Unit 3: Quality Management

Two examples of internally-oriented definitions of quality are:

Quality is the degree to which a specific product conforms to its design characteristics or specifications. Surgeons must follow the proper procedure as the surgical team closes the incision, thereby ensuring that no sponges or other items are left in the patient. Robots must place the spot welds in the proper location on the body of the automobile in order to maximize its strength.Quality can be measured as the amount of a specific, desired attribute, such as window tint or cheese on a pizza.

Quality with an external orientation focuses on

the customer, and typically includes a discussion of "fitness for use." In other words, quality cannot be effectively measured in the abstract. For example, a resort hotel with the finest food, cleanest rooms, best beaches, and friendliest staff does not meet the needs of the cross-country traveler who will spend only a few hours in the room.

Firms should ask the following questions when they want to understand customers' expectations:

Ask customers what they want.Ask customers specific questions about attributes of the product that are not mentioned by the customer: Probing the customers with specific questions about their needs may lead to unspoken expectations.Ask customers about their operations or how they will use the product: Knowing how the customer functions and how they use the product can lead to a better understanding of what and how new ideas and technologies could help them. The success of Facebook, Twitter, and Apple are based on creating services and goods that customers would use despite the customer not understanding the product and its application prior to product launch.Ask customers how their customers use the products: Knowing the needs of the customers' customers can help the organization better understand the impact of its product on the value-creation chain and, therefore, meet the needs of the final customer in this chain.

Service Quality: The following five dimensions of quality are often used by customers to judge service quality. Understanding these dimensions helps firms to define quality and determine what steps are needed to improve quality.

Reliability—ability to perform the promised service dependably and accurately.Responsiveness—willingness to help customers and provide prompt service.Assurance—knowledge and courtesy of employees and their ability to convey trust and confidence.Empathy—provision of caring, individualized attention to customers.Tangibles—appearance of physical facilities, equipment, personnel, and communication materials, including access and effectiveness of Internet-based information.

The following list describes the factors that determine quality for goods. As can be expected, these focus on specific attributes of the product and do not include human factors, with the exception of serviceability:

Performance—primary operating characteristics of a product.Features—secondary characteristics that supplement the product's basic functioning.Reliability—length of time a product will function before it fails, or the probability it will function for a stated period of time.Conformance—degree to which a product's design and operating characteristics match pre-established standards.Durability—ability of a product to function when subjected to hard and frequent use.Serviceability—speed, courtesy, and competence of repair.Aesthetics—how a product looks, feels, sounds, tastes, or smells.Perceived Quality—image, advertising, or brand name of a product.

While it may not be true in every instance, there is truth in the statement that "quality is free." Consider the following three categories of the costs of quality:

Failure costs—can be internal to the organization or external involving the customer.Appraisal costs—investment in measuring quality and assessing customer satisfaction.Prevention costs—put a stop to the quality problem.

Failure Costs

are incurred whenever any product or component of a product fails to meet requirements. Such costs can be divided into two categories: internal or external.

Internal failure costs

are those associated with defects found before the product reaches the customer. Examples of this include the costs of correcting errors in a customer's bank account, discarding food that was improperly cooked, scrapping defective parts, or reworking products that contain defects. In some cases internal failures can be dangerous to employees, such as when a building collapses while under construction because of defective materials.

External failure costs

External failure costs are incurred after a product has reached the customer. This can include the cost of warranty repair work, handling complaints, or replacing products. The costs of lost goodwill and possible liability if someone is injured or killed because of an external failure can be considerable. The costs of external failure can be especially devastating if customers are lost.

Appraisal Costs

are the costs incurred to measure quality, assess customer satisfaction, and inspect and test products. Activities that are designed to improve quality by better understanding the current performance level of a product are included in appraisal costs. Appraisal costs could include the cost of conducting a customer satisfaction survey, hiring an individual to visit, and inspect each property in a hotel chain, or testing new notebook computers to be sure they will operate as intended. In electronic components, most failures take place during the first 90-180 days of operations or during the wear-out period at the end of the product's life, and the defect rate between these two events is very low.

Prevention Costs

Prevention costs result from activities designed to prevent defects from occurring. Prevention costs can include activities such as employee training, quality control procedures, special efforts when designing products, or administrative systems to prevent defects. One example is the cost of modifying a bank's computer system to request confirmation whenever a teller's entries are unusually large or unusually small. Electronic confirmations are also seen on entry screens for online purchases and other applications. For example, an error message will appear if a digit in a telephone number is missing, and the customer will not be able to advance to the next screen. Conversely, if an extra keystroke is made in an attempt to enter a phone number, the system will not accept it. Critical information, such as e-mail addresses, require the customer to enter the data into these systems twice. The two entries are compared, and if they are the same, the user can advance to the next screen. Double-entry greatly reduces the chance of an incorrect entry. There are many examples of this in manufacturing as well, but customers do not see them. Manufacturers design assembly systems so that a part can only be assembled in one correct way. If it fits or snaps in place, it is correct. Parts are color-coded to ensure they are placed correctly on the right product. Thousands of preventative measures have been implemented to reduce the cost of maintaining quality in manufacturing.

Poka-Yoke: Mistake Proofing

Poka-yoke is an approach adopted by many companies to prevent defects. This term is a rough approximation of Japanese words that mean "mistake proofing." For example, Dell uses color-coding on its connections so that when customers set up their computers at home, they are less likely to plug the printer cable into the monitor connection. This results in a better experience for the customer and higher customer satisfaction.At one time there was a philosophy that companies should trade off the costs of prevention for the costs of failure. This resulted in the belief that companies should be willing to accept an optimum level of defects. Many companies now find that a reputation for high quality has benefits that far outweigh any additional prevention and appraisal costs associated with achieving high quality.

Design for manufacture and assembly (DFMA)

(DFMA) emphasizes that products should be designed so they are simple and inexpensive to produce. This concept has also been applied to service operations under the term design for operations (DFO). Both concepts underscore that the design of the product and the process by which the product is made are key factors when determining quality. Quality inspection does not improve the underlying quality of the product or the process. Building quality into a product, rather than trying to inspect it into the product, is described in the following: Product Design, Process Design, Work Execution, Inspection.

Product Design

This is how the product, either a good or a service, functions. It determines the features, functions, aesthetics, and performance of a product, which are essential parts of the product's quality. For example, the capabilities of an electronic device such as a notebook computer are determined by product design. The product design determines the capability of the display, the size and performance of the processor, and Wi-Fi accessibility. Product design also determines the reliability, durability, serviceability, and other key quality elements. The ability of Travelocity to provide robust and reliable service depends upon how it designs its servers, the user interface, and access to travel data. In large measure, the cost to produce the good or to provide the service is determined when the product is designed. Product design is one of the most important decisions a firm will make.

Process Design

This is how the product, either a good or a service, is produced. Process design includes the methods that the firm uses to transform the product ideas created in the product design into the good or service that the customer is purchasing. In manufacturing, process design includes selecting the materials, facilities, and equipment used to make the product as well as determining the labor skills needed to execute the process plan. In restaurants, decisions regarding the quality of the purchased food are important. In health care, facilities and equipment selection are also a very important decision. In banking, materials are really not an issue and facilities and equipment are limited to office space, ATMs, and basic office equipment. By their nature, process design for service operations heavily depends upon people skills. In many service operations, labor costs represent 70% or more of the cost of providing a service.

Work Execution

This is the performance of the plan created in the product and process design. If the product design and the process design represent the football game plan, then playing the game is the work execution. The success of this depends on how well the plan is communicated to the workforce, whether the workforce has been selected so it has the basic skills to execute the plan, and how well the workforce has been trained to do the work. When these functions are performed well, the product and process designs should be well executed and a high-quality product should be produced.


This is an assessment of the quality of the good or service. If the first three steps are properly performed, inspection is, theoretically, unnecessary. Inspection provides feedback about how well the product is designed and built. Its primary benefit is to identify quality problems and connect them to their sources. Defects may be caused by a poor product design (such as a defective software interface), a poor process design (such as equipment that is unsuitable for the product), or poor work execution (such as an untrained worker or poorly executed maintenance plan). Inspection does not increase the quality of the products being produced, but it may prevent defective products from reaching the customer. The primary purpose of inspection is gaining information that helps the firm improve quality by changing design and work execution.

W. Edwards Deming

is illustrated by his well-known 14 points for the transformation of management. Today, there is still confusion and disagreement about what is meant by some of Deming's points; however, Deming's basic premise notes that the system, not employees, causes defects. Management is responsible for changing the system, and must accept that responsibility instead of blaming employees when defects occur. Because of his background, Deming also stressed the use of statistical process control, and encouraged training all employees in its use.

Dr. W. Edwards Deming's 14 points for the transformation of management

1. Create constancy of purpose toward improvement of product and service. Aim to become competitive and to stay in business, and provide jobs.2. Adopt the new philosophy. We are in a new economic age. Awaken to the challenge. Learn the responsibilities, and take on leadership for change.3. Cease dependence on inspection to achieve quality. Eliminate the need for inspection. Build quality into the product in the first place.4. End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single supplier on any one item, on a long-term relationship of loyalty and trust.5. Improve constantly and forever the system of production and service, to improve quality and productivity and thus constantly decrease cost.6. Institute training on the job.7. Institute leadership.8. Drive out fear, so everyone may work effectively for the company.9. Break down barriers between departments.10. Eliminate slogans, exhortations, and targets for the workforce asking for zero defects and new levels of productivity.11a. Eliminate work standards (quotas) on the factory floor. Substitute leadership.11b. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership.12a. Remove barriers robbing the hourly worker of his right to pride of workmanship. Change the responsibility of supervisors from sheer numbers to quality.12b. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. Abolish the annual or merit rating and management by objective.13. Institute a vigorous program of education and self-improvement.14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody's job.

Joseph M. Juran

Like Deming, Juran emphasized management's responsibility for ensuring quality. Juran, however, focused on the customer by defining quality as "fitness for use."He also emphasized the need for continuous improvement and stressed that quality must be built on three elements: quality planning, quality control, and quality improvement.

Quality Planning (Joseph M. Juran):

The development of products and services that appeal to the ever changing customer wants and needs.

Quality Control (Joseph M. Juran):

Inspection and control functions revolve around understanding the customer's perception of fitness of use.

Quality Improvement (Joseph M. Juran):

The elimination of waste and errors is something that must be led by leadership of a firm.

Philip Crosby

Philip Crosby became internationally recognized with the publication of his 1979 book, Quality Is Free. In that book, and in later publications, he argues that failure costs are much greater than most companies had thought. By reducing failure costs, companies can save money, hence the title of Crosby's book. Crosby is most often recognized for emphasizing the importance of considering all costs of quality. He is also responsible for promoting the idea that all errors must be eliminated, indicated by his slogan "do it right the first time," and the concept of zero defects as a measurable object.

Genichi Taguchi

Japanese companies were among the world's first to place a strong emphasis on quality, so it is not surprising that several people from Japan have made significant contributions to the field of quality. Genichi Taguchi's ideas are particularly important. Taguchi first gained prominence shortly after World War II, working with research facilities to develop Japan's telephone system. After noticing that considerable time and effort were expended in experimentation and testing, Taguchi developed procedures for designing experiments so that more information could be obtained with fewer experiments. Taguchi has also contributed an entire philosophy about how products should be designed, and that philosophy now forms an important part of quality management.Taguchi argues that quality must be designed into a product. His point is that quality cannot be achieved through inspections after the good is made or the service is provided. Thus, an important part of Taguchi's philosophy is based on the concept of robust design— designs that guarantee high quality regardless of variations (such as employee errors) that may occur during the processes that produce the product. For example, McDonald's has designed a ketchup dispenser that puts precisely the right amount of ketchup on each burger, eliminating variations in product quality that may result from employees dispensing too much or too little.

Kaoru Ishikawa

Another individual from Japan that made significant contributions to the field of quality is Kaoru Ishikawa. He developed methodologies to help identify cause-and-effect characteristics and to develop teamwork for quality leadership. The Ishikawa diagram, also known as the fishbone diagram, helps to identify factors that may contribute to dependent outcomes. The main factors are categorized as People, Machines, Methods, Measurements, Materials, and Environment and within each category causes are considered that may have intentional or unintentional consequences that influence quality performance.Additionally, Ishikawa was instrumental in developing quality circles. This term refers to a group of colleagues or co-workers who meet to discuss, analyze, and eliminate work-related quality issues. Involving workers at all levels within an organization is consistent with Deming's 14th point. Worker participation develops teamwork and the group objectives to eliminate quality problems develops leadership. Quality circles meet regularly and their objectives are largely self-determined. They receive formal training in identifying problems, developing problem statements, measuring process variables, analyzing measurements, making improvements, and developing process controls to keep new changes stable over time. However, quality circles must have authorization from a champion in senior management who oversees their progress and approves their proposed changes.

Used the phrase "Do it right the first time.


Focus was on the customer's perception of quality


Used Robust Design


Had 14-point quality plan


Developed the Fishbone Diagram


Total quality management (TQM)

is an approach to quality management that originated in Japan and was adopted successfully by many companies throughout the world. TQM is an organization-wide philosophy that embodies the following components:Focus on the customerQuality function deploymentResponsibility for qualityTeam problem-solvingEmployee trainingFact-based managementEach of these components is discussed next, in detail. It should be stressed, however, that they apply to all aspects of a company's operation, from design of products and processes to distribution and after-the-sale service. Further, all parts of the company must be involved, including those which do not usually interact with external customers, but instead serve other parts of the company as a continuous process philosophy.

The voice of the customer

describes what customers want and what they like and do not like. Listening to the voice of the customer is essential for success. To do this, many companies get to know their customers personally. For example, some companies hold focus groups, in which customers are contacted to discuss their wants, needs, and expectations. They may also respond to proposals to change the good or service produced. Companies ask questions about how the customer uses their product. If a company understands its customers, it can better meet or exceed their needs and expectations. Listening to the voice of the customer is more than providing customers with what they request. Customers are likely to verbalize those things most familiar to them. If a new technology is available and customers are not aware of it, they will not know how to describe their need. If the company understands the customer and the customer's wants, it may have ideas and technologies that could be applied to meet a future need. For example, which customers told Apple that they wanted a small portable device that could download and play music on the run (the iPod)? Apple succeeded by anticipating what technology customers may want and how they could use these products.

Quality function deployment (QFD)

is one method that can be used to make that transformation by relating customer needs and expectations to specific design characteristics through a series of grids or matrices.

The House of Quality

a matrix that helps a product design team translate customer requirements into operating and engineering goals.

The voice of the customer is deployed throughout the entire organization. (Figure)

Further, all parts of the organization work together to achieve that deployment.

Standardization and Documentation

Standardization and documentation form the basis of continuous improvement. Standardization involves developing a preset procedure for performing an activity or job. Documentation is the act of putting that procedure into writing. Standardization and documentation are necessary for continuous improvement so that the organization knows exactly how something is being completed now (the "as is" condition). After the process has been improved, the firm should document the new procedure (the "should be" condition) so that it becomes the new standard procedure. Documentation and standardization are especially important for companies that want to become registered under ISO 9000:2000, which is a widely-used international quality standard. It should be noted, however, that the purposes of documentation and standardization are not to prevent change in the process but to ensure that in a given process, each person performs a task the same way every time. As better ways are found, the documentation and standardization are changed to promote continuous improvement. For example, service organizations rely extensively on documentation and standardization to ensure consistent service. Fast food restaurants have established procedures for everything—from cooking hamburgers to taking orders. Airline pilots follow a prescribed checklist each time they land or take off. This procedure ensures a high level of customer safety and ensures consistent service.


The plan-do-check-act cycle is also referred to as the Deming Wheel or the Shewhart cycle. The shape of a wheel embodies the philosophy of continuous improvement; the cycle is repeated over and over without end. Each part of the cycle is explained as follows: Plan, Do, Check, & Act.


Before making any changes, make sure everything is documented and standardized. Use appropriate tools to identify problems or opportunities for improvement. Develop a plan to make changes.


Implement the plan and document any changes made.


Analyze the revised process to determine if goals have been achieved.


If the goals have been achieved, then standardize and document the changes. Communicate the results to others that could benefit from similar changes. If the goals have not been achieved, determine why not, and proceed accordingly.

Identify Areas for Improvement

Teams of employees from different departments work together as cross-functional teams to understand the current conditions and prepare a method to improve the performance of an organizational activity. If a firm needs to improve its product development process so it is faster, lower-cost, and higher-quality, it is important to have various experts examine and improve the process. These experts should understand the roles of marketing, production, and information technology. They should also understand the accounting and financial aspects of this complicated process.

Methods Analysis and Problem-Solving Tools

Continuous improvement efforts require a set of methods or problem-solving tools. The type and application of these tools depends upon the outcome measures that need to be enhanced. For example, to improve the quality of an assembly, root-cause analysis and poka-yoke may be the tools. It allows the team to understand the problem and create a solution that should be error proof. To reduce the number of processing errors and the cost of evaluating life insurance applications, it would be useful to determine the process flow, identify essential tasks, and note tasks that can be reduced in length or eliminated completely. It would also be useful to identify which quality problems are the most common and to overlay those on the process flow to see how cost and quality interact.

Document Improved Procedures

The process for continuous improvement ends in the same place it begins with a documented process, so that future review for the purpose of process improvement commences again here. Documents are also valuable for training new employees. Finally, documentation is essential to achieve quality certification.

cross-functional team

a team composed of employees from different functional areas of the organization

Employee Empowerment

giving employees responsibility and authority to make decisions regarding all aspects of product development or customer service

Techniques for developing an empowered workforce are:

developing supportive supervision and complementary workforce development programs, such as team projects, quality circles, or team performance evaluationsbuilding transparency through open communication and decision-making that involves employees at all levels of the organizationenlarging jobs by moving responsibility and authority from managers and staff to the lowest level possible in the organization


is a process by which a company compares its performance to the performance of other companies.

What is the purpose of benchmarking?

To set a performance standard for a business activity.

Statistical Process Control (SPC)

is the use of statistical methods to determine when a process that produces a good or service is getting close to producing an unacceptable level of defects. In a broader sense, SPC relates to the set of tips, techniques, and tools used to monitor variations in a process, determine the stability of a process, and reduce or eliminate variations that result in non-conforming products that are either defective or do not meet customer's specifications.

There are seven basic tools of SPC.

1) Cause-and-effect diagrams or fishbone diagrams or Ishikawa diagrams2) Check sheets3) Control charts4) Histograms5) Pareto charts6) Scatter diagrams7) Flow charts or run charts

Fishbone charts...

also known as Cause and Effect or Ishikawa Diagrams show the impact of various inputs into the result of a process. They help organizations isolate the root causes of problems such as bottlenecks in their processes.

histogram (or box chart)

will demonstrate the frequency of data observations within a preset range of values. The data is continuously collected and each data value will match one of the preset range of values. As the data collects within each range, some ranges will accumulate more data points with respect to other data ranges. Therefore, a histogram will demonstrate which range of values contains the most observations--regardless of the ACTUAL measurement. Frequency and probability can be determined from a histogram, but there is little other quantitative value.

Scatter Plot

displays data as a relationship between two variables. Usually, this is only used when one variable can be influenced in different quantities, degrees, or proportions, while the other variable can be monitored for effects resulting from the changes. The controlled variable is called the independent variable. As it is adjusted incrementally, the measured variable is the dependent variable. In this way, a scatter plot can assist in visualizing the relationship and correlation between two variables.

Pareto Chart

represents data values in a descending order to visualize the most frequent occurrences. It is similar to a histogram because of the preset range of values, which might be qualitative or quantitative. But the difference from a histogram is that Pareto charts always reflect the data in descending order to emphasize the most common occurrences among the data points.

Control Charts

are graphical depictions of process output where the raw data is plotted in real-time within upper (UCL) and lower control limits (LCL). As each data point is collected, it is recorded on the control chart in relation to the process mean and the UCL and LCL. In this way, the process operator can instantly determine whether the process is stable or trending toward instability and take corrective action BEFORE variations result in non-conforming products.

Run Charts

are another form of control chart for processes that might have common features, a common scale, or some form of central tendency. One such example might be the variance around the optimum fill level of milk cartons.

Six sigma

A business process for improving quality, reducing costs, and increasing customer satisfaction


The Six Sigma expert uses a project charter to define a problem or an improvement opportunity. The charter includes the scope of the project, problem statement, time frame, boundaries, and team members. The define stage can also involve the voice of the customer or VOC. This includes feedback regarding characteristics that are critical for the satisfaction of the customer. Another tool in the define stage is value stream mapping that provides an overview of an entire process from beginning to end, with regard to the VOC and identifies what is required to meet the customer's needs. A SIPOC chart defines the supplier-input-process-output-customer relationships in a process.


Measuring current, or as is process performance is accomplished with a process map of the activities performed at each step of the process. Each step is assessed to determine the ability to meet customer specification in a capability analysis.


Charts and diagrams are used to visualize the measurements and the frequency of problems or defects, including scatterplots, Pareto charts, histograms, and run charts. The main objective of the analysis phase is to determine the root causes of variation in the process that result in failures or defects. Tools used in the analysis phase are cause and effect analysis, such as the fishbone diagrams described above; failure modes and effects analysis (or FMEA) for identifying possible causes of defects, errors, breakdowns, or failures; and statistical analysis, such as multiple regression, and hypothesis testing to detect different types of variation within a process. The analysis phase can also include measurement system analysis to determine the accuracy and repeatability of the measurement methods and devices used to control variation in the process.


The current process is changed by addressing the root causes identified in the analysis stage to improve process performance. This can be accomplished offline through simulations, or in realtime through the design of experiments (DOE). DOE solves problems within complex systems or processes that have many different factors that are not easily isolated from other factors. (There is no independent-dependent variable relationship). Improvements are often made through kaizen teams that can make rapid changes using ideas from the people who are directly involved in the process.


Maintaining and standardizing the improved performance is the final step of the DMAIC methodology. This can be accomplished through a control plan to document the requirements to reduce process variation. The control plan may include SPC to maintain process stability. Also mistake proofing a product or a tool can make errors immediately detectable. Another tool for control is the 5S methodology (sort, straighten, shine, standardize, and sustain). The 5S methodology creates visual control of the workplace.

SIPOC chart

Defines the supplier-input-process-output-customer relationships in a process.


Failure Mode and Effects Analysis: process used to identify potential failures before they result with the intent to minimize or eliminate them

For the statistician, what is the acceptable standard deviation for errors under six sigma?

Six Sigma implies that the process is 99.99966% error free. (3.4 defects per one million units)

What term is used in six sigma to describe changes made as errors occur?

Kaizen. Kaizen teams can make rapid changes using ideas from the people who are directly involved in the process.

What is the 5S process for improved control when implementing six sigma?

Sort, straighten, shine, standardize, sustain.

The six sigma expert uses a project charter to define a problem or improvement opportunity. What is included in a project charter?

The scope of the project, problem statement, time frame, boundaries, and team members.