Management
of Quality

Learning Objectives
 Define the term quality.
 Dimensions of quality
 Describe the costs associated with quality.
 Describe the quality awards.
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Learning Objectives
 Discuss the philosophies of quality gurus.
 Describe TQM.
 Give an overview of problem solving.
 Give an overview of process improvement.
 Describe and use various quality tools.
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Quality
 Quality is the ability of a product or service to
consistently meet or exceed customer
expectations.
 The totality of features and characteristics of a
product or service that bears on its ability to
satisfy stated or implied needs
• American Society for Quality
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Defining Quality – 5 Ways
 Conformance to specifications
– Does product/service meet targets and tolerances defined
by designers?
 Fitness for use
– Evaluates performance for intended use
 Value for price paid
– Evaluation of usefulness vs. price paid
 Support services
– Quality of support after sale
 Psychological
– e.g. Ambiance, prestige, friendly staff
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Different Views
 User-based – better performance, more
features
 Manufacturing-based – conformance to
standards, making it right the first time
 Product-based – specific and measurable
attributes of the
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Evolution of Quality Management
 1924 - Statistical process control charts
 1930 - Tables for acceptance sampling
 1940’s - Statistical sampling techniques
 1950’s - Quality assurance/TQC
 1960’s - Zero defects
 1970’s - Quality assurance in services
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The Quality Gurus
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Dimensions of Quality
 Performance - main characteristics of the
product/service
 Aesthetics - appearance, feel, smell, taste
 Special Features - extra characteristics
 Conformance - how well product/service
conforms to customer’s expectations
 Reliability - consistency of performance
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Dimensions of Quality
 Durability - useful life of the product/service
 Perceived Quality - indirect evaluation of
quality (e.g. reputation)
 Serviceability - service after sale
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Examples of Quality Dimensions
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Dimension
1. Performance
2. Aesthetics
3. Special features
(Product)
Automobile
Everything works, fit &
finish
Ride, handling, grade of
materials used
Interior design, soft touch
Gauge/control placement
Cellular phone, CD
player
(Service)
Auto Repair
All work done, at agreed
price
Friendliness, courtesy,
Competency, quickness
Clean work/waiting area
Location, call when ready
Computer diagnostics

Examples of Quality Dimensions
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Dimension
5. Reliability
6. Durability
7. Perceived
quality
8. Serviceability
(Product)
Automobile
Infrequency of breakdowns
Useful life in miles, resistance
to rust & corrosion
Top-rated car
Handling of complaints and/or
requests for information
(Service)
Auto Repair
Work done correctly,
ready when promised
Work holds up over
time
Award-winning service
department
Handling of complaints

Service Quality
 Convenience
 Reliability
 Responsiveness
 Time
 Assurance
 Courtesy
 Tangibles
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Examples of Service Quality
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Dimension Examples
1. Convenience Was the service center conveniently located?
2. Reliability Was the problem fixed?
3. Responsiveness Were customer service personnel willing and able
to answer questions?
4. Time How long did the customer wait?
5. Assurance Did the customer service personnel seem
knowledgeable about the repair?
6. Courtesy Were customer service personnel and the cashier
friendly and courteous?
7. Tangibles Were the facilities clean, personnel neat?

Manufacturing Quality vs. Service
Quality
 Manufacturing quality focuses on tangible
product features
– Conformance, performance, reliability, features
 Service organizations produce intangible
products that must be experienced
– Quality often defined by perceptional factors like courtesy,
friendliness, promptness, waiting time, consistency
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Cost of Quality
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External Failure
Costs
Appraisal Costs
Prevention Costs
Internal Failure
Costs
Costs of
Quality

Costs of Quality
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Costs of Quality (continued)
 Appraisal Costs
– Costs of activities designed to ensure quality or
uncover defects
 Prevention Costs
– All TQ training, TQ planning, customer
assessment, process control, and quality
improvement costs to prevent defects from
occurring
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Costs of Quality
 Failure Costs - costs incurred by defective
parts/products or faulty services.
– Internal Failure Costs
• Costs incurred to fix problems that are detected before the
product/service is delivered to the customer.
– External Failure Costs
• All costs incurred to fix problems that are detected after the
product/service is delivered to the customer.
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Quality Awards
 The Baldrige Award
 The European Quality Award
 The Deming Prize
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Quality Certification
 ISO 9000
– Set of international standards on quality management
and quality assurance, critical to international
business
 ISO 14000
– A set of international standards for assessing a
company’s environmental performance
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Total Quality Management
 A philosophy that involves everyone in an
organization in a continual effort to improve
quality and achieve customer satisfaction.
 TQM Focuses on identifying quality problem
root causes
 Encompasses entire organization, from
supplier to customer
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Evolution of TQM
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The TQM Approach
1.Find out what the customer wants
2.Design a product or service that meets or
exceeds customer wants
3.Design processes that facilitates doing the job
right the first time
4.Keep track of results
5.Extend these concepts to suppliers
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Elements of TQM
 Customer focus
 Continuous improvement
 Benchmarking
 Employee empowerment
 Use of quality tools
 Product design
 Process management
 Managing supplier quality
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Focus on customer
 Identify and meet customer needs
 Stay tuned to changing needs, e.g. fashion
styles
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Continuous Improvement
 Philosophy that seeks to make never-ending
improvements to the process of converting inputs
into outputs.
 Kaizen: Japanese word for continuous
improvement.
 Represents continual improvement of all
processes
 Involves all operations and work centers including
suppliers and customers
– People, Equipment, Materials, Procedures
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Six Sigma
 Statistically
– Having no more than 3.4 defects per million
 Conceptually
– Program designed to reduce defects
– Requires the use of certain tools and techniques
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Six sigma: A business process for improving
quality, reducing costs, and increasing
customer satisfaction.

Six Sigma
 Originally developed by Motorola, Six Sigma
refers to an extremely high measure of
process capability
 A Six Sigma capable process will return no
more than 3.4 defects per million operations
(DPMO)
 Highly structured approach to process
improvement
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Contd…..
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 Six Sigma allows managers to readily describe
process performance using a common metric:
Defects Per Million Opportunities (DPMO)
1,000,000x
unitsofNo.x
unit
pererrorfor
iesopportunit
ofNumber
defectsofNumber










DPMO

Contd…
10/7/2018 31
Example of Defects Per Million
Opportunities (DPMO) calculation.
Suppose we observe 200 letters delivered
incorrectly to the wrong addresses in a
small city during a single day when a
total of 200,000 letters were delivered.
What is the DPMO in this situation?
 
000,1 1,000,000x
200,000x1
200
DPMO
So, for every one
million letters
delivered this
city’s postal
managers can
expect to have
1,000 letters
incorrectly sent
to the wrong
address.
Cost of Quality: What might that DPMO mean in terms
of over-time employment to correct the errors?

Six Sigma Quality: DMAIC Cycle
 Define, Measure, Analyze, Improve, and Control
(DMAIC)
 Developed by General Electric as a means of
focusing effort on quality using a
methodological approach
 Overall focus of the methodology is to
understand and achieve what the customer
wants
 A 6-sigma program seeks to reduce the variation
in the processes that lead to these defects
 DMAIC consists of five steps….
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Six Sigma Quality: DMAIC Cycle
(Continued)
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1. Define (D)
2. Measure (M)
3. Analyze (A)
4. Improve (I)
5. Control (C)
Customers and their priorities
Process and its performance
Causes of defects
Remove causes of defects
Maintain quality

Example to illustrate the process…
 We are the maker of this cereal. Consumer
reports has just published an article that
shows that we frequently have less than 16
ounces of cereal in a box.
 What should we do?
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Step 1 - Define
 What is the critical-to-quality characteristic?
 The CTQ (critical-to-quality) characteristic in
this case is the weight of the cereal in the box.
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2 - Measure
 How would we measure to evaluate the
extent of the problem?
 What are acceptable limits on this measure?
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Contd…
 Let’s assume that the government says that
we must be within ± 5 percent of the weight
advertised on the box.
 Upper Tolerance Limit = 16 + .05(16) = 16.8
ounces
 Lower Tolerance Limit = 16 – .05(16) = 15.2
ounces
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Contd…
 We go out and buy 1,000 boxes of cereal and
find that they weight an average of 15.875
ounces with a standard deviation of .529
ounces.
 What percentage of boxes are outside the
tolerance limits?
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10/7/2018 39
Upper Tolerance
= 16.8
Lower Tolerance
= 15.2
Process
Mean = 15.875
Std. Dev. = .529
What percentage of boxes are defective (i.e. less than 15.2 oz)?
Z = (x – Mean)/Std. Dev. = (15.2 – 15.875)/.529 = -1.276
NORMSDIST(Z) = NORMSDIST(-1.276) = .100978
Approximately, 10 percent of the boxes have less than 15.2
Ounces of cereal in them!

Step 3 - Analyze - How can we improve the
capability of our cereal box filling process?
–Decrease Variation
–Center Process
–Increase Specifications
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10/7/2018 41
Step 4 – Improve – How good is good
enough? Motorola’s “Six Sigma”
– 6s minimum from process center
to nearest spec
1 23 1 02 3
12s
6s
9-41

Motorola’s “Six Sigma”
 Implies 2 ppB “bad” with no process shift.
 With 1.5s shift in either direction from center
(process will move), implies 3.4 ppm “bad”.
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1 23 1 02 3
12s

Step 5 – Control
 Statistical Process Control (SPC)
–Use data from the actual process
–Estimate distributions
–Look at capability - is good quality possible
–Statistically monitor the process over time
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Basic Quality Tools
 Flowcharts
 Check sheets
 Histograms
 Pareto Charts
 Scatter diagrams
 Control charts
 Cause-and-effect diagrams
 Run charts
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10/7/2018 45
No,
Continue…
Material
Received
from
Supplier
Inspect
Material for
Defects
Defects
found?
Return to
Supplier
for Credit
Yes
Can be used to
find quality
problems
Analytical Tools for Six Sigma and
Continuous Improvement: Flow Chart

Analytical Tools for Six Sigma and
Continuous Improvement: Run Chart
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Can be used to identify
when equipment or
processes are not
behaving according to
specifications
0.44
0.46
0.48
0.5
0.52
0.54
0.56
0.58
1 2 3 4 5 6 7 8 9 10 11 12
Time (Hours)
Diameter
9-46

Analytical Tools for Six Sigma and
Continuous Improvement: Pareto Analysis
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Can be used
to find when
80% of the
problems
may be
attributed to
20% of the
causes
Assy.
Instruct.
Frequency
Design Purch. Training
80%

Scatter Diagrams
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A graph that shows how two variables are related to one another
Data can be used in a regression analysis to establish equation for the
relationship

Analytical Tools for Six Sigma and
Continuous Improvement: Checksheet
Billing Errors
Wrong Account
Wrong Amount
A/R Errors
Wrong Account
Wrong Amount
Monday
Can be used to keep track of
defects or used to make sure
people collect data in a
correct manner
9-49

Analytical Tools for Six Sigma and
Continuous Improvement: Histogram
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NumberofLots
Data Ranges
Defects
in lot
0 1 2 3 4
Can be used to identify the frequency of quality
defect occurrence and display quality
performance

Analytical Tools for Six Sigma and Continuous
Improvement: Cause & Effect Diagram
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Effect
ManMachine
MaterialMethod
Environment
Possible causes: The results
or effect
Can be used to systematically track backwards to
find a possible cause of a quality problem (or
effect)

Analytical Tools for Six Sigma and
Continuous Improvement: Control Charts
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Can be used to monitor ongoing production process
quality and quality conformance to stated standards of
quality
970
980
990
1000
1010
1020
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
LCL
UCL

Other Six Sigma Tools
 Failure Mode and Effect Analysis (DMEA) is a
structured approach to identify, estimate,
prioritize, and evaluate risk of possible
failures at each stage in the process
 Design of Experiments (DOE) a statistical test
to determine cause-and-effect relationships
between process variables and output
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Six Sigma Roles and Responsibilities
1. Executive leaders must champion the
process of improvement
2. Corporation-wide training in Six Sigma
concepts and tools
3. Setting stretch objectives for improvement
4. Continuous reinforcement and rewards
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The Shingo System: Fail-Safe Design
 Shingo’s argument:
– SQC methods do not prevent defects
– Defects arise when people make errors
– Defects can be prevented by providing workers with
feedback on errors
 Poka-Yoke includes:
– Checklists
– Special tooling that prevents workers from making errors
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ISO 9000 and ISO 14000
 Series of standards agreed upon by the
International Organization for Standardization
(ISO)
 Adopted in 1987
 More than 160 countries
 A prerequisite for global competition?
 ISO 9000 an international reference for quality,
ISO 14000 is primarily concerned with
environmental management
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Three Forms of ISO Certification
1. First party: A firm audits itself against ISO
9000 standards
2. Second party: A customer audits its supplier
3.Third party: A "qualified" national or
international standards or certifying agency
serves as auditor
10/7/2018 57

Benchmarking
 Selecting best practices to use as a standard
for performance
– Determine what to benchmark
– Form a benchmark team
– Identify benchmarking partners
– Collect and analyze benchmarking information
– Take action to match or exceed the benchmark
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Benchmarking Process
 Identify a critical process that needs improving
 Identify an organization that excels in this
process
 Contact that organization
 Analyze the data
 Improve the critical process
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Employee Empowerment
 Empower all employees
 Getting employees involved in product and process
improvements
– 85% of quality problems are due to process and material
 Techniques
– Build communication networks that include employees
– Develop open, supportive supervisors
– Move responsibility to employees
– Build a high-morale organization
– Create formal team structures
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Obstacles to Implementing TQM
 Lack of:
– Company-wide definition of quality
– Strategic plan for change
– Customer focus
– Real employee empowerment
– Strong motivation
– Time to devote to quality initiatives
– Leadership
10/7/2018 61

Obstacles to Implementing TQM
 Poor inter-organizational communication
 View of quality as a “quick fix”
 Emphasis on short-term financial results
 Internal political and “turf” wars
10/7/2018 62

Basic Steps in Problem Solving
1.Define the problem and establish an
improvement goal
2.Define measures and collect data
3.Analyze the problem
4.Generate potential solutions
5.Choose a solution
6.Implement the solution
7.Monitor the solution to see if it accomplishes
the goal
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The PDS/CA Cycle
10/7/2018 64
Plan
Do
Study
Act

The Process Improvement Cycle
10/7/2018 65
Implement the
Improved process
Select a
process
Study/document
Seek ways to
Improve it
Design an
Improved process
Evaluate
Document

Process Improvement
 Process Improvement: A systematic approach
to improving a process
 Process mapping
 Analyze the process
 Redesign the process
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Process Improvement and Tools
 Process improvement - a systematic approach
to improving a process
– Process mapping
– Analyze the process
– Redesign the process
 Tools
– There are a number of tools that can be used for
problem solving and process improvement
– Tools aid in data collection and interpretation, and
provide the basis for decision making
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Tracking Improvements
10/7/2018 68
UCL
LCL
LCL
LCL
UCL
UCL
Process not centered
and not stable
Process centered
and stable
Additional improvements
made to the process

Methods for Generating Ideas
 Brainstorming
 Quality circles
 Interviewing
 Benchmarking
 5W2H
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Quality Circles
 Group of employees who meet regularly to
solve problems
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10/7/2018 72
Presentation
Implementation
Monitoring
Solution
Problem results
Problem
Analysis
Cause and effect
Data collection
and analysis
Problem
Identification
List alternatives
Consensus
Brainstorming
Training
Group processes
Data collection
Problem analysis
Organization
8-10 members
Same area
Supervisor/moderator