Operations Management and TQM

Module Content || Week 14

Lesson: Quality Management

Let’s activate your prior knowledge!

Greetings everyone!

Bubble Map

Task: Think of any word that you think is related to the term; Quality. Then, complete the map below
by writing related words as many you can.

QUALITY

Now, let’s acquire new knowledge!

QUALITY MANAGEMENT

Quality management refers to systematic policies, methods, and procedures used to ensure that goods
and services are produced with appropriate levels of quality to meet the needs of customers.

Understanding Quality
• Quality can be a confusing concept, partly because people view quality in relation to differing

CARD-MRI Development Institute, Inc.

Offline Module
Page 1 of 7
 Operations Management and TQM
Module Content || Week 14
Lesson: Quality Management
criteria based on their individual roles in the value chain, such as:
• perfection,
• delighting or pleasing the customer,
• eliminating waste,
• doing it right the first time, and/or
• consistency.
• Fitness for use is the ability of a good or service to meet customer needs.
• Quality of conformance is the extent to which a process is able to deliver output that conforms to
design specifications.
• Specifications are targets and tolerances determined by designers of goods and services.
• Quality Control means ensuring consistency in processes to achieve conformance.
• Service Quality is consistently meeting or exceeding customer expectations (external focus) and
service delivery system performance criteria (internal focus) during all service encounters.

Principles of Total Quality

• A focus on customers and stakeholders,
• A process focus supported by continuous improvement and learning, and
• Participation and teamwork by everyone in the organization.

W. Edwards Deming
• Focus on bringing about improvements in product and service quality by reducing uncertainty and
variability in goods and services design and associated processes (the beginning of his ideas in 1920s
and 1930s).
• Higher quality leads to higher productivity and lower costs.
• “14 Points” management philosophy.
• Deming Cycle – Plan, Do, Study, and Act.

W. Edwards Deming 14 Points

Point 1: Create a Vision and Demonstrate Commitment

Point 2: Learn the Philosophy

Point 3: Understand Inspection

Point 4: Stop Making Decisions Purely on the Basis of Cost

Point 5: Improve Constantly and Forever

Point 6: Institute Training

Point 7: Institute Leadership

Point 8: Drive Out Fear

Point 9: Optimize the Efforts of Teams

Point 10: Eliminate Exhortations

Point 11: Eliminate Numerical Quotas

CARD-MRI Development Institute, Inc.

Offline Module
Page 2 of 7
 Operations Management and TQM
Module Content || Week 14
Lesson: Quality Management
Point 12: Remove Barriers to Pride in Work

Point 13: Encourage Education and Self-Improvement

Point 14: Take Action

• Plan: study current situation

• Do: implement plan on trial basis
• Study: determine if trial is working correctly
• Act: standardize improvements

ISO 9000:2000

• Quality standards were created in 1987 and revised in 1994 and 2000 to improve product quality,
improve the quality of operation’s processes, and provide confidence to organizations and customers
that quality system requirements are fulfilled.
• Internationally recognized (and sometimes required to do business in certain countries).
• Standardizes key terms in quality and provides a set of basic principles for initiating quality
management systems.

Six Sigma

• Six Sigma is a business improvement approach that seeks to find and eliminate causes of defects
and errors in manufacturing and service processes by focusing on outputs that are critical to
customers and results in a clear financial return for the organization.

CARD-MRI Development Institute, Inc.

Offline Module
Page 3 of 7
 Operations Management and TQM
Module Content || Week 14
Lesson: Quality Management
• Used by companies including Motorola, Allied Signal, Texas Instruments, and General Electric.

• Defects are any mistakes or errors that are passed on to the customer (many people also use the
term nonconformance).
Defects per unit (DPU) = Number of defects discovered

Number of units processed

• The Six Sigma concept characterizes quality performance by defects per million opportunities
(dpmo), computed as DPU  1,000,000 opportunities for error (or, as is often used in services,
errors per million opportunities – epmo).
• A DPU measure might be lost bags per customer. However, customers may have different numbers
of bags; thus the number of opportunities for error is the average number of bags per customer.
• If the average number of bags per customer is 1.6, and the airline recorded 3 lost bags for 8,000
passengers in one month (note: 12,800 opportunities for error in one month), then
• epmo = (3/8,000 DPU)  1,000,000/1.6 = 234.375

Six Sigma’s DMAIC Process

• Define: identify customers and their priorities; identify and define a suitable project; identify CTQs
(critical to quality characteristics).
• Measure: determine how to measure the process and how it is performing; identify key internal
processes that influence CTQs and measure current defects.
• Analyze: determine likely causes of defects and understand why defects are generated by
identifying key variables that cause process variation.
• Improve: identify means to remove causes of defects; confirm key variables; modify the process to
stay within acceptable range.
• Control: determine how to maintain improvements; put tools in place to ensure that key variables
remain within acceptable ranges under the modified process.

CARD-MRI Development Institute, Inc.

Offline Module
Page 4 of 7
 Operations Management and TQM
Module Content || Week 14
Lesson: Quality Management

Click this link : https://www.youtube.com/watch?v=4EDYfSl-fmc

Cost of Quality Measurements

The cost of quality refers to the costs associated with avoiding poor quality or those incurred as a result of
poor quality. Four major categories are:

• Prevention costs are those expended to keep nonconforming goods and services from being made
and reaching the customer.
• Appraisal costs are those expended on ascertaining quality levels through measurement and
analysis of data to detect and correct problems.
• Internal-failure costs are costs incurred as a result of unsatisfactory quality that is found before
delivery of good or service to the customer.
• External-failure costs are incurred after poor-quality goods or services reach the customer.

The “Seven QC Tools”

1. Flowcharts: process mapping to identify the sequence of activities or flow of materials/ information
in a process.
2. Run Charts and Control Charts: a run chart is a line graph with data plotted over time; control
charts include control limits.
3. Checksheets: simple tools for data collection, ensure completeness.

Defective Item Checksheet

CARD-MRI Development Institute, Inc.

Offline Module
Page 5 of 7
 Operations Management and TQM
Module Content || Week 14
Lesson: Quality Management

4. Histograms: graphically represent frequency of values within a specified group.

5. Pareto Diagrams: separate the vital few from the trivial many causes; provide direction for
selecting projects for improvement.
6. Cause-and-Effect Diagrams: represent chain of relationships; often called a fishbone diagram.
7. Scatter Diagrams: graphical component of regression analysis.

Other Quality Improvement Strategies

Kaizen focuses on small, gradual, and frequent improvements over the long term with minimum financial
investment and with participation by everyone in the organization.

Poka-yoke (mistake-proofing) is an approach for mistake-proofing processes using automatic devices or

methods to avoid simple human error.

CARD-MRI Development Institute, Inc.

Offline Module
Page 6 of 7
 Operations Management and TQM
Module Content || Week 14
Lesson: Quality Management

Ready for the drill? Let’s have an application activity!

Think of a specific products or services and apply the Six Sigma’s DMAIC Process. You
may explain each process briefly.

Products/Services:

Six Sigma

Define:____________________________________________________________________________
__________________________________________________________________________

Measure:___________________________________________________________________________
__________________________________________________________________________

Analyze:___________________________________________________________________________
_________________________________________________________________________

Improve:___________________________________________________________________________
_________________________________________________________________________

Control:____________________________________________________________________________
_________________________________________________________________________

Look, you’re almost done, let’s do the assessment!

CARD-MRI Development Institute, Inc.

Offline Module
Page 7 of 7
 Operations Management and TQM
Module Content || Week 14
Lesson: Quality Management

Quality Quality management Appraisal costs

Fitness for use Quality Control Cost of quality
Prevention costs Six Sigma Service Quality

Matching Type: Match the definition below to the answers inside the box.

1. It refers to systematic policies, methods, and procedures used to ensure that goods and
services are produced with appropriate levels of quality to meet the needs of customers.
2. It is the ability of a good or service to meet customer needs.
3. The means ensuring consistency in processes to achieve conformance.
4. It is a business improvement approach that seeks to find and eliminate causes of defects and
errors in manufacturing and service processes by focusing on outputs that are critical to
customers and results in a clear financial return for the organization.
5. Cost that are those expended to keep nonconforming goods and services
from being made and reaching the customer.

What is the importance of learning the quality management in operations? (At least three sentences)

CARD-MRI Development Institute, Inc.

Offline Module
Page 8 of 7