. This is a difficult thing to do because this information is
not easily obtained. Therefore, it requires extensive research. It is also important to
remember when using competitive benchmarking that the goal is to focus on the direct
competitors and not he industry as a whole.
Competitive benchmarking involves the studying products, processes or business
performance of a competitor without their cooperation for the purposes of comparison
and improvement of own products, processes or business performance. One form of
competitive benchmarking is a commission granted to a third party to study a group of
competitors and share the result with all.
The benefits of competitive benchmarking include:
z

Creating a culture that values continuous improvement to achieve excellence

Enhancing creativity by devaluing the not-invented-here syndrome

Increasing sensitivity to changes in the external environment

Shifting the corporate mind-set from relative complacency to a strong sense of


urgency for ongoing improvement

Focusing resources through performance targets set with employee input

Prioritizing the areas that need improvement

Sharing the best practices between benchmarking partners

The cooperative benchmarking is the most suitable among all these types.
Benchmarking is usually done within the same industry. But it is often done between
organizations that have a similar process but are in different industries.
The first step in benchmarking is determining what to benchmark. To focus the
benchmarking initiative on critical issues, begin by identifying the key quality
characteristics of the critical processes. This step applies to every organization
function, since each one has outputs and customers.
It can be seen that the significant portion of the time spent on the process occurs
during the initial steps in this process. Further benchmarking is an ongoing process.
This is because customers perception varies.
Selecting an industry leader provides insight into what competitor s are doing; but
competitors may be reluctant to share this information. Several organizations are

responding to this difficulty by conducting benchmarking studies and providing that


information to other organizations without revealing the sources of the data.
Selecting an industry leader provides insight into what competitors are doing; but
competitors may be reluctant to share this information. Several organizations are
responding to this difficulty by conducting benchmarking studies and providing that
information to other organizations without revealing the sources of the data.
Selecting an industry leader provides insight into what competitors are doing; but
competitors may be reluctant to share this information. Several organizations are
responding to this difficulty by conducting benchmarking studies and providing that
information to other organizations without revealing the sources of the data.
Selecting organizations that are world leaders in different industries is another
alternative. For example, the Xerox Corporation uses may benchmarks:
z

Employee involvement: Procter& Gamble

Quality process: Florida Power and Light, Toyota, and Fuji Xerox

High-volume production: Kodak and Cannon

Billing collection: American Express

Research and development: AT&T and Hewlett-Packard

Distribution: L.L. Bean and Hershey Foods, and

Daily scheduling Cummins Engine.


Check Your Progress 2
1. What is performance benchmarking?
.
.
2. Define process benchmarking.
.
.

11.5 BENCHMARKING PROCESS


Benchmarking is a systematic and continuous process of measuring an organizations
performance on a key customer requirement. This is done against the best practice. It
understands the experience of the best and improvises and innovates from it.
Organizations that benchmark, adapt the process to best fit their own needs and
culture. The best performing organizations benchmark themselves against:
z

Their best competitor

The industry average

A world class supplier in a similar industry

Benchmarking techniques are central to the push for constant innovation. This
involves research into the best practices at the industry, firm or process level and
creates to facilitate the change process.
For benchmarking and best practices sharing to take root, management must create an
environment where there is a greater incentive to use the tools than to ignore them.
Managers must know what benchmarking and best practices sharing are, so there is
consistent implementation. Competency in benchmarking can be obtained from

201
Benchmarking

202
Total Quality Service Management

training courses, seminars and conferences, articles and books, and networking with
benchmarking practitioners.
The success of benchmarking and best practices sharing depends on senior executive
leadership. They must
z

Foster a common understanding of what benchmarking and best practices sharing


means and its implications for the organization.

Commit the necessary resources to develop and train managers and employees to
be involved in benchmarking and best practices sharing.

Designate a member of the senior executive team to manage the initial efforts of
the organization in implementing benchmarking and best practices sharing.

Select an area, product, service, or system in the organization that is likely to


benefit quickly from a benchmarking exercise.

Determine how to promote benchmarking and best practices sharing throughout


the organization by all practical means.

The leadership must be committed to the concept, thereby sustaining and supporting
employees and managers involved in benchmarking and best practices sharing to
generate continuous improvements.
The overall process usually requires three different teams
1. A Needs Assessment Team: to identify key customer needs and their status:

Needs that is not being met (cost, quality, timeliness, etc.)

Needs that are met better by the competition (hiring consultants)

Needs those are being met but can be improved.

2. The Benchmarking Team: The benchmarking team should be comprised of those


who own or work in the process to ensure suggested changes are actually
implemented. It takes the Needs Assessment results to design the required
benchmarking projects. The Benchmarking Team needs to:

Understand the critical processes and how they are measure both in their own
terms and in the customers terms.

Decide what kind of data is needed and how data will be collected.

Identify all team members and find a sponsor.

3. A Problem Solving Team: to take the action required to change the audit process
identified by the benchmark team. The problem Solving Team also helps to
identify new customer issues for a continuous change management loop.
The benchmarking effort should focus its energies on those customers and customer
needs that are most important. The relative importance can be developed using the
following selection procedure
z

Spell out the mission, purpose or goal of the function or department.

Make a list of the different outputs and customers for each output.

Identify major customers and their needs and complaints.

Relate the process that affects these needs or complaints.

Identify those processes that add the most value and the most cost.

Benchmarking projects are likely any other major project. Benchmarking must have a
strutted methodology to ensure successful completion of though and accurate
investigations. However, it must be flexible to incorporate new and innovative ways

of assembling difficult-to-obtain information. It is a discovery process and a learning


experience. It forces the organization to take an external view, to look beyond itself.
Most organizations have a strategy that defines how it wants position itself and
compete in the realize its vision. They are often referred to as critical success factors.
Critical processes are usually made of a number of sub-processes. Successful
benchmarking projects Adopt, Adapt, and Advance.
After searching out and examining highly effective operating practices, experienced
bench markers adopt the best. They then adapt them to their own work environments.
Though careful implementation and continuous refinement of the practices they
advance performance. A well-designed performance measurement and benchmark
systems essential. Other critical success factors include:
z

Senior management support.

Benchmarking training the project team.

Useful information technology systems.

Cultural practices that encourage learning.

Resources, especially in the form of time, funding, and useful equipment.

Benchmarking is a continuous improvement strategy and a change management


process. Once begun, benchmarking has to be continued against best practices in
order to continuously improve.
Successful organizations have used many versions of Benchmarking with varying
number of steps. For example the benchmarking steps pf AT&T is 12, Xerox uses 10,
Alcoa has 6 and soon. The differences between them are that some of the steps are
divided into multiple steps and it depends on the type of bench marking.
The simplest framework is recommended by GOAL/QPC. It has six steps as under:
1. Plan (Plan)
2. Research (Plan)
3. Observe (Do)
4. Analyze (Do)
5. Adapt (Check)
6. Improve (Act)

11.5.1 Xerox Twelve-Step Process


The pioneer of Benchmarking Robert Camp (Manager of Benchmarking Competency
Quality and Customer Satisfaction at Xerox) lists the benchmarking process in 5
phases. These 5 phases are divided into 12 steps as under:
1. Planning: This includes the following three steps:

Identify what is to be benchmarked

Identify comparative companies

Determine data collection method and collect data

2. Analysis: This includes the following two steps:

Determine current performance gap

Project future performance levels

3. Integration: This includes the following two steps:

203
Benchmarking

204
Total Quality Service Management

Communicate benchmark findings and gain acceptance

Establish functional goals

4. Action: This includes the following three steps:

Develop action plans

Implement specific actions and monitor progress

Recalibrate benchmarks

5. Maturity: This includes the following two steps:

Leadership position attained

Practices fully integrated into process

11.5.2 AT&T and Other Processes


Two-tune, Baldrige Award winning AT&T, an active bench marker, has developed a
nine-step model as under:
1. Identify what to benchmark
2. Develop a benchmarking plan
3. Choose data collection method
4. Collect data
5. Choose best-in-class companies
6. Collect data during a site visit
7. Compare processes, identify gaps, and develop recommendations
8. Implement recommendations
9. Recalibrate benchmarks

11.5.3 Motorolas Five-step Process


1. Decide what to benchmark
2. Fined companies to benchmark
3. Gather data
4. Analyze data and integrate results into action plans
5. Recalibrate and recycle the process
Although the number of steps in the process may vary from organization to
organization, 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.

Check Your Progress 3


Fill in the blanks:
1. ________________________ is a systematic and continuous process of
measuring an organizations performance on a key customer requirement.
2. ___________________ is a brainstorming session among organizations
on their processes.
3. Who had developed the just-in-time (JIT). Concept ________________.
4. ______________________ involves studying the best practices of
another organizations to learn how to do things better and as a means of
setting goals.

11.6 BENEFITS AND SHORTCOMINGS OF


BENCHMARKING
Formal benchmarking is the continuous, systematic process of measuring and
assessing products, services and practices of recognized in the field to determine the
extent to which they might be adapted to achieve superior performance.
Benchmarking can be applied to virtually any business or production process.
Important factors that drive the organization s to benchmark are:
z

Commitment to total quality

Customer focus

Product to market time

Manufacturing cycle time

Financial performance

All the winners of Malcolm Baldrige Award winners endorse benchmarking. Bench
marking is more interested in the process to produce, distribute and support of a
product than its cost.
Todays competitive world does not give time for gradual development.
Benchmarking tells a firm
z

Its position in relation to best in class practices and process:

The processes that need to be changed benchmarking brings out the newness and
innovative ways of managing operations.

It is an effective team-building tool.

It has increased general awareness of costs and performance of products and


services in relation to those of competitor organizations.

It brings together all the divisions and helps to develop a common front for facing
competition.

It highlights the importance of employees involvement and, as such, encourages


recognition of individual/team efforts.

Benchmarking is based on learning from others, rather than developing new and
improved approaches. It should never be the primary strategy for improvement, as
benchmarking cannot give a sustained competitive advantage.

205
Benchmarking

206
Total Quality Service Management

11.6.1 Benefits of Benchmarking


Benchmarking is by far the fastest and cheapest learning method. The main benefits
of benchmarking can be summarized as below:
z

Improves strategic planning

Provides realistic and achievable targets

Prevents companies from being industry led

Challenges operational complacency and Creates an atmosphere conducive to


continuous improvement

Provide assessments of the strengths and weaknesses of the current core business
processes and related critical work processes

Fosters organizational methods and practices

Leads to significant cost savings, and improvements to products, services and


business processes by comparing and adapting current methods and practices to
those identified as best practices

Foster and sustain an improved organizational capacity to successfully implement


quality and process improvement initiatives.

Helps to identify weak areas and indicate what needs to be done to improve.

Confirms the brief that there is a need for change and Create a sense of urgency
for improvement.

Allow employees to visualize the improvement that can be strong motivator for
change.

Additional benefits of bench marking are:


1. Creates an external business view.
2. Raises the organizations level of maximum potential performance improves
organizational quality.
3. Leads to lower cost.
4. Exposes people to new ideas.
5. Broadens the organisations operating perspective.
6. Creates culture open to new ideas.
7. Serves as a catalyst for learning.
8. Increase front-line employees satisfaction through involvement, empowerment,
and a sense of job ownership.
9. Tests the rigor of internal operating targets.
10. Overcome front-line employees natural disbelief that they can perform better.
11. It teaches organizations new lessons in competitiveness
Benchmarking Efforts Fail due to the following reasons
z

Lack of sponsorship

Wrong people on team

Teams dont understand their work completely

Teams take on too much time

Lack of long-term management commitment

Focus on metrics rather than process

Not positioning benchmarking within a large strategy

Misunderstanding the organizations mission, goals and objectives

Assuming every project requires a site visit

Failure to monitor progress

Many wrongly consider benchmarking as


z

Copycatting or

Spying on the competitor

Quick fix

Copycatting leads to lessened creativity and stale ideas. Benchmarking is not a


method for copying the practices of competitors, but a way of seeking superior
process performance by looking outside the industry. It is not support to take the
place of managers bringing insight and original strategies into the organization.
Benchmarking is not spying on the competitor but keeping up with what they and the
rest of the industry are doing. Benchmarking makes it possible to gain competitive
superiority rather than competitive parity. It is the only real way to assess industrial
competitiveness and to determine how one companys process performance compares
to other companies.
The primary weakness of benchmarking, however, is the fact that best in class
performance is a moving target. For functions that are critical to the business mission,
organizations must continue to innovate as well as imitate.
Benchmarking looks at the present in terms of how the best one is doing. Copying the
best class may lead only to a short-term advantage. This is not sufficient for future
needs.
Benchmarking is a relatively expensive and time-consuming process in most
industries. Therefore, it is recommended practice to benchmark only against the
critical Design Measures. Critically is defined by how important a particular measure
is to the success of the product and whether there are special circumstances impacting
a particular measure.
When an organization looks at benchmarking they must look at all aspects of the
business, its products, and its processes. It is crucial for organizations to focus on
anything that will impact its performance and quality. Thus though benchmarking
may not be the cure-all, it is definitely a right step in the direction for continuous
improvement.

11.7 LET US SUM UP


Benchmarking is an ongoing task at all levels of business and its purpose is to delight
the customer by continuous improvement. It is finding the secrets of success of any
given function or process and using the information to improve them.
Benchmarking means examining the methods of another business that is doing things
right and establishing its methods as the minimum standard. It involves studying the
best practices of other organizations to learn how to do things better and as a means of
setting goals.

11.8 LESSON END ACTIVITY


Write a note on the benefits of following benchmarking in an organization.

207
Benchmarking

208
Total Quality Service Management

11.9 KEYWORDS
Bench Marking: is the process of identifying, understandings and adopting
outstanding practices and process from organization anywhere in the world, in order
to help an Organization to improve its performance.
Strategic Benchmarking: Strategic benchmarking deals with to management and
looks at what strategies the organizations are using to make them successful.
Operational Benchmarking: Operational Benchmarking is assessing and
implementing the best practices of industry or public service leaders to improve
processes to the extent possible to meet organizational goals.

11.10 QUESTIONS FOR DISCUSSION


1. Explain the concept of Benchmarking and what are its advantages.
2. What are the steps to be followed to implement the benchmarking?
3. Explain the benchmarking process.
4. What are the different types of benchmarking?

Check Your Progress: Model Answers


CYP 1
Bench marking is the process of identifying, understandings and adopting
outstanding practices and process from organization anywhere in the world, in
order to help an Organization to improve its performance.
CYP 2
1. Performance benchmarking is an important technique secures external
involved in the processes or feedback to the concerned persons involved
in the processes or activities.
2. Process benchmarking involves seeking out the best potentially applicable
practices for an organization, both internally and externally, studying and
evaluating them, and then implementing the ones that will produce a
competitive advantage.
CYP 3
1. Benchmarking
2. Collaborative Benchmarking
3. Taiichi Ohro
4. Benchmarking

11.11 SUGGESTED READINGS


Sundara Raju, S.M., Total Quality Management: A Primer, Tata McGraw-Hill, 1995.
Sreenivasan, N.S. and V. Narayana, Managing QualityConcepts and Tasks, New Age
International, 1996.
Kume, H., Management of Quality, Productivity Press, 1996.
Dennis, Lock, Handbook of Quality Management, 1992.
Hammer, M. and Spect. Business Process Reengineering, 1995.

209
Model Question Paper

MODEL QUESTION PAPER


MBA
Second Year
Sub: Total Quality Service Management
Time: 3 hours

Total Marks: 100

Direction: There are total eight questions, each carrying 20 marks. You have to
attempt any five questions.
1. Explain the concept of Benchmarking and what are its advantages.
2. What are the steps to be followed to implement the benchmarking?
3. Explain the concept of Business Process Reengineering System.
4. Describe about the ISO standards and what are its advantages.
5. Explain the procedure for documentation of quality system.
6. Briefly explain the different types of charts.
7. Describe the characteristic of good sampling plan.
8. Explain the different types of controls followed in the service organization.

209

S-ar putea să vă placă și