INTRODUCTION TO QUALITY

CHAPTER 1

INEN 4315 Industrial Management

Berna Eren Tokgoz, PhD
Department of Industrial Engineering
The Business Imperative
“The first job we have is to turn out
quality merchandise that consumers will
buy and keep on buying. If we produce it
efficiently and economically, we will earn
a profit, in which you will share.”
- William Cooper Procter
Critical Issues of Managers
Following these three remain imperatives for modern
organizations.

• Productivity- the measure of efficiency

• Cost- cost of operations
• Quality- the quality of the goods and services that create
customer satisfaction

All these three determinants contribute to profitability.

However, the most significant factor in determining the long-

run success or failure of any organization is QUALITY.
Importance of Quality(1)
• Quality is uniquely positioned to accelerate
organizational growth through better execution and
alignment
• Quality provides the voice of the customer critical to
developing innovative products and services.
• Quality can provide an organization with a competitive
edge
• A reputation or high quality generates satisfied and
loyal customers.
• However, the consequences of failure in quality
could be brutal. Consider Toyota Motor company.
Importance of Quality(2)
• At the end, Quality is vital to products (goods and/or
services) as well as the management process and systems
that produce and deliver system
• “No quality, no sales. No sales, no profit. No profit, no
jobs.”
• The role of quality is recognized in many organizations
with senior management.
• For example, Apple created a new position “Senior Vice
President of Operations Dedicated to Product Quality”
whose responsible is to ensure that Apple’s products
meet the highest standards of quality.”
Importance of Quality in Practice

• This video is about quick service restaurant operations

which is called K&N Management
http://www.youtube.com/watch?v=9qI1ID40yKc&list=PL91
4FB9D44BF49C14&index=40&feature=plpp_video

• The second video is about Pal’s Sudden Service, which is

a small fast food restaurant chain.
https://www.youtube.com/watch?v=YfZN9gl9cvI
Quality Profiles
• Profile two “role-model” organizations
• They are mostly recipients of Baldrige Award
• This award recognizes outstanding US
organizations
• These examples will help us to understand
some of the approaches and cultural factors
that are characteristic of organizations that
have pursued a strategy of quality and
performance excellence.
Quality Profile – Motorola, Inc.
• Leader in the U.S. quality revolution during the 1980s and one of the
first organizations to receive Baldrige Award in 1988.
• Pioneer in continual reduction of defects and cycle times in all the
company’s processes, from design, order entry, manufacturing, and
marketing, to administrative functions.
• Employees in every function of the business measure defects and use
statistical techniques to analyze results. Products that once took weeks
to make are now completed in less than an hour.
• Exceptional practices in managing human assets, sharing data and
information with employees, customers, and suppliers, and aligning all
its business processes with key organizational objectives.
• Throughout its history, Motorola’s maintained a focus on quality.
Defining Quality
• Quality is a very subjective concept.
• The meaning of quality continues to evolve as the quality
profession grows and mature.
• There is no universal definition for quality.
• One study asked managers to define quality, responses are:

• Perfection
• Fast delivery
• Providing a good, usable product
• Consistency
• Eliminating waste
• Doing it right the first time
• Delighting or pleasing customers
• Total customer service and satisfaction
• Compliance with policies and procedures
Formal Definitions of Quality (1 of 6)

Transcendent Perspective: excellence, to rise above or extend

notably beyond ordinary limits (superiority or excellence).
• Quality is both absolute and universally recognizable, a
mark of uncompromising standards and high achievement.
• Quality cannot be defined precisely from this perspective
• You know it when you see it
• Product excellence often associated with higher price
• Do you think high quality is correlated with high price?
• Example of Lamborghini car
• Some examples of products associated with an image of
excellence are
• Rolex watches, Ritz-Carlton Hotels, and Lexus automobiles.
Formal Definitions of Quality (2 of 6)
Product Perspective: quantities of product
attributes
• thread count of a shirt or bed sheet
• number of different features in a cell phone.
• Larger numbers of product attributes are equivalent
to higher quality
• Designers are try to put more features into products
whether the customers want them or not.
• The assessment of product attributes may vary
considerably among customers.
 Formal Definitions of Quality (3 of 6)
• User Perspective: fitness for intended use or how well the product
performs its intended function.
• A Cadillac CTS is more useful if you are touring in highway
• A Honda Civic is more useful if you are commuting in a congested
urban environment
Application of the fitness for use concept: Nissan Motor Company Ltd.
• Nissan did not want to use name without knowing the U.S. customer
expectation in 1960. They decided to use name Datsun.
• Even though Datsun was very economical to own, U.S. drivers found it
to be slow, hard to drive, low-powered, and not very comfortable.
• After careful understanding of U.S. customer needs, Nissan finally got
a product that American liked and the Nissan brand name replaced
Datsun.
Second example comes from a U.S. appliance company.
• It did not fit for use in Japan
Formal Definitions of Quality (4 of 6)
• Value Perspective: quality vs. price, the
relationship of product benefits to price. Consumers
no longer buy solely based on price. They are
comparing quality of the product with price and
competitive offering.
• Generic pharmaceuticals, which usually provide the same
medical benefits at a lower price.

One important note: Competition demands that businesses

continually seek to satisfy consumer’s needs at lower
price. This requires a strong internal focus on efficiency,
and quality improvements in operations generally reduce
costs by reducing scrap and rework.
Formal Definitions of Quality (5 of 6)
Manufacturing Perspective: conformance to
specifications
• Specifications are targets and tolerances determined
by designers of goods and services.
• Targets are the ideal values but tolerances are necessary
because it is impossible to meet targets all the time.
• In manufacturing, a part dimension might be
specified as 0.236+0.003cm or 0.236-0.003.
• In services “on-time arrival” for an airplane is
typically defined as being within 15 minutes of the
scheduled arrival time. The target is scheduled time,
and the tolerance is specified to be 15 minutes.
Formal Definitions of Quality (6 of 6)
Customer Perspective: meeting or exceeding customer
expectations.

CUSTOMERS:
• Consumers
• Ultimate buyers of goods and services
• External customers
• Business-to-business
• Internal customers
• Anyone who receives goods or services from someone else within an
organization

Who are the customers of a university, its instructors and its students?
Quality Perspectives in the Value
Chain
Discussion Questions
DQ 4. In the Business Week (July 9 & 16, 2007, p. 16) article, the
reader said: “Americans have switched from Detroit Big Three
vehicles to Honda and Toyota vehicles not for visual design
features but for durability, reliability, good fuel consumption, and
low full cost of operation. Detroit needs to offer five-passenger,
35-mile-per-gallon vehicles with 100,000 mile bumper-to-bumper
warranties over 10 years of ownership to cause satisfied Honda
and Toyota buyers to switch.”
What definitions of quality are implied in these comments?
Discussion Questions
• DQ 5. Choose a product or service to illustrate
how several definitions of quality can apply
simultaneously.
Skilled Care Pharmacy
1. How might the various definitions of quality
apply to Skilled Care?
History of Quality Management (1 of 4)
• Ancient History
• Zhou Dynasty in China- inspection at various stages by the workers themselves was important in establishing
responsibility for quality

• The Age of Craftsmanship

• Skilled workers during the Middle Ages in Europe- served both as manufacturer and inspector
• Industrial Revolution

• Early 20th Century

• Inspection was primary control mechanism for quality
• Separate quality departments
• Ford Motor Company – Henry Ford, Sr.,developed the fundamentals of “total quality”
• The story of “the book”
• Statistical methods and quality assurance- The Bell system was the leader of the modern history of industrial quality
management
• The early pioneers of quality – Shewhart, Dodge, Edwards, Juran, and Deming
• They created the term quality assurance which refers to any planned and systematic activity directed toward
providing costumers with products of appropriate quality, along with the confidence that products meet consumers’
requirements
• In addition, they developed many useful techniques for measuring, controlling, and improving quality. So, quality
became a technical discipline
• During World War II US military began using statistical sampling and imposing strict standards on suppliers
• Professional societies and publications-The disciplines first professional journal, “Industrial Quality Control” was
published in 1944 . American Society for Quality Control (now called American Society for Quality) were founded soon
after
History of Quality Management (2 of 4)
• Post World War II
• Evolution of quality management in Japan
• W. Edwards Deming and Joseph Juran- focused on upper management and
thought statistical quality control techniques.
• U.S. “Quality Revolution”
• Quality crisis around 1980
• Growth of product quality awareness in manufacturing industries
• Early Successes
• Malcolm Baldrige National Quality Award (1987) was established by an act of Congress
- a statement of national intent to provide quality leadership. This award became the
most influential instrument for creating quality awareness among U.S. business, and
has also had a significant global impact.
• The gaps between Japanese and U.S. quality began narrow in automobile industry in
early 1990s.
• Florida Power and Light was the first non-Japanese company to be awarded for
Deming prize in 1989. AT&T Power Systems was the second one in 1994.
• Books, consulting, training
History of Quality Management (3 of 4)
• From Product Quality to Total Quality Management
• “Little Q” vs. “Big Q” and TQM
Big Q- managing for quality in all organizational
processes
Little Q- focusing solely on manufacturing
Total Quality (TQ), developed as a total, company-wide
effort-through full involvement of the entire workforce
and a focus on continuous improvement.
• Management Failures
• Cynicism and disinterest
• “No, TQM isn’t dead. TQM failures just prove that bad
management is still alive and kicking.”
History of Quality Management (4 of 4)
• Performance Excellence
• Can be defined as integrated approach to organizational performance
management
• All fundamental business activities needed to be based on quality
principles.
• Focus on customer value, organizational sustainability, improvement of
effectiveness and capabilities, and organizational and personal learning
• Emergence of Six Sigma
• After failures of TQM, six sigma emerged as a new approach to quality
improvement
• a customer-focused, results-oriented approach to business improvement
• Current and future challenges
• Continue to apply the principles of quality and performance
excellence.
• Quality is “a race without a finish line.”
Growth of Modern Quality
Management

Performance
Service
excellence
quality

Improved
product designs

Manufacturing
quality
Contemporary Influences on
Quality
The American Society for quality identified eight key forces that will influence the future of
quality:
• Global Responsibility- do not waste limited resources. It also deals with human rights,
labor practices, fair operating practices, consumer interest, and contributions to society.
• Consumer Awareness- customize costumer preferences.
• Globalization- growing number of competitors, sources of lower-cost labor and assume
the risks associated with global supply chains.
• Increasing Rate of Change- being first to market means the ability to anticipate and
respond to quickly to consumer demand.
• Workforce of the Future- organizations will need to make a greater investment in
training and education.
• Aging Population- there is a growing market for organizations to consider as the aging
lifestyle becomes more obvious.
• Twenty-first Century Quality- it is not the same it was 50 years ago, or even five years
ago.
• Innovation- create innovative products which can excite customers.
Quality in Manufacturing- Manufacturing
Systems
• Quality management is
rooted in manufacturing.
Figure shows a typical
manufacturing system
and the key relationships
among its functions.
• The quality concerns of
each component will be
discussed next.
Quality in Marketing

Marketing and sales personnel are

responsible for determining the needs
and expectations of consumers.
Quality in Product Design
Product design and engineering functions
develop technical specifications for
products and production processes to
meet the requirements determined by
the marketing function.
Quality in Purchasing and Receiving
A purchasing agent should not simply be
responsible for low-cost procurement,
but should maintain a clear focus on the
quality of purchased goods and
materials.
Quality in Production
Planning & Scheduling
Poor quality often results from time
pressures caused by insufficient planning
and scheduling.
Quality in Manufacturing and
Assembly

Both technology and people are essential to

high-quality manufacturing.
Quality in Process Design

Manufacturing processes must be capable of

producing output that meets specifications
consistently.

The role of industrial engineers and process

designers is to work with product design
engineers to develop realistic specifications.
Quality in Finished Goods
Inspection and Testing
The purposes of final product inspection
are to judge the quality of manufacturing,
to discover and help to resolve production
problems that may arise, and to ensure
that no defective items reach the
customer.
Quality in Installation and Service
Service after the sale is one of the
most important factors in
establishing customer perception of
quality and customer loyalty.
Quality in Service Organizations
• Service is defined as “any primary or complementary
activity that does not directly produce a physical product –
that is, the non-goods part of the transaction between
buyer (customer) and seller (provider).”
• Service organizations were probably 10 years behind
manufacturing in implementing quality approaches. This is
because
• They had not confronted foreign competition
• Constantly changing personnel makes establishing a culture for
quality more difficult.
• The nature of quality is significantly different in services than in
manufacturing.
• However, the importance of quality in services cannot be
underestimated.
Critical Differences Between Service
and Manufacturing (1 of 2)
• Customer needs and performance standards
are more difficult to identify and measure
• Services requires a higher degree of
customization
• Output is intangible
Critical Differences Between Service
and Manufacturing (2 of 2)
• Services are produced and consumed
simultaneously
• Customers are often involved in actual
process
• Services are more labor-intensive than
manufacturing
• Services handle large numbers of transactions
Components of Service Quality
The most important drivers of service quality are:
• People
• Call centers are primary means of customer contact. Call centers can be
advantage of serving customers more effectively and personalizing transactions
but they can also be a source of frustration.
• Customers evaluate a service primarily by the quality of the human contact
• “If we take care of our people, they will take care of our customers.”
• FedEx developed “no lay off policy” a “guaranteed fair treatment procedure” etc.
• However, the front-line workers received the lowest pay, minimal training,
little decision-making authority, and little responsibility in many service
companies.
• Technology
• Computers and information technology
• E-commerce - Customers can shop for almost any product
• Configure, price, and order computer systems
• Take virtual test drives of automobiles and select from various options
• Even though information technology increases the speed and reduces labor
intensity, some customer thinks customer satisfaction is decreased because of
less personal interaction.
Quality in Business Support Functions
• Finance and Accounting
• Finance must authorize sufficient budgeting for equipment, training, and
other means of assuring quality.
• Financial studies can help expose the costs of poor quality and
opportunities of reducing it.
• Accounting data are useful in identifying areas for quality improvement
and tracking the progress of quality improvement program.
• Legal Services
• Rapid increase in liability suits has made legal services an important
aspects of quality assurance.
• Quality Assurance
• Some managers lack the technical expertise required for performing
needed statistical tests or data analysis . Technical specialists usually in
the quality assurance department assist the managers in these tasks.
• Quality assurance department cannot guarantee quality. It is role is to
provide guidance and support to everyone in the organization.
Quality and Competitive Advantage
• Competitive advantage denotes a firms ability to achieve
market superiority.
• A strong competitive advantage provides customer value,
leads to financial success and business sustainability.
• It is difficult for competitors to copy. High quality is itself
an important source of competitive advantage.

Product quality is an important determinant of business

profitability.
Quality and Profitability

Improved quality Improved quality

of design of conformance

Higher perceived Higher Lower

value prices manufacturing and
service costs
Increased market Increased
share revenues

Higher profitability
Quality and Personal Values
• Personal initiative has a positive impact on
business success
• Quality-focused individuals often exceed
customer expectations
• Quality begins with personal attitudes
• Attitudes can be changed through awareness
and effort (e.g., personal quality checklists)
Quality and Personal Values

Unless quality is internalized at the personal

level, it will never become rooted in the
culture of an organization.

Thus, quality must begin at a personal level

(and that means you!).
Discussion Questions
16. Cite some examples from your own
experience in which you felt service quality was
truly top-notch, and some in which it was not.
What do you think might be some of the
fundamental differences in the infrastructure
and management practices of these
organizations?