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LECTURE – 5

QUALITY PHILOSOPHY AND PERFORMANCE


EXCELLENCE

Learning objective

• To discuss various quality philosophies proposed by quality gurus


and performance excellence models
5.10 Quality Philosophy by different quality gurus
In this section we will discuss the insights regarding managing and improving quality
proposed by various quality gurus, which are as follows.

1. The Deming Philosophy


2. The Juran Philosophy
3. The Crosby Philosophy
4. The Ishikawa’s Philosophy

5.10.1 The Deming Philosophy


W. Edwards Deming, a doctorate in mathematical physics in 1928 changed the way
Japanese companies were working. Deming provided quality concepts, which were
followed by Japanese companies, helped them to become world leaders in the
manufacturing sector. Later on Americans and whole world were influenced by
Deming’s philosophy that quality should be given prime importance.

• Deming emphasized that all stakeholders and all departments in an organization


should be considered as a part of one whole system. The stakeholders and
departments should work together towards a common goal to optimize the
performance of system.
• As per Deming, variation of any form caused due to any reason can lead to
increase in the costs. It is important to understand the variation, and identify the
source or cause of variation. Identify the cause of variation and make changes
in the process, technology, people, material, methods or measurement systems.
• It is important to understand the psychology of people. Proper nurturing of
people will help employees to enjoy work by exhibiting their innate attributes,
which may have quality impact on quality performance.
• Deming also suggested that management decisions should be supported with
data, facts and justifiable theories.

Deming propounded on ‘14 points for management’ to meet customer needs and for
continuous improvement which are given below in table 5.8.
TABLE 5.8: DEMING POINTS ON QUALITY MANAGEMENT

Deming Points Description


• Continuous improvement in all areas of
business.
Consistency
• Ensure that the company’s vision of quality
is understood by all in an organization
• Bring new ways of thinking by learning new
Learning new philosophy
approaches or by encouraging innovations
• Eliminate unnecessary inspections that adds
to non-value added costs
Minimize cost of inspection
• Improve the process which leads to less
number of defects
• Purchasing decisions only based on low
price may actually result in costs due to
inferior materials realized during production
process in the form of expensive inspection,
Price should not be only criteria rework, and scrap.
for purchasing • Encourage reduction of total cost of
ownership
• Emphasize on partnership with few
suppliers providing good quality products or
services
• Understand customer needs through market
surveys and feedback to incorporate service
Improve constantly
design process
• Eliminate wastes in all the functional areas
• Institute training for employees on
diagnosing, analyzing and solving quality
On-the-job training related problems on continual basis
• Evaluate training programs or effectiveness
of training using statistical methods
• Good leadership and guidance should
Good leadership as facilitators facilitate workforce to learn by eliminating
fear and by encouraging team work
• Encourage workforce to communicate their
Drive out fear
problems share new ideas without fear
• Remove barriers between individuals and
Remove functional silos between departments
• Encourage team work to have common goal
of meeting customer needs and improving
process performance
• Slogans and posters may cause resentment
Eliminate exhortations to employees as most of the system related
problems are not under their control
• Setting numerical goals may result in
Eliminate numerical targets resentment and frustration in employees and
may affect quality
• Encourage empowerment
Instill sense of pride in
• Provide sense of ownership to the
workmanship
employees work processes
• Educate workforce outside of specific job
Provide education
skills like self-development
• Top management should be committed of
continuous improvement as any cultural
Top management commitment
change begins with top management and
then percolates to whole organization

5.10.2 The Juran Philosophy


Dr. Joseph M.Juran, a Balkan-born American, started his profession as industrial
engineer in 1920’s. Juran took a pragmatic approach towards quality by focusing on
accounting and analysis of quality costs. Juran defines quality as “fitness for use”,
which can be classified into four categories as shown in figure 5.26.
FIGURE 5.26: JURAN’S CLASSIFICATION OF QUALITY

Juran propounded quality as quality triology comprised of quality planning, quality


control and quality improvement as shown in figure 5.27.

FIGURE 5.27: JURAN’S QUALITY TRIOLOGY


Juran linked quality trilogy with cost of poor quality in the form of waste. Once the
operation begins for any product after quality design 20% of work has to be repeated
due to quality deficiencies leading to chronic waste. To prevent the process from
going out of control, quality control is implemented to bring the process back within
control limits. Dr. Juran wrote many books and his first book was Quality Control
Handbook.

5.10.3 The Crosby Philosophy


Philip B. Crosby, a graduate of the Western Reserve University had experience in
quality control jobs from line inspector to Vice President for quality at International
Telephone and Telegraph (ITT). He published many book like “Quality is Free”,
“Quality Without Tears”, "Running Things”. Crosby’s philosophy can be related with
the concepts of ‘do it right first time’ and ‘zero defects’. Crosby defines quality with
Absolutes of quality management and these Absolutes are presented below.

1. Quality means conformance to the requirements, which can be achieved by


stating and understanding these requirements clearly.
2. There is nothing like quality problems. The problems or causes of problems
originate from different departments. Quality department should measure
conformance and report results.
3. Doing the jobs right at first time will not incur any costs hence there is nothing
like economics of quality. The cost of quality is the expense of non-
conformance.
4. The performance standard must be zero defects. Organizations should
concentrate on preventing defects rather than finding and fixing them.

5.10.4 The Ishikawa’s Philosophy


Professor Kaoru Ishikawa was graduated and doctorate from Engineering Department
of Tokyo University. Professor Ishikawa pioneered quality circle which is a voluntary
group of some workers or employees, also named as corrective action teams. The
quality circles can belong to a specific department or they may be limited in scope to
problems within that department. There can be quality circles at cross functional level.
The teams meet once a week to identify a set of problems and select one to work on
using standardized problems solving methodology.
Ishikawa devised Pareto diagrams and cause-and-effect diagrams to emphasize on
good data collection and presentation techniques. These easy to use tools assist quality
circles in cost reduction, identifying the causes of defects and quality improvement.

5.11 Frameworks for Performance Excellence


It is very important for organizations to be aware of competition so that organizations
can place themselves on the scale of performance measures. It helps in making right
improvements in proper directions. Certain frameworks are proposed in quality area as
mentioned below.

1. Benchmarking
2. ISO
3. Six Sigma

5.11.1 Bench Marking


Benchmark is a reference point used as a standard of comparison of performance. In
benchmarking process organizations compare their performance with other
organizations known for being “best in class” or leaders anywhere in the world.

What is benchmarking?

 Standard of comparison
 Means of self-evaluation
 Means of subsequent improvement

What to benchmark?

Organizations can benchmark following items

 Functions
 Processes
 Performance measures
 Any quality dimension

With whom to benchmark?

Benchmarking can be done

 Within organization between departments or between functions.


 With other organizations externally for the same functions/departments.
 With the best organization of same industry.
 With some specific process or function of different industry.

Examples

 Companies would like to benchmark Domino’s quick delivery process within


30minutes.
 Airlines would like to benchmark a particular airline whose turnaround time is
the shortest in industry.

Why benchmarking?

 Attempts to gain and maintain competitive advantage.


 Helps to create quality targets.

How to perform benchmarking?

 Visiting firms which have earned reputation for being “best in class”.
 Understand and learn best business practices.
 Plan for what to benchmark and identify companies to be compared. Collect
data and analyze the data for the performance gap. Devise method to fill the
gaps and set functional goals. Develop action plans and monitor the
performance.

Example

Xerox sent a project team to learn from its Japanese joint venture partner, Fuji-xerox
to fill the performance gap with Japanese competitors. By learning and adopting good
practices Xerox was able to reduce costs, improve quality and reduce time to market.

5.11.2 ISO (International Organization for Standardization)


ISO stands for International Organization for Standardization, which is a non-
governmental organization with a central secretariat in Geneva, Switzerland. The
objective of ISO is to facilitate international trade and coordination by establishing a
common set of standards. There are around 150 countries networked with ISO. From
India Bureau of Indian Standard (BIS) is a member of ISO. ISO has published over
15000 International standards with a series of quality standards written in 1987.
Quality standards were revised in 1994, 2004 and in 2008.

ISO 9000 are the standards for building a management system to produce quality
products (goods and service). It act as evidence from customers perspective that a
management system is in place as per their satisfaction. ISO 9000:2000 standards
focus in developing, documenting and implementing procedures to ensure consistency
in the process. ISO 9000 defines quality system standards with following objectives.

• To guide suppliers and purchasers about the minimum requirements of a quality


system.
• To achieve customer satisfaction by preventing non-conformity at all stages of
production or service process.
• To provide confidence to internal management, and stakeholders that quality
system requirements are fulfilled.

There are three types of ISO documents given in table 5.9.

ISO 9000 Fundamentals or definition of key terms


For development/design production, installation and
ISO 9001
servicing
ISO 9002 Only for production and installation of products/services

ISO 9003 Only for final inspection and testing


Guidance for quality system elements and performance
ISO 9004
improvement

TABLE 5.9: DIFFERENT ISO 9000 STANDARDS

ISO 9000 does not emphasize on results achieved but focus on the existence and
conformance to the elements of quality system. An organization needs to be certified
by an independent agency to adopt ISO 9000. As per certification of ISO standards,
organization documents its quality system and commonly follow “say what you do,
and do what you say”.

ISO 9000:2000 have following quality management principles

1. Customer focus
2. Leadership
3. Involvement of people
4. Process approach
5. System approach to management
6. Continual improvement
7. Factual approach to decision making
8. Mutually beneficial supplier relationship

The ISO standards were revised in 2008 as ISO 9000:2008 for various sub sections
like legal standards, out sourcing, internal audits, design and development process,
monitoring and measuring process, and controlling non confirming products.

ISO 9001:2008 is comprised of eight clauses as mentioned below.

1. Scope: It defines the scope of the quality management system (QMS), areas
covered and exclusions.
2. Normative reference: ISO 9000:2008 fundamentals and vocabulary must be
used in conjunction.
3. Terms and conditions: apply terms and conditions given in ISO 9000.
4. General requirements and documentation requirements.
5. Management responsibility: Responsibility of top management for effective
leadership with consideration of points presented in the sub-class in figure 5.28.

FIGURE 5.28: MANAGEMENT RESPONSIBILITY AS PER CLAUSE 5


OF ISO 9000:2008

6. Resource Management: Ensures that the required resources are available to


maintain and improve QMS. The sub-clauses of this clause are presented in
figure 5.29, which should be aligned with customer requirements.
FIGURE 5.29: RESOURCE MANAGEMENT AS PER CLAUSE 6 OF
ISO 9000:2008

7. Product Realization: This clause is comprised of six sub-clauses as given in


table 5.10.

TABLE 5.10: SUB CLAUSES OF PRODUCT REALIZATION CLAUSE OF


ISO 9000:2008

Number Sub-Clause Description


Planning and developing
processes for product
7.1 Planning of product realization
realization and maintaining the
relevant records.
Determine requirements
specified by the customers and
not stated by the customers but
7.2 Customer related process
necessary for the intended use
of product or service or
regulatory requirements.
Determine design &
development stages, the
review, verification and
7.3 Design & Development
validation of each stage, and
responsibilities and authorities
for design and development.
Proper procedures and criteria
7.4 Purchasing for evaluation and selection of
suppliers considering the fact
that each sourced component
will have impact on the quality
of final product.
Control of production and
service provision, validation
for processes for production
and service provision,
7.5 Production & service provision identification and traceability
of product or service, identify
and safeguard customer
property, preservation of
product.
Applies to organizations where
monitoring and measuring
Control of monitoring & devices are used to verify that
7.6
measuring devices products provided to the
customers are as per their
requirements.

8. Measurement Analysis & Improvement: This clause covers the wider


monitoring, measurement, analysis and improvement of the quality
management system. It should demonstrate the conformity of the product and
focus continual improvement. This clause has various subclasses as given in the
figure 5.30.
FIGURE 5.30: CLAUSE EIGHT OF ISO 9000:2008

In the past, ISO standards were assured to be applied only to manufacturing sector, but
these standards are now adopted by all sectors of service industry.

Example

The service sector like educational institute can also be ISO certified. IIT Madras, one
of the institutes of national importance in higher technical education has various non-
academic sections, certified as per ISO 9001:2008 requirement. Various sections like
central library, central workshop, stores and purchase, engineering units and few
others are certified and are being audited regularly as per ISO standards.

5.11.3 Six-Sigma
Six-sigma is a quality improvement initiative of reducing variation in the process and
preventing deficiencies in the product or service. The six-sigma means there are six
standard deviations between the process mean or central line and either specification
limit (Upper specification limit, USL or lower specification limit, LSL) as shown in
figure 5.31. This can be described as if an organization is producing 1 million
products, only 0.002 products will be defective. For a more generalized case, six-
sigma is defined in the units of defectives per million opportunities (DPMO).
Achieving 0.002 DPMOs is as good as zero defects.

Figure 5.31: Six sigma quality level


That is why the philosophy of six- sigma is to have one ultimate goal of zero defects
in everything we do. The concept of six-sigma was pioneered by the late Bill Smith, a
reliability engineer at Motorola, who sold this concept to Motorola’s CEO during mid-
1980. Motorola was able to achieve six-sigma capability by 1992. Motorola allows an
off-centering of process up to 1.5 sigma or quality level of 3.4 DPMO.

The other company, which has made significant improvements by implementing six-
sigma is General Electric (GE), driven by former CEO Jack Welch. Six-sigma has
been so imbibed in GE that Jack Welch in mid-1990’s changed its incentive
compensation plan. As per his incentive compensation 60% of the bonus was based on
financial and 40% on six sigma achievements.

Six-Sigma Projects Implementation

Six sigma projects are implemented using DMAIC process which stands for Define,
Measure, Analyze, improve and Control described in table 5.11.

Define Identify the attributes considered most important by the customers, also
called Critical to Quality (CTQ) characteristics. Define these priorities
given by customers.
Measure Measure the performance of process and defects arising in the products
or services pertaining to CTQ.
Analyse Analyze the process to identify key reasons or cause of variation
defects in the process
Improve Improve the performance of the process by fixing specification limits
of key variables to remove the cause of the defects. Establish the
systems of measuring the defects to improve the process performance.
Control Design controls by measuring ached performance with standards,
validate the measurement system and monitor the process control to
hold the gains of improvement.

TABLE 5.11: DMAIC PROCESS OF SIX-SIGMA

The DMAIC approach for six-sigma utilizes seven quality control tools, Quality
Function Development (QFD), Statistical Quality Control, Poka Yoke devices and
many other techniques to reduce the defects in the process. Six sigma approach, by
focusing on defects reduction or cost of poor quality reduction, helps to gain financial
returns for an organization.

Six-sigma is widely applied in service sector mostly in the transactional and


administrator processes. Some of the performance variables which can be improved
using six-sigma are given below.

 Reduce the average number of days and corresponding variation in getting the
passport after application submission.
 Reduce variation in cash flow.
 Reduce errors in invoices generated at retail stores.
 Improve the speed at cash counter of super market.
In six-sigma, Defects Per Million Opportunities (DPMO) are determined using
following equation.

Total number of defects det ected


DPMO ×1000000
Number of units produced × Opportunities of defects per unit

Where,

Defect is defined as any part of a product or service that does not meet customer
specifications or requirements.

The opportunities are the total number of chances per unit to have a defect.

A unit and an opportunity should be quantified by a customer.

Example:

A customer calling to the call center of Washing Machine Company has two
complaints. First regarding long hold of telephone call and second is the executive
receiving the call is not technically sound to provide solution.

So, in such case, the unit is telephone call. The opportunities of defect per unit are 2
per call.