Quality Management

Module 2
Module 2
•Strategic Quality Management: Cost of Quality-
Customer satisfaction- Quality Function
Deployment (QFD)- Integrating quality into
strategic management - quality and the
management cycle- obstacles to achieving
successful strategic quality management-
supplier selection- Concepts of 5S, Six Sigma,
Lean, Kaizen
STRATEGIC QUALITY PLANNING
•It sets the long term direction of the
organization in which it wants to proceed in
future.
Cost of Quality
• 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.
Iceberg of Cost of Poor Quality (Hidden Costs)
Cost of Quality
• Sum of costs incurred by an organization in
preventing poor quality
• Increasing efforts towards quality control
“Quality Cost” means different to different
people
• Cost involved in attaining the quality
• Cost of running Quality Department.
• Cost of poor quality.
Categories of Cost of Quality

• PREVENTION COSTS
• APPRAISAL COSTS
• INTERNAL FAILURE COSTS
• EXTERNAL FAILURE COSTS
PREVENTION COSTS
• Costs to prevent defects in design, development,
purchase, labor and other aspects of creation of the
product/service
• Staff training
• Product Quality Planning
• Design and Process FMEA
• Tolerance analysis before design release
• Computer aided design and analysis
• Process capability study for process qualification
• Part selection for better reliability
• Designed experiment for optimum settings of the product
APPRAISAL COSTS
•Costs incurred while conducting inspection,
tests, and several other planned evaluations
• Design reviews
• Software testing
• Set-up inspection
• Performance testing by customer
• Calibration of gauges
• Calibration of testing facility
• Receiving inspection of purchased parts
INTERNAL FAILURE COSTS
• Costs associated with the defects - found prior to
shipment of the product
Examples:
• Rework, fixing of bugs detected in internal testing of
software
• Premium freight due to late delivery
• Internal scrap
• Engineering and drawing changes to correct errors
• Energy cost for remelting of rejected castings
• Overtime due to non-conforming products.
EXTERNAL FAILURE COSTS
• Cost of defects found after the product reaches the
dealer or customer
Examples:
• Complaints
• Warranty claims
• Retrofit and recall costs
• Liabilities and penalties
• Allowances and customer goodwill
• lost sales and loss of goodwill
JURANS MODEL OF OPTIMUM QUALITY COSTS
Schneiderman quality costs
Quality Cost to Business Measures
• As a percentage of sales
• As compared to profit
• As related to production
 ANALYSIS OF COQ FOR IMPROVEMENT
• Management should use the COQ data to identify and
prioritize improvement opportunities.
Example:
Customer Satisfaction
• Customers are the greatest need of any organization
• Customers are the very reason for being in business.
• Profits can be reaped only if an organization has customers who will
pay for the products or services on a continuing basis.
SERVICE QUALITY
• “The results generated, by activities at the interface between the
organization and the customer and by the organization’s internal
activities, to meet customer needs”.

• Eg: Electricity supply

Customer Perception of Quality
1. Performance
2. Features
3. Service
4. Warranty
5. Price
6. Reputation
FEATURES OF SERVICES
• Speed
• Delivery Schedule
• Care in Handling
• Each Service Offering is Different (Eg; restaurant)
• Customer Requirements are Difficult to Comprehend
• Difficulty in Estimating Cost
• Difficulty in Measuring Performance of Services
• Difficulty in Marketing Services
• Difficulty in Measuring Customer Satisfaction
• Psychology of Customers
 Customer Attrition
• Some organizations may be able to attract new customers,
but existing customers may leave.
• “ If product is good then customer will come back (again);
If not, the product will come back (returned)”.
• The losing of a higher number of customers indicates falling
standards with regard to quality of services provided.
• According to Tom Peters, the customers leave because of
the following reasons2:
• 15 per cent because of quality problems
• 15 per cent because of higher price
• 70 per cent did not enjoy doing business with the organizations.
Delighting Customers
• Satisfy only the written requirements, then it is
unlikely to delight the customer and retain them
forever.
• Try to understand the hidden requirements of their
customers. Carry out a market survey
• Additional small things will satisfy the customer.
• Giving additional features or items
• Offering customers what they won’t have expected
• Fulfilling their unstated needs
Customer Contact
• Customer service personnel have to give COMFORT to the
customers
• C for Caring
• O for Observant
• M for Mindful
• F for Friendly
• O for Obliging
• R for Responsible
• T for Tactful
THE KANO MODEL
•1970s, Dr Nariaki Kano came out with a practical
model for understanding customer satisfaction
Basic Quality (threshold quality)

• Customer complaints
• Warranty data
• Product recalls
• Number of lawsuits
• Things gone wrong
• Other failure reports
Performance Quality
• The rule is: better the performance, the greater the
satisfaction.
Excitement Quality
• The features that will excite the customers and give
exponential increase in customer satisfaction
•Importance of Measuring Customer Satisfaction
•No Hard and Fast Rule for Identifying Measures
•Identify Vital Few Measures
•Arrive at Quantitative Indices
Measures for Customer Satisfaction

Customer Perceived Quality

•Defects in the product on delivery
•Number of requirements fulfilled
•Number of misunderstood requirement
•Frequency of defects
•Time taken for repair
Measures for Customer Satisfaction
•Response Time
Parameters, pertaining to response time are given
below:
• Delay in delivery
• Delay in installation
• Promptness in service
• Time taken for attending to service calls
• Number of reminders the customer made to his service
provider
• Response time of the organization for the customer’s
additional requirement after delivery
•Errors in Documentation
•Errors in Delivery
•Delay in Execution
•Delay in Delivery
•Measure Everyone's Satisfaction
CASE STUDIES
• Customer Satisfaction Survey – Customer Satisfaction
Index

• 1. Bike Service
• 2. Spouse Satisfaction Survey
CUSTOMER FEEDBACK
•Feedback Forms
•Confidentiality
•Display Results
COMPLAINT RESOLUTION
• Analyze Independently
• Give Benefit of Doubt to Customers
• Satisfying Annoying Customers
Quality Function Deployment

•Dr. Mizuno, professor emeritus of the Tokyo

Institute of Technology, is credited with initiating
the quality function deployment (QFD) system.

•The first application of QFD was at Mitsubishi,

Heavy Industries, Ltd., in the Kobe Shipyard,
Japan, in 1972
•Quality function deployment (QFD) is a
planning tool used to fulfill customer
expectations

•Often referred to as the voice of the customer

•Translate customer expectations, in terms
of specific requirements,

•Directions and actions, in terms of

engineering or technical characteristics
QFD Process

•Product planning
•Part development
•Process planning
•Production planning
Benefits of QFD
• Reduces product development time upto 50%
• Design cycle time shortened by 30 to 50%
• Start up and engineering costs reduce by 20 to 60%
• Reduces time to market
• Focuses the organization on customer needs
• Useful for gathering customer requirements
Benefits of QFD
• Design quality improves
• Improved performance of the products
• Improves communication within the organization about
customer needs
• Helps in identification of conflicting requirements and
resolving them
• Improves customer satisfaction and thereby increasing sales
• Reduces rework
Benefits of QFD
• Reduced warranty and field service costs
• Reduction of quality costs
• Enables concurrent engineering
• Enables understanding of competitors and hence
identification of competitive advantages of their products
and also their weaknesses
• Since most of the requirements are clearly understood, the
requirement changes are few. A boon to the software
industry.
QFD TEAM
• Marketing / Sales
• Design
• Production
• QA
• Testing
• Purchase
• Vendors, etc.
The team should have a senior employee as moderator or
facilitator
The Voice of the Customer
• Represents the requirements of the customers.
• QFD is a technique to record every requirement
expressed by the customer and take a conscious
decision
• list of what the customer wants in the product or
service
Sources of information
• Market survey from customers
• Information from sales team
• Information from service team
• Customer complaints
• Customer feedback
• Testing of products in labs
• Comparative analysis of competitor’s products through benchmarking
• Advertisement in newspapers and journals of competitors
• Customer direct feedback
• Product related exhibitions
• Uninformed visit to a customer site
• Beta testing reports
HOUSE OF QUALITY
• Primary tool for QFD
• product planning matrix or matrix diagram
• six major building blocks
Continuous Process Improvement
• TQM means gradual and continuous improvements of the processes
within the organization
• Finding new opportunities for improvements of processes, improving
them, measuring improvement and then repeating the cycle again
and again
• The improvement strategies were evolved, experimented and
published by the quality gurus.
• A number of new improvement methodologies were evolved in Japan
Improvement Strategies
• Repair
• Refinement
• Renovation
• Reinvention.

Choosing the right strategy for the right situation is

critical
The PDSA Cycle
Plan-Do-Study-Act (PDSA)
cycle was first developed
by Shewhart and
then modified by Deming
Problem-Solving Method
Juran’s Trilogy
Good financial results are achieved in an organization
through three managerial processes namely,
• planning,
• control and
• improvement.
Quality trilogy
• Quality Planning
• Quality Control
• Quality Improvement
Techniques for continuous process
improvement.

• Kaizen
• Kaizen Blitz
• 5S Practice
• Three MUs
• The Seven Deadly Wastes
• Business Process Reengineering
Kaizen
• Kaizen is a Japanese word
• It is the process of continuous improvement in small increments
• It focuses on simplification by breaking down complex processes into
their sub-processes and then improving them.
Kaizen Activities
Three Basic Principles of Kaizen
i) Work place effectiveness
ii) Elimination of waste, strain and discrepancy
iii) Standardization
Three MUs
• Kaizen is achieved through application of 5S tools for
workplace effectiveness and elimination of three MUs
• The waste, strain and discrepancy in respect of the
following are to be reduced and finally eliminated:
• Human resources
• Production volumes
• Inventory (materials)
• Time
• Working space
• Machinery
• Techniques
• Facilities
• Tools and Jigs
• Thinking
Kaizen improvement focuses
• 1. Value-added and non-value-added work activities.
• 2. Muda, which refers to the seven classes of waste—

• over-production
• delay
• transportation
• processing
• inventory
• wasted motion
• defective parts
Kaizen improvement focuses
•3. Principles of motion study and the use of cell
technology.
•4. Principles of materials handling and use of
one-piece flow.
•5. Documentation of standard operating
procedures.
Kaizen improvement focuses
• 6. The five S’s for workplace organization, which are
five Japanese words

• Seiko
• Seiton
• Seiketso
• Seiso
• Shitsuke
Kaizen improvement focuses
• 7. Visual management by means of visual displays that
everyone in the plant can use for better
communications.
• 8. Just-in-time principles to produce only the units in
the right quantities, at the right time, and with the
right resources.
• 9. Poka-yoke to prevent or detect errors.
• 10. Team dynamics, which include problem solving,
communication skills, and conflict resolution.
Kaizen Blitz
•Contrarily to Kaizen
•A quick improvement methodology.
•Unleash employee creativity and dramatically
improve the operations overnight.
•Usually the Kaizen Blitz is completed in a single
week.
5S PRACTICES
•The Kaizen toolbox includes the 5S for improving
workplace effectiveness
1. Seiri (Sort)
•Sort and throw away unnecessary items.
•Separate tools, machinery, products, inspection,
work in progress, and documentation into
necessary and unnecessary and discard
unnecessary items
2. Seiton (Straighten)
•For easy and fast access when needed,
everything has a place and everything in its
place.

• Step 1: Plan to arrange neatly

• Step 2: Decide where things should be stored
• Step 3: Be consistent in following the rules
3. Seiso (Scrub)
•Clean and inspect the respective work places
thoroughly,
•So that there is no dust on the floor, machinery
and equipment.
• Keep machinery and work environment clean.
4. Seiketsu (Systematize)
•Maintain high standards of work place
organization
•By keeping everything clean and orderly at all
times.
•Develop routine practices for cleaning and
checking
5. Shitsuke (Standardize)
•To make the previous four steps part of the daily
routine and
•to observe self-discipline through continuous
practice.

•Follow procedures and standardize continuously

to improve processes and reestablish standards.
THE SEVEN DEADLY WASTES
•Waste from overproduction
•Waste of waiting time
•Transportation waste
•Processing waste
•Inventory waste
•Waste of motion
•Waste from product defect
BUSINESS PROCESS REENGINEERING (BPR)
•Automating or applying Information Technology
to the existing processes or operations

•BPR is “the fundamental rethinking and radical

redesign of business processes to achieve
dramatic improvement in critical, contemporary
measures of performance, such as cost, quality,
service and speed”.
Reengineering

•Many practitioners believe that TQM is

associated with only incremental
improvements.
•Malcolm Baldrige National Quality Award
has defined continuous improvement as
referring to both incremental and
“breakthrough” improvement
Five phases of reengineering cycle
1. Planning
2. Process Study
3. Study of the best practices
4. Redesign
5. Implementation

BPR makes dramatic improvement in quality

 Six Sigma
• World War II gave a new thrust to quality control & SPC.
• 1980s, the lean manufacturing and JIT of Japanese
companies gave a threat to American companies.
• TQM was born in America to overcome the Japanese
competition.
• 1990s, ISO 9000 standards created a new wave of
quality.
• Motorola-sharper focus to TQM, embarked on six sigma
•GE used six sigma in 1995- Resulted in better GE
products
•Books, workshops, training courses, conferences
•Many organizations are launching six sigma
initiatives by using Black Belts, Green Belts, etc
•ASQ conducts examination for six sigma Black
Belts
•Many companies have acquired expertise by
hiring Black Belts from Motorola, Kodak, GE or
one of the other companies that were early users
of six sigma
•1999, M. Harry and R. Schroeder published Six
Sigma:
•The Breakthrough Management Strategy
Revolutionizing the World’s Top Corporation
•Six sigma was simply a TQM process that uses
process capability analysis as a way of measuring
progress
•Sigma,σ, is the Greek symbol for the statistical
measurement of standard deviation.
•It is the best measurement of process variability,
•Smaller the deviation value, the less variability in
the process.
• Figure shows a process that is normally
distributed and centered with the upper and
lower specification limits (USL and LSL)
established at +- 6σ.
• 99.9999998% of the product or service will be
between specifications,
• Nonconformance rate will be 0.002 parts per
million, or 2.0 per billion.
• Process capability index (Cp) of 2.0
• The number of defects gets reduced if the normal curve represents
performance of product or service.
•According to the six-sigma philosophy,
processes rarely stay centered
Fundamental concept of 6 sigma
• With more defects, the cost of waste is going to be
high.
• If waste can be eliminated, then the profit will go up
• One can expect total defects of 0.002 ppm, compared
with 2700 ppm when we achieve the traditional 3
sigma quality level.
• This happens when the mean lies exactly at (USL+LSL)
/2
Lean manufacturing
• Focuses on
• speed of processing
• reducing WIP
• elimination of waste
• standardization of processes
• flexibility of workstations, etc.

Concentrate more on reducing wastes and removing

non-value adding processes
• Umbrella concept - practiced in Japan.
• Application of more efficient methods to minimize delays, reduce
costs and improve quality
• Lean manufacturing enables JIT manufacturing
Major Tenets (Principles) of Lean manufacturing
• Quick Changeover/Setup Reduction
• Value Stream Analysis

• Pull/Kanban Systems
• Total Productive Maintenance (TPM)

• Workplace Organization
• 5S System
• Cellular Manufacturing
Strategies and Concepts of Lean
• One Piece Flow
• Quality at the source
• Standardized
• Visual Controls
• TAKT Time – Rate of completion of a product to meet customer demand
• Employee Involvement
• Continuous Improvement
• Team Building
• Balanced Flow
• Stabilized Operations
• Equipment Replacement
Kanban Systems
• Developed by Mr Taiichi Ohno, Vice President of Toyota
in the 1950s
Objectives:
• Managing material flow on the assembly line
• Reducing costs by eliminating waste/scrap
• Try to create work sites that can respond to changes quickly
• Facilitate the methods of achieving and assuring quality
control
• Design work sites according to human dignity, mutual trust
and support
Kanban
• Kan-card, Ban-signal.
• Japanese refer to Kanban as a parts-movement system
• depends on cards and boxes/containers to take parts
from one workstation to another on a production line.
• Supplier or the warehouse should only deliver
components to the production line as and when they
are needed, so that there is no storage in the
production area.
• A card containing all the information required for the
jobs to be carried out on a product
• at each stage along its path to completion and
• which parts are needed at subsequent processes.
• These cards are used to control work-in-progress
(WIP), production and inventory flow.
• A Kanban system allows use of Just-In-Time (JIT)
Types of Kanbans
(i) Withdrawal Kanban
(ii) Production Kanban
Withdrawal Kanban
• To pass the authorization for the movement of parts from one state
to another.
• It gets the parts from the preceding process and moves them to the
next process,
• remaining with the parts until the last part has been consumed by the
next process.
• The withdrawal Kanban then travels back to the preceding process to
get parts, thus creating a cycle
Information in WK
•Part number, part name, lot size, routing
process, name of the next process, location of
the next process, name of the preceding
process, location of the preceding process,
container type, container capacity, and number
of containers released
Production Kanban
•To release an order to the preceding stage to
build the lot size indicated on the card
Information:
• Materials required as inputs at the preceding stage
• Parts required as inputs at the preceding stage
• Information pertaining to withdrawal Kanban
• Kanban system - A network of workstations,
distributed amongst production stages.
• In order for a part to enter into production stage, it
must first acquire a free Kanban (withdrawal Kanban).
• Once the part has entered the workstation, it receives
a new production Kanban which remains attached to
the part while until all work steps associated with the
Kanban card have been completed.
Advantages of Kanban Process
• A simple and understandable process
• Provides quick and precise information
• Low costs associated with the transfer of information
• Provides quick response to changes
• Avoids overproduction
• Minimizies waste
• Control can be maintained
• Delegates responsibility to line workers