4.

4 (Quality cost and TQM)

Quality

Generally, it can be said that a product is of satisfactory quality, if it satisfies the customer. The customer will
buy product a product or service, only if it meets his or her minimum needs. Thus customer satisfaction is the
main criteria for determining whether a product possesses the required quality or not. Therefore customer wants
are first assessed by marketing people and then quality decision is taken on the basis of such information. In
order to define quality, therefore, we have to think of it in term of some use. The term quality can be defined as
the sum totals of feature of a product which influences its ability to satisfy a given demand. It is also known as
“fitness for use”. It is decided by customer. It is also considered as the sum total of the attributes or properties
that describe a product. A product quality should control at every stage of transformation like input (material,
machine), transformation (process) and output.

Benefits of Quality

 Customer satisfaction will increased

 Profit will increased
 Sales will increases
 Goodwill and image of company will increased
 Resources will be fully utilised
 Company will be able to survive in the market
 It will help company to grow in other market.
 It will easy to face competition in the market.
 Scrap and wastage will be reduced
 There will be reduction in complements.
 A mirror for a manufacturer.

Design Quality

The design of a product or service must incorporate that feature and attributes that would satisfy the customer
need. While designing product or service, there are various characteristic should be considered. The
characteristics for product or service may be different.

Component of Product quality Component of Service quality

 Performance (function) reliability(trustworthy)

 Features (various nature) responsiveness(discipline)
  Reliability (life of product) competence(perfection)
 Serviceability (ease in service) access(convenient)
 Appearance (looks) courtesy (behaviour)
 Safety (less breakdown) communication(understanding)
 Durability (operation life) accuracy (correctness )

Cost of quality

A product or service that satisfies the customer need must be produced in a cost effective manner. Every quality
has some cost. Generally there are four type of cost of quality. If Appraisal cost and prevention cost increases,
than failure cost will be decreased and vice versa.

 Preventive cost – They are associated with preventing defects before they happen. They include the cost
of redesigning the product to make it simpler to produce, redesigning the process to remove cause of
poor quality, and training of employee in the method of continuous improvement. For example design
cost, maintenance, product requirement, planning, appraisal equipment, training etc.
 Appraisal cost – They are incurred in assessing the level of quality attained by the operating system.
They include the cost of detecting defects that means the cost of all activities aimed at finding product
and service that do not conform to specification before they are shipped to customer. For example
inspection, verification, quality audit, equipment inspection, vendor rating etc.
 Internal failure cost – This result from defects that are discovered during the production of a product or
service. The cost includes the cost of repairing, wastage, reworking and retesting, rescheduling and other
hassles caused by defective products.
 External failure cost – They arise when a defect is discovered after the customer has received the
product or service. These costs include repairing, litigation, loss of goodwill, warranty cost, product
liability, cost of product return or recall and lost business and customer goodwill.

Total Quality Management (TQM)

A Philosophy that involve everyone in an organisation in a continuous efforts to improve quality and achieve
customer satisfaction. It demands cooperation from everyone in the company from the top management down to
the worker.TQM can be defined as an organisation wide efforts to develop system, tools, techniques, skill and
mindset to establish a quality assurance system that is responsive to the emerging market needs. Total connotes
every one, everywhere and every time. It involves everyone from CEO to the operator, the responsibility for
quality shift to the production workers.

Six basic concepts in TQM

  Top management commitment and support
 Focus on both internal and external customer
 Employee involvement and empowerment
 Continuous improvement
 Parternership with the supplier
 Establishing performance measure for process.

Essentials of TQM Focus

 Customer satisfaction
 Quality policy
 Employee involvement
 Supplier selection and development
 Recognition and reward
 Leadership
 Organisation structure quality.

Seven underlying Principle in TQM

 Strive for quality in all things (total quality)

 The customer is the creation of quality
 Improve the process or system by which product are produced
 Quality improvement is continuous, never ending activity
 Worker involvement is essential
 Ground decision and action on knowledge
 Encourage team work and cooperation.

Scope of TQM

 All integrated organisation infrastructure

 A set of management practices
 Wide variety of tools and techniques

Benchmarking

Benchmarking is a process used in management in which business use industry leaders as a model in
developing their business practices. This involve determining where you need to improve, finding an
organisation that is exceptional in this area, then studying the company and applying its best practices in your
firm. It is practice of learning from the best practices of others. A systematic way to identify superior product,
service and practices that can be adopted into an organization .Comparing company performance with the best
in class companies. It is a continuous process of measuring product, service against the toughest competitor who
is industry leaders.

Classification of Benchmarking

 Performance benchmarking
 Process benchmarking
 Internal benchmarking
 External benchmarking
 Competitive benchmarking

Procedure of Benchmarking

 Indentify your problem areas

 Identify organisation that are leaders in these areas
 Study the best practice
 Implement the best practices
 Repeat

Benefits of Benchmarking

 It enables the best practice from any industry to be creatively incorporated into the process of the
benchmarked function
 It can provide stimulation and motivation to the professionals
 Benchmarking breaks down ingrained reluctance of operation to change
 Bench marking may also identify technological brake through that would not have been recognised and
thus not applied.

Quality Circle

A quality circle or quality control circle is a group of worker who do the same or similar work, who meet
regularly to identify, analyze and solve work-related problems. Normally small in size, the group is usually led
by a supervisor or manager and presents its solutions to management; where possible, workers implement the
solutions themselves in order to improve the performance of the organization and motivate employees. It is a
group of employee whose assignment is to identify problems, formulates solution and present than result to the
management with suggestion for implementation. The various issue of discussion may be quality, productivity,
defective, wastage, scrape, utilsation of resources etc.It is started in Japan. In India BHEL, L&T, Kirlosker are
implementing quality circle practices. The support structure usually consists of a steering committee of top
management official, facilitator, circle leader and circle members.

Typical topics for the attention of quality circles are

 improving occupational safety and health improving product design, and

 Improvement in the workplace and manufacturing processes.

Quality circles are typically more formal groups. They meet regularly on company time and are trained by
competent persons (usually designated as facilitators) who may be personnel and industrial relations specialists
trained in human factors and the basic skills of problem identification, information gathering and analysis, basic
statistics, and solution generation. Quality circles are generally free to select any topic they wish (other than
those related to salary and terms and conditions of work, as there are other channels through which these issues
are usually considered.

ISO 9000

The ISO 9000 family of quality management systems standards is designed to help organizations ensure that
they meet the needs of customers and other stakeholders while meeting statutory and regulatory requirements
related to a product or program. ISO 9000 deals with the fundamentals of quality management
systems, including the seven quality management principles upon which the family of standards is based.ISO
9001 deals with the requirements that organizations wishing to meet the standard must fulfill.

Third-party certification bodies provide independent confirmation that organizations meet the requirements of
ISO 9001. Over one million organizations worldwide are independently certified, making ISO 9001 one of the
most widely used management tools in the world today. However, the ISO certification process has been
criticized as being wasteful and not being useful for all organizations.

Zero defects (Six Sigma)

Zero defect program, which attempt to improve quality by changing workers attitudes, where particularly
popular in 1960 and 1970.Their theme “Do it right the first time.” Stress error free performance. Error or
defects can be caused by lack of knowledge and lack of attention. While first factor can be taken care of by
providing training and more knowledge.

It mean minimize the number of defective item in the production precess.It mean making the process so capable
that there are only 3.4 defects per million.Empolyee try to Do it right the first time or error free performance.
Generally error detects are caused by lack of knowledge, lack of attention, attitude problem. To minimize error
employees should be motivated and training should be provided.

Principle of zero defects

 Quality is conformance to requirements. Every product has a requirement a described of what the
customer needs.

 Defect prevention is preferable to quality inspection and correction, less troublesome, more certain and
less expensive to prevent defects than to discover and correct them.

Continuous improvement (Kaizen)

It is also known as Kaizen. It is the philosophy of continuatially seeking ways to improve process. It involves
identifying benchmark of excellent practice. It require total employee involvement, training, team, Kaizen is
actually a life philosophy assuming that every aspect to life deserve to be constantly improved. The Kaizen
mean change –Kai and good – Zen. It is originated in Toyota motors Co. various step for improvement

 Train employee

 Make SPC method a normal aspect of daily life.

 Build team work

 Utilize problem solving tool within the work teams

 Develop a sense of operator ownership in the process.

Statistical Quality Control (SQC)

It refers to the use of statistical techniques in controlling the quality of goods. It is the mean of establishing and
achieving quality specification, which requires the use of tools and techniques of statistics.

SQC is the application of statistical techniques to accept or reject products already produced or to control the
process and therefore product quality while the parts are being made. Application of statistical techniques to
accept or reject product already product produced or to control the process while it is being carried out.SQC can
be done at two stages like

(i) process control

(ii) Product control.

Advantage of SQC

 It helps prevent defects from occurring. Assignable cause signifying deviation in quality are detected
and rectified. Costly rework, rejection and scrap are avoided.
 It also helps avoidance of the risk of accepting a bad lot.
 It emphasising on inspection of only samples, SQC avoids inspection of the entire lot.
 It ensures the maintenance of high standard of quality and enables the users to build up their goodwill.
 Another important reason for using SQC is to supply an audit of quality regarding the producer product.