Chapter 1 Theory for Quiz Generation 1.pdf

Quality Concepts product requirement that has not been met. Therefore, quality refers to meeting the product requirements. Increasing the quality of conformance usually results in closing the producer’s gap. Thus, quality also enables meeting product requirements. From the customer’s point of view,...

Quality Concepts product requirement that has not been met. Therefore, quality refers to meeting the product requirements. Increasing the quality of conformance usually results in closing the producer’s gap. Thus, quality also enables meeting product requirements. From the customer’s point of view, a defect is anything that causes customer dissatisfaction. Therefore, quality is the degree of fitness permitting use. Freedom from deficiencies in manufacturing industries covers freedom from defects and errors in the product at the time of delivery and during servicing. Similarly, in service industries, it means freedom from errors during initial and future transactions. Quality of design enables achievement of required product features and quality of conformance enables achievement of freedom from deficiencies. Quality thus functions to build product features and offers freedom from deficiencies while incurring profit by closing the customer gap and delighting the customer. This is explained in further detail in the section on the “importance of quality.” Quality is an idea which changes with time. It is a perception; a moving target. Quality (from the Latin term qualita) is an attribute or a property. Attributes are ascribed by a subject whereas properties are possessed. Some philosophers assert that quality cannot be defined. Contemporary philosophy defines the idea of quality differently specially focusing on how to distinguish certain kinds of qualities from one another, which remains controversial. The word “quality” has diverse definitions, ranging from the conventional to those that are strategic. Conventional definitions of quality usually describe a quality item as one that wears well, is well constructed and will last for a long time. However, managers competing in the fierce international marketplace are increasingly concerned with the strategic definition of quality—meeting customer requirements. defInItIons of QualIty Quality is a subjective term for which each person has his or her own definition. In technical usage, quality can have two meanings: (1) the characteristics of a product or service that bear on its ability to satisfy stated or implied needs and (2) a product or service free of deficiencies. —American Society for Quality Quality should be aimed at the needs of the customer, present and future. —Dr Edward Deming Quality is the total composite of product and services characteristics of marketing, engineering, manufacturing and maintenance through which the product and service in use will meet the expectations of the customer. —Armand V. Feigenbaum Quality is the degree of excellence at an acceptable price and control of variability at an acceptable cost. — Robert A. Broh The totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs. —ISO 8402: Quality Vocabulary The totality of features and characteristics of a product or service that bear on its ability to satisfy a given need. —The European Organization for Quality Control Glossary (1981) Quality is meeting the requirements of customers, both internal and external, for defect-free products services and business processes. —IBM Bird’s-eye view: Definitions of Quality: a. Conformance to requirements b. A degree of excellence c. Totality of characteristics which act to satisfy a need d. Fitness for use e. Fitness for purpose f. Freedom from defects g. Delighting customers 3 4 Total Quality Management Fitness for use or purpose is a definition of quality that evaluates how well the product performs for its intended use. —Joseph Juran Quality is the conformance to requirements/specifications. This is a definition of quality to find out, how well a product or service meets the targets and tolerances determined by its designers. —Philip Crosby Quality is the loss (from function variation and harmful effects) a product causes to society after being shipped, other than any losses caused by its intrinsic functions. —Dr Genichi Taguchi Quality is meeting and exceeding the present and future requirements of the customer on a continuous basis. —Poornima Charantimath Customer-driven Definitions of Quality Bird’s-eye view: Quality is important to businesses but can be quite hard to define. A good definition of quality is: “Quality is about meeting the needs and expectations of customers”. Value for price paid: Quality is defined in terms of the utility of the product or service for the price paid. Support services: Quality is defined in terms of the support provided after the product or service is purchased. Psychological criteria: A way of defining quality that focuses on judgemental evaluations of what constitutes product or service excellence. The common definitions of quality are summarized below: 1. 2. 3. 4. 5. 6. 7. Conformance to requirements (Crosby, 1979) Fitness for use (Juran, 1979) Continual improvement (Deming, 1982) As defined by the customers (Ford, 1984; 1990) Loss to society (Taguchi, 1987) Six Sigma (Harry and Stewart—Motorola, 1988) Zero defects (Crosby, 1979) 8. Meeting and exceeding present and future requirements of customer on a continuous basis (Charantimath, 2006) G a rv I n ’ s a p p r o a c h e s to d e f I n In G Q ua l I t y David Garvin identified five major approaches to defining quality. 1 The five approaches are as follows: 1. The Transcendent Approach Quality is recognized through learning and experience defined in terms of innate excellence. In this view “quality is synonymous with ‘innate excellence’ and is absolute and universally recognizable.” This is the approach which aligns most closely with Socrates’ question “What is the fine?” from Greater Hippias. This approach implies that there is a construct called quality that is universally applicable. This is the approach that forms the basis for Quality Concepts philosophical debate. Some say it is of little practical utility. Others argue that the transcendent approach is “the fundamentally most important approach to thinking about quality—particularly in the quality of design of breakthrough products and services.” 2. The Product-based Approach Quality is precise and measurable; it can be ranked on various attributes and is an inherent part of the product. In this regard, quality is “a precise and measurable variable” which is a composite of all the attributes that describe the degree of excellence of a product. This approach is illustrated by a draft of the ISO 8402 standard which stated that “quality is the degree to which a product possesses a specified set of attributes necessary to fulfill a stated purpose.” 3. The User-based Approach This is an approach to assure that the customer’s voice is incorporated during product design and is reflected in consumer demand curves. While this approach has been practical in the design of products based on incremental innovations, it is of limited value in designing products based on radical innovations. Products based on radical innovation enter a market that may not exist and where customers may not be able to articulate their needs. In the case of radical innovation, the transcendent approach may be of more than just philosophical interest. 4. The Manufacturing-based Approach Quality is defined as conformance to specifications; reduce costs by reducing the number of deviations with a focus on engineering and manufacturing practices. W. Edwards Deming criticizes this approach as “the absurdity of meeting specifications.” “Specifications don’t tell you what you need…Just to meet specifications—what you think the customer requires—no. That won’t keep you in business.” Taguchi argues that the manufacturing-based approach is fundamentally flawed. He says that simply meeting specifications is not good enough. He developed the quadratic loss function, which showed that losses increased exponentially as a parameter deviated from its target value. Others argue that conformance to specifications is a practical approach to defining quality, if and only if, the specifications are derived from customer requirements (userbased approach). Philip Crosby goes so far as to say that, “we must define quality as ‘conformance to requirements’ if we are to manage it.” Instead of thinking of quality in terms of goodness or desirability (transcendent approach), we are looking at it as a means of meeting requirements. Quality means conformance. No quality is non-conformance. 5. The Value-based Approach Quality is defined as performance or conformance at an acceptable cost. In this approach, quality is defined in terms of costs and prices. A quality product is one that provides performance at an acceptable price or conformance at an acceptable cost. Philip Crosby also endorses this approach. This blends the value-based approach with the manufacturingbased approach. Q ua l I t y M a na Ge Me nt Quality management is a method for ensuring that all the activities necessary for the design, development and implementation of a product or service are effective and efficient with Bird’s-eye view: ISO 9000 2015 Definition of Quality The adjective quality applies to objects and refers to the degree to which a set of inherent characteristics fulfills a set of requirements. Bird’s-eye view: An object is any entity that is either conceivable or perceivable and an inherent characteristic is a feature that exists in an object. Bird’s-eye view: The quality of an object can be determined by comparing a set of inherent characteristics against a set of requirements. David Garvin identified five major approaches to defining quality. The five approaches are: The Transcendent approach; The Product- based approach; The User- based approach; The Manufacturing-based approach and The valuebased approach. 5 6 Total Quality Management Bird’s-eye view: Quality management includes all the activities that organizations use to direct, control, and coordinate quality. respect to the system and its performance. Quality control, quality assurance and quality improvement are the three main components of quality management. Quality management focuses not only on product quality, but also on the means to achieve it. Quality management, therefore, uses quality assurance and the control of processes as well as products to achieve more consistent quality. I M p o r t a n t Q ua l I t y t e r M s  Quality improvement can be distinguished from quality control in that quality improvement refers to purposeful change of a process to improve the reliability of achieving an outcome.  Quality control is the ongoing effort to maintain the integrity of a process to maintain the reliability of achieving an outcome.  Quality assurance is the planned or systematic action necessary to provide enough confidence that a product or service will satisfy the given requirements of quality. Bird’s-eye view: QA and QC both are part of Quality Management however QA is focusing on preventing defect while QC is focusing on identifying the defect. Quality Control vs Quality Assurance Quality control is product-oriented and focuses on defect identification. It deals with adherence to requirements. It refers to quality-related activities associated with the creation of project deliverables and are performed after the product is developed. Quality control is used to verify pf deliverables are of acceptable quality and that they are complete and correct. Examples of quality control activities include inspection, deliverable peer reviews, and testing process. Quality assurance is process-oriented and focuses on defect prevention. It is generic and does not concern the specific requirements of the product being developed. It refers to the process used to create the deliverables, and can be performed by a manager, client, or even a third party reviewer. Quality assurance activities are determined before production work begins and these activities are performed while the product is being developed. Examples of quality assurance include process checklists, project audits and methodology, and standards development. Table 1.1 provides the differences between quality control and quality assurance. Table 1.1 Quality Control vs Quality Assurance Quality Control Quality Assurance It is a set of activities for ensuring quality in products. The activities focus on identifying defects in the actual products produced. It is a set of activities for ensuring quality in the processes by which products are developed. It aims to identify and correct defects in the finished product and is a reactive process. It aims to prevent defects with a focus on the process used to make the product. It is a proactive quality process. The goal is to identify defects after a product is developed and before it is released. The goal is to improve development and test processes so that defects do not arise when the product is being developed. Finding and eliminating sources of quality problems through tools and equipment so that customer’s requirements are continually met. It establishes a good quality management system and conducts assessment of its adequacy and periodic conformance audits of the operations of the system (Continued) Quality Concepts Table 1.1 (Continued ) Quality Control Quality Assurance The activities or techniques used to achieve and maintain the product quality, process, and service. Prevention of quality problems through planned and systematic activities including documentation is done. It is usually the responsibility of a specific team that tests the product for defects. All team members involved in developing the product are responsible for quality assurance. It is a corrective tool It is a managerial tool. Statistical quality control (SQC) is a part of quality control. Statistical process control is a part of quality assurance. Validation/Software testing is an example of quality control. Verification is an example of quality assurance. I M p o r ta n c e of Q ua l I t y The quality of goods and services can impart a competitive edge to an organization. The importance of quality is stated in the sentence—“No quality, no sales. No sale, no profit. No profit, no jobs.” The role of quality needs no further emphasis because it is the key to success in business and for the achievement of customer satisfaction. Today “quality” is the watchword for the survival and growth of any organization in the global business environment. Quality increases profits in addition to enhancing the image of the company. Things done right 99.9of the time means:  One hour of unsafe drinking water per month  Two unsafe landings at O’Hare Airport each day  16,000 lost pieces of mail per hour  20,000 incorrect drug prescriptions per year  500 incorrect surgical operations per week  50 newborn babies dropped each day by doctors  22,000 cheques per hour deducted from wrong accounts  32,000 missed heartbeats per person each year Box 1.1 discusses how quality initiatives taken at HCL Infosystems enable the company to fulfill its mission of providing world-class information technology solutions and services to its customers. Box 1.1 Quality at HCL Infosystems Ltd HCL Infosystems is India’s premier IT services, solutions, and distribution company enabling organizations to attain and sustain competitive advantage by leveraging information and communication technologies. It is a leader in IT services and solutions with a comprehensive portfolio of capabilities spanning IT and system integration services, digitally-enabled learning, career development solutions, value-added distribution of technology, and mobility products. The philosophy of quality at HCL Infosystems is as follows: We shall deliver defect-free products, services, and solutions to meet the requirements of our external and internal customers, the first time, and every time. Bird’s-eye view: Quality is associated with consistency. A client who is satisfied and happy with the first buying experience needs and wants to be equally happy on each further occasion. Or even happier. 7 8 Total Quality Management HCL’s pursuit of quality in all its endeavours is one of the key elements behind its success in the global marketplace. Quality journey began at HCL Infosystems in the late 1980s. It believes in the total quality management philosophy as a means for continuous improvement and customer satisfaction. Its concept of quality addresses people, processes, and products. The tryst for continuous quality improvement is never-ending in HCL Infosystems. The organization strives to maintain high-quality standards, to fulfill their mission to provide world-class information technology solutions and services, and to enable to serve their customers better. HCL Infosystems received the prestigious CMMI (Capability Maturity Model Integration) Maturity Level 5 certification for its Jaipur Development Centre (JDC). At the World Congress, the company won global awards for excellence in quality management and leadership. Speaking on the occasion, Anand Prakash, Vice President—Quality commented, ‘We are honoured to be felicitated by the World Quality Congress awards, which recognizes worldclass standards of quality attained by organizations across India. The award recognizes our commitment to create an enabling environment for HCL Infosystems to attain and sustain the highest standards of quality and services levels for our customers and partners.’ Source: www.hcl.com, last accessed in February 2016. Q ua l I t y Bird’s-eye view: Quality is fitness for use. Fitness for use is achieved through two components: product features and freedom from deficiencies. and profIt Listen to the president of a specialty casting manufacturing company: “Our scrap and rework costs this year were five times our profit. Because of those costs, we have had to increase our selling price and we subsequently lost market share. Quality is no longer a technical issue; it is a business issue.” The above statement reveals that quality improves the image of a company in the market. Earlier quality was a technical issue mainly dependent on inspection. But today, quality needs to be integrated with the system. Therefore, quality is gradually becoming a strategic issue given its direct link to profit. Fitness for use is achieved through two components: product features and freedom from deficiencies. Product features in manufacturing industries cover performance, reliability, durability, ease of use, serviceability, aesthetics, options, reputation, etc. In service industries, they cover accuracy, timeliness, completeness, friendliness, courtesy, anticipation of customer needs, aesthetics, the service provider’s knowledge and reputation, etc. Product features have a major effect on sales income through market share and premium prices and include the quality of design. Improving the quality of design generally leads to higher costs. Freedom from deficiencies in manufacturing industries covers freedom from defects and errors in the product at the time of delivery and servicing. Similarly, in service industries, it means freedom from errors during the initial and future service transactions. Both also include error-free billing and other business processes. Freedom from deficiencies has a major impact on costs through lower waste, lower warranty costs and lower cycle times. Freedom from deficiencies refers to the quality of conformance. Increasing the quality of conformance usually results in lower costs. In addition, greater conformance means fewer complaints and, therefore, increased customer satisfaction. Figure 1.1 shows how product features and freedom from deficiencies integrate and lead to higher profit. The approach taken by quality management for product features on the one hand and freedom from deficiencies on the other is characterized by dramatic differences. The former is proactive, while the latter is reactive. Managers, who are adept at one, need not necessarily Quality Concepts Fig. 1.1 Quality and Profit Quality Profit Quality Fitness for use Quality of design Product features Quality of conformance Freedom from deficiencies Quality of performance Profit Quality is customer delight Product features have a major impact on sales income Freedom from deficiencies has a major impact on costs excel in the other. There are dramatic differences within the manufacturing as well as the service industries, for example, assembly versus chemicals in the former and healthcare versus banking in the case of the latter. DISCUSSION FORUM 1. Discuss why it is important to study matter. 2. Discuss the three levels of quality. 3. Define quality. 4. Discuss the different types of quality in small groups. t y pe s o f Q ua l I t y In order to produce goods and services of consistent quality and costs, three types of quality are recognized.2 They are as follows: 1. Quality of design 2. Quality of conformance 3. Quality of performance 1. Quality of Design The quality of design is based on the use of market research to identify the product characteristics which connote quality to customers. Quality of design begins with consumer Bird’s-eye view: Quality of design, quality of conformance and quality of performance are required to produce goods and services of consistent quality and costs. As quality improves profit increases. 9 10 Total Quality Management Bird’s-eye view: Quality of design is the quality which the producer or supplier is intending to offer to the customer. Bird’s-eye view: If the quality of design does not reflect the customer’s requirements, the product which the producer offers him would not probably satisfy the customer, even if it does sufficiently conform to the design. Bird’s-eye view: Quality of conformance is the level of the quality of product actually produced and delivered through the production or service process of the organization as per the specifications or design. research and sales call analysis and is followed by the development of adequate specifications. Here, the focus is to develop products and services that can meet the customer’s needs at a given cost. This process of developing a product demands effective cross-pollination of ideas among the marketing, sales, services, manufacturing, research and development departments. Consumer research and service call analysis are at the heart of this process. Consumer research indicates the customer needs, both current and future while sales call analysis investigates the problems users face with the way the product performs. 2. Quality of Conformance Quality of conformance deals with translating user-based characteristics into identifiable product attributes. It refers to the extent to which a firm and its suppliers can create products with a predictable degree of dependability and uniformity at a given cost in keeping with the quality requirements determined by the study on quality of design. Once the specifications have been determined by the study on quality of design, organizations must continuously strive to improve on these specifications. 3. Quality of Performance Quality of performance deals with organizing the manufacturing process to ensure that product quality stringently adheres to specifications. Quality of performance studies focus on ascertaining how quality characteristics determined in the quality of design, and improved and innovated through the quality of conformance studies, perform in the market. The profit incurred also depends on quality of performance in the market. The major tools used to deduce the quality of performance are a study of after-sales service and service call analysis. These tools evaluate why consumers like or dislike a product. Table 1.2 shows other classifications of the types of quality. t hr ee lev els Bird’s-eye view: When the quality of a product entirely conforms to the specification (design), the quality of conformance is deemed excellent. Bird’s-eye view: Quality of performance can be assessed through measurements of physical products, statistical sampling of the output of processes, or through surveys of purchasers of goods or services. of Q ua l I t y 3 Viewing an organization from three levels helps clarify the roles and responsibilities of all employees in pursuing quality. Total quality management rests on the foundation of the total involvement of all the employees of the organization. An organization that is committed to quality must examine this at three levels: 1. Organizational level 2. Process level 3. The performer or job level or the task design level Table 1.2 Types of Quality 1. Indifferent quality 2. Expected quality 3. One-dimensional quality 4. Exciting quality It is the quality that the customer does not notice or appreciate It is the quality that the customer expects and demands It is the quality that the customer expects but that does not necessarily result in loss of the order or a displeased customer when found lacking in the product It is the quality that exceeds customer expectations, attracting favourable attention Source: Adapted from Debashis Sarkar, The Managers Handbook for Total Quality Management (Beacon Books, 1998). Quality Concepts 11 1. Organizational level: At this level, quality concerns revolve around meeting the requirements of the external customer. An organization must seek customer inputs on a regular basis. Top managers must focus attention at the organizational level. The following questions are designed to help define quality at this level:  What products and services meet your expectations?  What products and services do not meet your expectations?  What are the products or services that you need but are not receiving?  Are you receiving products or services that you do not need? 2. Process level: At the process level, organizational units are classified as functions or departments such as those undertaking marketing, design, product development, operations, finance, purchasing, billing and so on. Since most processes are cross functional, the managers of particular organizational units may try to optimize the activities under their control, which can sub-optimize activities for the organization as a whole. Middle managers and supervisors must, therefore, focus their attention at the process level. To define quality at the process level, managers must ask questions such as:  What products or services are the most important to external customers?  What processes produce those products and services?  What are the key inputs to the process?  Which processes have the most significant effect on the organization’s customerdriven performance standards?  Who are my internal customers and what are their needs? 3. Performer or job level or task design level: At the performer level, standards for output must be based on quality and customer service requirements that originate at the organizational and process levels. These standards include requirements for innovation, timeliness, completeness, accuracy and costs. All employees must understand quality at the performer level. To define quality at the job level, one must ask questions such as:  What is required by customers, both internal and external?  How can the requirements be measured?  What is the specific standard for each measure? t h e f Iv e p a r a dIGMs o f Q ua l I t y Across the world there are five distinct ways and means of estimating the quality of activities. These are called the quality paradigms and have resulted from changes in technology, society and customer demands (refer End Note 2). The Customer-craft Paradigm In this paradigm, the product is created or services are rendered exactly in the manner desired by the customer. Hence, the focus on the product/service and their performance is relative to the demand. Some examples of this pattern are bank loans, coffee shops, tailor’s shop, furniture supplier, etc. The Mass-production Paradigm This paradigm developed post mechanization. Here, the focus is on production rate with no direct involvement of the customer although the product is defined keeping the customer Bird’s-eye view: The five paradigms of quality are: The Customercraft paradigm; The Massproduction paradigm; The Statistical quality control paradigm; The Total quality management paradigm and The Techno-craft paradigm. 12 Total Quality Management in mind. Product performance is relatively low here and rework and scrap generation are evident. The delivery time is typically low as sales happen from the stock held. Service organizations in this paradigm are labour intensive. Examples of this pattern are found in automobile parts, readymade buildings for commercial enterprises, etc. The Statistical Quality Control Paradigm This is similar to the mass production paradigm except that the emphasis here is more on the process. Applied together with mechanized production, the statistical process control results in low scrap and rework and low cost of production. Products are designed and built, and statistical techniques are used after which customers are acquired. Examples of this pattern are found in automobile parts, electronic components, etc. The Total Quality Management Paradigm The focus here is on the customer and the supplier. Product lines here are the same as in the case of the mass production paradigm. However, the customer is a part of the product definition, creation and performance evaluation phases. Employee involvement and empowerment, customer-focus, continuous improvement, top management commitment, training, teamwork are its key tenets. The result is a high quality product, low cost, fast delivery and substantially reduced opportunities for rework and low generation of scrap. Examples of this pattern are found in product/services produced by TQM companies. The Techno-craft Paradigm This paradigm is a new frontier of quality that seeks to employ the custom-craft paradigm in performance while reducing delivery time. This paradigm requires a high level of product process flexibility, which enables the customers to get exactly what they desire. The requirement here is to integrate machine, men and automation. Computer aided design and manufacturing is of great use here. Each unit is designed and built on the basis of customer requirements. Examples of this pattern are found in the software and apparel industries. Bird’s-eye view: David Garvin has developed a list of eight dimensions of product quality. They are: Performance; Features; Reliability; Conformance; Durability; Serviceability; Aesthetics and Perceived quality. d I M e n s Io ns o f p r o d u c t Q ua l I t y There is widespread agreement that quality is a multidimensional construct (refer End Note 1). A number of researchers and scholars in the field of quality have developed various dimensions that define the quality of a product and/or a service. David Garvin has developed a list of eight dimensions of product quality. They are widely accepted as being applicable to most products with varying levels of importance attributed to particular dimensions. Table 1.3 explains Garvin’s eight dimensions of product quality. These dimensions were proposed to facilitate strategic quality analysis by breaking down the word quality into manageable parts so that management can define the quality niches in which to compete. d I M e n s Io ns o f s e r v Ic e Q ua l It y 4 Defining the dimensions of service quality is a daunting task. A number of scholars have developed general lists of service quality dimensions. These consist of 5 to 10 dimensions, which serve as good starting points. However, current research indicates that in terms of service quality, the dimensions and the relative emphasis on each are different for different Quality Concepts industries. So the dimensions developed in one or a group of service industries may not be directly applicable to another group of service industries. The SERVQUAL instrument is often used to assess customer satisfaction in service industries. It measures quality by comparing customer perceptions of the quality of a service experience to customer expectations for that experience. The instrument is based on ten overlapping dimensions of service quality that are eventually distilled down to five dimensions. The instrument was developed in four different service industries: banking, credit card, repair and maintenance, and long distance telephone. Although they called this set “SERVQUAL” the five can be easily recalled through the acronym “RATER.” Table 1.4 gives the SERVQUAL dimensions of service quality using an example. Table 1.3 Garvin’s Eight Dimensions of Product Quality Dimension Performance Features Reliability Conformance Durability Description A product’s primary operating characteristics Characteristics that supplement basic functioning Probability of a product malfunctioning within a specific time period The degree to which a product’s design and operating characteristics meet established standards Expected product life Serviceability Speed, courtesy, competence and ease of repair Aesthetics How a product looks, feels, sounds, tastes or smells Reputation and other indirect measures of quality Perceived quality Assurance Tangibles The SERVQUAL service quality model is a quality management framework was developed by a group of American authors, ‘Parasu’ Parasuraman, Valarie Zeithaml and Len Berry, in 1988. SERVQUAL dimensions of service quality are: Reliability; Assurance; Tangibles; Empathy and Responsiveness Clock speed; RAM; hard drive size Wireless mouse; flat-screen monitor; DVD-RW Mean time between failures Underwriter Laboratories labeled; mouse, monitor, keyboard included with CPU Time to technical obsolescence; rated life of monitor Warranty conditions; availability of customer service and replacement parts. Computer housing colour scheme; keyboard “touch” Brand name; advertising Table 1.4 SERVQUAL Dimensions of Service Quality Reliability Bird’s-eye view: Example for Personal Computer Source: Adapted from David A. Garvin, Managing Quality: The Strategic and Competitive Edge (New York: Free Press, 1988). Dimension 13 Description Example from the Banking Sector Ability to perform the promised service with dependable and accurate results Knowledge and courtesy of employees and their ability to inspire trust and confidence Physical facilities, equipment and appearance of personnel Promised deadlines met; reassuring problem resolution Trustworthiness; safe environment around ATMs; polite tellers ATM access; lobby layout; tellers dressed professionally (Continued) Bird’s-eye view: Businesses using SERVQUAL to measure and manage service quality deploy a questionnaire that measures both the customer expectations of service quality in terms of these five dimensions, and their perceptions of the service they receive. When customer expectations are greater than their perceptions of received delivery, service quality is deemed low. 14 Total Quality Management Table 1.4 (Continued ) Dimension Empathy Responsiveness Description Example from the Banking Sector Caring, individualized attention provided by the firm to its customers Willingness to help customers and provide prompt service Personal attention to customers; convenient hours Respond quickly to customer requests; willingness to help customers Source: Adapted from Valarie A. Zeithaml Leonard L. Berry and A. Parasuraman, “The Nature and Determinants of Customer Expectations of Service,” Journal of the Academy of Marketing Science (April 2008): 1–12. o l d Q ua l I t y versus n e w Q ua l I t y The difference between old and new quality lies in the fact that the old is the work of craftsmen, whereas the new is the work of a system. Old quality was created by a few, for the few. New quality is the work of many, for the many. The first is expensive, in terms of labour if not cash; while the second, reduces cost. Old quality still matters because it produces beautiful products. However, new quality can drive the economy by making business more competitive and by serving the population with products and services of a certain standard never before achieved. Table 1.5 states the differences between old quality and new quality. Box 1.2 highlights the difference between small “q” and big “Q.” According to the conventional view of quality, products are manufactured exactly to specifications. As per the new view of quality (total quality), products and services totally satisfy customer needs and expectations in every respect on a continuous basis. Table 1.5 Old Quality Versus New Quality Old Quality Bird’s-eye view: Big Q and little q is a term coined by Dr. Juran and is key in fully understanding quality. Expression that contrasts the difference between striving for quality in all of the firm’s products and processes (the big ‘Q’) and striving for quality in a limited or specific area (the little ‘q’). About products Technical For inspectors Led by experts High grade About control Little “q” New Quality About organizations Strategic For everyone Led by management The appropriate grade About improvement Big “Q” Box 1.2 Big “Q” versus Small “q” Big “Q” is a term used to describe the process of managing quality in all business processes and products. Small “q” denotes the management of quality in a limited capacity—traditionally only in factory products and processes. The small “q” approach to quality focuses on segregating the good from the bad rather than eliminating the defects. Whether there is a method to prevent the recurrence of defects is, however, not considered. The small “q” approach exists in situations where demand exceeds supply and competition is negligible. In cases where defects exist in products, an attempt is made to rework and salvage rather than try to prevent the defects recurring in future. A system of learning based on feedback on the quality of the product being produced is absent. Quality Concepts 15 The big “Q” approach to quality is the closest to total quality management. The starting point consists of the customers and their needs. Customer needs are converted into product features, which are then optimized to maximize customer satisfaction by providing maximum quality at the least cost. The emphasis in the manufacturing process is on “zero defects” rather than correction or rework. The mechanism that provides feedback information on product quality provides a high degree of learning that is aimed at preventing a recurrence of errors in the process. People are considered the major variables in many processes and efforts are made to enable them to perform tasks without error. A conscious effort is made to train employees in handling tools and empower them to do the job right the first time. Source: Adapted from Debashis Sarkar, The Manager’s Handbook for Total Quality Management (Beacon Books, 1998). DISCUSSION FORUM 1. Discuss the five paradigms of quality. 2. List Garvin’s eight dimensions of product quality. 3. List SERVQUAL’s five dimensions of service quality. cost of Q ua l I t y (cOQ) 5 Cost of quality measures the impact of quality of any business. It is defined as the cost of those activities, which an organization or process has incurred over and above the minimum costs required to do the job well. This is the amount of money a business loses because its products or services failed to secure customer satisfaction in the first place. Businesses lose money everyday due to poor quality. For most businesses, these losses can range from 15 per cent to 30 per cent of their total costs. By addressing COQ, companies can look to adding 10 per cent to 15 per cent of the total costs to the bottom line without any capital investment. Any cost associated with correcting failure or waste comes under quality costs, as do any assurance or approval activities built in to cushion customers from the effects of such failures. A further set of activities are those in which organizations attempt to prevent such failures from occurring at all. Cost of quality is, therefore, the sum of all costs a company invests into the release of a quality product/service. Cost of quality has two main components—cost of conformance and cost of nonconformance. Cost of conformance is the cost of providing products or services as per the required standards. This can be termed as a good amount spent (prevention and appraisal costs). Cost of non-conformance refers to failure costs associated with a process not operating according to the requirements. This can be termed as unnecessary amount spent (internal and external failure costs). Cost of Quality Cost of Conformance Cost of Non-conformance Essentially, quality costs are defined as the total costs incurred by (1) Investing in the prevention of non-conformance to requirements, (2) Appraisal of a product or service for conformance to requirement and (3) Failure to meet requirements. Table 1.6 shows the costs associated with poor quality. 1. Prevention costs: These are the costs associated with trying to prevent failure and arise from efforts to keep defects at bay. Prevention activities lead to the reduction of failure Bird’s-eye view: Cost of poor quality (COPQ): The costs associated with providing poor quality products or services. There are four categories: internal failure costs, external failure costs, appraisal costs and prevention costs 16 Total Quality Management Bird’s-eye view: Prevention costs are incurred to prevent or avoid quality problems. These costs are associated with the design, implementation, and maintenance of the quality management system. Table 1.6 The Costs of Quality Category Measure of Quality Failure cost (internal and external failure) Scrap, rework, labour, sorting, downtime, slowdown, complaints, investigations, travel, recall, unpaid invoices, lost sales Receiving, in-process and final inspection, test equipment, test technicians, special tests, laboratory maintenance, quality control, quality control overheads Quality planning, design tolerances, training, house keeping, packaging, special sourcing, lifecycle tests, field tests, pre-production tests, shelf-tests, inventories, cash flow Appraisal Prevention Bird’s-eye view: Appraisal costs are associated with measuring and monitoring activities related to quality. These costs are associated with the suppliers’ and customers’ evaluation of purchased materials, processes, products, and services to ensure that they conform to specifications. Bird’s-eye view: Internal failure costs are incurred to remedy defects discovered before the product or service is delivered to the customer. These costs occur when the results of work fail to reach design quality standards and are detected before they are transferred to the customer. Bird’s-eye view: External failure costs are incurred to remedy defects discovered by customers. These costs occur when products or services that fail to reach design quality standards are not detected until after transfer to the customer. Mapping of Quality Costs  Operating costs  Operating expenses (labour)  Variable expenses  Losses  Operating expenses  Fixed expenses  Depreciated assets (equipment)  Fixed assets (technicians)     Operating expenses Fixed expenses Variable assets (cash flow) Inventory and appraisal costs. The motto is prevention rather than appraisal. The activities associated with prevention costs are training and education, market research, quality planning, quality improvement projects, supplier evaluation, design review, contract review, field trials and preventive maintenance. 2. Appraisal costs: These are costs to determine conformance with quality standards and performance requirements. These costs arise from detecting defects. Appraisal activities are associated with discovery of defects rather than their prevention. The activities associated with appraisal costs are inspection, checking, auditing, surveying, inquiries, prototype testing, vendor surveillance and calibration of measuring and test equipment. 3. Failure costs: The costs resulting from products or services not conforming to requirements or customer/user needs are termed failure costs and can be divided into categories such as internal and external failure costs.  Internal failure costs: Internal failure costs arise when results of work fail to reach designated quality standards, and are detected before transfer to the customer takes place. Activities associated with internal failure costs are scrap, rework, downgrading, design changes and corrective action.  External failure costs: These costs occur when the product or service is offered to the customer and found to be defective. External failure costs can be higher than internal failure costs because the stakes are much higher. These may also influence the company’s reputation leading to a loss in customers. These costs include post-release customer and technical support. External failure costs occur when the product or service from a process fails to reach designated quality standards, and is not detected until after transfer to the customer. Activities associated with external failure costs are returned products, product recalls, rejected services, unhappy customers, warranty claims, processing/investigation of customer complaints, interest charges on delayed payment due to quality problems. Total quality costs: The sum of all the above costs. It represents the difference between the actual cost of a product or service and what the reduced cost would be if there were no possibility of substandard service, failure of products or defects in their manufacture. Quality Concepts Size of Four Categories of Quality Costs6 Figure 1.2 displays various cost elements and Figure 1.3 shows the COQ model, which is often referred to as the preventive, appraisal, failure (PAF) model. The relationship between various cost elements is explained below:  In organizations which do not follow TQM, there is less emphasis on prevention of defects while main quality efforts focus on appraisal with very little control on internal and external failure costs.  Various studies have shown that quality costs in manufacturing companies the world over, range from 20 per cent to 30 per cent of the turnover and in the case of service companies it can go up to 40 per cent.  A penny of prevention is worth a pound of cure. The relationship between costs is expressed as 1:10:100. It means that an expenditure of Re 1 on prevention can brings about savings of Rs 10 on appraisal and Rs 100 on failure costs. This rule will help one to prioritize expenditure. Any expenditure on prevention is sure to bring greater returns. Fig. 1.2 Various Quality Cost Elements Quality costs Conformance Prevention Non-conformance Appraisal Internal failure Fig. 1.3 PAF Model Prevention Appraisal Failure External failure 17