Module I

INTRODUCTION

Introduction – Need for quality – Evolution of quality – Definitions of quality –

Dimensions of product and service quality – Basic concepts of TQM – TQM
Framework – Contributions of Deming, Juran and Crosby – Barriers to TQM –
Quality statements – Customer focus – Customer orientation, Customer
satisfaction, Customer complaints, Customer retention – Costs of quality.

INTRODUCTION
• According to ISO, Total Quality Management is the management
approach of an organization, centered on quality, based on the
participation of all its members and aiming at long-term success through
customer satisfaction, and benefits to all members of the organization
and to society.
• The Simple Objective of TQM - “Do the right things, right the first time,
every time.”
• TQM is the art of managing the whole to achieve excellence.
• It consists of 3 Paradigms:
o Total – Made up of the whole (or) Complete.
o Quality – Degree of Excellence a product or service provides to the
customer in present and future.
o Management – Act, art, or manner of handling, controlling,
directing, etc.

QUALITY
Quality is the most important thing. The quality of your work defines you.
Whoever you are, whatever you do, I can find the same products and services
cheaper somewhere else. But your quality is your signature.

NEED FOR QUALITY

• Good quality of goods and services can provide an organization with
competitive edge.
• Good quality reduces costs due to product returns, rework and scrap.
• Good quality increases productivity, profits and other measures of
success such as brand image, product image and company goodwill.
• Most importantly, good quality generates satisfied customers today and
tomorrow.
• Good quality creates an atmosphere for high employee morale, which
improves productivity.

CHARACTERISTICS OF QUALITY
• Customer dependent
• Market attributed
• Fitness for use
• Degree of preference
• Dynamic and different

BENEFITS OF QUALITY
• Higher customer satisfaction
• Reliable products/services
• Better efficiency of operations
• More productivity & profit
• Better morale of work force
• Less wastage costs
• Less Inspection costs
• Improved process
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 • More market share
• Spread of happiness & prosperity
• Better quality of life for all.

EVOLUTION OF QUALITY
• The history of total quality management (TQM) began initially as a term
coined by the Naval Air Systems Command to describe its Japanese-style
management approach to quality improvement.
• An umbrella methodology for continually improving the quality of all
processes, it draws on a knowledge of the principles and practices of:
– The behavioral sciences
– The analysis of quantitative and nonquantitative data
– Economics theories
– Process analysis

– The following shows the history of Total Quality Management, from

inspection to business excellence.
1. Inspection:
o Inspection involves measuring, examining, and testing
products, process and services against specified
requirements to determine conformity.
o During the early years of manufacturing, inspection was
used to decide whether a worker’s job or a product met
the requirements.
2. Statistical Quality Control:
o Statistical Quality Control focuses on product and the
detection and control of quality problems.
o It involves testing samples and statistically infers
compliance of all products.
o It is carried out at stages through the production
process; and it relies on trained production personnel
and quality control professionals.
o Walter A. Shewhart of the Bell Telephone Laboratories
first applied the newly discovered statistical methods to
the problem of quality control.
3. Quality in Japan:
o In the 1940s, Japanese products were perceived as
cheap.
o Japanese industrial leaders recognized this problem
and aimed to produce innovative high quality products.
o They invited a few quality gurus, such as Deming,
Juran, and Feigenbaum to learn how to achieve this
aim.
o In the 1950s, quality control and management developed
quickly and became a main theme of Japanese
management.
o A by-product of quality circles was employee motivation.
Workers felt that they were involved and heard.

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 o Another by-product was the idea of improving not only
quality of the products, but also every aspect of
organizational issues.
o This probably was the start of the idea, total quality.
4. Total Quality:
o The term ‘total quality’ was used for the first time in a
paper by Feigenbaum at the first international
conference on quality control in Tokyo in 1969. The term
referred to wider issues within an organization.
o Ishikawa also discussed ‘total quality control’ in Japan,
which is different from the western idea of total quality.
o According to his explanation, it means ‘company-wide
quality control’ that involves all employees, from top
management to the workers, in quality control.
5. Total Quality Management:
o In the 1980s to the 1990s, a new phase of quality
control and management began. This became known as
Total Quality Management (TQM).
o Having observed Japan’s success of employing quality
issues, western companies started to introduce their
own quality initiatives.
o A typical definition of TQM includes phrases such as:
customer focus, the involvement of all employees,
continuous improvement and the integration of quality
management into the total organization.
6. Quality Awards and Excellence Models:
o In 1988 a major step forward in quality management
was made with the development of the Malcolm Baldrige
Award in the United States.
o The model, on which the award was based, represented
the first clearly defined and internationally recognized
TQM model.
o It was developed by the United States government to
encourage companies to adopt the model and improve
their competitiveness.
o In response to this, a similar model was developed by
the European Foundation of Quality Management in
1992.
o This EFQM Excellence Model is the framework for the
European Quality Award.
7. Business Excellence:
o TQM models are often called Business Excellence
Models.
o Also, TQM itself is now often called Business Excellence.
o This is to distinguish the “new TQM” from the past work
on TQM.
o Business Excellence is really the same as TQM, but with
a more clearly defined approach.

DEFINITIONS OF QUALITY
• Quality is the degree to which an object or entity (e.g., process,
product, or service) satisfies a specified set of attributes or
requirements.
• Quality means when a product or service meets or exceeds
expectation considering the intended use and the selling price.
– If the quality of a product is high then that means that it is
fit for its purpose.
– If the quality of an item is low that means that the product
may break easily or not work properly.
• Quality means "degree of excellence“.
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 – Quality = performance / expectation
• Quality is defined as the predictable degree of uniformity and
dependability, at low cost suited to the market. (Deming).
• Quality is defined as fitness for use (Juran).
• Quality is defined as conformance to requirements (Crosby).
• Quality is totality of the characteristics of entity that bear on its
ability to satisfy stated and implied needs.(ISO).

DIMENSIONS OF QUALITY
• Products and Services that meet or exceed customer expectations
result in customer satisfaction.
• Quality is the expected product/service being realized.
• Various dimensions of quality that the customers do look for in a
product, in order to satisfy their needs, only decide the characteristics
of a product.
• Two categories:
a. Dimensions of product(or manufacturing)quality
b. Dimensions of service quality

a. Product Quality Dimensions

– A quality product is a product that meets the expectations of the
customers. It refers to how well a product satisfies customer
needs, serves its purpose and meets industry standards.
– The eight dimensions of quality help producers to meet these
expectations. They are-
1. Performance
o This describes the main characteristics of the product.
Generally, if the performance is equal to the overall
expectations or exceeds them, your product will be
considered of high quality. However, if the performance
rating falls below the customer’s expectations, your quality
rating will suffer.
o Example: Performance would include characteristics like
clear phone reception, audibility, data speed etc in mobile
phones.
2. Features
o This dimension involves all of the additional features of the
product that supplement the basic functioning of the
product.
Example: In Mobile phone, features include high-resolution
camera, retina or fingerprint sensor, mp3& email facility.
3. Conformance
o This describes how well the product meets the design
specifications and any industry standards and
requirements.
o Example: In software development, the code complies with
the requirements defined by the customer.
4. Reliability
o This is how well you can depend on the performance of the
product.
o Example: In Mobile Phones, Catching feeble signals, Good
Battery life.s
5. Durability
o This is the product’s performance over time. A durable
product is of high quality when its performance does not
decrease as it is being used.
o Example: Battery life, Sturdiness of buttons in mobile
phone.
6. Serviceability

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 o This is how well your organization is able to handle service-
related issues such as customer complaints or product
repairs. This can also include the ease of repair of the
product, which can be a determinant in whether the
customer will buy the product.
o Example: Service expenses in mobile phone.
7. Aesthetics
o This involves the characteristics of the product that are
related to its appearance, feel, smell, or taste (if applicable).
o Example: Sleekness, weight, Colour combination in mobile
phone
8. Reputation
o This describes the name the supplier has made over time.
o Example: Maruthi Suzuki service, Nokia Mobile Phone
9. Response
o Human to human interface, such as the courtesy of the
dealer. It refers to the degree they react and act quickly to
resolve the problems.
o Example: Replacement of defective parts – TATA Indica,
Honda

b. Service Quality Dimensions

– Quality of Service is judged by the customers on many dimensions
in addition to the physical and functional characteristics
associated with the service.
– The various aspects or dimensions of service which are found to be
very important in determining customer perception of service
quality include:
1. Reliability
o Reliability is the ability to perform the promised service
dependably and accurately.
o Example: Providing error free invoices, making repairs correctly
first time.
2. Assurance
o Assurance is the knowledge and courtesy of employees and
their ability to convey trust and confidence.
o Example: ability to answer questions, having capability to do
the necessary work, avoiding possible fraud with the system of
operations.
3. Tangibles
o Tangibility is the appearance of physical facilities, equipment,
personnel, and communication materials.
o Example: Attractive front office, well dressed employees, well
designed forms etc.
4. Empathy
o Empathy is the caring, individualized attention the firm
provides its customers.
o Example: willingness to schedule deliveries at the customer’s
convenience, explaining technical jargon in a layman’s
language.
5. Responsiveness
o Responsiveness is the willingness to help customers and
provide prompt service.
o Example: acting quickly to resolve problems, promptly crediting
returned materials

BASIC CONCEPTS OF TQM

Total Quality Management (TQM) is an enhancement to the traditional way
of doing business. It is a proven technique to guarantee survival in
world-class competition. Only by changing the actions of management will
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 the culture and actions of an entire organization be transformed. TQM is for
the most part common sense. Analyzing the three words, we have
Total - Made up of the whole
Quality- Degree of excellence a product or service provides.
Management- Act, art, or manner of handling, controlling, directing, etc

The Basic Concepts of TQM are as follow:

1. A committed and involved management:
TQM is a continual long term activity that must be imbibed in
the culture of the organization. Everything begins with the long-term-
top-to-bottom organization support. Management must participate in
the quality program, establish a quality council to develop clear
vision, set goals and direct the programs. TQM must be
communicated to all people in the organization.
2. An unwavering focus on the customer:
The key to an effective TQM is its focus on its customers &
orienting all activities towards the need of the customer, both
internally and externally. The management must listen to voice of
customer and emphasize design quality and defect prevention.
3. Effective involvement and achievement of the entire work force:
Implementing TQM is everyone’s responsibility. Employees are
the future of any organization. All personnel must be trained in TQM,
its tools. They must be empowered to perform processes in an optimal
manner.
[Link] improvement of the business and production processes:
All employees must continually strive to improve all business
and production systems. Quality improvement projects such as one
time delivery, order entry efficiency, billing error rate, customer
satisfaction, cycle time scrap reduction and supplier management are
good places to begin.
5. Treating Suppliers as Partners
On the average 40% of the sales is purchase of product or
service; therefore, the supplier quality must be outstanding. A
partnering relationship rather than adversarial one must be
developed. Both parties have as much to gain or lose based on the
success or failure of the product or service. The focus should be on
quality and life cycle costs rather than price.
6. Establish Performance measures:
Performance measures such as uptime, percent non
conforming, absenteeism and customer satisfaction should be
determined for each functional area. These measures should be
posted for everyone to see. Quantitative data are necessary to
measure the continuous quality improvement activity.

PRINCIPLES OF TOTAL QUALITY MANAGEMENT:

Total Quality Management (TQM) is a management technique based on the
idea that all “employees continuously improve their ability to provide on-
demand products and services that customers will find of particular value.”
The eight principles are:
1. Customer-Focused Organisation
2. Leadership
3. Involvement of People
4. Process Approach
5. System Approach to Management
6. Continual Improvement
7. Factual Approach to Decision Making and
8. Mutually Beneficial Supplier Relationships.

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Principle 1: Customer Focus
– "Organisations depend on their customers and therefore should
understand current and future needs of the customer, meet customer
requirements and strive to exceed customer expectations“.
– Steps in application of this principle are:
1. Understand customer needs and expectations for products,
delivery, price, dependability, etc.
2. Ensure a balanced approach among customers and other stake
holders (owners, people, suppliers, local communities and society
at large) needs and expectations.
3. Communicate these needs and expectations throughout the
organization.
4. Measure customer satisfaction & act on results and
5. Manage customer relationships.

Principle 2: Leadership
– "Leaders establish unity of purpose and direction of the organisation.
They should create and maintain the internal environment in which
people can become fully involved in achieving the organisation's
objectives.“
– Steps in application of this principle are:
1. Be proactive and lead by example.
2. Understand and respond to changes in the external environment.
3. Consider the needs of all stake holders including customers,
owners, people, suppliers, local communities and society at large.
4. Establish a clear vision of the organisation's future.
5. Establish shared values and ethical role models at all levels of the
organisation.
6. Build trust and eliminate fear.
7. Provide people with the required resources and freedom to act with
responsibility and accountability.
8. Inspire, encourage and recognise people's contributions.
9. Promote open and honest communication.
10. Educate, train and coach people.
11. Set challenging goals and targets, and
12. Implement a strategy to achieve these goals and targets.

Principle 3: People Involvement

– "People at all levels are the essence of an organisation and their full
involvement enables their abilities to be used for the organisation's
benefit".
– Steps in application of this principle are:
1. Accept ownership and responsibility to solve problems.
2. Actively seek opportunities to make improvements, and enhance
competencies, knowledge and experience.
3. Freely share knowledge & experience in teams.
4. Focus on the creation of value for customers.
5. Be innovative in furthering the organisation’s objectives.
6. Improve the way of representing the organisation to customers,
local communities and society at large.
7. Help people derive satisfaction from their work, and
8. Make people enthusiastic and proud to be part of the
organisation.

Principle 4: Process Approach

– "A desired result is achieved more efficiently when related resources
and activities are managed as a process."
– Steps in application of this principle are:
1. Define the process to achieve the desired result.
2. Identify and measure the inputs and outputs of the process.
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 3. Identify the interfaces of the process with the functions of the
organisation.
4. Evaluate possible risks, consequences and impacts of
processes on customers, suppliers and other stake holders of
the process.
5. Establish clear responsibility, authority, and accountability for
managing the process.
6. Identify internal and external customers, suppliers and other
stake holders of the process, and
7. When designing processes, consider process steps, activities,
flows, control measures, training needs, equipment, methods,
information, materials and other resources to achieve the
desired result

Principle 5: Systematic Approach To Management

– "Identifying, understanding and managing a system of interrelated
processes for a given objective improve the organisation's effectiveness
and efficiency.“
– Steps in application of this principle are:
1. Define the system by identifying or developing the processes that
affect a given objective.
2. Structure the system to achieve the objective in the most efficient
way.
3. Understand the interdependencies among the processes of the
system.
4. Continually improve the system through measurement and
evaluation, and
5. Estimate the resource requirements and establish resource
constraints prior to action.

Principle 6: Continual Improvement

– "Continual improvement should be a permanent objective of the
organisation."
– Steps in application of this principle are:
1. Make continual improvement of products, processes and systems
an objective for every individual in the organization.
2. Apply the basic improvement concepts of incremental
improvement and breakthrough improvement.
3. Use periodic assessments against established criteria of excellence
to identify areas for potential improvement.
4. Continually improve the efficiency and effectiveness of all
processes.
5. Promote prevention based activities.
6. Provide every member of the organisation with appropriate
education and training, on the methods and tools of continual
improvement such as the Plan-Do-Check-Act cycle, problem solving,
process re-engineering, and process innovation.
7. Establish measures and goals to guide and track improvements,
and
8. Recognise improvements.

Principle 7: Factual Approach To Decision Making

– "Effective decisions are based on the analysis of data and
information."
– Steps in application of this principle are:
1. Take measurements and collect data and information relevant to
the objective.
2. Ensure that the data and information are sufficiently accurate,
reliable and accessible.

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 3. Analyse the data and information using valid methods.
4. Understand the value of appropriate statistical techniques, and
5. Make decisions and take action based on the results of logical
analysis balanced with experience and intuition.

Principle 8: Mutually Beneficial Supplier Relations

– "An organisation and its suppliers are interdependent, and a mutually
beneficial relationship enhances the ability of both to create value.“
– Steps in application of this principle are:
1. Identify and select key suppliers.
2. Establish supplier relationships that balance short-term gains with
long-term considerations for the organisation and society at large.
3. Create clear and open communications.
4. Initiate joint development and improvement of products and
processes.
5. Jointly establish a clear understanding of customers' needs.
6. Share information and future plans, and
7. Recognise supplier improvements and achievements

TQM FRAMEWORK
TQM is an umbrella under which the management includes everything
that it considers important for its success. Most of the elements are common to all.
TQM programmes and the list of elements can be divided into 2 groups – TQM
Principles and practices and TQM tools and techniques.

Here's a detailed breakdown of the TQM Framework components:

A. Quality Gurus:
1. Walter Shewhart: Known for the Shewhart Cycle (PDCA) and statistical
process control.
2. W. Edwards Deming: Developed the Deming Cycle (PDCA) and 14 Points for
Management.
3. Joseph Juran: Introduced the Juran Trilogy (Quality Planning, Quality
Control, Quality Improvement).
4. Arm and Feigenbaum: Developed the concept of Total Quality Control.
5. Kaoru Ishikawa: Introduced the Fishbone Diagram (Ishikawa Diagram) for
root cause analysis.
6. Philip Crosby: Developed the Crosby Quality Management Maturity Grid.
7. Genichi Taguchi: Introduced the Taguchi Methods for quality engineering.

B. Tools and Techniques:

1. Benchmarking: Comparing processes with industry best practices.
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 2. Information Technology: Leveraging technology for quality management.
3. Quality Management Systems (QMS): Framework for managing quality.
4. Environmental Management Systems (EMS): Framework for managing
environmental impact.
5. Quality Function Deployment (QFD): Translating customer needs into
product features.
6. Quality by Design (QbD): Designing quality into products and processes.
7. Failure Mode and Effects Analysis (FMEA): Identifying potential failures and
their impact.
8. Products and Services Liability: Managing liability for products and services.
9. Total Productive Maintenance (TPM): Maintaining equipment and processes
for optimal performance.
10. Management Tools: Various tools for planning, organizing, and controlling
quality.
11. Statistical Process Control (SPC): Monitoring and controlling processes using
statistical methods.
12. Experimental Design: Designing experiments to optimize processes and
products.
13. Taguchi Quality Engineering: Applying Taguchi Methods for quality
engineering.

C. Principles and Practices:

1. People and Relationships: Building strong relationships with employees,
customers, and suppliers.
2. Leadership: Demonstrating commitment and leadership from top
management.
3. Customer Satisfaction: Focusing on meeting customer needs and
expectations.
4. Employee Involvement: Encouraging participation and empowerment of
employees.
5. Supplier Partnership: Building strong relationships with suppliers.
6. Product or Service Realization: Managing the realization of products and
services.
7. Customer Focus: Understanding customer needs and expectations.
8. Continuous Process Improvement Approach: Encouraging on going
improvement.
9. Performance Measures: Establishing metrics to measure quality
performance.

This detailed breakdown covers the key components of the TQM Framework,
including the contributions of renowned quality gurus, various tools and
techniques, and essential principles and practices for achieving quality excellence.

CONTRIBUTIONS OF DEMING, JURAN AND CROSBY

A. CONTRIBUTIONS OF W. EDWARDS DEMING

W. Edwards Deming was a renowned American engineer, statistician, and
management consultant. He is best known for his work in quality
management and his contributions to Japan's post-war industrial recovery.
Here are some of his key contributions:

1. PDCA Cycle (Plan-Do-Check-Act)

– Deming encouraged a systematic approach to problem solving and
promoted the widely known Plan, Do, Check , Act (PDCA) cycle. The
PDCA cycle is also known as the Deming cycle or Deming Wheel.

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 [Link] Cycle

2. 14 Points for Management

– Deming's 14 Points for Management provide a framework for
organizations to achieve quality and competitiveness. These points
emphasize the importance of:
1. Create a constant purpose toward improvement.
o Plan for quality in the long term.
o Resist reacting with short-term solutions.
o Don't just do the same things better – find better
things to do.
2. Adopt the new philosophy.
o Embrace quality throughout the organization.
o Put your customers' needs first, rather than react to
competitive pressure – and design products and
services to meet those needs.
o Be prepared for a major change in the way business
is done. It's about leading, not simply managing.
3. Stop depending on inspections.
o Inspections are costly and unreliable – and they don't
improve quality, they merely find a lack of quality.
o Build quality into the process from start to finish.
o Don't just find what you did wrong – eliminate the
"wrongs" altogether.
o Use statistical control methods to prove that the
process is working.
4. Use a single supplier for any one item.
o Quality relies on consistency – the less variation you
have in the input, the less variation you'll have in the
output.
o Look at suppliers as your partners in quality.
Encourage them to spend time improving their own
quality – they shouldn't compete for your business
based on price alone.
o Analyze the total cost to you, not just the initial cost
of the product.
o Use quality statistics to ensure that suppliers meet
your quality standards.
5. Improve constantly and forever.
o Continuously improve your systems and processes.
Deming promoted the Plan-Do-Check-Act approach
to process analysis and improvement.
o Emphasize training and education so everyone can
do their jobs better.
6. Use training on the job.
o Train for consistency to help reduce variation.
o Build a foundation of common knowledge.
o Allow workers to understand their roles in the "big
picture."

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 o Encourage staff to learn from one another, and
provide a culture and environment for effective
teamwork.
7. Implement leadership.
o Expect your supervisors and managers to
understand their workers and the processes they
use.
o Don't simply supervise – provide support and
resources so that each staff member can do his or
her best.
o Figure out what each person actually needs to do his
or her best.
o Emphasize the importance of participative
management and transformational leadership.
o Find ways to reach full potential, and don't just focus
on meeting targets and quotas.
8. Eliminate fear.
o Allow people to perform at their best by ensuring that
they're not afraid to express ideas or concerns.
o Let everyone know that the goal is to achieve high
quality by doing more things right – and that you're
not interested in blaming people when mistakes
happen.
o Make workers feel valued, and encourage them to
look for better ways to do things.
o Use open and honest communication to remove fear
from the organization.
9. Break down barriers between departments.
o Build the "internal customer" concept – recognize
that each department or function serves other
departments that use their output.
o Build a shared vision.
o Use cross-functional teamwork to build
understanding and reduce adversarial relationships.
o Focus on collaboration and consensus instead of
compromise.
10. Get rid of unclear slogans.
o Let people know exactly what you want – don't make
them guess.
o Don't let words and nice-sounding phrases replace
effective leadership. Outline your expectations, and
then praise people face-to-face for doing good work.
11. Eliminate management by objectives.
o Look at how the process is carried out, not just
numerical targets. Deming said that production
targets encourage high output and low quality.
o Provide support and resources so that production
levels and quality are high and achievable.
o Measure the process rather than the people behind
the process.
12. Remove barriers to pride of workmanship.
o Allow everyone to take pride in their work without
being rated or compared.
o Treat workers the same, and don't make them
compete with other workers for monetary or other
rewards. Over time, the quality system will naturally
raise the level of everyone's work to an equally high
level.
13. Implement education and self-improvement.
o Improve the current skills of workers.
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 o Encourage people to learn new skills to prepare for
future changes and challenges.
o Build skills to make your workforce more adaptable
to change, and better able to find and achieve
improvements.
14. Make "transformation" everyone's job.
o Improve your overall organization by having each
person take a step toward quality.
o Analyze each small step, an understand how it fits
into the larger picture.
o Use effective change management principles to
introduce the new philosophy and ideas in Deming's
14 points.

3. Seven Deadly Diseases

– Deming identified seven obstacles to quality and productivity, known
as the "Seven Deadly Diseases":
1. Lack of consistency of purpose
2. Emphasis on short-term profits
3. Evaluation by performance metrics alone
4. Mobility of management
5. Reliance on financial figures
6. Excessive medical costs
7. Excessive legal costs

4. Deming's System of Profound Knowledge

– Deming's System of Profound Knowledge is a management philosophy
that consists of four interrelated components:
1. Appreciation for a system: Understanding the organization as a
whole
2. Knowledge of variation: Recognizing the difference between
common and special causes of variation
3. Theory of knowledge: Understanding the limitations of knowledge
and the importance of continuous learning
4. Knowledge of Psychology: Understanding human behaviour and
motivation

5. Focus on Quality and Customer Satisfaction

– Deming emphasized the importance of quality and customer
satisfaction, encouraging organizations to focus on delivering value to
customers.
– These contributions have had a lasting impact on quality
management, organizational leadership, and continuous
improvement. Deming's ideas continue to influence industries
worldwide.

B. CONTRIBUTIONS OF JOSEPH JURAN

Juran was one of the first to point out the cost of poor quality. He
illustrated this concept in “Juran trilogy,” a cross-functional management
approach, constituted of three managerial processes: quality planning,
quality control, and quality improvement. He pointed out that without
change, there will be a constant waste.
Juran defines quality as fitness for use in terms of design, conformance,
availability, safety, and field use. His approach is based customer, top-down
management and technical methods.
Juran's contributions can be studied under the following six topics:
a. Internal customer;
b. Cost of quality;
c. Quality trilogy;

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 d. Juran's 10 steps for quality improvement; and
e. The breakthrough concept.
f. Pareto Principle
g. Quality by design
h. Employee Empowerment
i. Continuous Improvement

a. Internal Customer
– Juran realised that the customer was not just the end customer
and that each person along the chain has an internal customer.
– Each person along the chain, from product designer to final user,
is a supplier and a customer.
– In addition, the person will be a process, carrying out some
transformation or activity.
– Therefore Juran maintained that at each stage was a "three role
model". supplier, process, and customer, as shown in Figure.

Fig. Juran’s Three Role Model

b. Cost of Quality
– Juran classified the cost of quality into three classes as:
(i) Failure costs: Scrap, rework, corrective actions, warranty
claims, customer complaints, and loss of customer.
(ii) Appraisal costs: Inspection, compliance auditing and
investigations.
(iii) Prevention costs: Training, preventive auditing, and process
improvement implementation.
– Juran demonstrated the potential for increased profits that would
result if the costs of poor quality could be reduced.

c. Juran's Quality Trilogy

– Juran views quality as fitness-for-use. He also believes that
roughly 80% of quality defects are management controllable. Thus
management has the responsibility to correct this deficiency.
– Juran divides quality management into three parts. They are given
below:
1. Quality planning: Objectives are to determine quality
goals: to form implementation planning: to do resource
planning; to express goals in quality terms; and to create
the quality plan.
2. Quality control: Objectives are to monitor performance;
to compare objectives with achievements; and to act to
reduce the gap.
3. Quality improvement: Objectives are to reduce waste; to
enhance logistics; to improve employee morale; to
improve profitability: and to satisfy customers.
– According to Juran, quality planning is necessary to establish
processes that are capable of meeting quality standards; that
quality control is necessary in order to know when corrective
action is needed; and that quality improvement will help to find
better ways of doing things.

14
The entire concepts of Juran's quality trilogy can be summarized below.
1. Quality Planning
Identify the customers
Determine the customer's needs
• Develop product features
Establish quality goods
• Develop a process
Prove process capability
2. Quality Control
• Choose control subjects (what to control?)
Choose units of measurement
Establish measurement
Establish standards of performance
• Measure actual performance
Interpret the difference (actual vs, standard)
Take action on the difference
3. Quality Improvement
• Prove need for improvement
Identify specific projects for improvement
Organise to guide the projects
Organise for diagnosis- for discovery of causes
Diagnose to find the causes
• Provide remedies
Prove that remedies are effective under the
operating conditions
Provide for control to hold gains

d. Juran's 10 Steps for Quality Improvement

– Juran proposed 10 steps for quality improvement.
1. Build awareness of the need and opportunity for
improvement.
2. Set goals for improvement.
3. Organise to reach the goals.
4. Provide training.
5. Carry out projects to solve problems.
6. Report progress.
7. Give recognition.
8. Communicate results.
9. Keep score.
10. Maintain momentum by making annual improvement part
of the regular systems and processes of the company.

e. The breakthrough concept

– This splits it up into two areas: the journey from symptom to
cause and the journey from cause to remedy

f. Pareto Principle
– Juran popularized the Pareto Principle (80/20 rule), which states
that approximately 80% of problems are caused by 20% of the
variables.

g. Quality by Design
– Juran emphasized the importance of designing quality into
products and processes, rather than relying on inspection and
testing.

h. Employee Empowerment

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 – Juran advocated for employee involvement and empowerment,
encouraging organizations to tap into the knowledge and skills of
their workforce.

i. Continuous Improvement
– Juran stressed the importance of continuous improvement,
encouraging organizations to strive for ongoing quality
improvement.

C. CONTRIBUTIONS OF PHILIP CROSBY

Philip Crosby was an American businessman and author who made
significant contributions to the field of quality management. Here are some
of his key contributions:
1. Zero Defects
– Crosby popularized the concept of "Zero Defects," which aims to
achieve perfect quality by eliminating defects and errors.
2. Four Absolutes of Quality Management
– Crosby's Four Absolutes of Quality Management provide a
framework for achieving quality:
o First absolute: The definition of quality is conformance to
requirements, not goodness
o Second absolute: The system of causing quality is
preventive, not appraisal
o Third absolute: The performance standard must be zero
defects not that’s close enough
o Fourth absolute: The measurement of quality is the price of
non- conformance, not indexes.
3. Cost of Quality
– Crosby emphasized the importance of measuring the cost of
quality, including the costs of prevention, appraisal, and failure.
4. Quality is Free
– Crosby argued that quality is free, as the cost of achieving quality
is offset by the savings from reduced defects and errors.
5. 14 Steps to Quality Improvement
– Crosby's 14 Steps provide a roadmap for quality improvement:
i. Management commitment - Establish and ensure
management commitment.
ii. Quality improvement team - Form quality improvement
teams (QITs) for quality improvement process planning and
administration.
iii. Quality measurement - Establish quality measurements.
iv. Cost of quality evaluation - Evaluate the cost of quality and
explain its use as a management tool to measure waste.
v. Quality awareness - Raise quality awareness among all
employees.
vi. Corrective action - Take actions to correct problems
identified through previous steps.
vii. Zero Defects program - Establish a zero defects committee
and programme.
viii. Supervisor training - Train supervisors and managers on
their role and responsibilities in the quality improvement
process.
ix. Zero Defects day - Hold a zero defects day to reaffirm
management commitment.
x. Goal setting - Encourage individuals and groups to set
improvement goals,
xi. Error cause removal - Obstacle reporting (i.e., encourage
employees to communicate to management any obstacles
they take in attaining their improvement goals).
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 xii. Recognition and rewards - Recognise and appreciate all
participants.
xiii. Quality councils - Establish quality councils to discuss
quality matters on a regular basis.
xiv. Do it all over again - Do it all over again to demonstrate that
the improvement [Link] ends.
6. Crosby's Quality Vaccine
– In the Crosby style, the "vaccine" is explained as medicine for
management to prevent poor quality. The five sections of vaccine
that cover the requirements of total quality management are
presented.
1) Section 1: Integrity - The Foundation of Quality
o Top-Down Commitment: Quality is a top priority, led by
senior management and embraced by all employees.
o Organization-Wide Focus: Quality is integrated into
every aspect of the business, from planning to execution.
o Future Dependence: The company's future success is
directly tied to its quality performance.
o No Compromise: Quality is non-negotiable; it's a
fundamental aspect of the organization's culture.
2) Section 2: Prevention - Proactive Quality Management
o Identify and Address Root Causes: Prevent defects by
understanding and addressing their underlying
causes.
o Error-Proofing: Implement processes that prevent
mistakes from occurring.
o Continuous Improvement: Encourage a culture of
ongoing improvement and learning.
3) Section 3: Participation - Employee Involvement
o Empower Employees: Give employees the authority
and resources to take ownership of quality.
o Training and Development: Provide ongoing training
to ensure employees have the necessary skills.
o Recognition and Rewards: Encourage and recognize
employees' quality contributions.
4) Section 4: Measurement - Data-Driven Quality
o Set Clear Goals and Standards: Establish
measurable quality objectives.
o Track and Analyze Performance: Monitor progress
and identify areas for improvement.
o Fact-Based Decision Making: Use data to drive
quality decisions.
5) Section 5: Certification - Continuous Improvement
o Regular Assessments: Conduct regular evaluations to
ensure quality standards are met.
o Corrective Action: Address any quality issues
promptly and effectively.
o Continuous Learning: Stay up-to-date with industry
best practices and emerging trends.
By administering these five sections of the "quality vaccine,"
organizations can develop a robust Total Quality Management system,
ensuring a culture of excellence and continuous improvement.
7. Author and Educator
– Crosby wrote several influential books, including "Quality is Free"
and "The Art of Getting Quality." He also founded the Crosby
Quality College, which provided training and education on quality
management.

17
Crosby's contributions have had a lasting impact on quality management,
emphasizing the importance of prevention, measurement, and continuous
improvement. His ideas continue to influence industries worldwide.

BARRIERS TO TQM IMPLEMENTATION

– There are lots of obstacles/barriers/impediments for implementation of
TQM in an organization because it depends upon physical, social,
economic, technological or political. The nine important
barriers/roadblocks in implementing TQM, listed by Robert J. Masters,
are given below:
1. Lack of management commitment.
o Management should commit their time and organizational
resources, for implementing TQM successfully in an organization.
o Competition alone should not be considered as the single factor
that drives managers into implementing quality initiatives.
o The purpose must be clearly and continuously communicated to
all members of the organization.
o Management should consistently apply the principles of TQM.
2. Inability to change organizational culture.
o Inadequate cultural dynamism has made TQM implementation
difficult, because most of the top level management of many
organizations are rigid in their ways of doing things.
o Every organization will have its own way of doing things
(organization culture). Organization culture has to be reviewed
and readjustments have to be done according to the prevailing
economic, social and technological realities. The ability to
change in organizational culture will result in improve
efficiency of the organization.
3. Improper planning.
o The absence of a sound planning/strategy has often
contributed to ineffective quality improvement.
o All the functions and departments of the organization should
involve in planning and implementation of the system.
o Two-way communication of ideas should be encouraged at all
levels during the planning and implementation phases.
o Customer satisfaction should be the goal rather than financial
or sales goals.
4. Lack of continuous training and education.
o There is evidence that lack of understanding and proper
training exists at all levels of any organization, and that it is a
large contributor to worker resistance.
o TQM should provide comprehensive training, including
technical expertise, communication skills, small-team
management, problem-solving tools, and customer relations.
o Thus, training and education should become an ongoing
process for everyone in the organization.
5. Incompatible organizational structure and isolated individuals and
departments.
o There is need of co-ordination between departments and
individuals, as it is the longest internal barrier.
o The only way to resolve conflicts are restructuring through
proper segmentation; such restructuring should make the
organization more responsive.
6. Ineffective measurement techniques and lack of access to data and
results.
o Data plays an important role in management decision making.
For effective decision making, the organization should employ
effective data collection and analysis techniques.

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 o To improve various processes of the organization, various key
characteristics of the processes are to be measured. Also
access to data and quick retrieval is necessary for effective
processes.
o Finding the root cause, correcting the problem and eliminating
the root cause are the key to prevent recurrence of the
problem.
7. Paying inadequate attention to internal and external customers.
o For effective TQM implementation, the organization requires to
understand the changing needs and expectations of its
customers.
o Effective feedback mechanisms should be devised to convert
the needs/feedback of both internal and external customers
into tangible product features and actions.
o The right people (who are directly working on the product)
should be given direct access to the customers. This will
provide the person accountability along with the responsibility.
8. Inadequate use of empowerment and team work.
o Team members should be trained enough in problem solving,
monitoring, and resolving conflicts. Norms need to be
established around the issues of leadership, membership, and
processes.
o Individuals should be empowered to make decisions that affect
the efficiency of their process or the satisfaction of their
customer.
9. Failure to continuously improve.
o A lack of continuous improvement of the process, product and
service will even throw the best-in-the-industry out of the
market.
o There is need to explore problems; constantly improve the
system of production and service. There should be continual
rise in productivity and a decrease in costs.

POTENTIAL BENEFITS OF TQM

Tangible benefits Intangible benefits

– Improved product quality – Improved employee participation
– Improved productivity – Improved teamwork
– Reduced quality costs – Improved working relationships
– Increased market and – Improved customer satisfaction
customers – Improved communication
– Increased profitability – Enhancement of job interest
– Reduced employee – Enhanced problem-solving
grievances capacity
– Better company image

QUALITY STATEMENTS
– Quality statements are established by the quality council to provide overall
direction for achieving the total quality culture.
– Three elements of quality statements are:
a. Vision statements
b. Mission statement
c. Quality policy statement

a. Vision Statement:
o The vision statement is a short declaration of what an organization
aspires to be tomorrow.

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 o The vision should be coined in such a way that the leaders and the
employees working in the organization should work towards the
achievements of the vision statement.
o A well-written vision statement, regardless of the type of organization,
has the following characteristics:
 Is easily understood by all stakeholders
 Is briefly stated, yet clear and comprehensive in meaning
 Is challenging, yet attainable etc..
o Example:”to be the leading customer battery company in the world”-
Duracell International

b. Mission statement:
o The Mission statement is usually one paragraph, describes the
function of the organization.
o It provides a clear statement of purpose for employees, customers and
suppliers.
o Key elements of a mission statement:
a. Obligation to stakeholders: The most important stakeholder and
the relative emphasis placed on meeting the needs of various
stakeholders.
b. Scope of the business: The areas in which the company will
compete defined by the customers served, the functions provided,
and the technology employed.
c. Sources of competitive advantage: The skills that the company will
develop/leverage to achieve its vision and a description of how the
company intends to exceed in creating customer value and
competitive advantage
d. View of the future: The anticipated regulatory, competitive and
economic environment in which the company must compete.
o Example:”We exist to create. make, and market useful products and
services to satisfy the needs of the customer throughout the world”-
Texas Instruments.

c. Quality policy statement:

o The quality policy is a guide for everyone in the organization as to how
they provide products and service to the customers.
o It should be written by the CEO with feedback from the work force
and be approved by quality council.
o A quality policy is an important requirement of ISO 9000 quality
systems.
o ISO 9000, the international standard for quality for quality assurance,
requires a quality policy as a declaration of intent to meet the needs of
the customers.
o Common characteristics are
a. Quality is first among equals.
b. Meet the needs of the internal and external customers.
c. Equal or exceed the competition.
d. Continually improve the quality.
e. Include business and production practices.
f. Utilize the entire work force.
o Examples of a simple quality policy statements:
1. "Reliance is committed to meeting customer requirements through
continual improvement of its quality management systems. Reliance
shall sustain organization excellence through visionary leadership and
innovative efforts." -Reliance Industries Limited
2. "Parle products limited will strive to provide consistently nutritious
and quality food products to meet customers' satisfaction by using
quality materials and by adopting appropriate processes. To facilitate
the above we will strive to continuously train our employees and to

20
 provide them an open and participative environment." - Parle Products
Limited
3. Xerox is a quality company. Quality is the basic business principle
for Xerox. Quality means providing our external and internal
customers with innovative products and services that fully satisfy
their requirements. Quality is the job of every employee. - Xerox
Corporation

– The quality statements consist of the core values and concepts given in a
previous section, the vision statement, the mission statement, and the
quality policy statement. The core values and concepts should be condensed
considerably for simplicity and publication.

CUSTOMER FOCUS
– Customer focus is a business approach that prioritizes understanding and
meeting the needs of customers. It involves:
• Emphasis on customer-defined quality
• Emphasis on customer service
• Integration of customer information for new product development
• Partnering with customer for the product development , R&D,
technology forecasting

– A customer-focused approach can lead to:

• Increased customer satisfaction
• Loyalty and retention
• Positive word-of-mouth and referrals
• Competitive advantage

CUSTOMER ORIENTATION
– Customer orientation is a business philosophy that prioritizes
understanding and meeting the needs of customers. It involves:
• Understanding customer needs, preferences, and behaviors
• Aligning products, services, and processes to meet customer needs
• Delivering value to customers through quality, convenience, and
support
• Continuously gathering customer feedback to improve offerings
– Customer orientation leads to:
• Increased customer satisfaction
• Loyalty and retention
• Positive word-of-mouth and referrals
• Competitive advantage
• Revenue growth
– Key aspects of customer orientation include:
• Customer insights: gathering and analyzing customer data
• Customer-centric culture: aligning company culture with customer
needs
• Customer touchpoints: managing all interactions with customers

CUSTOMER SATISFACTION
– The most important asset of any organization is its customers. An
organization’s success depends on how many customers it has, how much
they buy, and how often they buy. Customers that are satisfied will increase
in number, buy more, and buy more frequently. Satisfied customers also pay
their bills promptly, which greatly improves cash flow—the lifeblood of any
organization.
– Customer satisfaction refers to the degree to which a product, service, or
experience meets or exceeds customer expectations. It's a key performance
indicator (KPI) for businesses, as satisfied customers are more likely to:
• Return for repeat business

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 • Recommend to others
• Provide positive reviews
• Be loyal to the brand
– As emphasised so far, in today's buyers market 'the customer is the king'.
Even the definition of quality, 'quality is what customer wants', emphasises
on the customer requirements. In other words, quality is a measure of
customer satisfaction.
– It is obvious that business cannot survive without satisfied customers.
Therefore TQM's purpose is meeting or exceeding customer expectations, so
that the customers are delighted.

Importance of Customer Satisfaction

o It is understood that the customer satisfaction must be the primary
goal of any organization. Therefore it is essential that every employee
in the organisation understands the importance of the customer.
o Some of the main reasons for achieving customer satisfaction by an
organization include:
 Retaining satisfied customers is cheaper than acquiring new
ones. Obtaining the attention of prospective customers, gaining
their interest and converting them costs up to 6 times more
than retaining existing customers.
 Customer satisfaction matters even more than price. Majority
of customers will choose the company that made them satisfied
even if it offers higher prices over a cheap but low-quality
service option.
 Customer satisfaction keeps company's brand ahead of the
competitors.
 Customer satisfaction promotes customer retention. The longer
customers stay satisfied, the more often they will prefer buying
company's goods and services again that its competitors'
products.
 Customer satisfaction promotes customer loyalty.
 Customer satisfaction reduces negative word of mouth. As
research shows, customers are more eager to share negative
experiences than positive reviews and recommendations. So
losing one unsatisfied customer means losing up to 20 more
customers (both existing and prospective) because of their bad
experience spreading through word of mouth. On the other
hand, satisfied customers will become the company's brand
ambassadors.

Ways to Improve/Achieve Customer Satisfaction

– In order to improve customer satisfaction, an organization should:
(i) Identify their target customers;
(ii) Understand the customer perceptions of quality;
(iii) Identify customer needs through various tools/strategies;
(iv) Collect customer feedbacks/complaints using various tools;
(v) Build strong customer service system (before, during- and after-
the-sale of the product);
(vi) Focus on the customer retention strategies.
The above aspects of customer satisfaction are presented, in detail, in the
following sections.

22
 Customer Satisfaction Model

The above figure shows the Teboul's model of customer satisfaction. In the
figure, the customers' needs are represented by the circle, and the square
represents the product or service offered by the company. The intersection portion,
shown with dots, is perceived as the customer satisfaction. So it is understood that
the company should strive for increasing the intersection portion ie., customer
satisfaction.

Who are the Customers?

– The customers are
o the most important people in the business.
o not dependent on the organisation. The organisation depends
on them.
o not an interruption to work but are the purpose of it.
o doing a favour when they seek business and not vice-versa.
o a part of business, not outsiders.
o life blood of the business.
o people who come with their needs and jobs.
o deserve the most courteous and attentive treatment.

Types of Customers
– Customers are two types. They are:
1. Internal customers, and
2. External customers.
1. Internal Customers
o The customers inside the company are called internal customers.
o As there is a flow of work, product and service in the organisation,
each department is dependent on the other.
o In this, each department or each quality management unit is
considered as a customer by the previous department and as a
supplier for the next department.
o Similarly every person in a process is considered as a customer of the
preceding operation, This explains the concept of internal customer.
2. External Customers
o The customers outside the company are called external customers.
o In other words, on external customer is the one:
who uses the product or service;
who purchases the product or service; or
who influences the sale of the product or service.
o Types of external customers
a) Purchaser: Someone who buys the product for himself or
herself or for someone else; e.g., anyone who purchases food
for his or her family.
b) End user/Ultimate customer: Someone who finally benefits
from the product: e.g., the patient who goes to health care
facility for diagnostic testing.

23
 c) Merchants: People who purchase products for resaler,
wholesalers, distributors, travel agents, and brokers.
d) Processors: Organisations and people who use the product
or output as an input for producing their own product; e.g.,
a refinery that receives crude oil and processes it into
different products for a variety of customers.
e) Suppliers: Those who provide input to the process.
f) Potential customers: Those are not currently using the
product but capable of becoming customers.
g) Hidden customers: Those who can exert great influence over
the product design: regulators, critics, opinion leaders,
payers, the media, corporate policy makers, labour unions,
professional associations.

Customer-Supplier Chain
– In order to achieve the total customer orientation, TQM requires the
better customer-supplier relationship. Figure shows the model of
customer-supplier chain.

– Since customer needs keep changing, the process of identifying

customer needs becomes very difficult and more challenging.
– Some of the most common ways to collect customer needs include:
o Customer surveys, focus groups, and market research
programs and studies
o Routine communications, such as sales and service calls and
reports, management reviews, house publications
o Tracking customer complaints, incident reports, letters, and
telephone contacts
o Customer meetings
o User conferences for the end user
o Information on competitor's products
o Personal visits to customer locations
o Personal experience dealing with the customer and the product
o Employees with special knowledge of the customer
o Government or independent laboratory data
o Simulated-use experiments and planning processes that
involve the customer

Kano Model Of Customer Satisfaction (Understanding Customer Needs)

– The Kano model is a useful tool in understanding customer needs.
– The Kano model of customer satisfaction classifies product attributes
based on how they are perceived by customers and their effect on
customer satisfaction.
– The Kano model is useful for:
o identifying customer needs;
o determining functional requirements;
o concept development;
o analysing competitive product.
– Other tools that are useful in conjunction with the Kano model are
Quality Function Deployment (QFD), Value Analysis, and
Prioritisation Matrices.

24
CUSTOMER COMPLAINTS
What is a Customer Complaint?
– A customer complaint in any communication a customer has with a
company in which 'displeasure' is expressed.
– A customer complaint may be defined as an expression of
dissatisfaction with a product/service, either orally or in writing, from
an internal or external customer.
– A customer may have a genuine cause for complaint, although some
complaints may be made as a result of a misunderstanding or an
unreasonable expectation of a product or service.
– How a customer complaint is handled will affect the overall level of
customer satisfaction and may affect long-term customer loyalty.
Thus it is important for enterprises to have clear procedures for
dealing rapidly with any customer complaints.
– From many statistical analysis of customer satisfaction, the following
conclusions were made:
o A totally satisfied customer contributes 2.6 times as much
revenue to a company as a somewhat satisfied customer.
o A totally satisfied customer contributes 17 times as much
revenue as a somewhat dissatisfied customer.
o A totally dissatisfied customer decreases revenue at a rate
equal to 1.8 times of what a totally satisfied customer
contributes to business.
– Thus the number of dissatisfied customers should be reduced as
much as possible. In order to do so, customer feedback must be
continuously solicited and monitored.

Customer Feedback Collection Tools

– A customer compliant may be defined as an expression of dissatisfaction
with a product/service, either orally or in writing, from an internal or
external customer.
– Why customer complaints?
• To discover customer dissatisfaction
• To identify customer needs
• To discover relative priorities of quality etc.
• Customer complaints related to products:
o Product is defective
o Product did not meet the basic requirements etc.
o Service department responding to the problem
o Speed of response to a compliant call etc.
– Common Customer Feedback Collection Tools (Tools used for collecting
Customer complaints)
a. Comment cards
b. Customer questionnaire
c. Post-transaction surveys
d. Report (feedback) cards
e. Focus groups
f. Social media
g. Toll free telephone numbers
h. Customer visits
i. Employee feedback

a. Comment cards
 Comment cards are normally attached, to the warranty card,
issued with the product at the time of sales. It is completed
later and mailed back.
b. Customer questionnaire
 A customer questionnaire, also known as a survey, is a more
effective and also a popular tool for obtaining opinions and
perceptions about organization ads its product and services.
25
 c. Post-transaction surveys
 Post-transaction surveys are conducted immediately after a
customer service interaction and usually provide feedback
directly on that interaction.
 Survey include:
o Survey through mail
o Survey through E-mail
o Survey through telephone
 Particularly online, phone and mail survey are most frequently
used methods to collect customer feedback.
 Types of online surveys:
o E-mail: Survey is emailed to customer, either as a
link to a web based survey, or questions are included
in the body of the email.
o Pop-up:”pop ups” are request for feedback after a
visitor has landed on company website.
o Website: a link on company website to a survey often
used to gather feedback on website or web-based
interaction.
d. Report (feedback) cards:
 Report cards, like comment cards are physical, paper cards or
forms with one or more survey questions designed to collect
customer feedback.
e. Focus groups
 Focus groups are moderated, small group discussions where a
pre-selected group of individual (often customers) provides
insight into their preferences, attitudes and opinions about
products or services.
f. Social media
 Social media such social networks, online communities, blogs,
forums or discussions boards, can be used to collect customer
feedback.
g. Toll free telephone numbers
 Toll free telephone numbers are an effective tool for receiving
customer feedback/compliant.
h. Customer visits
 Visits to customer place of business is an another technique for
gathering information and feedback of the product.
i. Employee feedback
 Employee feedback is also potential source of information.

CUSTOMER RETENTION
– Customer retention is more powerful and effective than customer
satisfaction.
– Customer retention represents the activities that produce the necessary
customer satisfaction that creates customer loyalty, which actually
improves the bottom line.
– Customer retention moves customer satisfaction to the next level by
determining what is truly important to the customers and making sure
that the customer satisfaction system focuses valuable resources on
things that really matter to the customer.
– Customer retention is the connection between customer satisfaction and
the bottom line.

Customer Retention Strategies:

1. Build Strong Relationships: Foster personal connections with customers
through regular communication and personalized interactions.
2. Deliver Exceptional Customer Service: Provide timely, helpful, and
empathetic support to ensure customer satisfaction.

26
 3. Offer Loyalty Programs: Reward repeat customers with exclusive benefits,
discounts, or premium services.
4. Gather and Act on Feedback: Collect customer insights and implement
changes to improve products and services.
5. Stay Top of Mind: Engage customers through regular newsletters,
updates, and relevant content.
6. Foster a Sense of Community: Create online forums or social media
groups for customers to connect and share experiences.
7. Provide Value-Added Services: Offer complementary products, training,
or support to enhance customer experience.
8. Set Clear Expectations: Communicate transparently about products,
services, and processes to avoid misunderstandings.
9. Measure and Monitor Retention: Track key metrics like churn rate,
retention rate, and customer lifetime value.
10. Empower Customer-Facing Teams: Give employees the autonomy and
resources to make customer-centric decisions.

Customer Retention Metrics:

1. Customer Retention Rate: Percentage of customers retained over a period.
2. Churn Rate: Percentage of customers lost over a period.
3. Customer Lifetime Value (CLV): Total value of a customer over their lifetime.
4. Net Promoter Score (NPS): Measure of customer satisfaction and loyalty.
5. Customer Satisfaction (CSAT): Measure of customer happiness with
products or services.

Customer Retention Tools:

1. Customer Relationship Management (CRM) Software: Manage customer
interactions and data.
2. Marketing Automation Platforms: Personalize and automate customer
communications.
3. Customer Feedback and Survey Tools: Collect and analyze customer
insights.
4. Loyalty Program Software: Manage and track loyalty programs.
5. Analytics and Reporting Tools: Monitor customer retention metrics and
trends.

Benefits of Customer Retention:

1. Increased Revenue: Retained customers generate repeat business and
referrals.
2. Improved Brand Loyalty: Satisfied customers become brand advocates.
3. Reduced Acquisition Costs: Lower marketing expenses due to reduced
churn.
4. Enhanced Customer Insights: Long-term relationships provide valuable
feedback.
5. Competitive Advantage: Retention strategies differentiate your business.
6. Positive Word-of-Mouth: Happy customers share experiences, attracting new
customers.
7. Increased Customer Lifetime Value: Retained customers yield higher lifetime
revenue.
8. Better Customer Understanding: Long-term relationships reveal evolving
needs.
9. Improved Products/Services: Customer feedback drives innovation and
improvement.
10. Reduced Support Costs: Familiarity with customers reduces support
queries.
11. Increased Employee Satisfaction: Positive customer relationships boost
morale.
12. Data-Driven Decision Making: Retention metrics inform business strategies.

27
COST OF QUALITY
– Cost of Quality can be termed as the process that measures and determines
where and how organizations’ resources are utilized to maintain quality and
prevent poor outputs. It can be regarded as a method of process
improvement and quality assurance and prevents internal and external
audit failures.
– Cost of Quality (CoQ) refers to the costs associated with quality control,
quality assurance, and quality improvement within an organization. It
includes costs incurred to prevent, detect, and correct defects or errors in
products or services.
– This two-pronged approach to quality can be categorized as “control” (good
quality) vs. “failure of control” (bad quality).
– Cost of quality has four main components between the two buckets of “good”
and “bad” quality.
– Taken together, the four main costs of quality add up to make up the total
cost of quality.
CoQ = Appraisal + Prevention + Internal Failure + External Failure

Four Types of Cost of Quality

1. Appraisal Costs:
o 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.
o 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.
o Examples include Design reviews, Software testing, Set-up
inspection, Performance testing by customer, Calibration of
gauges, Calibration of testing facility, Receiving inspection of
purchased parts
2. Prevention Costs:
o These are the costs of all such activities undertaken to prevent
defects in design, development, purchase, labor and other
aspects of creation of the product/service. Prevention costs
lower the other costs (failure cost and appraisal cost).
o Prevention is achieved by examining previous failure data and
developing action plans for incorporating into the basic system
so that the same failures/ defects do not occur again.
o Examples include new product review, quality planning,
supplier surveys, process reviews, quality improvement teams,
education and training.
3. Internal Failure Costs:
o These are costs which are associated with the defects or non-
conforming situations that are found prior to shipment of the
product to customer. These costs can be reduced to zero if no
defect existed prior to shipment. Expenses incurred to remedy
defects discovered before the delivery of a product or service.
o Examples include scrap, rework, re-inspection, re-testing,
material review, material downgrades.
4. External Failure Costs:
o Expenses incurred to remedy defects discovered by customers
after the customer receives the product or service.
o Examples include processing customer complaints, customer
returns, warranty claims, product recalls, Liabilities and
penalties.

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How to Measure the Cost of Quality (COQ)
– Cost of Quality calculation differs from organization to organization.
Many times, organizations determine the Cost of Quality by
calculating total warranty dollars as a percentage of sales.
– But this method looks externally at the Cost of Quality and not
internally. For better understanding, a more comprehensive overview
of all quality costs is essential.
– The cost of Quality is categorized by:
o Prevention Cost (PC)
o Appraisal cost (AC)
o Internal Failure Cost (IFC)
o External Failure Cost (EFC)
– By applying these four categories to the original Cost of Quality
equation, which states that Cost of Quality is the sum of Cost of Good
Quality and Cost of Poor Quality, the basic equation can be expanded
as shown below:
o The Cost of Good Quality is the total of Prevention Cost and
Appraisal Cost (COGQ = PC + AC)
o The Cost of Poor Quality is the addition of Internal and
External Failure Costs (COPQ = IFC + EFC)
– By combining the above equations, the Cost of Quality can be more
defined, as shown below:
COQ = COGQ+ COPQ = (PC + AC) + (IFC + EFC)

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