CHAPTER - 9

QUALITY MANAGEMENT

EMBA 20TH BATCH (ONLINE)

MBA – 121 Operations Management: Integrating
Manufacturing and Services

11TH SEPTEMBER 2023 PRESENTED BY GROUP -7

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 Chapter Objectives…

 Introduce the Quality Gurus who have played a significant role in the evolution of
quality management and describe their specific contributions.
 Identify the different dimensions of Quality for both goods and services
 Define the components of the Cost of Quality.
 Describe the more successful quality managing initiatives, including Total Quality
Management (TQM) and Six Sigma.
 Present some of the Quality Awards and recognition that encourage firms to provide
high quality goods and service
  Introduce the quality gurus who have played a significant role in the evolution
of quality management and describe their specific contributions

Managerial Issues and The Quality Gurus...

• Quality remains a critical factor for success in both goods and services.
• Customer expectations are continually rising..Definding quality can be challenging..
• Poor quality comes at a significant cost, leading to dissatisfied customers and lost business.
• Maintaining high-quality products and services is crucial for customer loyalty and long-term
profitability.
• To provide only the highest quality Goods and Service is the KEY….
• US companies focused on high volume of Goods when 2 American Gurus teaches to Japanese
Manager about “TO LOWER COST AND TO IMPORVE QUALITY BY DOING IT RIGHT
THE FIRST TIME”.
• US Quality movement started when the Documentary airing at NBC as “If Japan Can, Why
Can’t We”.. Today.. High Quality Goods and Services is mandatory for long-term success of
every organization.
  Introduce the quality gurus who have played a significant role in the evolution
of quality management and describe their specific contributions

The Quality Gurus

• Individuals who have been identified as making a significant contribution to improving
the quality of Good and Service.

1. Mr. Walter A. Shewhart

2. Mr. W Edwards Deming
3. Mr. Joseph M.Juran
4. Mr. Armand Feigenbaum
5. Mr. Philip Crosby
6. Mr. Genichi Taguchi
7. Mr. Kaoru Ishikawa
  Introduce the quality gurus who have played a significant role in the evolution
of quality management and describe their specific contributions

• Created a system to distinguish between random and assignable causes

of process variability. "In control" meant random variation, while
nonrandom variation required identification and correction.
Walter A. Shewhart
• Developed the foundations for Statistical Process Control (SPC).
1891 – 1967
American physicist,
• Developed the “Plan-Do-Check-Act" (PDCA) cycle to emphasize for
EEngineer & Statistician Continuous Improvement.

• SPC is the fundamental of Deming's quality management

approach.
• Intorduce SPC and PDCA to Japanese.
• The Japanese honored his contributions by naming their highest
industrial excellence award as “Deming Prize”.
• High-quality processes are more cost-effective due to reduced Dr. W. Edwards Deming
1900-1993
rework, repairs, and material scrap. American Professor
Engineer & Statistican
• He identified 14 Points for imporving quality.
  Introduce the quality gurus who have played a significant role in the evolution
of quality management and describe their specific contributions

Joseph Armand Philip Crosby

M.Juran Feigenbaum 1926 – 2001
1904-2008 1922 – 2014 Engineer &
Engineer & American Businessman
Management quality control
consultant expert &
Businessman

• Focuses primarily on three areas as quality • In 1979, founded his own institution called the
planning, quality control & quality "Quality College" in Florida.
improvement.
• In 1956, Armand Feigenbaum introduced the • His statement that "quality is free." that investing in
concept of "total quality control." quality improvement pays off in the long run by
• Defines the quality as "fitness for use," reducing the costs.
product or service should meet the • Interdepartmental communication in achieving
customer's needs and expectations quality control, includes effective communication • Cost of providing poor-quality goods and services
regarding product design control, incoming material could be as high as 25% of revenues for
control, & and production control. manufacturing companies and 40% of operating
• Consisting (5) components as 1) quality of
expenses in service operations
design 2) quality of conformance 3) • The Japanese embraced Feigenbaum's concept of
availability 4) safety 5) field use total quality control, "companywide quality • Successfully implemented quality programs could
control." expect to reduce their costs of quality to less than
• He divided the cost of quality into three 2.5% of sales
major categories 1)prevention, • The Massachusetts Quality Award is named in honor
of Armand Feigenbaum
2)detection/appraisal, and 3)failure
  Introduce the quality gurus who have played a significant role in the evolution
of quality management and describe their specific contributions

Genichi Taguchi • Designing products and processes that are less sensitive to variations,
1924 – 2012
Japanese Engineer which leads to more consistent and higher-quality results
& Statistician
• Taguchi Methods which design and reduce variation in manufacturing
processes, emphasis on reducing defects and improving product quality.
• Dual engineering-philosophical perspective shows how much is lost when
products fail to meet specifications, which "ups the stakes" for managers
concerned with the quality of their products and services.
Kaoru Ishikawa
1915-1989
Japanese Professor &
Influential quality
• Developed problem-solving tools ,cause-and-effect or Fishbone diagram. management innovator

• Wrote about the cultural differences between Eastern and Western people.
• Emphasized the importance of quality control in developing, producing,
and servicing economical, useful, and satisfactory products for consumers.
• Provided specific recommendations regarding the role of managers within
organizations
  Identify the different dimensions of quality for both goods and
services

Defining Quality
• The quality was viewed primarily as a defensive function.
• Quality control : reducing the number of customer complaints.
• Heavy reliance on identifying poor quality through in inspection rather than on
preventing poor quality.
• Higher quality = more costly
• Today, more and more companies recognize the strategic importance of quality.
• Firms are now able to not only identify new market , but also increase their
market share.

Quality in Goods
• Dimensions of quality – Elements of quality as perceived by customers.
• David Garvin identified eight dimensions of quality with respect to goods.
  Identify the different dimensions of quality for both goods and
services
Eight Dimension of Quality in Goods
  Identify the different dimensions of quality for both goods
and services

Quality in Service
• Parasuraman, Berry and Zeithaml categorized Service quality
into five major dimensions;
 Reliability: The ability to perform the promised service dependably
and accurately.
 Tangibles: The physical facilities, equipment, personnel, and
communications materials.
 Responsiveness: The willingness of service providers to help
customers and provide prompt service.
 Assurance: The knowledge and courtesy of employees and their
ability to convey trust and confidence.
 Empathy: The ability to show caring, individualized attention to
customers.
  Identify the different dimensions of quality for both goods
and services
Five Major Dimensions Quality in Services
  Identify the different dimensions of quality for both goods
and services
Additional Views of Quality
• Technical Quality versus Functional Quality
 Technical quality – The core element of the goods or service.
 Functional quality – The customers’ perception of how the service is delivered.

• Expectations and Perceptions

 Customers’ satisfaction relates to their prior expectations and their perception about the service.
 Satisfaction = (Perception of performance) – (Expectation)
 The service satisfaction is important for achieving
high levels of customer satisfaction.
  Define the components of the cost of quality
The Cost of Quality
• Framework for identifying quality components that are related to producing both
high-quality products and low-quality products, with the goals of minimizing the
total cost of quality.
  Define the components of the cost of quality

• Cost of prevention
 Costs associated with the development of programs to prevent defectives from occurring in the
first place.
• Cost of detection/ appraisal
 Costs associated with the test and inspection of subassemblies and products after they have
been made.
• Cost of failure
 Costs associated with the failure of a defective product.
• Internal failure costs
 Costs associated with producing defective products that are identified prior to shipment.
• External failure costs
 Costs associated with producing defective products that are delivered to the customer.
  Define the components of the cost of quality

Two Views of the Cost of Improved Quality

  Define the components of the cost of quality

Assuring Customer satisfaction

• Service organizations believe that achieving total
customer satisfaction is a “mission impossible."
• Two approaches to achieving total customer satisfaction:
service recovery and service guarantees.
  Define the components of the cost of quality

• Service Recovery
 Services mistakes can happen, especially in services that require a high degree of interaction between the
provider and the customer.
 95 percent of the customers said that they intend to repurchase if their problem is resolved quickly on the
spot.
 if the service recovery takes even a little time, the percentage drops to 70 percent.
• Service Guarantees
 Warranties are common for goods such as automobiles, washing machines, and televisions.
 Products will work throughout a stated period of time or they will be cither repaired or replaced free of
charge.
  Describe the more successful quality management initiatives,
including total quality management (TQM) and Six Sigma

Organization wide Quality Initiatives

• Managers looked to develop initiatives to integrate Quality to the entire

organization
• Two of the most successful quality initiatives are,
 Total Quality Management (TQM)
 Six Sigma
  Describe the more successful quality management initiatives,
including total quality management (TQM) and Six Sigma

What is Total Quality Management?

• Total Quality Management (TQM) is a management approach for integrating

quality at all levels of an organization.
  Describe the more successful quality management initiatives,
including total quality management (TQM) and Six Sigma

Major Components of TQM

• Leadership – actions and words by top, quality

is the number one priority
• Employee Involvement – each and every
employee is responsible for Quality
• Product/Process Excellence – by SPC,
Kaizen/Continuous improvement and Poka-Yoke
• Customer Focus – a product isn’t reliable unless
the customer says it’s reliable and a service isn’t
fast unless the customer says it’s fast
  Describe the more successful quality management initiatives,
including total quality management (TQM) and Six Sigma

Obstacles of TQM
1. Lack of companywide definition of quality
2. Lack of formalized strategic plan for change
3. Lack of customer focus
4. Poor intraorganizational communication
5. Lack of real employee empowerment
6. Lack of employee trust in senior management
7. View of quality program as a quick fix
8. Drive for short-term financial results
9. Politics and turf issues
  Describe the more successful quality management initiatives,
including total quality management (TQM) and Six Sigma

What is Six Sigma?

• To minimize process variation and reduce defects to 3.4 per million

opportunities(PMO) – 99.99966%
  Describe the more successful quality management initiatives,
including total quality management (TQM) and Six Sigma
To know more about Six Sigma!
• By Motorola in the 1980s to counter high-quality products being
manufactured in Japan.
• Particularly beneficial for high-volume manufacturing and service
sectors.
• Without Six Sigma, even systems operating at 99% efficiency can lead to
significant issues.
• Six Sigma evolved as a management tool to reduce all form of waste in an
organization
• DMAIC: Methodology involves Define, Measure, Analyze, Improve, and
Control.
 Success depends on the commitment of top-level executives.
 At GE, executive bonuses are tied to Six Sigma performance.
• Black Belts: Key employees selected for specialized training.
 Training: Intensive instruction in quantitative improvement tools,
teamwork, and communication.
  Describe the more successful quality management initiatives,
including total quality management (TQM) and Six Sigma
Six Sigma in services
• Six Sigma is expanding to service sectors like healthcare
and finance due to the large number of transactions
involved.
• Financial Services
 Bank of America: Achieved cost-saving and increased
customer satisfaction rates.
Citibank and Chase Manhattan: Successfully implemented
Six Sigma.

• Healthcare
 North Shore University Hospital: Reduced patient waiting
time by 37% and increased satisfaction.
 Commonwealth Health Corp: Achieved cost savings of
over $800,000.
  Present some of the quality awards and reignitions that encourage
firms to provide high-quality goods and services

Kinds of awards

• JAPAN – Deming Prize

• EU – European Quality Award
• USA – Malcolm Baldrige National Quality Award –
MBNQA
• International – ISO 9000
  Present some of the quality awards and reignitions that encourage
firms to provide high-quality goods and services

• USA – Malcolm Baldrige National Quality Award – MBNQA

 ACT – 1987
 Objective - To recognize the TQM in USA Industries
 Name - MALCOLM BALDRIGE (Secretary Commerce)
 In 1987 – Manufacturing, Services and Small Business
 In 2001 – Health Care and Education

• MBNQA Criteria
 Based on – expert’s comments and observations (whole country)
Evaluate on three abroad dimensions
(a) soundness of approach or systems
(b) the deployment or integration of these systems throughout the entire organization
(c) the results generated by those systems
  Present some of the quality awards and reignitions that encourage
firms to provide high-quality goods and services

Seven Award

No Area Points
1 Leadership 120
2 Strategic Planning 85
3 Customer & Market 85
Focus
4 Measurement 90
Analysis &
Knowledge
Management
5 Human Resource 85
Focus
6 Process Management 85
7 Business Results 450
Total 1000
  Present some of the quality awards and reignitions that encourage
firms to provide high-quality goods and services

• Benefit of Baldrige Quality Criteria

 Help define and design a total quality system
 Evaluate ongoing internal relationship among departments,
divisions, and functional units within an organization
 Assess and assist outside suppliers of goods and services to a
company
 Assess customer satisfaction
  Present some of the quality awards and reignitions that encourage
firms to provide high-quality goods and services

• Benefit of Baldrige Quality Criteria

 Help define and design a total quality system
 Evaluate ongoing internal relationship among departments,
divisions, and functional units within an organization
 Assess and assist outside suppliers of goods and services to a
company
 Assess customer satisfaction
  Present some of the quality awards and reignitions that encourage
firms to provide high-quality goods and services

• Benefit of Baldrige Quality Criteria (Cont’d)

 Early-Stage Company – Checklist or blue print to design overall

quality programs.
 Middle-Stage Company – Road Map to continue quality
improvement.
 Advanced-Stage Company – Evaluative Tools for fine-tune quality
programs and benchmark to against industry and to be world
leader.
 Provide – common language and assessment for total qualities,
 Foster – improve information system, overall communications
 Lead – employees and management both understand total quality
 Develop – organizational value system
 Center – culture of company
 Increase – company’s stock share significantly
  Present some of the quality awards and reignitions that encourage
firms to provide high-quality goods and services

Award Process

• Examiners - experts (business, consulting, academic)

• Score – 1000 points
• Feedback – experts give company’s strengths and weaknesses
• Finalist – approximate 10% of applicants, examiners visit
company’s sites
• Winner – choose form finalists
• Prestige – USA, International attention
  Present some of the quality awards and reignitions that encourage
firms to provide high-quality goods and services

ISO CERTIFICATION
• About ISO Organization and its Purpose
 ISO, headquartered in GENEVA, Switzerland made up of representatives from each of
the national standard bodies from over 90 countries.
 It is aimed for
• (1) To satisfy the customer organization quality assurance requirement
• (2) To increase the level of customer confidence in their supplier

• Revision of ISO in 2000

 ISO 9001:2000 : Quality Management System – Requirement

 ISO 9004:2000 : Quality Management System – Guideline for performance improvement
 ISO 9000:2000 : Quality Management System – Fundamental and Standards
  Present some of the quality awards and reignitions that encourage
firms to provide high-quality goods and services

Ways of Certification
• First-part certification
• Second party certification
• Third party registrars for certification

Steps of Certification
  Present some of the quality awards and reignitions that encourage
firms to provide high-quality goods and services
Other Quality Award
• European Quality Award
 Sponsored by European Foundation for Quality Management
 Foster excellence in European organizations, improving customer and employee
satisfaction, social impact, and business results.
 Support European managers in leveraging TQM for global competitiveness.
 Having framework for quality improvement for organization.
 Awarded to outstanding organization in several categories.

Deming Prize
• Administrated by Union of Japan Scientist Engineering
• 3 Types of Award
(1) Deming Prize for individual
(2) Deming Application Prize
(3) Quality Control Award for Operation and Business Unit
Conclusion
Thank You For Your Attention!

GROUP 07

Kind Questions?