CHAPTER 9

Management of Quality

Quality The ability of a product or service to consistently meet or exceed customer expectations.

Successful management of quality requires that managers have insights on various aspects of quality
Defining Quality: The Dimensions of Quality

Customer expectations can be broken down into a number of categories, or dimensions, that customers use to
judge the quality of a product or service. Understanding these helps organizations in their efforts to meet or
exceed customer expectations

Product Quality. Product quality is often judged on eight dimensions of quality:

(PASCRDPS)
Performance —main characteristics of the product.
Aesthetics —appearance, feel, smell, taste.
Special features —extra characteristics.
Conformance —how well a product corresponds to design specifications.
Reliability —dependable performance.
Durability —ability to perform over time.
Perceived quality —indirect evaluation of quality (e.g., reputation).
Serviceability —handling of complaints or repairs.

Service Quality. The dimensions of product quality don’t adequately describe service quality. Instead,
service quality is often described using the following dimensions:
(CCRRTACT)
Consistency —The ability to provide the same level of good quality repeatedly.
Convenience —the availability and accessibility of the service.
Reliability —the ability to perform a service dependably, consistently, and accurately.
Responsiveness —the willingness of service providers to help customers in unusual situations and to
deal with problems.
Time —the speed with which service is delivered. Assurance —the knowledge exhibited by
personnel who come into contact with a customer and their ability to convey trust and confidence.
Courtesy —the way customers are treated by employees who come into contact with them.
Tangibles —the physical appearance of facilities, equipment, personnel, and communication
materials.

SERVQUAL, an instrument designed to obtain feedback on an organization’s ability to provide quality service
to customers.

It focuses on five of the above-mentioned service dimensions that influence customers’ perceptions
of service quality: tangibles, reliability, responsiveness, assurance, and empathy .
The results of this service quality audit help management identify service strengths and weaknesses.
The Determinants of Quality

1. Design.

2. How well the product or service conforms to the design.

3. Ease of use.
4. Service after delivery.

Quality of design refers to the intention of designers to include or exclude certain features in a product or
service.

Quality of conformance - The degree to which goods or services conform to the intent of the designers.

RESPONSIBILITY FOR QUALITY

Top management. Top management has the ultimate responsibility for quality. While establishing strategies
for quality, top management must institute programs to improve quality; guide, direct, and motivate
managers and workers; and set an example by being involved in quality initiatives.

Design. Quality products and services begin with design. This includes not only features of the product or
service; it also includes attention to the processes

Procurement. Department that has responsibility for obtaining goods and services that will not detract from
the quality

Production/operations. has responsibility to ensure that processes yield products and services that conform
to design specifications

Quality assurance. is responsible for gathering and analyzing data on problems and working with operations
to solve problems.

Packaging and shipping. This department must ensure that goods are not damaged in transit,

Marketing and sales. This department has the responsibility to determine customer needs and to
communicate them

Customer service. Customer service is often the first department to learn of problems.

Benefits of Good Quality

Enhanced reputation for quality

Ability to command premium prices
Increased market share
Consequences of Poor Quality

loss of business
liability
productivity
costs
Costs of Quality

Appraisal Costs Costs of activities designed to ensure quality or uncover defects.

Prevention costs Costs of preventing defects from occurring.

Failure costs Costs caused by defective parts or products or by faulty services.

Internal failures Failures discovered during production.

External failures Failures discovered after delivery to the customer.

Return on quality An approach that evaluates the financial return of investments in quality.

Ethics and Quality Management

All members of an organization have an obligation to perform their duties in an ethical manner. Ethical
behavior comes into play in many situations that involve quality.

THE EVOLUTION OF QUALITY MANAGEMENT

Frederick Winslow Taylor – the “Father of Scientific Management,”

gave new emphasis to quality by including product inspection and gauging in his list of fundamental
areas of manufacturing management.
G. S. Radford - improved Taylor’s methods

significant contributions were the notions of involving quality considerations early in the product
design stage and making connections among high quality, increased productivity, and lower costs.
zero defects – (1960) This approach focused on employee motivation and awareness, and the expectation of
perfection from each employee.

It evolved from the success of the Martin Company in producing a “perfect” missile for the U.S. Army.
Organization of Petroleum Exporting Countries (OPEC) - caused an increase in energy costs, and automobile
buyers became more interested in fuel-efficient, lower-cost vehicles.

THE FOUNDATIONS OF MODERN QUALITY MANAGEMENT: THE GURUS

Walter Shewhart.

was a genuine pioneer in the field of quality control, and he became known as the “ father of
statistical quality control.”
He developed control charts
W. Edwards Deming.

Deming, a statistics professor at New York University in the 1940s, went to Japan after World War II
to assist the Japanese in improving quality and productivity.
Deming Prize – Prize established by the Japanese and awarded annually to firms that distinguish
themselves with quality management programs.
14 points – he believed were the prescription needed to achieve quality in an organization.
Joseph M. Juran.

like Deming, taught Japanese manufacturers how to improve the quality of their goods, and he, too,
can be regarded as a major force in Japan’s success in quality.
viewed quality as fitness-for-use.
He also believed that roughly 80 percent of quality defects are management controllable.
management has the responsibility to correct this deficiency.
Armand Feigenbaum.

was instrumental in advancing the “cost of nonconformance” approach as a reason for management
to commit to quality.
Quality is a total field.
Quality is defined by customers.
Philip B. Crosby.

developed the concept of zero defects and popularized the phrase “Do it right the first time.”
He stressed prevention, and he argued against the idea that “there will always be some level of
defectives.”
Kaoru Ishikawa.

The late Japanese expert on quality was strongly influenced by both Deming and Juran, although he
made significant contributions of his own to quality management.
Cause-and-effect diagram (also known as a fishbone diagram) for problem solving and the
implementation of quality circles, which involve workers in quality improvement
Genichi Taguchi.

is best known for the Taguchi loss function, which involves a formula for determining the cost of poor
quality
Taiichi Ohno and Shigeo Shingo.

both developed the philosophy and methods of kaizen, a Japanese term for continuous improvement
Continuous improvement is one of the hallmarks of successful quality management.

QUALITY AWARDS

Baldrige Award Annual award given by the U.S. government to recognize quality achievements of U.S.
companies.

Benefits of the Baldrige competition include the following:

1. Winners achieve financial success.

2. Winners share their knowledge.

3. The process motivates employees.

4. The process provides a well-designed quality system.

5. The process requires obtaining data

6. The process provides feedback.

European Quality Award is Europe’s most prestigious award for organizational excellence.

The European Quality Award sits at the top of regional and national quality awards and applicants
have often won one or more of those awards prior to applying for the European Quality Award.
Deming Prize, named in honor of the late W. Edwards Deming, is Japan’s highly coveted award recognizing
successful quality efforts.

It is given annually to any company that meets the award’s standards.

QUALITY CERTIFICATION
International Organization for Standardization (ISO) – promotes worldwide standards for the improvement
of quality, productivity, and operating efficiency through a series of standards and guidelines.

ISO 9000 A set of international standards on quality management and quality assurance, critical to
international business.

ISO 14000 A set of international standards for assessing a company’s environmental performance.

Management systems —systems development and integration of environmental responsibilities into business
planning.

Operations —consumption of natural resources and energy.

Environmental systems —measuring, assessing, and managing emissions, effluents, and other waste streams.

ISO 24700 A set of international standards that pertains to the quality and performance of office equipment
that contains reused components.

QUALITY AND THE SUPPLY CHAIN

Business leaders are increasingly recognizing the importance of their supply chains in achieving their quality
goals.

supply chain quality management is on reducing outsourcing risk as well as product or service variation and
overhead

Supply chain quality management can benefit from a collaborative relationship with suppliers that includes
helping suppliers with quality assurance efforts as well as information sharing on quality-related matters.

TOTAL QUALITY MANAGEMENT

A primary role of management is to lead an organization in its daily operation and to maintain it as a viable
entity into the future. Quality has become an important factor in both of these objectives.

Total quality management (TQM) – A philosophy that involves everyone in an organization in a continual
effort to improve quality and achieve customer satisfaction.

Fail-safing – Incorporating design elements that prevent incorrect procedures.

Continuous improvement – Philosophy that seeks to make never-ending improvements to the

process of converting inputs into outputs.
Kaizen – Japanese term for continuous improvement.
Competitive benchmarking. This involves identifying other organizations that are the best at
something and studying how they do it to learn how to improve your operation. The company need
not be in the same line of business
Employee empowerment. Giving workers the responsibility for improvements and the authority to
make changes to accomplish them provides strong motivation for employees.
Team approach. The use of teams for problem solving and to achieve consensus takes advantage of
group synergy, gets people involved, and promotes a spirit of cooperation and shared values among
employees.
Decisions based on facts rather than opinions. Management gathers and analyzes data as a basis for
decision making.
Knowledge of tools. Employees and managers are trained in the use of quality tools.
Supplier quality. Suppliers must be included in quality assurance and quality improvement efforts so
that their processes are capable of delivering quality parts and materials in a timely manner.
 Champion. A TQM champion’s job is to promote the value and importance of TQM principles
throughout the company.
Quality at the source – The philosophy of making each worker responsible for the quality of his or her
work.
Suppliers are partners in the process, and long-term relationships are encouraged. This gives
suppliers a vital stake in providing quality goods and services
SIX SIGMA

A business process for improving quality, reducing costs, and increasing customer satisfaction.
Statistically, six sigma means having no more than 3.4 defects per million opportunities in any
process, product, or service.
DMAIC A six-sigma process: define, measure, analyze, improve, and control.

LEAN/SIX SIGMA

is a balanced approach to process improvement that integrates principles from lean operation and
statistical tools for variation reduction from six sigma to achieve speed and quality.
combines the power of the workers, who are close to the process, and the structured approach of six-
sigma methodology

Obstacles to Implementing TQM

1. Lack of a companywide definition of quality

2. Lack of a strategic plan for change

3. Lack of a customer focus.

4. Poor intraorganizational communication

5. Lack of employee empowerment.

6. View of quality as a “quick fix”

7. Emphasis on short-term financial results: “Duct-tape” solutions often treat symptoms; spend a little now—
a lot more later.

8. Inordinate presence of internal politics and “turf” issues: These can sap the energy of an organization and
derail the best of ideas.

9. Lack of strong motivation

10. Lack of time to devote to quality initiatives.

11. Lack of leadership.

Criticisms of TQM

1. Overzealous advocates may pursue TQM programs blindly, focusing attention on quality even though other
priorities may be more important.

2. Programs may not be linked to the strategies of the organization in a meaningful way.
3. Quality-related decisions may not be tied to market performance. For instance, customer satisfaction may
be emphasized to the extent that its cost far exceeds any direct or indirect benefit of doing so.

4. Failure to carefully plan a program before embarking on it can lead to false starts, employee confusion, and
meaningless results.

5. Organizations sometimes pursue continuous improvement (i.e., incremental improvement) when dramatic
improvement is needed.

6. Quality efforts may not be tied to results.

PROBLEM SOLVING

Define the problem and establish an improvement goal.

Develop performance measures and collect data.
Analyze the problem.
Generate potential solutions.
Choose a solution.
Implement the solution.
Monitor the solution to see if it accomplishes the goal.

Plan-do-study-act (PDSA) cycle A framework for problem solving and improvement activities.

Plan. Begin by studying the current process

Do. Implement the plan, on a small scale if possible
Study. Evaluate the data collection during the do phase.
Act. If the results are successful, standardize the new method and communicate the new method to
all people associated with the process.
Process improvement A systematic approach to improving a process.

QUALITY TOOLS

Flowchart A diagram of the steps in a process.

Check sheet A tool for recording and organizing data to identify a problem.

Histogram A chart of an empirical frequency distribution.

Pareto chart A diagram that arranges categories from highest to lowest frequency of occurrence

Scatter diagram A graph that shows the degree and direction of relationship between two variables

Control chart A statistical chart of time-ordered values of a sample statistic (e.g., sample means)

Cause-and-effect diagram A diagram used to organize a search for the cause(s) of a problem; also known as a
fishbone diagram

Run chart Tool for tracking results over a period of time.

Methods for Generating Ideas

Brainstorming Technique for generating a free flow of ideas in a group of people.

Quality circles Groups of workers who meet to discuss ways of improving products or processes.

Benchmarking Process of measuring performance against the best in the same or another industry.