MODULE 4.

1 IMPORTANCE OF QUALITY

QUALITY IS ONE OF THE KEY OBJECTIVES IN OPERATIONS MANAGEMENT ALONG WITH PRODUCTIVITY, COST, FLEXIBILITY & DELIVERY GOOD QUALITY REDUCES COSTS DUE TO PRODUCT RETURNS, REWORK AND SCRAP GOOD QUALITY INCREASES PRODUCTIVITY, PROFITS, BRAND IMAGE, PRODUCT IMAGE AND COMPANY IMAGE.

IT ALSO GENERATES, SATISFIED CUSTOMERS WHO REWARD THE ORGANIZATION WITH CONTINUED PATRONAGE AND FAVORABLE WORD FO MOUTH ADVERTISEMENT.

THE IMPORTANCE OF QUALITY CAN BE STATED AS

NO QUALITY NO SALES NO SALE NO PROFITS NO PROFIT NO JOBS

QUALITY - WHAT IT STANDS FOR

Q QUEST FOR EXCELLENCE U - UNDERSTANDING CUSTOMER NEEDS A - ACTION TO ACHIEVE CUSTOMER SATISFACTION L - LEADERSHIP FOR ACHIEVING QUALITY I - INVOLVING PEOPLE T - TEAM SPIRIT TO ACHIEVE A COMMON GOAL Y - YARD STICK TO MEASURE PROGRESS

MODERN QUALITY MANAGEMENT

THE MODERN APPROACH TO QUALITY IS REFLECTED BY THE IDEA THAT QUALITY DRIVES PRODUCTIVITY. THE MODERN ERA OF QUALITY MANAGEMENT WAS HERALDED BY A FEW NEW THINKERS KNOWN AS QUALITY GURUS LIKE W.EDWARDS DEMING HIGH QUALITY MEANS LOWER COST

PHILIP . B. CROSSLY ZERO DEFECTS

ARMAND . V. FEIGENBAUM QUALITY AT SOURCE (STARTS WITH EMPLOYEE)

KAORU ISHIKAWA - QUALITY CIRCLES FISH BONE DIAGRAM JOSEPH . H. JURAN TOP MANAGEMENT COMMITMENT GENECHI TAGUCHI STATISTICAL QUALITY CONTROL MODERN QUALITY MANAGEMENT FOCUSES ON MODERN QUALITY PLANNING, CONTROL AND IMPROVEMENT. THIS PROCESS REQUIRES, A CONTINUOUS INTERACTION BETWEEN THE CUSTOMER, OPERATIONS AND OTHER PARTS OF THE ORGANISATION. THIS IS KNOWN AS QUALITY CYCLE .

CUSTOMER NEEDS ARE DETERMINED THROUGH MARKETING FUNCTION. THE ENGINEERING DEPARTMENT DESIGNS A PRODUCT TO MEET THOSE NEEDS AND FINALISES THE DESIGN SPECIFICATIONS THAT FIT WITHIN PRODUCTION CAPABILITIES PAGE 31 (KSB) EXHIBIT 2.1 QUALITY CYCLE.

DETERMINANTS OF QUALITY

SEVERAL ACTIVITIES AND ACCOMPLISHMENTS ARE NECESSARY TO ACHIEVE QUALITY. THEY ARE:

QUALITY OF DESIGN QUALITY CAPABILITY OF PRODUCTION PROCESSES QUALITY OF CONFORMANCE QUALITY OF CUSTOMER SERVICE ORGANISATION QUALITY CULTURE

QUALITY OF DESIGN: IT IS DETERMINED BEFORE THE PRODUCT IS PRODUCED AFTER ASCERTAINING THE CUSTOMERS REQUIREMENTS. PRODUCTS ARE DESIGNED TO EXHIBIT THE ATTRIBUTES NECESSARY TO MEET CUSTOMER EXPECTATIONS. QOD IS DETERMINED BY A CROSS FUNCTIONAL TEAM CONSISTING OF MEMBERS FROM MARKETING, ENGINEERING, OPERATIONS AND OTHER FUNCTIONS. QUALITY OF DESIGN IS DETERMINED BY MARKET RESEARCH, DESIGN CONCEPT AND SPECIFICATIONS.

A PARTICULAR DESIGN CONCEPT IS DEVELOPED TO MEET THE CUSTOMER NEEDS. THE DESIGN CONCEPTS THAT RESULTS IN A SET OF SPECIFICATIONS FOR THE PRODUCT. QUALITY OF PRODUCTION PROCESSES:

PRODUCTION PROCESSES MUST BE DESIGNED AND BUILT TO HAVE CAPABILITY OF PRODUCING PRODUCTS WITH ATTRIBUTER WANTED BY CUSTOMER.

MANUFACTURING PROCESS SPECIFICATION (COMPANY STANDARDS) SHALL BE ESTABLISHED FOR VARIOUS PRODUCTIONS PROCESSES TO ENSURE PROCESS CAPABILITIES:

STANDARDS FOR FABRICATIONS, JOINING, MACHINING, PLATING, PAINTING, PACKING ETC SHOULD BE AVAILABLE, AND FOLLOWED STRICTLY. QUALITY OF CONFORMANCE:

IT REFERS TO MANUFACTURING PRODUCTS MEETING OR CONFORMING TO SPECIFICATIONS PRODUCTION FACILITIES AND PROCESSES ARE USED TO PRODUCE PRODUCTS AND SERVICES THAT MEET PERFORMANCE SPECIFICATIONS.

QUALITY IF CUSTOMER SERVICE:

ALL CONTRACTS BETWEEN CUSTOMERS AND COMPANIES MUST BE MANAGED WELL SO THAT THE CUSTOMER PERCEIVES THAT THEY HAVE BEEN TREATED FAIRLY AND COURTEOUSLY WITH THEIR NEEDS, ATTENDED TO PROMPTLY AND WITH CARE AND CONCERN.

ORGANISATION QUALITY CULTURE:

THE ENTIRE ORGANISATION MUST FOCUS ON DESIGNING PRODUCTS AND SERVICES THAT MEET CUSTOMER EXPECTATIONS. EFFORTS MUST BE MADE TO CONTINUOUSLY IMPROVE TOWARDS MEETING EVER INCREASING LEVELS OF CUSTOMER SATISFACTION.

COST OF QUALITY:

IT REFERS TO COSTS THAT ARE ASSOCIATED WITH PREVENTING POOR QUALITY AND ALSO COSTS THAT OCCUR AFTER POOR QUALITY PRODUCTS. THE COSTS OF POOR QUALITY RESULTING IN LOSSES IS ESTIMATED TO BE IN THE RANGE OF 20 TO 30 PERCENT OF GROSS SALES FOR DEFECTIVE AND UNSATISFACTORY PRODUCTS. THE FOUR MAJOR CATEGORIES OF COSTS OF QUALITY ARE:

PREVENTION COSTS APPRAISAL COSTS COSTS OF INTERNAL FAILURE COSTS OF EXTERNAL FAILURE

PREVENTION COSTS: ARE ASSOCIATED WITH PREVENTING DEFECTS BEFORE THEY HAPPEN. THEY INCLUDE THE COST OF REDESIGNING THE PRODUCT OR PROCESS TO REMOVE CAUSES OF POOR QUALITY, TRAINING EMPLOYEES IN THE METHODS OF CONTINUOUS IMPROVEMENT, WORKING WITH SUPPLIERS TO INCREASE THE QUALITY OF PURCHASED ITEMS AND / OR SUB-CONTRACTED ITEMS. APPRAISAL COSTS: THEY INCLUDE COST OF DETECTING DEFECTS SUCH AS COST OF INSPECTION, TESTING, QUALITY CONTROL ACTIVITIES AIMED AT FINDING PRODUCTS THAT DO NOT CONFORM TO SPECIFICATIONS.

APPRAISAL COSTS INCLUDE INCOMING MATERIAL INSPECTION AND COSTS INCURRED ON MAINTAINING QUALITY LABORATORIES. INTERNAL FAILURE COSTS: IT REFERS TO THE COSTS WHICH RESULT FROM DEFECTS THAT ARE DISCOVERED DURING THE PRODUCTION OF A PRODUCT OR SERVICE WHEN PRODUCTS ARE FOUND TO BE DEFECTIVE WHILE IN PRODUCTION, THEY MUST EITHER BE SCRAPPED OR SENT BACK FOR REWORK. THE COSTS INCLUDE COST OF PRODUCING THE ITEMS THAT ARE SCRAPPED, THE COST OF REPAIRING, REWORKING, RETESTING DEFECTIVE PRODUCTS AND ALL THE COSTS OF DELAYS, PAPERWORK, RESCHEDULING AND OTHER HASSELS CAUSED BY DEFECTIVE PRODUCTS.

INTERNAL FAILURE COSTS FALL INTO TWO MAJOR CATEGORIES.

YIELD LOSSES WHICH ARE INCURRED IF A DEFECTIVE ITEMS HAS TO BE SCRAPPED REWORK COSTS WHICH ARE INCURRED IF THE ITEM IS REROUTED TO CORRECT THE DEFECTS OR IF THE RESOURCE MUST BE PERFORMED AGAIN. SCRAP, REWORK, DOWN GRADING, RETEST, DOWNTIME, COSTS.

EXTERNAL FAILURE COSTS: IT ARISES WHEN A DEFECT WAS DISCOVERED AFTER THE CUSTOMER HAS RECEIVED THE PRODUCT OR SERVICE. THESE COSTS INCLUDE WARRANTY COSTS, PRODUCT LIABILITY SUITS OR SUPPLEMENT, THE COST OF PRODUCT RETURNS OR RECALLS AND LOST BUSINESS AND CUSTOMER GOOD WILL. WARRANTY, RETURNED MERCHANDISE, COMPLAINTS & ALLOWANCES.