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Total Quality Management

Multiple Perspectives on Quality

Terry Nolan

Quality what does it mean?


there is little agreement

on what constitutes `quality' despite what the dictionaries might suggest, and it appears that the more we hear it the more confusing its meaning seems to become

Terry Nolan

Quality has a wide scope


Narrowly interpreted, quality means quality of product. Broadly interpreted, quality means quality of work, quality of service, quality of information, quality of process, quality of division, quality of people, including workers, engineers, managers, and executives, quality of systems, quality of company, quality of objectives, etc. (Ishikawa, 1985, p. 45).
Terry Nolan

Perspective 1 - Quality is Excellence


Investment of the best skill and effort possible

to produce the finest and most admirable results possible ... Quality is achieving or reaching for the highest standard as against being satisfied with the sloppy or fraudulent ... It does not compromise with second-rate (Tuchman, 1980, p. 39).

Terry Nolan

Perspective 1 - Quality is Excellence


Only 1 in 10 customers complain
Quality must be customer-driven not supplier

driven
Quality=Customers perceptionsnot our own!

Terry Nolan

Perspective 2 - Quality is Value


Feigenbaum (1983) stated the following:

Quality does not have the popular meaning of `best' in any absolute sense. It means `best for certain customer conditions'. These conditions are (a) the actual use and (b) the selling price of the product. Product quality cannot be thought of as apart from product cost
Terry Nolan

Perspective 2 - Quality is Value


Allows comparison to be made across widely different objects and experiences, such as a Eurostar train journey through the Channel Tunnel to Paris versus a plane flight from London to Paris.

Terry Nolan

Perspective 3 Quality is Conformance to Specifications


Juran (1951) proposed what have become the two most commonly agreed definitions: 1.Conformance to specifications.
2.Fitness for Use

Terry Nolan

Perspective 3 Quality is Conformance to Specifications


Quality of conformance to design concerns

the extent to which the product or service conforms to the design specifications

Terry Nolan

Perspective 3 Quality is Conformance to Specifications


The `conformance to specifications' view of

quality is a manufacturing-based outlook. It implies that once a design or a specification has been established by the producer, any deviation from it, during production or downstream from production, means a reduction in quality

Terry Nolan

Perspective 3 Quality is Conformance to Specifications


Historically, quality as `conformance-to-

specifications' tended to be internally focused. By using this view of quality, organizations pay:
little attention to the link, in customers' minds, between quality and product characteristics other than conformance. Rather, quality is defined in a manner that simplifies engineering and production control. On the design side, that has led to an emphasis on reliability engineering. On the manufacturing side, it has meant an emphasis on statistical quality control (Garvin, 1988, p. 45).
Terry Nolan

Perspective 4 - Quality is meeting and/or exceeding customers' expectations


Jurans `fitness for use' definition - the

extent to which a product successfully serves the purposes of the user, not the manufacturer, merchant or the repair shop it ensures that firms are more externally focused by paying greater attention to the changes in the market.
Terry Nolan

Cost of Quality (CoQ)


Quality costs do not readily appear in

the accounting journals Large timing delays between quality costs and benefits create distortion Accounting rules do not lend themselves to measuring quality

Terry Nolan

Difficulties in capturing the True costs


Numerous cost estimates are needed
There are hidden costs never captured Matching future costs with historical

costs is necessary A clear definition of quality needs to be made before the costs associated with it can be measured.
Terry Nolan

CoQ
The two definitions which are most commonly agreed upon are:

1. Conformance Costs - comprising Prevention costs and Appraisal costs


2. Non-Conformance Costs comprising Internal Failure costs and External Failure costs

Terry Nolan

Prevention costs all activities designed to prevent defects in products or services


Include direct and indirect costs related to: quality training and education, pilot studies, quality circles, quality engineering, quality audits, supplier capability surveys and so on. These costs are used to build awareness of the quality programme and to keep the costs of appraisal and failure to a minimum

Terry Nolan

Conformance Costs
Appraisal Costs - associated with measuring and

evaluating the product or service quality to ensure conformance. These include the cost of inspection, test or audit of purchases, manufacturing or process operations and finished goods or services.

Terry Nolan

Nonconformance Costs: or failure costs


Internal Failure costs - these are incurred prior

to the final shipment of the product or the delivery of the service. Costs include, defects that are found prior to customer delivery, net cost of scrap, spoilage, rework, supplier rework, re-inspection and retest, downtime due to poor quality etc.

Terry Nolan

Nonconformance Costs: or failure costs


External failure cost the cost of discovered

defects occurring after product shipment or service delivery. These include warranty charges, customer complaint adjustments, returned merchandise, product recalls, allowances and product liability. They also include the costs of labour and travel associated with the investigation of customer complaints

Terry Nolan

Traditional Model of Quality Costs


TQ TQ

Total quality costs

Failure costs Costs of appraisal Plus prevention

0
Terry Nolan

Quality of Conformance

100

Old Model Discredited


Nowadays, this is discredited for two reasons:
(i)

appraisal and prevention costs probably decrease through experience factors;

(ii) they must be continued any way to preserve the earlier quality improvements.

Terry Nolan

Emerging model of Quality costs


Total Quality Costs

Cost per Good Unit of product

Failure costs

costs of appraisal and prevention

0
Terry Nolan

Quality of Conformance

100

Four Cost of Quality Components


1. 2. Prevention costs remain relatively consistent as the awareness of TQM is built and maintained. Appraisal costs will initially increase as inspection programs are initiated but should eventually level off

3.

Internal failure costs will initially increase as the inspection programs are implemented but should then gradually decrease with learning
External failure costs should continue to fall as various TQ programs are brought on line

4.

Terry Nolan

Limitations of Cost-of Quality concept


COQ measurements do not solve quality problems Publication of the cost figures does not stimulate cost reduction COQ reports do not provide specific actions COQ calculations do not capture all of the cost Standard accounting conventions do not cater for COQ needs Important costs can be easily omitted from the COQ calculation

Terry Nolan

Limitations of Cost-of Quality concept


There is a time delay between cause and

effect, and a COQ report may not capture all the changes in the same period Quality costs are subject to judgement and estimation, which can cause distortion COQ has a tendency to be short term

Terry Nolan

Summary
The various definitions discussed show that there

is no `one best' or `correct' definition for quality.


Sources: Yong, J and Wilkinson, A. (2002) The long and winding road: the evolution of quality management .Total Quality Management , Jan. Vol.13 11 p101(21) Rao, A. (1996) Total Quality Management: A Cross Functional Perspective. Wiley & Sons

Terry Nolan