Definition of quality

-The standard of something as measured against other things of a similar kind; the degree of
excellence of something
- A distinctive attribute or characteristic possessed by someone or something.
The sales system is developed and its quality is measured against the requirements.
Quality Definition: Conformance to Requirements. A quality process or product conforms to
the set requirements. This definition is ideal for quality assurance teams that need to validate
processes, systems, services and product quality.
Synonyms- standard, grade, class, classification, makeup, caliber, value, worth, rank etc

What is Quality? What does ‘Quality’ Mean? How do You Know When You Have Quality?

Quality Is The Degree To Which A Commodity Meets The Requirements Of The Customer
At The Start Of Its Life. (Iso 9000)

Quality does not come from using an ISO 9001 quality management system. The ISO9001
standard is not designed to create quality. ISO 9001 is just a “bookshelf” to store and manage
your quality creation processes and procedures.

The Effects of Quality are experienced by the customer. Product quality perception comes from
your design specifications and the manufacture standards achieved. Service quality perception
comes from your service process design and standard of delivery.

Dimensions of Total Quality Management

TQM dimensions consist of four main elements which are customer focus, continuous
improvement, employee involvement and top management support.
Traditional dimension of quality?

In order to develop a more complete definition of quality, we must consider some of the key
dimensions of a quality product or service.
 Dimension 1: Performance…
 Dimension 2: Features…
 Dimension 3: Reliability....
 Dimension 4: Conformance. ...
 Dimension 5: Durability. ...
 Dimension 6: Serviceability. ...
 Dimension 7: Aesthetics. ...
 Dimension 8: Perception. ...
 Quality planning

Definition:
Assume that you are Michael. You find out that you will be the new leader for an upcoming
project in your organization. Because this is your first project, you decide to do some research on
how to effectively lead a project. The first place you start at is by determining the most
important aspects of the project; essentially, you are determining which standards are
necessary in order to successfully complete the project. You learn that you need to identify what
standards are relevant to the project and how you and your team will meet those standards. This
is known as quality planning and is the focus of this lesson.
Quality planning is the task of determining what factors are important to a project and figuring
out how to meet those factors. Such factors often include:
1) The resources that will be used,
2) The steps needed to complete the project and
3) Any other specifications.
So for Michael, this means
1) Planning what resources the project will need,
 2) Determining the cost of those resources,
3) Planning a timeline for completing the project,
4) Outlining the steps to take, and
5) The need to assign the tasks and responsibilities to each person in the team (Delegation)?.
Need for Quality Planning
1. A Quality Plan Sets TQM Priorities and Goals

Perhaps the most important aspect of a quality system plan is that it clearly sets in place, for the
whole organization, a reference point for the quality management system by answering critical
questions. What is it supposed to do? What are we trying to achieve?

A well-communicated plan sets overarching goals as well as near-term objectives. Once

everyone understands the ultimate reason for what they are doing, people are on the same page
and working toward shared TQM goals.

Clear goals and objectives then enable informed priority setting. If it is clear to everyone what is
important, then they know what they should be doing and what can be put off. Often in
organizations people don’t have a clear vision of what the goals are, so they end up doing things
that aren’t really important for priority objectives.

A Quality Plan clearly defines what the quality management system is supposed to achieve. It
puts everyone on the same page and working toward the same goal. Success is impossible if you
don’t even know its definition. Remember, if you don’t know where you are going, any road will
get you there.

2. A Quality Plan Clarifies TQM Activities

Once the Plan communicates why the QMS exists, the next question is how and what to do to
meet the Plan goals. In order to consistently meet TQM objectives, there has to be some
standardization in how tasks are carried out. Through policies and procedures the Plan defines
processes, process owners, and the best practices for carrying out the process including capturing
data for metrics. The Plan also defines what Total Quality Management documents (procedures,
work instructions, forms) and training are needed to ensure consistent results.
In order to consistently meet TQM objectives, there has to be some standardization in how tasks
are carried out. Through policies and procedures the Plan defines processes, process owners, and
the best practices for carrying out the process including capturing data for metrics.
 3. QMS Review and Improvement

Finally, the quality management plan creates a method for periodic review and improvement,
including how to handle corrective action when something goes wrong to deal with problem as
well as prevent repeat occurrences. Correction and improvement are two critical elements of a
working quality management system, often referred to as a corrective action plan.

A Plan also establishes a yardstick by which to measure performance against established

goals. In addition to identifying areas for improvement, the goals and objectives themselves are
reviewed. It is hard to find time to take stock of the situation and make needed adjustments if it
is not put in place through planning.

This is the kind of structure and organization a quality management plan creates, and it produces
results that almost never happen when thing are done in an ad hoc fashion.

Achieving clearly defined goals through consistent activities defined by the quality plan will
provide tangible benefits and a return on your TQM efforts. Now consider that the effectiveness
of the quality management system impacts how well the whole organization meets customer
expectations.
 Introduction to Cost of Quality (COQ)
The business climate is becoming increasingly more competitive. There are multiple options
available to the consumer for nearly every product on the market. Companies must stay price
competitive to survive. The top performing companies set themselves apart from the competition by
listening to the voice of the customer and providing products that meet the customer’s requirements
while maintaining a high level of quality and dependability. These companies measure Cost of
Quality and use the information gained to their advantage. The principle of Cost of Quality is similar
to a commercial that aired years ago on television that advertised oil filters. The tag line was “Pay
Me Now or Pay Me Later”. The message was that preventive maintenance of your vehicle could
prevent more costly repairs down the road. Cost of Quality is much the same. An organization can
choose to invest in upfront quality costs to reduce or prevent failures or pay in the end when the
defect is eventually discovered by the customer. In too many cases organizations choose the latter.
Product failures can result in increased warranty costs and possibly even product recalls. The impact
to the bottom line can be devastating. In addition, there are the hard to measure costs incurred
through loss of brand equity and possible decline in future sales. Cost of Quality can have an
immense impact on a company’s bottom line, positive or negative.

What is Cost of Quality (COQ)

Cost of Quality is a methodology used to define and measure where and what amount of an
organization’s resources are being used for prevention activities and maintaining product quality as
opposed to the costs resulting from internal and external failures.

The Cost of Quality can be represented by the sum of two factors. The Cost of Good Quality and the
Cost of Poor Quality equals the Cost of Quality, as represented in the basic equation below:
CoQ = CoGQ + CoPQ
The Cost of Quality includes all costs associated with the quality of a product from preventive costs
intended to reduce or eliminate failures, cost of process controls to maintain quality levels and the
costs related to failures both internal and external.

Why Implement Cost of Quality (COQ)

Effective use and implementation of Cost of Quality methodology enables an organization to
accurately measure the amount of resources being used for Cost of Good Quality and Cost of Poor
Quality. With this valuable information the organization can determine where to allocate resources to
improve product quality and the bottom line/profits.

Illustration:
Alpha Company once measured Cost of Quality as the amount of warranty cost versus total sales.
This method only examined the Cost of Poor Quality. This data did reveal a problem area in the
facility. It was discovered that customer part shortages originating from one work cell were resulting
in warranty costs of over Kshs. 40,000,000 in one year. A team was formed to investigate and
perform Root Cause Analysis (RCA) of the shortages and a plan was developed to redesign the
work cell for an estimated cost of Kshs. 6,000,000. With management approval, the work cell was
redesigned with a revised layout, pick bins, dedicated locations for all the parts, process controls
were defined and implemented and several additional improvements were made. The changes
reduced tact times and the number of operators required for the process. This provided resources for
the addition of quality technicians to regularly audit and maintain the process on all shifts. Within the
first year of operation, shortages were reduced by 50% equaling a Kshs. 20,000,000 reduction in
warranty costs. The project resulted in a positive impact on the bottom line of Kshs. 14,000,000 in
the first year. Alpha Company has since implemented processes to measure and reduce scrap,
improved process controls and introduced new quality metrics throughout the organization. They are
now actively measuring and evaluating both the cost of good quality and poor quality.
In the example above, the Cost of Poor Quality (CoPQ) was having a major impact on the bottom
line. Through an investment in the Cost of Good Quality (CoGQ), Alpha Company achieved a
significant reduction in the Cost of Quality. There are opportunities for improvement in processes at
most organizations. It has been estimated that the Cost of Quality usually amounts to between 15-
40% of business costs. The goal of implementing Cost of Quality methodology is to maximize
product quality while minimizing cost. Cost of Quality methodology provides the detailed
information that management needs to accurately evaluate the effectiveness of their quality systems,
identify problem areas and opportunities for improvement.

How to Measure Cost of Quality (COQ)

The methods for calculating Cost of Quality vary from company to company. In many cases,
organizations like the one described in the previous example, determine the Cost of Quality by
calculating total warranty Shillings as a percentage of sales. Unfortunately this method is only
looking externally at the Cost of Quality and not looking internally. In order to gain a better
understanding, a more comprehensive look at all quality costs is required.
The Cost of Quality can be divided into four categories. They include Prevention, Appraisal, Internal
Failure and External Failure (PAIEf). Within each of the four categories there are numerous possible
sources of cost related to good or poor quality. Some examples of typical sources of Cost of Quality
are listed below.
The Cost of Good Quality (CoGQ)
1. Prevention Costs – costs incurred from activities intended to keep failures to a minimum.
These can include, but are not limited to, the following:
 Establishing Product Specifications
 Quality Planning
 New Product Development and Testing
 Development of a Quality Management System (QMS)
 Proper Employee Training
2. Appraisal Costs – costs incurred to maintain acceptable product quality levels. Appraisal costs
can include, but are not limited to, the following:
 Incoming Material Inspections
 Process Controls
 Check Fixtures
 Quality Audits
 Supplier Assessments

The Cost of Poor Quality (CoPQ)

3. Internal Failures – costs associated with defects found before the product or service reaches
the customer. Internal Failures may include, but are not limited to, the following examples:
 Excessive Scrap
 Product Re-work
 Waste due to poorly designed processes
 Machine breakdown due to improper maintenance
 Costs associated with failure analysis
4. External Failures – costs associated with defects found after the customer receives the product
or service. External Failures may include, but are not limited to, the following examples:
 Service and Repair Costs
 Warranty Claims
 Customer Complaints
 Product or Material Returns
 Incorrect Sales Orders
 Incomplete BOMs
 Shipping Damage due to Inadequate Packaging
These four categories can now be applied to the original Cost of Quality equation. Our original
equation stated that the Cost of Quality is the sum of Cost of Good Quality and Cost of Poor Quality.
This is still true however the basic equation can be expanded by applying the categories within both
the Cost of Good Quality and the Cost of Poor Quality.
 The Cost of Good Quality is the sum of Prevention Cost and Appraisal Cost (CoGQ = PC +
AC)
 The Cost of Poor Quality is the sum of Internal and External Failure Costs (CoPQ = IFC +
EFC)
By combining the equations, Cost of Quality can be more accurately defined, as shown in the
equation below:
COQ = (PC + AC) + (IFC + EFC)
One important factor to note is that the Cost of Quality equation is nonlinear. Investing in the Cost of
Good Quality does not necessarily mean that the overall Cost of Quality will increase. In fact, when
the resources are invested in the right areas, the Cost of Quality should decrease. When failures are
prevented / detected prior to leaving the facility and reaching the customer, Cost of Poor Quality will
be reduced.
Quality Cost Analysis
The main language of corporate management is money, so the concept of studying quality-
related costs is essential. The quality guru, Joseph Juran has been advocating the analysis of
quality-related costs since 1951. He give his theory of quality improvement which is commonly
known as Juran Trilogy.
Quality costs: The costs that are associated with preventing, finding, and correcting defective
work are Quality Costs. Normally, these costs are running at 20% – 30% of sales.
Many of these costs can be significantly reduced or completely avoided. One of the key
functions of a Quality Analysis / Engineer is the reduction of the total cost of quality associated
with a product / service.
Below are the main Quality Costs:
- Prevention Costs
- Appraisal Costs
- Failure Costs
- Internal Failure Costs
- External Failure Costs
Total Cost of Quality can be calculated as the sum of costs:
Prevention + Appraisal + Internal Failure + External Failure
Prevention Costs: Costs of activities that are specifically designed to prevent poor quality which
include
- Coding errors
- Design errors
- Mistakes in the user manuals
- Badly documented or unmaintainable complex code
Most of the prevention costs don’t fit within the Testing Group’s budget. This money is spent by
the programming, design, and marketing staffs.
Appraisal Costs: Costs of activities designed to find quality problems, such as code inspections
and any type of testing.
Design reviews are part of prevention and part appraisal. Please note the following two points:
1. To the degree that you’re looking for errors in the proposed design itself when you do the
review, you’re doing an appraisal.
2. To the degree that you are looking for ways to strengthen the design, you are doing
prevention.
Failure Costs: Costs that result from poor quality, such as the cost of fixing bugs and the cost of
dealing with customer complaints.
Internal Failure Costs: Failure costs that arise before your company supplies its product to the
customer. Along with costs of finding and fixing bugs are many internal failure costs borne by
groups outside of Product Development. If a bug blocks someone in your company from doing
his or her job, the costs of
- the wasted time
- the missed milestones
- and the overtime to get back onto schedule; are all internal failure costs.
The UI issues / bugs / defects – the ones that will be fixed later – can make it hard for these staff
members to take accurate screen shots. Delays caused by these minor design flaws, or by bugs
that block a packaging staff member from creating or printing special reports, can cause the
company to miss its printer deadline.
External Failure Costs: External failure costs are much higher. The costs that arise after your
company supplies the product to the customer such as
- Customer service costs
- Cost of patching a released product distributing the patch
It is much cheaper to fix problems before shipping the defective product to customers.
Examples of Prevention Costs:
- Fault-tolerant design
- Defensive programming
- Usability analysis
- Clear specification
- Staff training
- Requirements analysis
- Early prototyping
- Accurate internal documentation
- Evaluation of the reliability of development tools
Examples of Appraisal Costs:
- Training testers
- Beta testing
- Test automation
- Usability testing
- Design review
- Code inspection
- Glass box testing
- Black box testing
Examples of Internal Failure Costs:
- Wasted writer time
- Wasted marketer time
- Cost of late shipment
- Bug fixes
- Regression testing
- Wasted in-house user time
- Wasted tester time
Examples of External Failure:
- Lost sales
- Lost customer goodwill
- Discounts to resellers to encourage them to keep selling the product
- Warranty costs
- Liability costs
- Penalties
- Technical support calls
- Preparation of support answer books
- Investigation of customer complaints
- Refunds and recalls
- Coding / testing of interim bug fix releases
- Shipping of updated product
- All other costs imposed by law
Basic Concepts of Total Quality Management
The basic concept of TQM are:
1. customers-orientation (both internal and external),
2. never-ending improvement ,
3. statistical control of business processes,
4. upstream preventive maintenance,
5. participative management,
6. ongoing preventive action,
7. cross-functional management and
8. Committed leadership and commitment.

Total Quality Management

- The way of managing an organization to achieve excellence:
*Total – everything
* Quality – degree of excellence
*Management – art, act or way of organizing, controlling, planning, and directing to
achieve certain goals.
 *Definition “A management philosophy embracing all activities through which the needs
and expectations of the CUSTOMER and COMMUNITY, and the objectives of the
organization are satisfied in the most efficient and cost effective manner by maximizing
the potential of ALL employees in a continuing drive for improvement.”
-Total Quality Management TQM - Requires cultural change – prevention not detection,
pro-active versus fire-fighting, life-cycle costs not price, etc.
- Many companies will not start this transformation unless faced with disaster/problems
or forced by customers

Effects of TQM (Total Quality Improvement)

a. Improve Quality (Product/Service)
b. Increase Productivity (less rejects, faster job)
c. Lower Costs and Higher Profit
d. Business Growth, Competitive, Jobs, Investment
Characteristics of Successful Leaders
1. Give attention to external and internal customers
2. Empower, not control subordinates. Provide resources, training, and work environment to help
them do their jobs
3. Emphasize improvement rather than maintenance
4. Emphasize prevention
5. Encourage collaboration rather than competition
6. Train and coach, not direct and supervise
7. Learn from problems – opportunity for improvement
8. Continually try to improve communications
9. Continually demonstrate commitment to quality
10. Choose suppliers on the basis of quality, not price
11. Establish organizational systems that supports quality efforts
Implementation Process
• Must begin from top management
• Cannot be delegated (lack of involvement cited as principle reason for failure)
• Top/senior management must be educated on TQM philosophy and concepts
• Visits to TQM companies, read books, attend seminars
• Need a roadmap/framework for implementation – consider timing (any crisis)
• Formation of Quality Council – policies, strategies, programs
Total Quality Management Criteria (1)
.Customer Satisfaction
• Customer is always right – in Japan customer is “King”
• Customer expectations constantly changing – what was acceptable 10 years ago, today not
anymore!
• Delighting customers (Kano Model)
• Satisfaction is a function of total experience with organization
• Need to continually examine the quality systems and practices to be responsive to ever –
changing needs, requirements and expectations – Retain and Win new customers
Issues for customer satisfaction (Checklist for both internal and external customers)
1. Who are my customers? 2. What do they need? 3. What are their measures and
expectations? 4. Does my product/service exceed their expectations? 5. How do I satisfy
their needs? 6. What corrective action is necessary?
2. Customer Feedback • Discover customer dissatisfaction • Discover priorities of quality,
price, delivery • Compare performance with competitors • Identify customer’s needs •
Determine opportunities for improvement.
Customer Feedback Tools/Method
• Warranty cards/Questionnaire • Telephone/Mail Surveys • Focus Groups • Customer
Complaints • Customer Satisfaction Index Good experience are told to 6 people while bad
experience are repeated to 15 people
Continuous Process Improvement (CPI)
• View all work as process – production and business • Process – purchasing, design, invoicing,
etc. • Inputs – PROCESS – outputs • Process improvement – increased customer satisfaction •
Improvement – 5 ways; Reduce resources, Reduce errors, Meet expectations of downstream
customers, Make process safer, make process more satisfying to the person doing Problem –
Solving Method 1. Identify the opportunity (for improvement) 2. Analyze the current process 3.
Develop the optimal solution(s) 4. Implement changes 5. Study the results 6. Standardize the
solution 7. Plan for the future
Identify the opportunity (for improvement)
• Phase 1 – Identify problems • Use Pareto Analysis – external & internal failures, returns •
Phase 2 – Form a team (same function of multifunctional) • Phase 3 – Define scope of problem
(Paint process – data collected foe a week showed high 30% ‘runs’ defect) Analyze the current
process • Understand the current process, how it is performed • Develop process flow diagram •
Define target performance • Collect data, information • Determine causes not solution (use cause
and effect diagram) • Root cause if possible
Develop the optimal solution(s)
• To establish solutions • Recommended optimal solution to improve process • Create new
process, combine different process, modify existing process • Creativity (rubber pad adhesive,
door trim) • Brainstorming, Delphi, Nominal Group Technique • Evaluate and testing of
ideas/possible solutions Implement changes • To prepare implementation plan, obtain approval,
conduct process improvements, study results • Why is it done? How, When, Who, When it will
be done?
Study the results/Standardize the solution/Plan for the future
• Measure and evaluate results of changes • Standardize solution – certify process, operator,
done?
Criteria 5 Supplier Partnership • 40% prod. Cost comes from purchased materials, therefore
supplier Quality Management important • Substantial portion quality problems from suppliers •
Need partnership to achieve quality improvement – long-term purchase contract • Supplier
Management activities • Define product/program requirements; 1. Evaluate potential and select
the best suppliers 2. Conduct joint quality planning and execution 3. Require statistical evidence
of quality 4. Certify suppliers, e.g. ISO 900, Ford Q1 5. Develop and apply Supplier Quality
Ratings ƒ Defects/Percent non-conforming ƒ Price and Quality costs ƒ Delivery and Service
Performance Measures
• Managing by fact rather than gut feelings • Effective management requires measuring • Use a
baseline, to identify potential projects, to asses results from improvement • E.g. Production
measures – defects per million, inventory turns, on-time delivery • Service – billing errors, sales,
activity times • Customer Satisfaction • Methods for measuring • Cost of poor quality ƒ Internal
failure ƒ External failure ƒ Prevention costs ƒ Appraisal costs • Award Models (MBNQA,
EFQM, PMQA) ƒ Awards criteria ƒ Scoring • Benchmarking – grade to competitors, or best
practice • Statistical measures – control charts, Cpk • Certifications ƒ ISO 9000:2000 Quality
Mgt System ƒ ISO 14000 Environmental Mgt System, ƒ Underwriters Lab (UL), GMP ƒ QS
9000, ISO/TS 16949
Deming’s 14 Points for Management
1. Create constancy of purpose towards improvement of product and service with aim to be
competitive, stay in business and provide jobs.
2. Adopt a new philosophy – new economic age, learn responsibilities and take on leadership for
future change.
3. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a
mass basis by building quality into product in the first palace.
4. End the practice of awarding business on the basis of price, instead, minimize total costs.
5. Improve constantly and forever the system of production and service, to improve quality and
productivity, thus decreasing costs.
6. Institute training on the job
7. Institute leadership, supervision to help do a better job.
8. Drive out fear, everyone can work effectively for company.
9. Breakdown barriers between departments. Work as teams to foresee production problems.
10. Eliminate slogans, exhortations, and targets for workforce.
11. Eliminate numerical quotas on the workforce.
12. Remove barriers that rob people pride of workmanship.
13. Institute a vigorous program of education and self-improvement.
14. Put everybody to work to accomplish the transformation.