Module 2 MET414 Quality Management

Module 2
Strategic Quality Management

2.1.1 Cost of Quality

 “Cost of quality” is an approach to measure and track financial impact of various quality activities.
 In the 1950s, Dr. Armand Feigenbaum suggested to consider reporting systems focusing on quality
costs.
 Dr. Joseph Juran also started emphasizing the need to speak of the language of upper management
which is money.
 As the upper management best understands the language of money, reporting cost of quality can help
in prioritizing appropriate improvement activities to minimize overall costs.

Definition: Quality costs are defined as the costs associated with the non-achievement of product
(or) service quality as defined by the requirements established by the organisation, customers and
society, i.e. Quality cost is the cost of poor products (or) services.

Need for Evaluation Cost of quality

1. Estimation of quality cost leads to identification of improvement plans and also sensitizes the
managers to take actions in order to reduce the costs.

2. Reduction in quality cost has a direct bearing on the increase in profitability, without increasing sales
or without deploying more resources.

3. Some components of poor quality are the result of product failure, which takes place after sales.

4. Quality costing and its associated analysis exercise leads to identification of opportunities for
reducing customer dissatisfaction.

5. Most companies have financial controls on the basis of departments. For costs like scrap, rework and
field failures, which cut across the departmental lines, quality costing helps in bringing the right focus
and financial allotments.

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Module 2 MET414 Quality Management

 Cost of poor quality is often

compared with the tip of an iceberg.
 Figure shows that the warranty costs
and scrap costs are clearly visible but
significant portion of the financial
impact of poor quality is hidden like
an iceberg

1. Internal Failure costs Examples of internal failure costs are:

 These are costs which are associated with 1. Rework, fixing of bugs detected in internal
the defects or non-conforming situations testing of software (Rework cost): Rework
that are found prior to shipment of the cost represents the cost of correcting
product to customer.
defectives for reuse. It includes material and
 These costs can be reduced to zero if no labour cost incurred in rework and the cost of
defect existed prior to shipment. Whenever inspection and test additionally required.
quality appraisals are carried out, there
exists a possibility of discovering 2. Premium freight due to late delivery
nonconforming situations.
3. Internal scrap (Scrap cost): Scrap cost
 Such situations are salvaged by either represents the total cost of defective product
rework, complete replacement or scrapping. (material, labour or overhead cost on defective
 The total cost of carrying out re- product) which cannot be economically
inspection/re-tests, failure analysis, reworked to conform to requirements.
evaluation, disposition and subsequent
actions are included in the internal failure 4. Down grading cost: It includes the total cost
cost. in selling substandard product with the
difference between the normal selling price
 In summary, this includes all material,
and reduced price due to quality reasons.
labor, energy and overhead expenses that
are wasted on account of non-conforming 5. Down time cost: This includes costs incurred
or defective product or service
because of loss of productive time of
engineers, workers and the machines

6. Engineering and drawing changes to

correct errors

7. Energy cost for remelting of rejected

castings

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Module 2 MET414 Quality Management

2. External Failure costs:

These costs represent all costs incurred on defective products after it is delivered to a customer. These
costs will disappear if there is no defect.

The external failure costs include the following.

1. Customer complaint adjustment cost: This includes the costs of investigating and resolving
individual customer complaints, attributable to defective product.

2. Warranty claims: Recall of vehicles for defects, costs involved in repairs or replacement of product
during warranty period, the cost associated with receipt, evaluation and replacement of defective product
from field.

3. Liabilities and penalties: Insurance claims and contractual obligatory claims are included in such types
of costs.

4. Allowances and customer goodwill: The cost of concessions offered to the customer due to
substandard product, poor quality or costs incurred because the customer is not completely satisfied with
the quality because his expectations were higher than those delivered to him by the product.

5. Retrofit and recall costs: It is often required to modify or update the product in order to incorporate
new design changes in order to overcome design deficiencies. There are several cases in recent past,
where automobiles were recalled due to failure investigation reports on the steel used in the
manufacturing.

6. External failure costs will also include lost sales and loss of goodwill although these are difficult to
measure.

3. APPRAISAL COSTS
 These are the costs incurred while conducting inspection, tests, and several other planned
evaluations with the purpose of determining whether the product (or service) confirms to its stated
requirements.

 Appraisal cost also includes various activities related to quality system audit, cost of legal compliance,
supplier surveillance, product quality audits, costs for calibration of testing equipment, etc.

 Thus, cost of maintaining the inspection and test equipment is a part of appraisal cost. Examples include:

(a) Product design, qualification and conformance test cost

 The costs incurred in testing the new product design for its suitability (or) design of the existing product
for major changes.

(b) Supplier product inspection cost (or) Incoming inspection and testing cost: This includes the cost of
determining the quality of products supplied by vendors. This includes all the costs such as

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Module 2 MET414 Quality Management
 The costs for the normal (or) routine incoming inspection, the costs for testing of purchased
materials, The cost of additional inspection and tests required at the time of release of production
quantities of purchased goods and The inspection cost at supplier plant.

(c) In-process and final inspection and testing cost: It includes the costs incurred for all in-process and final
inspection and acceptance test of manufactured products.

(d) Product quality audit cost: It includes the costs of performing quality audits on in-process (or) finished
products.

(e) Maintenance and Calibration test cost: It includes the cost incurred in the maintenance and calibration
of measuring instruments and equipments.

(f) It includes the costs of products in destructing testing.

(g) Cost of evaluation of stock: It includes the costs of testing products in field storage (or) in stock to
evaluate degradation.  Examples of prevention costs include:

4. PREVENTION COSTS • Staff training

 These are the costs of all such activities • Product Quality Planning
undertaken to prevent defects in design,
• Design and Process FMEA
development, purchase, labor and other
aspects of creation of the product/service. • Tolerance analysis before design release
 Prevention costs lower the other costs (failure • Computer aided design and analysis
cost and appraisal cost).
• Process capability study for process
 Prevention is achieved by examining previous qualification
failure data and developing action plans for
incorporating into the basic system so that the • Part selection for better reliability
same failures/ defects do not occur again.
• Designed experiment for optimum settings
of the product
Relation between Prevention Appraisal and Failure Costs

 Figure shows a broad-level relationship

between cost of prevention + appraisal
and failure costs.
 There is a quality level at which the
total cost of quality is minimum.
 The quality level for minimum cost has
been challenged by Six Sigma
professionals.

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Module 2 MET414 Quality Management
2.1.2 CUSTOMER SATISFACTION
 Customers are the most important asset of any organization.
 The whole concept of quality is oriented to meet the expectations of customers.
 ‘Quality is what customer wants’. It is the definition of quality. Quality is a measure of customer
satisfaction.
 An organization should give its customers a quality product or service that meets their needs at a
reasonable price which includes on-time delivery and outstanding service.

The following factors will influence the The importance of the customer is shown in Fig.
customer satisfaction

(a) Fitness for use

(b) Reliability - the life aspect of quality.
(c) Value for money
(d) After sales service and support
(e) Packaging
(f) Customer information and transit.
(g) Maintainability  In today’s buyer’s market, the customer is the king.
(h) Variety
 Therefore it is essential that everyone in the
(i) Speed of service organization should understand the importance of the
(j) Image of the company and customer customer and the following philosophy.
confidence on the organization.
1. Customers are the most important people in the
business.
Steps to evaluate the customer satisfaction
1. Study the buying procedures of each 2. Customers are not dependent on the organization.
customer organization and map them with The organization depends on them
respect to individuals. 3. Customers are not an interruption to work but are the
2. Determine the factors of buyer-seller purpose of it.
interactions.
3. Analyse the trends of the above and 4. Customers are doing a favour when they seek
business and not vice – versa
formulate the indices, to represent of all
relevant features such as repeat orders, 5. Customers are a part of business, not outsiders.
switching, and number of customers lost, as
.
well as gained.

The Teboul model (1991) for customer satisfaction

 The square represents the features that a company offers and
the circle represents the customer needs.
 The total customer satisfaction is achieved when the offer
matches needs. i.e. when the circle is superimposed on the
square.
 The part of the square which lies within the circle is known as
customer satisfaction and the part of square outside the circle is perceived as unnecessary.
 Customer satisfaction is not an objective statistic but more of a feeling (or) attitude.
 People’s opinions and attitudes are subjective by nature and subject to change. So it is hard to
measure the customer satisfaction.

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Module 2 MET414 Quality Management
There are two types of customer’s internal customers and external customers.
1. An external customer is the one who uses the product (or) service, the one who purchases the product
(or) service, the one who influences the sale of the product (or) service.
2. An internal customer receives a product (or) service and in exchange, provides a product (or) service.
 In the organisation, each department is dependent on the other and then forms the internal
customer.
 Unless and until the internal customers are satisfied, the external customers cannot get what
they want.
 Hence the organisation should satisfy both internal and external customers.
Customer perception of Quality
 Perceived quality is the customer’s measure of satisfaction in the product, the ‘feel’ for its
quality. Between these two extremes, the product is in the hands of producer.
 The American Society of Quality (ASQ) survey on the following factors, ranking from top which
affect the customer perception of quality.
1. Performance
2. Features
3. Service
4. Warranty
5. Price
6. Reputation

1. Performance

Performance involves Fitness for use, Availability, Reliability, Maintainability

2. Features: Different features (or) identifiable attributes of a product (or) service are used for attracting the
customers and these are all psychological, time - oriented, contractual, ethical and technological factors.

3. Service: The customer service is an intangible one which is changing according to the customer’s
perception - Providing excellent customer service is more difficult than achieving excellent product quality

4. Warranty: Warranty is a public promise of quality product guaranteeing customer satisfaction. It is a public
commitment to guarantee a level of service needed to satisfy customer. A warranty forces the organization to
identify the characteristics of product, service quality and the importance for which the customer attaches to
each of those characteristics.

5. Price: Customers are ready to pay higher prices for good products. Customers are constantly evaluating one
brand’s products and services against those of its competitors to determine which provides greater value.

6. Reputation: Customers rate organization by their past experiences. Total customer satisfaction is based on
the entire experience with the organization, not just the product. Customers are ready to buy a known (or)
trusted brand name products (or) services and they often become customers for their lifetime.

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Module 2 MET414 Quality Management
Kanos Customer satisfaction Model

Customer satisfaction model developed by N.Kano is

used measure client happiness. Kano identified three
different factors influencing customer satisfaction.
They are
1. Basic factors- Are the minimum requirement
factors which will cause dissatisfaction if not fulfilled
but won't increase the customer satisfaction if
fulfilled. eg. A cell phone having basic functionality.
2 Excitement factors - Excitement factors (value
addition factors) are those factors which cause
customer satisfaction if delivered but do not cause
dissatisfaction if not delivered. It is schematically
represented in figure below. eg. Cell phone having
features like mp3 player etc.
3 Performance factors - Factors will cause customer satisfaction if high and cause customer dissatisfaction if
low. eg. Mobile phone having more battery backup, life etc.
Based on the above view, customers are classified into:
Type A customers - Type A customers are those who have expectations on value addition (i.e., a movement
towards positive of x axis). When their expectations are met they will make no comments, with the satisfaction
at normal. When their expectations are not met they will become dissatisfied customers.
Type B customers - Type B customers are those who are without any expectations. When there is no value
addition, since there is no expectations their satisfaction will be at normal. When there is some value addition,
these customers become delighted.
Benefits of customer satisfaction

1. Customers are retained by the organization for a long period

2. Customer deeper their relations with the organization.of time.
3. Customer becomes less sensitive to changes in price of products or services.
4. Customer recommends the products to others.
5. Satisfied customers are likely to purchase from you again.

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Module 2 MET414 Quality Management
2.1.3 Quality function deployment (QFD)
Introduction

 Quality function deployment (QFD) is a planning tool used to fulfill customer expectations.

 It is a disciplined approach to product design, engineering, and production and provides in-depth
evaluation of a product.

An organization that correctly implements QFD can improve engineering knowledge, productivity, and
quality and reduce costs, product development time, and engineering changes.

Definition of QFD

Quality function deployment focuses on customer expectations or requirements, often referred to as the
voice of the customer. It is employed to translate customer expectations, in terms of specific
requirements, into directions and actions, in terms of engineering or technical characteristics

Steps /Phases involved in QFD

Process
1. Product planning
2. Part development
3. Process planning
4. Production planning
1. Phase I - Product planning
a) The first step is to identify and establish customer attributes. Care has to be taken not to allow any
distortion or misunderstanding of the attributes wanted by customers during the processing of information.
If there is more than one customer in the chain, then all the needs should be considered.
b) The second step is working out and listing all technical features that are necessary for meeting the
customer satisfaction. These technical features should form the basis of activities for subsequent design,
manufacturing and service processes. The technical features must be quantitative and durable in order to
facilitate control and Comparison to target values.
c) The third step is to establish a relationship between the customer attributes and technical features.
Purpose of the relationship matrix is to ensure that final technical feature expectations adequately address all
the customer attributes. Often, sign, established by controlled experiments or getting feedback from
customers. Lack of strong relationship between customer attributes and any technical features may lead to
failure to customer needs.
2. Phase II - Part development: Development of design matching the customer requirement and trial
production.
3. Phase III-Process planning: Development of a Suitable process and develop control plans.
4. Phase IV- Production planning: Development of a suitable production, Develop prototype and do
testing and launching the final product to the market.

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Module 2 MET414 Quality Management
Benefits of QFD
Objectives of Quality Function Deployment
 Improves customer satisfaction
 Focus on the customer
 Reduces implementation time
 Reduce time-to-market
 Promotes Teamwork
 Reduce cost
 Provides documentation
 Manage information
 Shorter product development cycle
 Improve marketing and development
 Focus on process
collaboration
 Prevents design errors and Reduced
 Organizational learning
development cost

House of Quality
 The implementation of QFD progresses through the development of a composite matrix known as
House of Quality (HoQ).

 The primary planning tool used in QFD is the house of quality.

 The house of quality translates the voice of the customer into design requirements that specific values.
It also matches those requirements against the ability of the organization to meet

Building the House of Quality

Step 1: List Customer Requirements (WHATs): This list

is often referred to as the WHATs that a customer needs or
expects in a particular product

Step 2: List Technical Descriptors (HOWs): The QFD

team should come up with engineering characteristics or
technical descriptors (HOWs) that will affect one or more of
the customer requirements.

Step 3: Develop a Relationship Matrix between WHATs

and HOWs: The next step in building a house of quality is
to compare the customer requirements and technical
descriptors and determine their respective relationships.

Step 4: Develop an Interrelationship Matrix between

HOWs: The roof of the house of quality, called the
correlation matrix, is used to identify any interrelationships Advantages of House of Quality
between each of the technical descriptors.
1. Help to understand customer needs
Step 5: Competitive Assessments: The competitive 2. Give top management needful
assessments are a pair of weighted table (or graphs) that strategic direction
depict item for how competitive products compare with 3. Help to identify parameter to include
current organization products. the design
Step 6: Develop Prioritized Customer Requirements

Step 7: Develop Prioritized Technical Descriptors

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Module 2 MET414 Quality Management
QFD Team The Voice of Customer
 QFD team of six to eight persons has to be  QFD concentrates on customer expectations and needs,
constituted for every project. a considerable amount of effort is put into research to
determine customer expectations.
 It should be a cross functional team consisting of  Words used by the customers to describe their
representatives of various functions (Marketing, expectations are often referred to as the voice of the
Design, Production, QA, Testing, Purchasing, etc). customer. Frequently, customer expectations are vague
and general in nature.
 The team members should be able to spend the  QFD team should continually ask and answer numerous
questions, such as the following:
required time for successful completion of project.
 What does the customer really want?
 The QFD task is carried out for design of a new  What are the customer’s expectations?
 Are the customer's expectations used to drive the design
product as well as improvement of an existing
process?
product.
 What can the design team do to achieve customer
satisfaction?
2.2.1 Integrating quality into strategic management
 Strategy means a direction, guide, or course of action.
 Strategic planning is a process by which organisation develops a vision, mission, objectives and
goals for its achievement.
 It is the highest level of managerial activity, usually performed by the company’s Chief
Executive Officer (CEO) and executive team.
 Strategic planning process determines the future of an organisation.

 Normally, the time horizon for strategic planning is three to ten years where as business (short-
term) planning is for one year (or) less.
 So strategic planning is also known as long-term planning. Goals are needed for long-term
planning. Objectives are needed for short-term planning.

Steps Involved in Strategic Quality Planning there are seven basic steps for strategic quality planning

1. Customer needs 1. Customer needs: The future needs of the customers should be
discovered. (a) Who are the customers? (b) Will the customer
2. Customer Positioning base change? (c) What will the customers want? (d) How will
the organisation meet the customer needs?
3. Predict in Future 2. Customer Positioning:
 Strategic planners should plan where the organisation should be
4. Gap Analysis in the view of customers.
 ‘It is a best company. It is an excellent product. The service is
very good’- It is one view of customer. ‘It is not a good product.
5. Closing the Gap
The quality is not good. It is a third rate product’ - It is another
view of customer.
6. Alignment
 Generally, the organisation should concentrate on areas of
excellent quality and try to get good certificate from the
7. Implementation customer.

8. Re-evaluation

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Module 2 MET414 Quality Management
3. Predict the future:

 The strategic planners should predict future conditions which will affect their product (or) service.
 The organisations should foresee the changing technology to continuously improve the quality of
their product.
 Because the rate of change is continuously increasing. By using the forecasting tools like
demographics, economic forecasts and technical assessments (or) projections, the strategic planners
can predict the future.

4. Gap Analysis

 Gap analysis is nothing but analysis and identifying the gaps between the current state and future
state of the organisation.
 An analysis of the core values and concepts is an excellent technique for pinpointing

5. Closing the gaps

 The strategic planning should be in such a way, that it can close all the gap by establishing goals and
responsibilities.
 All stakeholders should be involved in the development of the strategic planning.

6. Alignment of strategic planning

 The strategic planning should be aligned with the mission statement, vision statement, core values
and concepts of the organisation.
 The strategic planning will not be successful without this alignment.

7. Implementation:

 Resources must be allocated for implementation of strategic planning.

 Collection of data, design of changes, overcoming resistance to change and monitoring activity to
ensure the progress are implementation process of strategic planning.
 Evaluating the efficiency of the process controlling for variances, and making adjustments to the
process if necessary

2.2.2 Obstacles to achieving successful strategic quality management

1. Lack of employee commitment - As employees are directly related with the production process, lack of
commitment on their part can render the whole process of quality management useless.
2. Improper channel of communication - For getting the rewarding results of the plans, it is necessary
that all the information flow in the organization at right time and in right manner. But loop holes in the
communication channel act as a barrier in achieving the quality results
3. Inadequate human resources development and management -Availability of human resources i1s a
major factor in achieving strategic quality management.
4. Problems in identifying customer needs-Companies oft plant, fail in identifying the needs of
customers may be because quality so that inaccurate data, improper survey, and wrong interpretation

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Module 2 MET414 Quality Management
facts, ete. This may result in supply o unwanted product to customer and hence fail in identifying the
main objective that is, customer satisfaction.
5. Constraints imposed by quality culture-The lack of genuine quality culture poses threats in terms of
resistance to change as it is reluctant to the accept the techniques that makes a variation in its present
style of working.
6. Autocratic style of leadership- If autocratic style of leadership is adopted by the top management, it
creates an environment of fear. Because of which employees may not contribute their 100% which
degrades their productivity ultimately affecting the quality.
7. Lack of planning for quality-The absence of sound planning has often contributed to ineffective
quality improvement
8. Lack of leadership; A quality implementation program will succeed only it top management is
committed beyond public announcements.
9. Lack of vision
10. Employee resistance to change

Strategies to Improve Quality Management

5 Strategies to Improve Your Approach to Quality Management
1) Build a company culture that emphasizes quality improvement.
2) Design a robust training program
3) Develop a detailed quality inspection program
4) Ensure that equipment is regularly maintained
5) Schedule periodic internal audits.
2.2.3 Quality and the management cycle
A quality management process consists of four main components:
1. Quality Planning
2. Quality Assurance
3. Quality Control
4. Continuous Improvement

PDCA CYCLE

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Module 2 MET414 Quality Management

2.3 Supplier Selection

 Supplier selection is the process by which firms identify, evaluate, and contract with suppliers.
 The supplier selection process deploys an enormous amount of a firm's financial resources and plays
crucial role for the success of any organization.
 Supplier selection depends upon several factors such as reliability,
reputation, cost, service, value for money, etc.

Steps to Supplier Selection

 Step 1 – Supplier Selection Scorecard. The first step in the supplier

selection process is to create a supplier selection scorecard. Criteria for Selecting a Supplier
 Step 2 – Identify Suitable Suppliers.
 Price.
 Step 3 – Scorecard Ranking.  Value for money.
 Quality.
 Step 4 – Negotiate.
 Reliability.
 Step 5 – Create Contract  Responsiveness.
 Flexibility
 Selection of suppliers starts with the decision as to whether to make (or) buy.

 This decision requires analysis of factors such as the skills and facilities needed, plant capacity,
ability to meet delivery schedules, expected costs of ‘making’ (or) ‘buying’.

 Once the decision is made to buy, then the supplier should be selected with the following ten
conditions.
1. The supplier should understand clearly the management philosophy of the organisation.
2. The supplier should have stable management system.
3. The supplier should maintain high technical standards to deal with future technological
innovations.
4. The supplier should provide the raw materials and parts which meet quality specifications
required by the purchaser.
5. The supplier should have the capability to produce the amount of production needed (or) should
try to attain the capability.
6. The supplier should not leak out the corporate secrets.
7. The supplier should quote right price and should meet the delivery schedule. The supplier should
be accessible in terms of transportation and communication.
8. The supplier should be sincere in implementing the contract provisions.
9. The supplier should have an effective quality system and improvement program such as ISO/QS
9000.

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Module 2 MET414 Quality Management
10. The supplier should be renowned for customer satisfaction and organisation credibility. The
supplier should be identified as ‘good supplier’, ‘world
classes, ‘Quality supplier’, ‘Number one’ etc.

2.4.1 Concepts of 5S
 5-S (JAPANESE 5-S PRACTICE)
 5-S is the key for Total Quality Environment. The 5-S
practice is a technique used to establish and maintain
quality environment in an organization.
 The 5S methodology is often summarized by the philosophy
of “a place for everything and everything in its place.”
 5-S is a method for organizing a workplace, espec1ally a
shared workplace (like a shop floor or an office space), and
keeping it organized.
 It's sometimes referred to as a housekeeping methodology.
 These are also called housekeeping steps for quality improvement. 5S implementation helps to have
improved morale, safety, productivity and maintenance. 5S implementation also helps in reduction
of waste and maintenance.
 There are five 5S phases.
1. Sort (Seire): Eliminate that which is not needed (Organize).
2. Set in order (Seiton) : Organize what remains after sorting.
3. Shine (Seiso): Clean and inspect the work area.
4. Standardize (Seiketsu): Write standards for 5S. Establish schedules and methods of
performing cleaning and sorting.
5. Sustain (Shitsuke): Consistently apply the 5S standards (Discipline). Implement
mechanism to sustain the gain though the involvement of people. Integration to
performance measurement system, disciple and recognition.
Objectives of 5S
The key benefits of a 5S program
 To create a neat and clean work environment.
 To systemize day to day activities i.e., assigning  Creating space within your facility by
the materials and tools in a right place. removing unnecessary tools and equipment
 To improve work effectiveness by cleaning the  Reducing waste from unnecessary motion by
work places. organizing the workspace
 To standardize work procedures  Reducing down time and improving quality
 To improve work discipline by maintaining by consistently maintaining equipment
orderliness and cleanliness.  Engaging operators by granting them more
 To improve the quality of products and responsibility for their work environment
employee morale.  Creating a safer work environment by
 To minimize the material handling cost. ensuring it is clean and well-maintained
 To reduce the accidents.
 To spend more time for improvement activities.
1. SEIRI (Structurise/Sort)

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Module 2 MET414 Quality Management

1. SEIRI (Structurise/Sort)

 It is about separating the things which are necessary for the job from those that are unnecessary
and keeping the number of necessary things as low as possible and at a convenient location.
 Differentiate between the necessary and the unnecessary and discard the unnecessary things.
2. SEITON (Systemise/Set in order)
 Things must be kept in order so that they are ready for use when needed.
 An American Mechanical Engineer recalls that he used to spend so many hours for searching
tools and parts, when he worked in U.S.A. Only after he joined a Japanese company, he saw how
easily workers were able to find what they needed and he realised the value of seiton.
 It is all about neatness.
 Neatness is a study of efficiency. It is a question of how quickly one can get the things needed
and how quickly one can put them away. Things should be put back where they belong.
3. SEISO (SANITISE/ Cleaning) Keep the workplace clean. Everyone in the organisation from the
managing director to the sweeper should undertake.
4. SEIKETSU (Standardise)
 Seiketisu means continually and repeatedly maintaining neatness and cleanliness in the
organisation.
 It claims both personal cleanliness and the cleanliness of the environment. The emphasis is on
visual management, transparency in storage (put appropriate labels) and standardisation.
5. SHITSUKE (Self-Discipline/Sustain)
 Self Discipline means instilling the ability of doing things the way they are supposed to be done.
 Discipline is a process of repetition and practice. The emphasis in self-discipline is on creating a
workforce with good habits.
 The logic behind the 5-S practices is that organisation, neatness, cleanliness, standardisation, and
discipline at the workplace are basic requirements for producing high quality products and
services, with high productivity and little (or) no wastage

2.4.2 Six Sigma

 SIX SIGMA - Six sigma is a set of techniques and tools for process improvement.
 It was developed by Motorola in 1986.
 Today it is used in many industrial sectors.
 It seeks to improve the quality of process outputs by identifying and sensoring the cause of
defects or error and minimizing variability in manufacturing and business process
Six sigma project carried out within an organization follows a structured methodology and has
quantified value targets;

Goal of 6 Sigma 1) Reduce process time 2) Reduce pollution 3) reduce costs 4) Increase customer
satisfaction and increase profits.

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Module 2 MET414 Quality Management
 The word sigma is a statistical term that measures how far a given process deviates from perfection.

 This concept allows only 3.4 defects per million opportunities with 99.99966% of accuracy.

 Six sigma is the best measurement of process variability because, the smaller the deviation
value, the less variability in the process.
 The six - sigma strategy measures the degree to which any process has deviated from its
mean without causing errors in the operation.

Concepts of six sigma Six sigma comprises of the following concepts.

 Critical to quality: Attributes most importance to the customer.

 Process capability: What your process can deliver.
 Variation: What the customer sees and feels.
 Defects: Failing to deliver, what customer wants.
 Stable operations: Consistent processes to improve what customers sees & feels.

Six sigma design: Designing to achieve 100% customers satisfaction.

Six sigma follows two key methodologies. 2. Measure: The purpose of this step is to
establish current baselines at the basis for
1. [DMAIC] - This methodology is used to improvement.
improve an existing business process.
2. [DMADV/DFSS] - This methodology is used  This is a data collection step in order to
to create a new product or process designs. establish process performance baselines.

DMAIC  The performance baseline are used to make

conclusion of the project, whether
 It is a data driven improvement cycle used for significant improvement has been made
improving an existing business process DMAIC or not.
is an abbreviation of the fine improvement steps
it comprises. 3. Analyze: The purpose of this step is to
identify validate and select root cause for
 D - Define ,M - Measure ,A – Analyze, I - elimination. Large number of potential root
Improve ,C - Control causes of the project problem are identified
 All the above steps are required and always through root cause analysis (eg: fish bone
proceed in the given order. diagram).

 Define: Define the problem or project goals that 4. Improve: The purpose of this step is to
needs to be addressed. This information is identify, test and implement a solution to
typically gathered within project charter the problem. Identify creative solution to
document. eliminate the key root causes in order to fix
and present process problems .
 Current information about the problem/project
in noted and objective are set. 5. Control: Monitor the improvements to
ensure continued and sustainable success
by creating a control plan, updating
documents, business process and training
records as required.
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Module 2 MET414 Quality Management

DMADV or DFSS
 It is a separate and emerging business - process management methodology related to traditional
six sigma.
 DMADV project methodology is also known as DFSS “Design for six sigma”. DMADV is an
abbreviation of the five phases.
 D - Define design goals that are consistent with customer elements and the enterprises strategy.
M - Measure and identify CTQs (critical to quality). A - Analyze to develop and design
alternations. D - Design an improved alternative. V - Verify the design, implement the
production process and hand over to the process owner.

Objective of DMADV/DFSS

 It has the objective of determining the needs of customers and the business and driving
those needs into the product solution.
 It is relevant to the complex system/product especially in the context of unprecedented system
development

6 Sigma Quality Concepts

Advantages of 6 sigma
1. It refers to having 3.4 defects per million opportunities or product sample.
2. It drives customer and maximum customer satisfaction.
3. Minimizing defects
4. Increase profit

Disadvantages of 6 sigma
1. Increase capital cost and overhead cost.
2. Doses not work well with intangible results.
3. Does not work with goal like lift employee morale.

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Module 2 MET414 Quality Management
2.4.3 Lean Manufacturing
History
 Lean manufacturing.. Which also re refers as Toyota Production System (TPS), is created at created at
Toyota.
 However, the roots of TPS can be found in Henry ford system of Line assembly and manufacturing
process.
 In the Ford system they manufactured automobiles in large quantities of standard design, with high
efficiency and deliver product with low cost.
 Main idea of the Ford system is the standardized product, ich lead to the standard processes.
 Training of workers became easily
easily, and anyone can work in the Ford plant within no time. All workers
have their own duty and only need tom perform a specific smallll part of the full job like tightening screw
or oiling a part.
 After learning from Ford system, Toyota identified the problem that standard products could not meet
the all customer demands, and then generated the unique Toyota Production System.
Instead of the Ford push system, Toyota created a unique pull system, which then became the backbone of
lean manufacturing, to avoid overproduction and meet the diversified customer demands.
 As the name implies,
lies, lean is focused at cutting fat' from production activities..
 Lean manufacturing is a collection of tactical methods that emphasize eliminating waste while,
delivering quality products on time at least cost with greater efficiency.
 The term lean manufacturing
cturing refers to a production process which considers all expenditures of
resources for anything other than the addition of value to the end consumer to be waste.
 It maximizing productivity while simultaneously minimizing waste within a manufacturing
operation.
 Main Goal: create more value with less work

SEVEN WASTES IN LEAN MANUFACTURING

 Elimination of wastes forms the core of lean manufacturing system.
 Shiego Shingo, a Japanese JIT authority and engineer at the Toyota Motor Company identified seven
wastes as being the targets of continuous improvement in production process.
 By attending to these wastes, the impro
improvement is achieved.

1. Overproduction
 Overproduction refers to the production of more
quantity than actually required by the customers.
 It occurs in organizations due to mistakes in
forecasting compulsion to exploit the full service of
employee, etc.
 Manufacture of products in advance or in excess of
demand wastes money, time and space.
2. Excessive inventory
 Inventory is said to be an idle resource of the
organization.

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Module 2 MET414 Quality Management
 Inventory may be necessary only when high uncertainties like interrupted supplies, irregular workforce,
rarely available facilities and fluctuating prices of the raw materials are encountered.
 Any inventory maintained in an organization which is not capable of overcoming these uncertainties is
termed unnecessary inventory.
 Excessive inventory wastes resources through costs of storage, and locks up the working capital.

3. Unnecessary motion
 In an organization where the layout isM not properly designed, people are forced to move more
distances through random pathways.
 In industrial engineering the method of optimizing the motion of people has been largely addressed
under the area called method study. Those principles are required to reduce or eliminate the motion of
people in the organization.
 The increased motion of people leads to the wastage of time and sometimes money too due to the
reduction in the service hours.
 Workplace ergonomics assessment should be conducted to design a more efficient environment.

4. Waiting
 Any delay in the processing of activities causes damages to the planning activities of the organization.
 In an organization, delays are prone to occur in several areas such production, marketing, administration,
etc.
 Any delay in the beginning of a process gets transferred to their subsequent stages. In order to avoid
such delays, a realistic schedule is to be prepared.

5. Transportation
 Transportation is the process of moving something from one place to another.
 Transportation itself does not add any value to the customer, so it should be minimized as much
possible.
 The transportation requirements may be eliminated or minimized by applying concepts like Cellular
Manufacturing and by utilizing Computer Numerical Control (CNC)-based machineries like machining
centers.
 These facilities enable the processing of materials by keeping them within a small area.

6. Inappropriate processing
 Oriented activities require to be processed to get the value-added output.
 Though processing appears to be a value-adding resource activity, there are many circumstances in
which elongated processes lead to the wastage of money and time.
 For example, a component cast in foundry needs to be machined in machine shop to make it a
machined component. However, a net-shaped component (any manufacturing process which creates an
object in its finished form without the need to finish machining) does not require machining after
forming.
 Hence, the quest for eliminating processes in the organization will lead to the reduction of wastes.

7. Defects
 Defects refer to a product not meeting the specifications expected by the customer.

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Module 2 MET414 Quality Management
 Defects lead to a waste of time, starting in the form of paperwork. The product then needs to be
disposed of and reproduced, which also costs time and money.
 Defects also lead to lost customer reputation. Inspecting the products produced take time and costs
money. It is, therefore, an exponentially costly form people of waste.
 The production of defective parts and offering of Due services are preventable using technological and
Managerial models.
LEAN MANUFACTURING Tools
 5-S – Organizing work place
 Just –in –Time (JIT) – on demand system of production.
 Kanban –Signaling system
 Kaizen –Continuous improvement
 Plan –Do- Check –Act (PDCA) –Method t manage change
 Poka –Yoke Error Proofing
2.3.4 Kaizen
 Kaizen is a Japanese word which means small but continuous improvement.
 It means ongoing improvement involving everyone including managers and workers.
 The kaizen philosophy assumes that our way of life - i.e. our professional life, social life, (or) personal
life - deserves to be constantly improved.
 In the kaizen philosophy, improvement in all areas of business such as cost, meeting delivery
schedules, employee safety and skill development, supplier relations, new product development,
(or) productivity - all enhance the quality of the firm.

 Kaizen was created in Japan following World War 1.

 The word Kaizen means 'continuous improvement. It comes from the Japanese words 'Kai'
meaning 'change and Zen meaning better'. Kaizen is a system that involves every employee -
from upper management to the cleaning crew.
 Everyone is encouraged to come up with small improvement suggestions on a regular basis.
 This is not a once a month or once a year activity. It is continuous.
 Japanese companies, such as Toyota and Canon, a total of 60 to 70 suggestions per employee per
year are written down, shared and implemented.

 Kaizen means improvement, improvements without spending much money, involving everyone from
managers to workers, and using much common sense.
 The Japanese way encourages small improvements day after day, continuously.
 The key aspect of Kaizen is that it is an on-going, never-ending improvement process. It requires little
investment, but great efforts are required to maintain it.
 The results obtained are long-lasting and on long term basis. In most cases these are not ideas for major
changes.
 Kaizen is based on making little changes on a regular basis: always improving productivity, safety and
effectiveness while reducing waste.
 Suggestions are not limited to specific area such as production or marketing. Kaizen is based on making
changes anywhere that improvements can be made.

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Module 2 MET414 Quality Management
 To support the higher standards Kaizen also involves providing the training, materials and
supervision that is needed for employees to achieve the higher standards and maintain their ability to
meet those Standards on an on-going basis.
Any activity directed towards improvement falls under kaizen umbrella
Benefits Resulting from Kaizen

1. Kaizen involves every employee in making small,

incremental changes.
2. It focuses on identifying problems at their source,
solving them at their source, and changing standards to
ensure the problem stays solved.
3. These continual small improvements add up to major
benefits. T hey result in improved productivity,
improved quality, safety, faster delivery, lower costs,
and greater customer satisfaction.
4. Kazen reduces waste in areas such as inventory,
waiting, times, transportation, over production, and in
processes

Process oriented management Vs Result-oriented management

 This Kaizen is the process-oriented approach rather than a results-oriented approach which is a
characteristic of Western management thought.
 Kaizen is people-oriented and directed at people’s effort.
 It generates process-oriented thinking since processes must be improved before we get improved results.
This contrasts sharply with the result-oriented thinking of most western-managers.
 A process-oriented manager will be interested in the following. (a) Discipline (b) Time management (c)
Skill development (d) Participation and Involvement (e) Morale (f) Communication .
How can everyone be involved in improvement activities (Kaizen philosophy)?
Top management
1. It can focus on improvement as an important component of corporate strategy.
2. It provides support to improvement activities by allocating resources effectively.
3. It builds systems, procedures and reward structures that are conducive to improvement.
Middle Management
1. Middle management can implement top management improvement goals by establishing, upgrading,
and maintaining operating standards that reflect those goals.
2. It improves cooperation between departments.
3. It makes employees conscious of their responsibility toward improvement and develops their problem-
solving skills through training.
Supervisors
1. Supervisors provide more of their attention to improvement rather than ‘supervision’.
2. They provide better guidance for workers and improve communication.
Workers: Workers engage in improvement through suggestion systems and small group activities, self-
development programs for problem solving and enhanced job performance skills.

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Module 2 MET414 Quality Management
Kaizen Strategy
There are always two external forces acting on an
organization.
1. The improvements made by competition
2. The ever-increasing
increasing pressure from customers and the
market.
A company will fail, if its people have attitudes like “Let’s
stop here”. “Hold performance at this level” “We have done
enough” Therefore, e, it is essential to build awareness of
Kaizen as a continuous process through out the company.
Hence Kaizen never stops and this philosophy is shown in the
following Fig.
Kaizen focusses on breaking down complex processes into
sub-tasks and then improving ng them with little effort.
The goals of Kaizen include the following
following. 1. Elimination of waste. 2. Just-in-time
time production/delivery. 3.
Standardized work. 4. Better work place organization through “5S.” 5. Effective material handling
Foundation of Kaizen

1. Teamwork, 2. Personal discipline 3. Improved morale 4. Quality circles and 5. Suggestions for improvement.

IMPORTANT
RTANT QUESTIONS (MODE
(MODEL QUESTION
ESTION PAPER)
1. Define strategic quality management.
2. With examples, describe the classification of quality costs.
3. Describe the concepts of Kaizen approach.
4. Describe the concept of Quality Function Deployment
5. What are the obstacles to achieving successful strategic quality management?
6. Describe the steps to be followed to integrate qual quality
ity into strategic management journey of an
organization.
7. Enumerate the objectives and key principles of lean manufacturing paradigm.

Objectives of lean manufacturing

 Reducing wastage of resources. Principles of lean
 Optimizing quality. manufacturing
 Increasing production agility and capacity.
1. Define value
 Minimizing business expenses.
2. Map the Value
 Improvingg the workplace environment.
Stream
 Eliminate wasteful processes. 3. Create flow
 Reduce inventory. 4. Establish Pull
 Increase response time. 5. Pursue Perfection

1. Define Value: To better understand the first principle of defining customer value, it is important to
understand what value is. Value is what the customer is willing to pay for. It is paramount to discover the actual
or latent needs of the customer. Sometimes customers may not know what they want or are unable to articulate
it. This is especially common when it comes to novel products or technologies. There are many techniques such

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Module 2 MET414 Quality Management
as interviews, surveys, demographic information, and web analytics that can help you decipher and discover
what customers find valuable

2. Map the Value Stream: The second Lean principle is identifying and mapping the value stream. In this step,
the goal is to use the customer’s value as a reference point and identify all the activities that contribute to these
values. Activities that do not add value to the end customer are considered waste. The waste can be broken into
two categories: non-valued added but necessary and non-value & unnecessary.

3. Create Flow: After removing the wastes from the value stream, the following action is to ensure that the
flow of the remaining steps run smoothly without interruptions or delays. Some strategies for ensuring that
value-adding activities flow smoothly include: breaking down steps, reconfiguring the production steps,
leveling out the workload, creating cross-functional departments, and training employees to be multi-skilled and
adaptive.

4. Establish Pull: Inventory is considered one of the biggest wastes in any production system. The goal of a
pull-based system is to limit inventory and work in process (WIP) items while ensuring that the requisite
materials and information are available for a smooth flow of work. In other words, a pull-based system allows
for Just-in-time delivery and manufacturing where products are created at the time that they are needed and in
just the quantities needed.

5. Pursue Perfection: Wastes are prevented through the achievement of the first four steps: 1) identifying value,
2) mapping value stream, 3) creating flow, and 4) adopting a pull system. However, the fifth step of pursuing
perfection is the most important among them all. It makes Lean thinking and continuous process improvement a
part of the organizational culture

8. Compare traditional and lean manufacturing paradigms.

9. Explain customer satisfaction

10. Explain criteria of Supplier selection
11. Compare Concepts of 5S and Six Sigma

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