Thesis process

maps (10 mins)

 Process Mapping Symbols

Figure 4.4
Managing
Quality
 Chapter Objectives
Be able to:
Discuss the various definitions and dimensions of quality and
why quality is important to operations and supply chains.
Describe the different costs of quality, including internal and
external failure, appraisal, and prevention costs.
Know what TQM is, along with its seven core principles.
Calculate process capability ratios and indices and set up control
charts for monitoring continuous variables and attributes.
Describe the key issues associated with acceptance sampling, as
well as the use of OC curves.
Distinguish between Taguchi’s quality loss function and the
traditional view of quality.
 Definitions of Quality
• American Society of Quality (ASQ):
• The characteristics of a product or service that bear on its
ability to satisfy stated or implied needs
• Fitness for use (value perspective)
• Free from defects (conformance perspective)

• Question: How would you evaluate the quality of the

following?
• Software package ……………
• Hand-held vacuum cleaner…………………
• No-frills air flight……………….
Strategic Quality
Quality as a Competitive Advantage
Dimensions of Quality
• Performance
• Features Q: Which dimensions do
• Reliability you think are directly
• Durability affected by Operations
and Supply Chain activities?
• Conformance
• Aesthetics
• Serviceability
• Perceived Quality

REMEMBER: INTERLINKAGES BETWEEN FUNCTIONS!

Concurrent task:

As we run through the PRODUCT quality dimensions

•SHOUT out examples that

come to your mind
 What is Quality?
Product Quality Dimensions

Performance Efficiency with which a

product achieves its
Features intended purpose
Reliability
Conformance

1-9
 What is Quality
Product Quality Dimensions

Performance  Attributes that

supplement the product’s
Features
basic performance – bells
Reliability and whistles

Conformance

1 - 10
 What is Quality
Product Quality Dimensions

Performance Performs consistently

over the product’s useful life.
Features
Reliability
Conformance

1 - 11
 What is Quality
Product Quality Dimensions

Performance Adherence to quantifiable

specifications within a
Features small tolerance – the most
traditional definition of
Reliability
quality
Conformance

1 - 12
 What is Quality
Product Quality Dimensions

 Tolerate stress or  Durability

trauma without failing  Serviceability
 Aesthetics
 Perceived Quality

1 - 13
 What is Quality
Product Quality Dimensions

 A product is serviceable if Durability

it can be repaired easily
and cheaply
Serviceability
Aesthetics
 Perceived Quality

1 - 14
 What is Quality
Product Quality Dimensions

 Subjective  Durability
characteristics such as
 Serviceability
taste, feel, sound, look.
 Aesthetics
 Perceived Quality

1 - 15
 What is Quality
Product Quality Dimensions

 Quality as the customer  Durability

perceives it - image,
 Serviceability
recognition, word of mouth.
 Aesthetics
 Perceived Quality

1 - 16
 What is Quality
Service Quality Dimensions
Parasuraman, Zeithamel, and Berry provide service quality
dimensions (measures):
 Tangibles
 Service Reliability
 Responsiveness
 Assurance
 Empathy

Services have more diverse quality attributes than products

because of wide variation created by high customer involvement.

1 - 17
 What is Quality
Service Quality Dimensions

 Tangibles  Physical appearance of

the facility, equipment, and
 Service Reliability personnel
 Responsiveness
 Assurance
 Empathy

1 - 18
 What is Quality
Service Quality Dimensions

 Tangibles  The ability of the service

provider to perform the
 Service Reliability promised service
 Responsiveness
 Assurance
 Empathy

1 - 19
What is Quality
Service Quality Dimensions

 Tangibles  The willingness of the

provider to be helpful and
 Service Reliability
prompt in providing service
 Responsiveness
 Assurance
 Empathy

1 - 20
What is Quality
Service Quality Dimensions

Tangibles  The knowledge and

courtesy of the employees
 Service Reliability and their ability to inspire
 Responsiveness trust and confidence

 Assurance
 Empathy

1 - 21
 What is Quality
Service Quality Dimensions

Tangibles  Caring individualized

attention from the service
 Service Reliability company
 Responsiveness
 Assurance
 Empathy

In service “If you are in it for the money, you probably won’t
survive.” If employees are constantly focused on efficiency,
they will not give the customers the feeling that they care. There
is no empathy, so there are no return customers.

1 - 22
 What is Quality?

Why does it matter that different definitions of quality exist?

 Different functional areas have different definitions of quality.

 However, we want everyone in all functional areas to execute from

the same playbook with regard to the meaning of quality for the firm.

 Cross-functional teams must share a common definition of quality

so these diverse teams will be working for a common goal. All
functional areas must focus on what they need to do to meet the
customer’s definition of quality.

 However, cross-functional teams have poor communication because

of their different vocabularies, priorities, and cognitive styles.

 As organizational processes become more cross-functional, many of

these communication issues will resolve themselves. 1 - 23
What is Quality?
Differing Functional Perspectives on Quality
• The Sand Cone Model for Priorities

Cost (Efficiency)
Cycle Time (Speed)
Reliability (Dependability)
Quality

Over time, capabilities are improved in a sequential order. 1 - 24

 What is Quality?
Differing Functional Perspectives on Quality
1. Functional perspectives include:

1. Supply Chain
2. Operations
3. Strategic Management
4. Marketing
5. Financial
6. Human resource

 Flipped learning Group Task – research and identify the

(different) perspectives of quality based on the above functions.
 Working time 20 mins – 2 mins, per group to present findings

1 - 25
Theoretical
findings for the
task…..
 What is Quality?
Differing Functional Perspectives on Quality

(1) Supply Chain Management (SCM) Perspective

• Supply chain management (SCM) grew out of the concept of the value chain.

• The value chain includes inbound logistics, core processes (operations and
marketing), and outbound logistics – processes which directly add value to the
product or service.

• Functions such as HRM, IS, and Purchasing support the core processes in the value
chain – non-value added processes which provide a context for the value chain
processes.

• Upstream activities include all of those activities involving interaction with

suppliers.

• Downstream activities include shipping and logistics, customer support, and

focusing on delivery reliability.

1 - 27
 What is Quality?
Differing Functional Perspectives on Quality

(1) Supply Chain Management (SCM) Perspective

• Supplier development activities include evaluating, training, and implementing

systems with suppliers, such as electronic data interchange (EDI) to link customer
purchasing systems to supplier enterprise resource planning systems (ERP).

• Supplier qualification involves evaluating supplier performance with regard to

conformance rates, cost levels, delivery reliability, etc. using supplier filters, such
as ISO/TS 16949 (an automotive standard), ISO 9000:2000, and QS9000.

• Value stream mapping flowcharts processes to determine where customer value is

created as well as identifying non-value-added process steps. Value stream
mapping also involves analyzing processes from a systems perspective such that
upstream and downstream effects of core process changes can be evaluated.

1 - 28
 What is Quality?
Differing Functional Perspectives on Quality

(2) Operations Management (OM) Perspective

 The OM view of quality is rooted in the engineering approach and was
the first functional field of management to adopt quality as its own.

 OM is concerned about product and process design. However, rather

than focusing on only the technical aspects of these activities, OM
concentrates on the management and continuous improvement of
conversion processes.

 OM uses the systems view which is the basis for quality management.
The systems view maintains that product quality is the result of the
interactions of several variables (manpower, materials, methods,
machinery, feedback, environment, time, and technology) which
comprise a system, and these variables and their interactions are the cause
of quality problems.

1 - 29
 What is Quality?
Differing Functional Perspectives on Quality

(2) Operations Management (OM) Perspective

Planning
Process Customer
Organizing
Control Feedback
Controlling

Inputs Conversion Process Outputs Customer

 OM has an operations-marketing interface which focuses

priorities on the customer in the product and process design and
operations decisions.
 Ferdows and Demeyer link the strategic view of OM to quality management
with their sand-cone model: quality is the basis on which lasting improvement
in other competitive dimensions (reliability - dependability, cycle time -
speed of delivery of concept to market, and cost - efficiency) are
accomplished.
1 - 30
 What is Quality?
Differing Functional Perspectives on Quality

(3) Strategic Management Perspective

 For Quality Management to be pervasive in a firm it needs to be included in all of
the firm’s business processes including Strategic Planning.
 Strategy is the planning process used by an organization to achieve a set of long-
term goals. This planned course of action must be cohesive and coherent in terms
of goals, policies, plans, and sequencing to achieve quality improvement.
 Company strategies are based on a mission (why the organization exists) and core
values (guiding operating principals that simplify decision making).
 Mission and core values influence organizational culture, a major determinant (and
sometimes roadblock) to the successful implementation of quality improvements.

1 - 31
 What is Quality?
Differing Functional Perspectives on Quality

(3)
Strategic Management Perspective

The ultimate goal of strategic quality planning is to aid an organization

to achieve sustainable competitive advantage.

Alignment refers to consistency between different operational sub-plans

and the overall strategic plan.

Madu and Kuei propose a strategy process based on plan-do-check-act:

plan – strategy formulation

do – implement strategy in a pilot
check – evaluate pilot implementation and make adjustments
act – full scale strategy implementation
1 - 32
 What is Quality?
Differing Functional Perspectives on Quality

(4) Financial Perspective

 “Will quality management pay us financial benefits?”
The answer is an unqualified “maybe.”
 Deming made the first theoretical link between quality improvement and financial results:
Quality Improvement leads to reduction of defects, improved organizational
performance, and increased employment.
 Finance is concerned with the relationship between the risks of investments and their
potential return on investment to maximize return for a given level of risk.
 Finance professionals communicate using an accounting language: the language of financial
management is money.
 Quality professionals must translate the quality concerns into the costs of (poor) quality in
terms of lost sales, inspection, scrap, and rework.
 The pursuit of quality does not safeguard a company against bad management because of
intervening variables (e.g., products that don’t meet customer needs).

1 - 33
 What is Quality?
Differing Functional Perspectives on Quality
(4) Financial Perspective - The Deming Value Chain

Improve Quality

Decrease Costs

Improve Productivity

Capture Market

Stay in Business

Provide More jobs

1 - 34
What is Quality?
Differing Functional Perspectives on Quality
• (4) Finance professionals believe the law of diminishing
marginal returns applies to quality improvement.

Total Quality Costs =

Sum of Losses +
Cost Costs of Improving Quality

Losses Due to Costs of Improving

Poor Quality Quality

Minimum Minimum Sum of

Cost Losses + Costs
Quality
Optimum Quality Level
The financial perspective on quality relies on quantified measurable,
results oriented thinking. 1 - 35
 What is Quality?
Differing Functional Perspectives on Quality

 (5) Human Resources (HRM) Perspective

 It is impossible to implement quality without the commitment and action of

employees (want hogs – not chickens).

 Employee empowerment moves decision making to the lowest level possible in the
organization.

 Organizational design is concerned with the design of reward systems, pay

systems, organizational structure, compensation, training programs, and employee
grievance and arbitration.

 HRM advocates the employee to management and the company’s needs to the
employee.

 Quality management flourishes where the employees’ and the company’s needs are
aligned – what’s good for the company is good for the employees.

1 - 36
 What is Quality?
Differing Functional Perspectives on Quality

(5) HRM Perspective

• HRM Functions
• Job analysis involves collecting detailed information about each job. This
information includes tasks, skills, abilities, and knowledge requirements for
each job. This information is used to define a job description which is used to
set pay levels. The bureaucratic delay in accomplishing job analysis to modify
job descriptions can limit the ability of the organization to achieve the flexibility
needed for quality management.

• Selection in recruitment and hiring decisions involves finding employees who

have the technical and behavioral preparation to perform the tasks for a job,
and who are fast learners during quality improvements. The selection process is
critical because people, politics, and culture constrain and enable
organizational change.

1 - 37
What is Quality?
Differing Functional Perspectives on Quality
(5) HRM Perspective
• HRM Functions
• Effective training provides for standardizing methods for solving
unstructured problems in quality management. Top managers and
low-ranking employees should use similar processes for solving
problems. This is called vertical deployment of quality management.
Different departments should use similar processes for solving
problems to achieve horizontal deployment of quality management.

• Performance appraisals and evaluations are key methods for

motivating employees. Face-to-face reporting sessions and 360-
degree evaluations (an employee’s peers, supervisors, and
subordinates evaluate the employee) are used.

1 - 38
What is Quality?
Differing Functional Perspectives on Quality
(5) HRM Perspective

• The following table distinguishes between traditional HRM and total quality
human resources management.

Traditional HRM TQHRM

Process Characteristics Unilateral role Consulting role
Centralized Decentralized
Push - Demand Pull – Empower
Administrative Developmental

Content Characteristics Single-mindedness Pluralistic

Compartmentalized Holistic
Worker-oriented System-oriented
Performance Satisfaction
Job-based Person-based

1 - 39
 What is Quality?
Differing Functional Perspectives on Quality

 (6) Marketing Perspective

 Traditional marketing involved directing the flows of products and services from producer
to consumer. The new relationship marketing directs its attention toward satisfying the
customer and delivering value to the customer.
 Companies are basing sales commissions on perceptual measures of customer satisfaction
rather than volume of sales because the value of the loyal customer is much greater than an
individual transaction.
 The marketer focuses on the perceived quality of products and services, quality as the
customer views it, and marketing efforts are focused on managing quality perceptions.
 The primary marketing tools for influencing customer perceptions of quality have been
pricing and advertising, but these tools are inadequate for influencing perceptions of quality
because not all products are priced based on cost of materials and production only.

1 - 40
 What is Quality?
Differing Functional Perspectives on Quality

(6) Marketing Perspective

 Marketing systems involve interactions between the producing organizations, the

intermediaries, and the final consumer, and it is often very difficult for firms to agree on
who the customer is.

 Marketing is also focused on service at the time of the transaction and after-sales
support.

 Marketing interacts closely with engineering and operations in product design to bring the
voice of the customer into the design process.

 Customer service surveys are used for assessing the multiple dimensions of quality.

 The customer is the focus of marketing-related quality improvement in developing

specialized products for different customers, which is in conflict with standardizing
products to reduce complexity by operations.

1 - 41
Quality
Management
What is Quality Management?
• The focus of quality management is to manage properly the interactions among:
• people,
• technology,
• inputs, =to provide outstanding
products and services to
• processes,
customers.
• and systems

With total quality management (TQM), the role of the quality department has moved
from a technical, inspection, policing role to a supportive training and coaching role.

• A strong knowledge of quality is best coupled with technical expertise in business

disciplines such as materials management, supply chain management, finance,
accounting, operations management, HRM, strategy, and industrial engineering.

• The goal is to completely immerse the organization in quality thinking and

commitment.

1 - 43
 What is Quality Management?

The Three Spheres of Quality

Quality Control

The control process is based on the

Quality scientific method which includes the
phases of analysis, relation, and
Management
generalization.
Analysis involves breaking the
process into its fundamental pieces.
Quality Quality
Assurance Control Relation involves understanding the
(reactive) relationships between the parts.
(proactive)
Generalization involves perceiving
how interrelationships apply to the
larger phenomenon of quality being
1 - 44
studied.
 What is Quality Management?

The Three Spheres of Quality

Quality Assurance

Assurance refers to proactive activities

Quality associated with guaranteeing the quality of
a product or service, especially during the
Management
design phase.
By contrast, quality control is reactive,
rather than proactive, by detecting quality
Quality Quality problems after they occur.
Assurance Control
(proactive) (reactive)

1 - 45
 What is Quality Management?

The Three Spheres of Quality

Quality Management
The management processes that overarch
Quality and tie together the control and assurance
activities make up quality management.
Management

Quality Quality
Assurance Control
(proactive) (reactive)

1 - 46
 Defensive Quality
• Quality analyzed in economic terms
Total Cost of Quality:

$ Failure Costs
$ Appraisal Costs
$ Prevention Costs
 Zero Defects View

Cost per defect- Minimum Total

free unit of product Cost

The total
costs of
quality fall Total Cost
as defect of Quality

levels
($)

decrease Prevention Costs

Appraisal Costs
Internal/External
Failure Costs

100% Defects 0% Defects

Q* = Optimal Quality
Now, How about
quality in a hollistic
view?
 Total Quality Management (TQM)

Managing the entire organization so that it excels in all

dimensions important to the customer.
 Product development

 Marketing

Operations

 Supply chain

 Support services
 TQM Principles

1.Customer focus
2.Leadership involvement
3.Continuous improvement
4.Employee empowerment
5.Quality assurance (including SQC or SPC)
6.Strategic partnerships
7.Strategic quality plan
 TQM Principles Expanded
 Customer focus
 Each employee has a customer whether internal or external to the company
 Leadership involvement
 Must be ‘top’ down, throughout the company
 If not, major cause of TQM failures
 Continuous improvement
 Supports other core principles
 TQM Principles Expanded
 Employee empowerment
 Key to success
 Lack of empowerment major cause of TQM failures
 Quality assurance
 Quality Function Deployment (QFD) discussed in
 Statistical quality control (SQC), also called statistical
process control (SPC)
 Acceptance sampling (OC curve)
Switching Focus . . .

TQM to Quality Assurance

“Did we do it right?”
We Noted That Organizations Must ...
• Understand which quality dimensions are important
• Develop products and services that will meet users’ quality needs
• Put in place business processes capable of meeting these needs
• Verify that business processes are meeting the specifications
Process Capability

Answers the Question:

Can the process provide

acceptable quality consistently?
 Process Capability Ratio (Cp)

Upper Tolerance Limit – Lower Tolerance Limit

6σ

Where σ is the estimated

standard deviation
for the individual observations
 Shown Graphically:

LTL Mean UTL

3 3
Process Capability ratio of 1
(99.7% within tolerance range)
Upper and lower tolerance limits are also
called the upper and lower specification
limits (USL and LSL).
 “Six Sigma Quality”

LTL Mean UTL

6 6

When a process operates with 6σ variation centered between the

tolerance limits, only 2 parts out of a billion will be unacceptable.
 Process Capability Index (Cpk)

   LTL UTL   
Cpk  min  , 
 3  3 

• Used when the process is not precisely centered

between the tolerance limits.
Acceptance Sampling
Some definitions

• Acceptable quality level (AQL)

• Maximum defect level for 100% customer acceptance
• Lot tolerance percent defective (LTPD)
• Highest defect level customer will tolerate
• Consumer’s risk, 
• Probability of accepting a bad lot
• Producer’s risk, 
• Probability of rejecting a good lot
• Operating characteristics (OC) curve
• Probability of accepting a lot given the actual fraction defective in the
entire lot and the sampling plan being used.
Putting the terms together

OC Curve

Operating characteristics (OC) curve

Probability of accepting a lot given the actual fraction defective in
the entire lot and the sampling plan being used.
The Big Picture

So how do TQM, continuous

improvement, and all these statistical
techniques “fit” together?
3 Lines of Defense

1) PREVENT defects from occurring

 TQM and continuous improvement

2) DISCOVER problems early

 Process control charts

3) CATCH DEFECTS before used or shipped

 inspection / acceptance sampling
 TQM Principles Expanded
Strategic partnerships
Value of good suppliers and distributors
i.e.,
Quality consistent throughout supply chain
Strategic quality plan

ISO 9000 family of quality standards, www.iso.org

American Society for Quality, www.asq.org
Small pair/group task
• Go here: https://www.iso.org/popular-standards.html
• Choose one standard
• Clarify in the chat which standard code you choose to avoid overlap

• Briefly explain to the rest of the group

• what the standard specifies?

• When it was updated
• Is it current
• Who prepared it
• Any other pertinent info.
Thanks!