fundamentals of quality management

7/28/2019 Fundamentals of Quality Management

1/8

2004. Satyam Computer Services Limited. All rights reserved. 1

Project Quality ManagementEarlier, project firms believed that higher quality increased project costs. But nowthey realize that improved quality increases business. The growing size andcomplexity of projects have forced firms to concentrate more on quality at every

stage. Otherwise, the cumulative effect of each defect in the various stages willlead to a considerable reduction in the quality of project end product.

Quality is relative and different people have different definitions of quality. Theproject manager, however, has to be very specific regarding the quality of aproject. He can use several techniques to meet the quality requirements. Project

quality management includes all the processes required to ensure that the projectmeets or exceeds the specific requirements of its stakeholders. The projectmanager should prepare a quality plan and communicate it to team members andensure that the plan is being implemented properly.

DEFINITION OF QUALITY

The ISO 9000 defines 'quality' as the totality of features and characteristics of aproduct or service that bears on its ability to satisfy stated or implied needs.

The client looks at quality as:

Conformance to specifications: The project manager mentions the project end

product and its clear specifications in the POS. The client expects the product orservice to match the specifications provided in the POS. To him, quality is theconformance of the end product's specifications as mentioned in the POS.

Value for money: Clients may define quality as a value or how well the product orservice fulfills the intended purpose for the price they are willing to pay. If they feelthat the price of the product or service is higher than the utility they derive, they

may conclude that the product is of less quality.

Fitness for use:The client considers the features of a product or the convenience

of a service to decide the project quality. The aspects include appearance, style,durability, reliability, and serviceability, etc.

Support: Often the support a company provides to its product or service isconsidered as the quality. For instance, if the project manager provides servicingfacility at a low price or free of cost, the client feels that quality of the product

(project) is high.

Psychological impression: Clients evaluate the quality of a product or service

based on some psychological impressions: physical ambience, the firm's image,etc. For instance, well-dressed, courteous, and friendly project team membersmake a positive impact on clients who associate these attributes with quality.

Few quality gurus define quality in the following manner:

A product or service's nature or features that reflect capacity to satisfy express orimplied statements of needs........... Deming

Conformance to requirements.........Corsby

Fitness for the purpose of use ..Juran

The common factor in all of these definitions is satisfying customer requirements.In other words, a product should be able to perform its intended tasks properly.

Quality is to some extend is dependent on the perception, likes and dislikes ofindividuals.


2/8


COST OF QUALITY

The cost of quality can be divided into three major categories cost of prevention,cost of detection/appraisal, and cost of failure. The total cost of quality is the sum

of costs in all three categories.Cost of Prevention

Prevention costs are those costs that are incurred by a company in preventingdefective goods and services from being produced and/or delivered to thecustomers. This category includes the investments made in machinery, technologyand education/training programs to reduce the number of defects. It also includescosts to administer the firms quality program, data collection and analysis, andvendor certification. Investments in this category bring high returns includingbenefits gained from increased customer satisfaction and reduced scrap losses andrework expenses.

Cost of Detection/Appraisal

Detection or appraisal costs are those costs that are associated with evaluating the

quality and performance of the products and machines. These costs include inwardmaterials inspection, tests and inspection throughout the transformation process,equipment maintenance, etc.

Cost of Failure

The cost of failure relates to non-conforming and non-performing products. Thesecosts can be divided into internal and external failure costs. Internal failure costsrefer to the costs incurred when defects are found before products are delivered tothe consumers. These costs include scrap, repair, retesting of repaired products,downtime, losses due to process variability and disposition of defective items.These costs can be eliminated if defects are minimized or eliminated within thesystem. External failure costs are the costs that are incurred after the productshave been delivered to the customers. Costs in this category include the cost of

returned material, warranty charges, field survey costs, legal expenses due tolawsuits, loss of sales due to customer dissatisfaction and costs of concessionsmade to customers.

EVOLUTION OF QUALITY MANAGEMENT

Quality has been talked and written about for hundreds of years. Under theBabylonian Code of Hammurabi, builders were penalized if they were foundresponsible for building defective structures that led to injuries or death. The codealso included a clause, which stated that shipbuilders had to pay for repairs if aship started leaking within one year of use. Clearly, the issue of quality has longbeen an important part of trade and commerce.

Industrialization led to the mass customization of products and the large scale ofmanufacture of products. As demand was greater than supply, and goods could be

sold easily, issues of quality took a backseat. Quality was controlled throughinspection only after goods were produced. During such inspections, defectiveproducts were removed or replaced. But after World War II, with the increase incompetition, quality again became an important consideration for all organizations.The importance of maintaining quality standards at every stage of the productionprocess was realized after studies showed that the cost of an error found duringdesign stage was 10 times less than the cost of an error found during the


3/8


production stage, and that an error found during the production stage was 10times less than the cost of an error found by the end user.

The quality movement was driven not just by concerns about productivity anddefect rates, but also by customer attitudes. In the 1960s, customers started

resorting to legal actions against companies whose products were found to bedefective or were not able to perform according to the advertised claims.

The Japanese were the first to fully embrace quality in every aspect of business.Japanese firms formed quality groups that were responsible for maintaining qualitystandards in various aspects of business: design, production, maintenance,administration, after sales service, and so on. Inspired by the performance ofJapanese organizations, European and American organizations shifted their focusfrom quantity to quality. With increasing emphasis on quality, many quality guruscame into the limelight. Their studies gave momentum to the quality movement.The gurus who are considered to have had the maximum influence on the qualitymovement are W. Edward Deming, Joseph M. Juran, Armand V. Feigenbaum, PhilipB Crosby, Shigeo Shingo, K. Ishikawa and G. Taguchi.

The evolution of quality initiatives can be classified into four stages:

Inspection: In the first stage of the evolution of the quality movement, firmsfocused on inspecting finished products and identifying those items that weredefective and then removing or replacing them.

Quality control: In the next stage, firms focused on total quality control.Organizations improved their quality control procedures and took steps to improvethe efficiency of the inspection process and reduce the cost of quality.

Quality assurance: Quality assurance involved developing processes andtechniques that ensured that a products performance, features and attributesmatched company specifications and customer requirements. Firms also focused onproduct reliability.

Total quality management: Modern organizations focus on total qualitymanagement. Under TQM, every employee and every department is responsible for

quality control, not just the quality department.Principles and Philosophies

Deming

According to W. E Deming, improvement in quality is achieved through topmanagement initiatives, and top managements decisions on quality should beregarded as strategic decisions. Deming argues that quality and productivity isdependent on the variability of the process. As the variability in the processincreases, quality and productivity decreases. Deming identified 14 points forimproving quality:

1. Create constancy of purposes2. Adopt new philosophy.3. Cease dependence on inspection4. Price should not be the only criteria while awarding business5. Constantly improve production and services processes6. Provide on-the-job training7. Institute leadership


4/8


8. Drive out fear9. Break down barriers between departments10.Eliminate slogans and exhortations11.Eliminate quotas and management by objectives.12.Remove barriers that rob people of their pride of workmanship13.Institute a vigorous program of education and self-improvement14.Ensure that everyone is involved in accomplishing the transformationDeming advocated the use of the PDCA (Plan-Do-Control-Act) cycle developed byShewhart for continuous improvement. Because of his preference for this tool, itwas named Demings cycle instead of Shewharts cycle.

Juran

Joseph M. Juran emphasized fitness for use than conformance to specification.According to Juran, a product that matches specifications but does not meet therequirements of customers is not a quality product. Juran, who had an analytical

approach towards quality, gave suggestions on managing and improving qualitythrough market research, product design, product development, production,inspection, and so on.

In his first book Quality Control Handbook, Juran defined quality managementtrilogy: quality improvement, quality planning and quality control. According tohim, the key elements in strategic quality planning are:

1. Identify customers and their needs and wants2. Set quality goals3. Identify the criteria for measuring quality4. Develop plans that are in-line with quality goals5. Be in a position where one is able to improve market share and charge

premium prices

According to Juran, 80% of quality related problems can be controlled bymanagement and 20% can be controlled by employees. He stressed theimportance of involving all members of the management in the qualityimprovement process.

P. B Crosby

P.B Crosby, the author ofQuality is Free and Quality without Tears, is one of theleading quality gurus. According to him, quality refers to conformance torequirements not goodness or elegance. Crosby gave importance to zero defectsand doing it right the first time. According to Crosby, zero defects does not meanthat workers will not make any mistakes, instead, it means that managers muststart by assuming that employees will not make any mistakes. Crosby identifiedtwo causes of mistakes: lack of knowledge and lack of attention. Lack of knowledge

is measurable and can be eliminated by providing suitable training and education.Lack of attention is an attitude problem and can be handled only by the concernedindividual.

Crosby recommended 14 steps for quality improvement:

1. Establish management commitment2. Form a quality improvement team with members from each department


5/8


3. Establish quality measurement throughout the company4. Evaluate the cost of quality5. Develop awareness about quality among employees6. Take corrective action7. Establish an ad hoc committee for the zero defects program8. Supervise employee training9. Hold zero defects day to establish the new attitude10.Review employee goal setting11.Error cause removal should be set up to follow the collection of problems12.Give non-financial awards to employees whose performance is outstanding13.Quality councils composed of quality professionals and team chairpersons

should meet regularly

14.Do it all over againMalcolm Baldrige AwardThe Malcolm Baldridge National Quality award was instituted in 1987 with the

objective of creating awareness about quality among US companies. The award

was named after Malcolm Baldrige, Secretary of Commerce (US), whose quality

initiatives improved the effectiveness and efficiency of many government

departments. The award aims at motivating organizations to improve quality and

productivity, recognize achievement, and provide guidance on quality

improvement. The award is given to small or large manufacturing and service

organizations, and also to organizations in the field of education and healthcare.

The seven categories that form the award criteria are leadership, strategic

planning, customers and market focus, information and analysis, human resources,

process management and business results.

Deming PrizeIn 1951, the Union of Japanese Scientists and Engineers instituted the DemingPrize. Initially, only Japanese companies or individuals were eligible for this award,but now non-Japanese companies and individuals are also being considered. Theprize is given in recognition of successful improvement in quality of products,services and processes. The companies are evaluated on the basis of their policiesand objectives, operations, assembling and disseminating of information, analysis,product standardization, control and quality assurance mechanism, results, andfuture plans.

CAUSE AND EFFECT DIAGRAM

Kaoru Ishikawa is the creator of the cause and effect diagram, which is also, knownas the fishbone diagram because of its shape. The diagram is used to illustrate the

sequence of possible causes of a problem or an effect. As many causes result inone problem, it is important to understand the effects of these causes on eachother and the final problem. The steps involved in the implementation of cause andeffect method are the following:

1) Identify the problem or effect for which potential causes are to be analyzed.

2) Identify main causes and sub-causes through brainstorming.


6/8


3) Illustrate these causes in a diagram, showing the relationship between differentcauses and their effects on the problem. Figure shows a cause and effectdiagram for analyzing the causes for poor sales.

PARETO METHOD

According to the Pareto principle, about 80% of the problem are due to 20% vitalfew factors. By identifying these vital few problem areas, the management can

employ most of its resources in solving them, and leaving trivial many. Paretocharts are used to graphically depict and evaluate the relative significance of thedifferentcauses on a particular condition. Pareto method helps in

1) Identifying and focusing on the items which require utmost attention.

2) Optimizing or modifying the factors which would improve quality the most.

3) Analyzing effects of a change before and after its application.

The process of developing a Pareto chart involves the following steps:

1) Identification and categorization of data regarding problems, errors, causes,etc.

2) Tabulating information on the number of times an individual event hasoccurred, using a tally table. The tally is based on common unit ofmeasurement like time, frequency or costs.

3) Calculating the relative and cumulative percentage of the occurrence ofdifferent category of items

4) Generating a Pareto chart. On the x-axis of the chart, problems or causes areplotted in descending order of occurrence from left to right. Two vertical axesare created on far left and far right edges of x-axis. The vertical axis on the left

PoorSales

AdvertisingCustomers

SalesMarkets

Product priced to high

Salesmen not effective

No special promotionCompetitorsproduct better

Product Outdated

Complimentary products

Not enough advertising

Wrong medium used

Not aware ofthe product

Model not attractive

Pricing not right

Figure: Cause and Effect Diagram


7/8


depicts the frequency of occurrence of each segment of data and the verticalaxis on the right depicts cumulative percentage.

5) Draw a bar graph from the information.

6) Draw a line graph by using cumulative percentage, wherein the first pointshould be on top of the first bar. If the cumulative line is steep and arched thenit can be interpreted that the first few causes contribute most to the problem.In case the cumulative line is straight it indicates each cause contributesequally to the problem. The Figure (Given below) shows a Pareto chart toidentify the main causes for delay in production based on the informationprovided in the Table (Given below).

Table: Causes and Relative PercentageCauses Number of

OccurrencePercenta

geCumulativepercentage

Machine Breakdown 30 46 46

Absenteeism 15 23 69

Raw Material delay 12 19 88

Preventive maintenance 8 12 100

PROCESS CAPABILITY

Process capability refers to the ability of a process to function within its designspecifications, which are defined by both its central tendency and inherent processvariability. The design specifications are expressed in terms of a central value andtolerance level. For instance, the design specification for a steel sheet may have acentral value for thickness as 10 cm and tolerance level of +/-2 mm. Based on thistolerance level, the upper tolerance limit is 10.2 cm and lower tolerance limit is 9.8cm. So a process would be considered capable if the thickness of the steel sheetsfell between the upper and lower specifications.

Figure: Pareto Chart

0

10

20

30

40

50

60

70

80

Machine

breakdown

Absenteeism Raw material

dealy

Preventive

maintenance

Cause

NumberofOccurance

0

20

40

60

80

100

120

CumulativePercen

tage


8/8


The process capability ratio (Cp) is given by the equation

6

LTLUTLpC

=

Where,

UTL= Upper tolerance limit

LTL= Lower tolerance limit

= Standard deviation of the process variability

If the value of Cp is more than one, the process is considered capable, and if thevalue is less than 1, the process is considered not capable. The assumption thatthe average of the process variation would be centered at process mean is not truein most cases. So a better method for identifying the performance of the process isidentifying the position of the process mean in relation to the design limit. Theprocess mean can shift in either direction, i.e. towards UTL or LTL, and its distancefrom the design specification sets the limit on the process capability.

If,

Cpk < 0, process average is not within design limits, the process would result inhigh defect rates and immediate action would be required to improve processcapability.

0 < Cpk < 1, the process is centered within the design limits, but the head and tailare outside the design limits. Defects rates are high for this process and immediateaction may be required.

Cpk = 1, then the process only just meets the design specifications.

Cpk > 1, then all the output from such processes are within the designspecifications.

So, the greater the value of Cpk, the better the performance of the process.

= 3XUTL,

3LTLXminpkC

fundamentals of quality management

Documents