UNIT 1 - INTRODUCTION TO QUALITY CONCEPT • Importance of Quality: Quality is crucial as it

directly impacts customer satisfaction, loyalty,

and brand reputation.
Quality refers to the degree of excellence of a product or
HISTORY OF QUALITY - THE EVOLUTION OF QUALITY
service, meeting or exceeding customer expectations.
MOVEMENT
Quality is the degree of excellence exhibited by a
product, service, or process, characterized by its ability
to consistently meet or exceed customer expectations. It
encompasses factors such as performance, reliability,
durability, and aesthetics, contributing to customer
satisfaction and organizational success. QUALITY IN THE MEDIEVAL GUILDS OF EUROPE

Key Aspects of Quality The quality movement can trace its roots back to
medieval Europe, where craftsmen began organizing into
• Meeting Standards: Quality often adheres to
unions called guilds in the late 13th century. These guilds
predefined standards, specifications, or
were responsible for developing strict rules for product
benchmarks, ensuring a level of performance
and service quality. Inspection committees enforced the
that aligns with established norms.
rules by marking flawless goods with a special mark or
• Durability: Quality ensures the longevity and symbol.
resilience of a product, minimizing wear and tear,
and maintaining its performance over an QUALITY IN THE INDUSTRIAL REVOLUTION
extended period.
Until the early 19th century, manufacturing in the
• Aesthetics: Visual and sensory appeal
industrialized world tended to follow this craftsmanship
contribute to quality, enhancing the overall
model. The factory system, with its emphasis on product
experience and perceived value of a product or
inspection, started in Great Britain in the mid-1750s and
service.
grew into the Industrial Revolution in the early 1800s.
• Customer Satisfaction: Quality directly American quality practices evolved in the 1800s as they
influences customer satisfaction, loyalty, and were shaped by changes in predominant production
brand reputation. A high-quality offering delights methods.
customers and fosters trust.
• Continuous Improvement: Striving for quality CRAFTMANSHIP - Since most craftsmen sold their
involves an ongoing commitment to goods locally, each had a tremendous personal stake in
improvement, identifying areas for enhancement meeting customers’ needs for quality. If quality needs
and taking corrective measures when necessary. weren’t met, the craftsman ran the risk of losing
• Reliability: A quality product or service customers not easily replaced. Therefore, masters
consistently performs as expected, with minimal maintained a form of quality control by inspecting goods
variation or unexpected failures, instilling before sale.
confidence in its users. THE FACTORY SYSTEM - The factory system, a product of
• Consistency: Quality involves delivering the Industrial Revolution in Europe, began to divide the
uniformity in performance, characteristics, and craftsmen’s trades into specialized tasks. This forced
attributes over time and across different craftsmen to become factory workers and forced shop
instances of production or service delivery. owners to become production supervisors and marked
• Fitness for Purpose: A high-quality product or an initial decline in employees’ sense of empowerment
service effectively performs the functions it was and autonomy in the workplace. Quality in the factory
designed for, meeting the specific needs and system was ensured through the skill of laborers
intended uses of the customer. supplemented by audits and/or inspections. Defective
QUALITY Products/ Services leads to.... products were either reworked or scrapped.

• Impact on Customer Satisfaction: High quality

products and services lead to happier customers
and repeat business.
 THE TAYLOR SYSTEM • Joseph M. Juran, who predicted the quality of
Japanese goods would overtake the quality of
Late in the 19th century the United States broke further
goods produced in the United States by the mid-
from European tradition and adopted a new management
1970’s because of Japan’s revolutionary rate of
approach developed by Frederick W. Taylor, whose goal
quality improvement.
was to increase productivity without increasing the
number of skilled craftsmen. He achieved this by Japan’s strategies represented the new "total quality"
assigning factory planning to specialize engineers and by approach. Rather than relying purely on product
using craftsmen and supervisors as inspectors and inspection, Japanese manufacturers focused on
managers who executed the engineers’ plans. improving all organizational processes through the
people who used them. As a result, Japan was able to
QUALITY IN THE EARLY 20TH CENTURY
produce higher quality exports at lower prices, benefiting
After entering World War II, the United States enacted consumers throughout the world.
legislation to help gear the civilian economy to military
The American Total Quality Management Response
production. During this period, quality became a critical
component of the war effort and an important safety
issue. Unsafe military equipment was clearly
unacceptable, and the U.S. armed forces inspected
virtually every unit produced to ensure that it was safe for
operation. This practice required huge inspection forces
and caused problems in recruiting and retaining
competent inspection personnel.

THE HISTORY OF TOTAL QUALITY IN AMERICA

The birth of total quality in the United States was in direct

response to a quality revolution in Japan following World
War II, as major Japanese manufacturers converted from
producing military goods for internal use to producing
civilian goods for trade. At first, Japan had a widely held
reputation for shoddy exports, and their goods were At first, U.S. manufacturers held onto to their assumption
shunned by international markets. This led Japanese that Japanese success was price-related, and thus
organizations to explore new ways of thinking about responded to Japanese competition with strategies
quality. aimed at reducing domestic production costs and
restricting imports. This, of course, did nothing to
QUALITY PIONEERS
improve American competitiveness in quality.
• Walter Shewhart and the concept of statistical
The American Total Quality Management Response
control
• W. Edwards Deming's contributions to Total • ISO 9001 Series of Quality Management
Quality Management (TQM) Standards
• Joseph Juran's focus on quality management • The Baldrige National Quality Award
and improvement • Malcolm Baldrige National Quality Award
• Philippine Quality Award (in PH)
DEMING, JURAN AND JAPAN
Quality Approaches / Philosophies
The Japanese welcomed input from foreign companies
and lecturers, including two American quality experts: • Total Quality Management (TQM)
• Six sigma
• W. Edwards Deming, who had become • Lean Philosophy
frustrated with American managers when most • ISO Standards
programs for statistical quality control were
terminated once the war and government
contracts came to an end.
 Total Quality Management SIX SIGMA

TQM is a management approach that seeks to achieve is a highly disciplined and data driven approach to quality
long-term success through customer satisfaction, management and process improvement. It aims to
involving all employees in continuous improvement minimize defects and variations in processes, leading to
efforts. improved quality, increased efficiency, and greater
customer satisfaction. Developed initially by Motorola in
TQM is a comprehensive management philosophy and
the 1980s and popularized by companies like General
approach that encompasses all aspects of an
Electric, Six Sigma has become a widely adopted
organization's activities with the goal of consistently
methodology across various industries.
delivering high-quality products, services, and processes
that meet or exceed customer expectations. The term "Six Sigma" refers to a statistical concept that
measures the level of process performance. In a Six
Key elements of TQM
Sigma process, the goal is to achieve a level of
• Customer-Centric Focus: TQM starts with a performance where the number of defects or errors is
deep understanding of customer needs, extremely low, allowing for only about 3.4 defects per
preferences, and expectations million opportunities.
• Continuous Improvement: TQM promotes an
ongoing process of improvement in all aspects of
the organization.
• Employee Empowerment: TQM recognizes that
employees are the driving force behind quality
improvement.
• Data-Driven Decision Making: TQM relies on
accurate and relevant data for decision-making.
• Process Optimization: TQM emphasizes the
importance of well-defined and efficient
processes.
• Supplier Collaboration: TQM extends the focus
on quality beyond the organization's boundaries.
• Leadership Commitment: TQM starts with a
deep understanding of customer needs,
preferences, and expectations.
What is Lean Six Sigma?
• Training and Development: TQM requires active
leadership involvement and commitment. • Lean focuses on removing wasteful activities
• Prevention Over Inspection: TQM recognizes processes
that employees are the driving force behind • Six sigma focuses on reducing process defects
quality improvement.
• Strategic Alignment: TQM aligns quality
initiatives with the organization's strategic goals What is DMAIC?
and vision. • Define: Clarify the problem and process
• Measure: Quantify the problem and map the
process
• Analyze: Determine the root causes
• Improve: Confirm the solutions work
• Control: Ensure the grains are sustained
 ISO Standards

are a series of internationally recognized standards

developed by the International Organization for
Standardization. These standards provide guidelines,
specifications, and best practices for various industries
and sectors to ensure quality, safety, efficiency, and
interoperability. ISO standards cover a wide range of
topics, and each standard is identified by a unique
number.

• ISO 9001 - Quality Management System: outline

the requirements for establishing a quality
management system (QMS) within an
organization. It provides a framework for
consistently providing products and services that
Key principles and elements of Six Sigma meet customer and regulatory requirements.
• ISO 14001- Environmental Management
• Data-Driven Decision Making: Six Sigma heavily
System: out the criteria for an environmental
relies on data collection, analysis, and statistical
management system (EMS). Organizations use
tools to identify the root causes of defects and
this standard to manage their environmental
variations.
responsibilities, reduce their environmental
• Focus on Variation Reduction: Six Sigma aims to
impacts, and improve sustainability
minimize process variations that can lead to
• ISO 22000 - Food Safety Management System:
defects. It uses statistical methods to
This standard sets out the requirements for a food
understand and control the sources of variability
safety management system. It's designed to
in a process.
ensure safe food production, handling, and
• Roles and Certifications: Six Sigma introduces a
distribution throughout the food supply chain.
hierarchy of roles including Yellow Belt, Green
• ISO 45001 - Occupational Health and Safety
Belts, Black Belts.
Management System: outlines the requirements
• Process Performance Metrics: Six Sigma uses
for an occupational health and safety
several metrics, including process capability
management system (OHSMS). It helps
indices (such as Cp and Cpk) and sigma levels, to
organizations establish processes to prevent
quantify process performance and identify areas
work-related injuries, illnesses, and fatalities.
needing improvement.
• ISO 50001 - Energy Management System: This
• Customer Focus: Six Sigma places a strong
standard specifies the requirements for
emphasis on understanding customer needs and
establishing, implementing, maintaining, and
requirements. The ultimate goal is to deliver
improving an energy management system. It
products and services that meet or exceed
helps organizations improve energy performance
customer expectations.
and reduce energy consumption and costs.
• Continuous Improvement: Like other quality
• ISO 21001 - Education Organizations
management approaches, Six Sigma promotes
Management System: This is a quality
continuous improvement as a fundamental
management system that aims to standardize or
principle.
prioritize an education management system so
• Project-Based Approach: Six Sigma projects are
that it meets its learner needs.
structured and data-driven. They follow a defined
roadmap (DMAIC or DMADV) and typically involve
cross-functional teams working collaboratively.
• Cultural Transformation: Implementing Six
Sigma often leads to a cultural shift within
organizations. It fosters a mindset of
accountability, problem-solving, and proactive
quality improvement.
 UNIT 2: Cost of Quality

QUALITY COSTS

● Some equate “Quality Costs” with the costs of poor

quality (mainly the costs of finding and correcting
defective work).
● Costs to attain Quality
● Costs of running the Quality Department

WHAT IS A COST OF QUALITY?

● It is the term that is widely used and widely

misunderstood
● Cost of Quality of not the price of creating a quality
product or service PREVENTION COSTS
● It is the cost of NOT creating a quality product
● are associated with design, implementation,
Every time work is redone, the cost of quality increases: maintenance, and planning prior to actual
Examples include: operation, in order to avoid defects from happening
● The emphasis is on the prevention of defects in
● The reworking of a manufactured item order to reduce the probability of producing
● The retesting of an assembly defective products
● The rebuilding of a tool • The correction of a bank ● Prevention activities lead to reduction of appraisals
statement costs and both type of failures (internal and
● The reworking of a service, such as the external)
reprocessing of a loan operation or the replacement
of a food order in a restaurant.

Cost of Quality = Cost of Conformance + Cost of Non-

conformance

Cost of Conformance

● is the cost incurred in ensuring that things are done

right the first time
● It is the cost of providing products or services as
per the required standards.
● This can be termed as a good amount spent.
(Prevention and Appraisal Costs)

Cost of Non-Conformance
● In the ideal situation, Prevention Costs will be the
● is cost incurred as a result of not doing things right largest portion of Total Cost of Quality
the first time ● Typically, prevention is less than 10% of Total
● It is the failure cost associated with a process not COQ where it should be about 70%
being operated to the requirements
● This can be termed as an unnecessary amount ACTIVITIES ASSOCIATED WITH PREVENTION
spent. (Internal and External Failure Cost. COSTS

● Market Research
● Quality Planning
● New Product View
● Tolerance Analysis
● Field Trials
● Cost of Research and Development
● Cost of Training
● Quality Audits
 INTERNAL FAILURE COSTS

APPRAISAL COSTS

● These are the failure costs occurring prior to

delivery or shipment of the product, or the
furnishing of a service, to the customer.
● These are the costs that would disappear if no
defect is found in the product before dispatching

ACTIVITIES ASSOCIATED WITH INTERNAL

FAILURE COSTS

● Cost of rework, scrap, defectives, waste, etc.

● Cost of reinspection, retests to verify the
performance analysis
● Cost of 100% inspection
● Appraisal costs are spent to detect defects to assure ● Changing processes: modifying manufacturing or
conformance to quality standards service processes to correct deficiencies
● It is the cost expenditure on inspection and testing
● Appraisal costs activities sum up to the cost of EXTERNAL FAILURE COSTS
checking if things are correct
● The appraisal costs are focused on the discovery of
defects rather than prevention of defects
● Appraisal Costs should be the second largest
category, but should not exceed prevention costs

ACTIVITIES ASSOCIATED WITH APPRAISAL

COSTS

● Inspection / Test of purchased trial

● In-Process and final inspection / testing
● Product, process or service audits
● Calibration of measuring the test equipment
● Maintaining accuracy of testing equipment,
performed in terms of periodic calibration
● Cost of non-destructive testing such as electric
● These are the costs incurred after the product is
probes, x-ray, radiography, etc.
dispatched to the customer.
● It may include the cost to the business of providing
THESE ARE ALL PLANNED ACTIVITIES
a bad service or product and this may also result in
cancellation of order.
● These costs also would disappear if there were no
deficiencies.
ACTIVITIES ASSOCIATED WITH EXTERNAL
FAILURE COSTS

● Complaint Adjustment
● Returned Material
● Warranty Charges
● Allowances and Recalling

COST OF POOR QUALITY (COPQ)

● How much is it costing our organization by not

doing a good job on quality? “Thus we will use
the term “cost of poor quality”.
● The obvious and visible costs are a small portion
of the overall COPQ. The bottom of the iceberg
represents the majority of the COPQ and are not
easily identified and quantified.
● By revealing new hidden costs of poor quality, a
company can prevent the production of a
nonconforming products.

IMPACT OF TQM ON COSTS

● TQM is Primarily aimed to improve the quality of
a product, higher customer satisfaction and better
working environment for the employees. The most
dramatic impact of TQM is on reduction of quality
costs which directly affect the profitability
● This is demonstrated by the results of the TQM
program in Xerox Corp. The change in various
elements of quality cost before and after launching
TQM by Xerox Corp is shown on the next slide.
 that contribute to the cost of poor quality. Work
records, job descriptions, flowcharts, interviews,
and brainstorming can be used to identify the
activities.
6. Publish a draft of the categories defining the cost
of poor quality.
7. Finalize the definitions and secure management
approval.
8. Secure agreement on responsibility for data
collection and report preparation
9. Collect and summarize the data. Ideally, this
should be done by Accounting.
10. Present the cost results to management along with
WHY MEASURE COQ? the results of a demonstration quality
improvement project (if available). Request
● COQ can be used to identify quality improvement authorization to proceed with a broader company
candidates wide program of measuring the costs and pursuing
● COQ provides one measure of comparing the projects Clearly, the sequence must be tailored for
success of projects each organization.
● COQ can provide cost of data for motivational
purposes. GAINING APPROVAL
● Establish that the costs are large enough to justify
“Money is the language of management, you need to show action.
them the numbers” - Crosby ○ Use the grand total to demonstrate the
need for quality improvement. This is the
most significant figure in a quality cost
study.
○ Relate the grand total to business
measures.

● Estimate the savings and other benefits.

○ If the company has never before
undertaken an organized program to
reduce quality- related costs, then a
reasonable goal is to cut these costs in
two, within a space of 5 years.
○ Don't imply that the quality costs can be
reduced to zero.

● Calculate the return on investment resulting from

improvement in quality.
STEPS IN IMPLEMENTING QUALITY COSTS ● Use a successful case history (a "bellwether"
The following sequence applies to most organizations: project) of quality improvement in the company to
1. Review the literature on quality costs or consult justify a broader program.
others in similar industries who are using the same ● Identify the initial specific improvement projects:
tool. Propose the structure of the improvement program
2. Select one organizational unit of the company to including organization, problem selection, training,
serve as a pilot site. This unit may be one plant, review of progress, and schedule
one large department, one product line, etc.
3. Discuss the objectives of the study with the key
people in the organization.
4. Collect whatever cost data are conveniently
available from the accounting system and use this
information to gain management support to make
a full cost study.
5. Make a proposal to management for a full study.
The proposal should provide for a task force of all
concerned parties to identify the work activities
RELATIONSHIP BETWEEN PREVENTION +
APPRAISAL COST AND FAILURE COST

CONCLUSION

● The cost of Poor Quality can be reported in an

endless number of ways
● It can take a variety of different forms
● It can be represented 10% of a company's annual
sales, or it can represent 40% depending on how far
they "peel the onion"
● However, once quality costs are presented in the
language of money, misunderstandings evaporate,
and executives immediately realize the true
significance of the cost of poor quality.
● Quality costs are dynamic and constantly changing
overtime.