141107

PRODUCTIVITY AND QUALITY MANAGEMENT

Productivity
• Measurement of output related to inputs
• Yield – Ratio

Project – Exercise – given on 1st lecture ( 30 ) to be done individually.

Quality
• Different definitions –
o Conventional – one that wears well, well constructed and will
last for a long time.Therefore, will meet cost requirement

We will deal with various other definitions later –

Before that let us try & trace the History of Quality Management

History of Quality Management

- The issue of Quality of Goods and services is not new. Throughout

history – say 1700 BC King Hummurabi of Babylon – introduced the
concept of product quality and liability into the building industry
declaring

o “.. if the building falls into pieces and the owner is killed, then
the builder shall also be put to death. If the owner’s children
die, then the builder’s children also die.”

- Industrial revolution:
o Early-mid 19th century
o Many technological advances – (Do you remember our
discussion on “The Race”)
o Invention of steam engine
o Standardization of engineering components as screw threads
o Advent of mass production – early 20th century
o Increased demand / control of product quality
o 1920-30 – Walter Steward at AT&T – Bell Laboratories
- Used statistics for Industrial process
 - His book “The economic control of Quality of
manufactured products” was considered as landmark
contribution to the efforts to improve the quality of mfd.
Goods. He reported
• Variations could be understood through
application of simple statistical tools, such as
sampling and probability analysis. His basis was
“Use of Statistics to processes” to provide an
early warning and allow products to be adjusted
prior to producing defective products”.
- He developed “control Charts” to track performance
over time.
o 1920
o The concept of quality emerged in 1920’s in the USA.
o W. Edwards Deming: (disciple of Schewart)
- Went one step ahead.
• By shifting the theory of checking Q by
statisticians from Inspection stage to Inception
stage.
- Deming was regarded as father of TQM.
- He believed Q concerns everybody
o Before WW II, US / Europe felt Deming’s theory as a useless
pursuit. They were more concerned with “cutting costs” and
selling. All their management attention was pointed towards
reduction in human labor.
o Now, Japan (post WWII) was a shattered economy. Gen.
McArthur (Governor of Japan) brought Deming to Japan,
o The Japanese listened – felt it was a natural way “to prevent
waste”
o Their willingness to heed boosted Deming’s exhortation.

o 1954
o Again in 1954 JURAN visited Japan, helped Japanese
manufacturers restructure – gave way to tremendous exports
potential – thrust upon them Q concepts and tools – earlier
these concepts were designed primarily for factory – later
became the basis for an overall “Management process”

o 1979
- Philip Crosby (started a Quality Consultancy firm)
• He said “Quality is Free” – Zero defects
• Product should be in “complete conformance to
defined Q parameters and not AQL –
• Quality is achieved by prevention, not appraisal
o 1970-80 - Japan hit the globe (with Deming & Jurans) ideas
o Japanese created the leading edge in manufacturing
- First with basic technology (steel, aluminum, ship
building
- Then, with increasingly sophisticated products like
motorcycles, cameras, TVs, semi conductors,
appliances
- They invaded the world market
- They told the world “Throw traditional thinking – face
bitter moments of truth”
• For example, JIT (Taichi oheno / Shgeo Shingo) is
a revolutionary shift in paradigm
• Reverses workflow from Supplier – Manufacturer
– customer to Customer – Manufacturer –
Supplier.
• This shall strip away all “Inventories”
o Genuchi Taguchi
- Cut the “noise” level at design stage – to get uniformity
from product to product
o Kauro Ishikawa
- “Fish Bone diagram” (identifying possible causes of
problems)
- And, Quality Circles.
- Important:
• Inverts traditional management thinking – through
bottom up problem solving.
o 1980 - NBC, USA
• “If Japanese can do it why can’t we?”
• Struck a public chord
• And unlike 1970s – US companies took Quality
serious
• By 1990 virtually all US companies were on a
quality revolution
o E.g. Motorola – six sigma concept
o Statistical improvement in output
o Everything that is done has to be
99.99997% correct
o Later – six sigma – 0.334% - defect not >
1ppm.
o India
- Not lagging behind – due competitive pressures, --
M&M, C&G, Amtrex, Stanchart, HLL, Philips (I), Godrej,
many others.
(Q is no more a tool for competitive advantage – A threshold
limit and a Qualifier)
--------------------------------------------------------------------------------------

Definitions:
• Webster dictionary
o Quality is physical or non-physical. Characteristics that
constitutes the basic nature of a thing or one of its
distinguishing attributes / features

• Radford:
o Characteristics or grade or combination of characteristics
which distinguishes one article from another, or goods of one
manufacturer from competition, or one grade for product from
a certain factory from another grade out by the same factory.

• Juran
o Quality is fitness for use

• Grant & Leavenworth:

o It is convenient to think of all matters related to Q of
manufactured product in terms of these functions of ---
specification, production and inspection

• Philips Crosby
o Quality is conformance to requirement
o Quality is respect to Humanity

• Deming
o Quality should be aimed at the needs of the consumer present
and future

• Feigenbaum
o Quality is the total product and service characteristics of
marketing, engineering, manufacturing and maintenance
through which the product and service in use will meet the
expectation of the customer.

• Mizuno
o Product quality encompasses those charactierstics which the
product must p0ssess, if it is to be used in the intended
manner

• Teguchi
o 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.
• ISO 9000
o QA, all those planned and systematic actions necessary to
provide adequate confidence that a product or service will
satisfy given requirements for quality.

• American National Standards Institute

o QC is the operational techniques and the activities which
sustain a quality of a product or service that will satisfy given
needs, also the use of such techniques and activities.
o TQC is an effective system for integrating the quality
development, quality maintenance, and quality improvement
efforts of various groups in an organization, so as to enable
marketing, engineering production and service at the most
economical levels which allow full customer satisfaction.

• David Garvin (Harvard Business School)

o Describes it as different purposes, stage(s) of product
development, product develop type, type of product or
process and company strategy. He talked about 5 approaches:
• 1) Transendent approach: Q is recognized through
learning and experience defined in terms of innate
excellence
• 2) Product based approach: Quality is precise and
measurable, it can be ranked on various attributes and
is an inherent part of the product
• 3) User based approach: Q reflects personal view,
reflected in consumer demand curves, in marketing
quality is the ideal combination of attributes for
maximizing consumer satisfaction.
• 4) Manufacturing based approach: focus on engineering
and manufacturing practices; quality is defined as
conformance to specs, decreased costs by decreasing
no. of deviations.
• 5) Value based approach: Quality is defined as
performance or conformation at an acceptable cost,
“noion of “affordable excellence”.
Definitions of Quality Gurus (some more insights)
Give here to the students the Comparison table (handwritten)

W. Edward Deming
- Developed Juran’s “road map” to quality
- 85% of quality problems are due to poor system
- 15% only employees – Systems provides a common language
- Heart of Q strategy is SQC – to identify special causes and common
causes of variation
- Categorized “Personnel performance evaluation” as “management
by fear”
- His 14 points – and 7 deadly sins are widely applauded
o 7 deadly sins:
 Lack of constancy of purpose
 Emphasis on short-term profits
 Evaluating performance, merit rating or annual review
 Mobility of management (commitment to the
organization impacted?)
 Management by visible figures
 Excessive medical costs
 Excessive costs of liability
o 14 points
 Create and publish to all employees a statement of aims
and purpose of the Company. Mgmt. must demonstrate
constantly their commitment to this statement.
 Learn the new philosophy – by top M and everybody
 U/stand the purpose of inspection for improvement of
processes and reduction of cost.
 End the practice of awarding business on the basis of
price tag alone
 Improve constantly and forever the system of
production and service
 Institute training (for skills).
 Teach and institute leadership
 Drive out fear, create trust and a climate for innovation
 Optimize toward the aims/purposes of Co.
 Eliminate exhortations for workforce - Eliminate quotas /
MBO – instead learn capabilities of process and how to
improve them.
 Remove barriers that rob people of pride / ownership
 Encourage education and self improvement
 Take action to accomplish the transformation.
Joseph P. Juran

- Quality is “fitness for use of customer’

- Full management commitment to Q effort – not just a leadership role,
but “hands on” involvement
- His “universal process of Q improvement” requires studying
symptoms, diagnosing causes, and applying remedies”

- Juran’s Trilogy

o Quality Planning:

 Process, identify customers requirement from the

product, service features the customer expect, the
process that will delivery those products with correct
attributes, and then facilitates the transfer of this know
how to the producing arm of the organization

o Quality Control:

 Process where product is actually examined and

evaluated against original requirement – expectations of
customer, problem detected – corrected.

o Quality improvement:

 Process – sustaining mechanisms are put in place, so

that quality can be achieved on a continuous basis.
Includes, allocating resources, assigning people to
pursue quality projects, and in general establishing a
permanent structure to pursue Q and maintain the gains
secured.

Juran recommended project-by-project improvements in which projects

are selected on the basis of their projected return on investment.
Armand V. Feigenbaum

- TQC – everyone’s responsibility

- Said: Responsibility should be beyond design and mfg.
- He abhorred poorly designed – inefficiently distributed,
incorrectly marketed, etc.
- His 9 Ms of Quality

o Market
o Money
o Management
o Men
o Motivation
o Materials
o Machines and mechanism
o Modern Info. Methods
o Meeting product requirements

- His 10 principles

o General Management involvement

o Serious consideration of employee ideas
o Long term continuity
o Involvement – Office – factory
o Clear, simple programs
o Careful initial preparation
o Purposeful involvement
o Fresh, relevant
o Line operation leadership
o Company wide QC
Kaoru Ishikawa
- Customers’ view of product performance and producer’s view
- His 6 principles are:
o Quality first
o Consumer orientation
o Breaking down the barrier of sectionalism
o Utilization of statistical method
o Participatory management
o X functional management
- He suggested the following tools
o Cause – Effect
o Stratification
o Check Sheet
o Histogram
o Scatter diagram
o Pareto charts
o Graphs / SQC

Shigeo Shingo
- Poka Yoke devices

Genichi Taguchi
- System Design (primary)
- Secondary design (secondary)
- Tolerances design (tertiary)
Gravin’s 8 dimensions of quality:
• (shift the approach as product moves from design – manufacturing –
market place.
o 1. Performance: Industry reactions to objective characteristics
(User)
o 2. Features: “bells and whistles” or product /secondary to
basic function and less central to user
o 3. Reliability: Problem of product failing within a given period
of time period, more relevant to durable goods
o 4. Conformance: degree design / operational characteristics
match specification; related to reliability; factory (defects);
field (recalls – repairs)
o 5. Durability: Meausre of product life; technology, amount of
use before it deteriorates; repair costs, trade off between
repairs and replacement – personal and economic cost)
o 6. Serviceability: speed, courtesy, competency. Rapid repair
with quality
o 7. Aesthetics: subjective assessment of look, feel, or sound,
individual preferences
o 8. Perceived quality: individual measures, brand image, names
often used when other info. Is not available.

• To avoid confusion, Garvin suggested 3 step process to address

quality from its own perspective

o Use market resources to identify quality which connote quality

to customers.
o Translate these user-based characteristics into identifiable
product attributes
o Organize the manufacturing process to ensure products are
o made to specs.
Determinants of Service Quality

1.
Reliability:
• Performing the right service, at the right time, consistency,
dependability

2.
Responsiveness:
• Willingness / readiness to provide help

3.
Competence: Possessing skills / knowledge to perform
4.
Access, approachability, ease, waiting time, hours of operations

5.
Courtesy: politeness, respect, consideration, friendliness
6.
Communication: language one can understand, listening, adjusting,
explaining the subject, cost, and how problems will be handled.
7.
Credibility: trustworthy, believable, honesty; company reputation, 8.
8.
Security: freedom from danger, risk, or doubt, physical safety, financial
security, confidentiality
9.
Understanding the customer: efforts, his needs, his requirements,
individual attention, recognizing the regular user
QUALITY FROM BUSINESS IMPERATIVES POINT OF VIEW

Historically, “hitting specs..” “fitness for use”, “conformance to

requirements. Also Crosby says this.

The question is:

Let us talk about specifications:
There are numerical target of components/measures to run the business,
and which a firm must make:
e.g. part shall be X cm by Y cm, and order shall be processed within X
days, hours, minutes etc.

Does the customer really wants to know this?

e.g. You go to a store to buy a set of tyres. The salesman tells you “this is
the price, and the tires will last for 50000 miles”

But it wears out after just 35000 miles – how do you as a customer feel?
An emotion “south of delight” LET DOWN.

Let us see another case of similar nature:

You are shown to the same set of tires. The salesman tells you the price,
and says the tires will last 25000 miles. But in goods shape, they last even
up to 35000 miles.

What would be your “feeling” here. ‘CUSTOMER DELIGHT”

These are the same set of tires – same specifications.

As a customer u r not worried about details (specs)..

You just say, hee is the money, tell me how long the function will last?

In the example above, your feel for the quality of tyres has changed
dramatically.
OWING TO THE TIRES PERFORMANCE – RELATIVE TO YOUR
EXPLECATIONS.

This leads us to a refinement of standard definition of quality:

Quality is that which meets the customers expectations.
Does this mean the definitions are wrong? NO.
They are not. In final analysis:
Question is what the customer says it is.
Company makes quality judgment not on a detailed reading of suppliers
operations specs, but on “Impressionist scale” e.g.
Did you or did ou not given me what I thought I was paying you for? Did
you or did you not meet my expectations?

IF YOU DOUBT THIS, Consider how u make decisions.

Exercise -- Take some product
Now CONSIDER THE ROLE, expectations play in determining your level of
satisfaction.

Why meet expectations only? Why not > expectations?

Let us take the example of: a LAMP
“Which lamp is more on?”
One can certainly go beyond expectations and this way you have delivered
more of something.
But this is not more of quality – but more of something else.
That something else is “Value” – again customer perspective
“The ratio of what I got to “What it cost me”.
Value = Got/Cost (denominator)
R we saying a firm has to provide or focus on “added value”
And forget quality.
The concept of “addl. Value” makes sense once we have got out quality
house in order.
This way Q becomes the foundation on which to build and deliver
“additional value”.
FIVE PARADIGMS OF QUALITY

Evolved with time – emanating due to changes in technology, society, etc.

1. Custom Craft Paradigm:

- Clear communication between the customer – craftsman
- Focus on product and product performance relative to demands
- Made exactly the way customer wants (tailor, bank loans, furniture)

2. Mass Production P:
- Post mechanization – focus on production rates.
- No direct involvement of customer, although the product and
production is defined with customer in mind
- Product performance low (e.g. rework, repair/scrap)
- Delivery time low
- Sales from stock (labor intensive in some cases) – e.g. readymade
garments, auto parts.

3. Statistical QC paradigm:

- Mass production may be, but focus is on process – together with

mechanized production
- SPC applied – to obtain less generation of scrap / rework and
production cost per unit lo
- E.g. auto parts, electronic components, pharma)

4. TQM paradigm

- Mass production + SQC – focus on customer + supplier

- Production lines may be same, but customer lays a part in product
definition, creation and performance evaluation.
- Key tenets:
o Employee involvement, empowerment, customer focus,
continuous improvement, top management commitment,
training, team work, -- result – high quality product, low cost,
faster delivery
o Rework, scrap low
o Customer tells, firm produces – reactive strategies

5. Techno craft paradigm

- Frontier of quality? – requires high level of product and process
flexibility, requires integration of man-machine (autocad etc).
- Each unit is designed and say customer built (software, apparel, auto
etc.)
Types of Quality
Quality of design, Quality of conformance, quality of performance

1. Quality of design:
- Focus on development of products that are suited to customer needs
at a given cost
- QoD begins with consumer response, sales call analysis and leads
to determination of product that meets customer requirement
- This is followed by development of adequate specs.
- This process demands effective cross-pollination of ideas among
marketing, sales, services, manufacturing, R&D, Customer sales.
Service call analysis is really the heart of the process.
- Customer – prognosis of needs present and future sales calls –
- Idea of how people purchase.
- Service calls – deals with problems users have with the product
performance.
2. Quality of conformance
- Refers to the extent to which a firm and its suppliers can produce
products with a predictable degree of uniformity and dependability,
at a given cost in keeping with quality requirement determined in the
QoD study.
- Once the specs are decided at QoD stage, it is followed by
organization installing a Kaizen (continuous improvement) process.
3. Quality of Performance:
- Studies focus on determining how the Quality characteristics
determined in QoD (improved and innovated) and Quality of
performance are performing the market place.
- The major tools used are study of after sales service, sales
callanalysis
- These tools evaluate why consumers LIKE or DISLIKE a product.

Bring here the chart of Quality Evolution (p9 of written draft)