the managerial perspective. UNIT I : Introduction UNIT II : Principles and Philosophies of Quality Management UNIT III : Statistical Process Control UNIT IV : Tools and Techniques for Quality Management UNIT V : Quality Systems Organizing and Implementation Quality – Vision, Mission and Policy Statements Customer Focus Customer perception of quality Translating needs into requirements Customer retention Dimensions of product and service quality Cost of quality. Quality : A popular slogan of the quality movement is “quality begins with the customer”. The quality that comes out of a process is affected by the quality of what goes in and what happens at every step along the way. We must collaborate with internal and external suppliers and communicate with internal and external customers to determine their needs. Quality is meeting the Customer’s needs and expectations. Quality is defined as “conformance to Specifications. Any product or service that meets its specifications is a quality product or service”- By David Butler
Quality is defined as "The totality of features
and characteristics of a product or service that bear on its ability to satisfy stated or implied needs”- By American National Standard. " Quality is Conformance to requirements" (Crosby)
" Quality is The efficient production of the
quality that the market expects" (Deming)
" Quality is Fitness for use"; (Juran)
Quality can be quantified as follows:
Q = P/E
Where, Q = Quality P = Performance E = Expectation
If Q is greater than 1.0, then the customer
has a good feeling about the product or service A short declaration of what an organization aspires to be tomorrow. An ideal state that might never be reached but which you continually strive to achieve Successful visions are timeless, inspirational, and become deeply shared within the organization. Answers the following questions: ◦Who we are ◦Who are the customers ◦What we do ◦How we do it.
Usually one paragraph or less in length
Easy to understand Describe the function of the organization. A guide for everyone in the organization as to how they should provide products and service to the customers. It should be written by the CEO with feedback from the workforce and be approved by the quality council. Quality is first among equals. Meet the needs of internal & external customers. Equal or exceed the competition. Continually improve the quality. Utilize the entire work force. For example, “ Xerox is a quality company. Quality is the basic business principle for Xerox. Quality means providing our external and internal customers with innovative products and services that fully satisfy their requirements. Quality is the job of every employee.” (XEROX CORPORATION) A customer is an individual or business that purchases the goods or services produced by a business. The people for whom a product or service is produced; these people can be either external or internal to a Company. A customer could be a person, a department, a company, etc. There are two distinct types of customers are external and internal customers. The one who uses the product or service The one who purchases the product or service The one who influence the sale of the product or service. An external customer exists outside the organization Generally falls into three categories: current, prospective and lost customers. External customers purchase the product, financially supporting the company Examples: Your suppliers Your vendors The organizations / people you sell your product or service The public in general Any person or organization outside your direct organization Every function, whether it be engineering, order processing, or production, has an internal customer Each receives a product or service and in exchange, provides a product or service. Every person in a process is considered a customer of the preceding operation. Internal customers are the other employees to whom you pass on your work. Examples: Your secretary or assistant Your co-workers The employees who report to you Your immediate supervisor Any person who has a need that you supply. The orientation of an organization toward serving its clients' needs. Usually a strong contributor to the overall success of a business Involves ensuring that all aspects of the company put its customers' satisfaction first. Usually includes maintaining an effective customer relations and service program Customer satisfaction is the customers felt of mind resulting from the perceived performance of product in relation to the expectation(P.K. Sinha ) The buyer’s satisfaction is a function of the closeness between the consumer’s product expectations (E) and the product’s perceived performance (P).(John E. Swan and Linda Jones Combs ) S = f (E, P) If the product matches expectations, the consumer is satisfied; if it exceeds them, the consumer is highly satisfied; if it falls short, the consumer is dissatisfied. Contributes to the profitability of the firm by allowing firms to change higher prices, by reducing advertising expenditure, by reducing the number of product faults, and by enlarging the firm’s reputation. Reduces the number of customer complaints. Builds customer loyalty towards the firm. Comparison with competitors. Customer oriented management Reduced costs. Ideas for new development. The circle represents the customer’s needs The square depicts the product or service offered by the organization Total satisfaction is achieved when the offer matches the needs, or the circle is superimposed on the square. Core products Product and service features Value addition Price and perceived benefits Contextual factors Consumer emotions Attributions for service success or failure Perceptions of equity or fairness Complaints and suggestion systems Sales activity and after-sales service How does a company analyze customer needs? How can it easily determine what delights customer? what their basic needs are? The Kano Analysis For some customer requirements, customer satisfaction is proportional to the extent to which the product or service is fully functional. The Kano model addresses the three types of requirements: Satisfying basic needs: Allows a company to get into the market. Satisfying performance needs: Allows a company to remain in the market. Satisfying excitement needs: Allows a company to excel, to be world class. The horizontal axis of this figure indicates how fully functional a product/service is. The vertical axis indicates how satisfied the customer is. The line going through the origin at 45 degrees, represents the situation in which customer satisfaction is directly proportional to how fully functional the product/service is. Kano terms such requirements as “one- dimensional” requirements. A 10 percent improvement in functionality results in a 10 percent improvement in customer satisfaction. Requirements Type Definition Must Be (Expected Quality) Requirement that can dissatisfy (expected, but cannot increase satisfaction) One-Dimensional (Desired The more of these requirements Quality) that are met, the more a client is satisfied Delighters (Excited Quality) If the requirement is absent, it does not cause dissatisfaction, but it will delight clients if present Indifferent Client is indifferent to whether the feature is present or not Reverse Feature actually causes dissatisfaction Perceived quality defined as the customer perception of the overall quality of the product or service with respect to its intended purpose, relative to alternatives. Performance Features Service Warranty Price Reputation Perceived service quality: ◦ Customer orientation ◦ Competence ◦ Tangibility ◦ Convenience Perceived product quality ◦ Benefits ◦ Intentions Brand Image Complaints point out areas that need improvement. Complaints give you a second chance to provide service and satisfaction to dissatisfied customers. Complaints are a wonderful opportunity to strengthen customer loyalty. Seek out and welcome complaints. Take every complaint seriously Get people at the top actively involved in both listening to and helping resolve customer complaints. Consider setting up a system to document and classify complaints. Set goals for resolving complaints. Learn and get better from complaints. Make it easy for clients to complain Respond quickly to complaints Resolve complaints on the first contact Use computers to manage complaints Recruit the best for customer service jobs To discover customer dissatisfaction To identify customer‘s needs To discover relative priorities of quality To compare performance with the competition To determine opportunities, for improvement Comment card - Low cost method, usually attached to warranty card Questionnaire - Popular tool, costly and time consuming - by mail or telephone preferably multiple choice questions or a point rating system (1 to 5) or (1 to 10) Customer Focus groups - Meeting by a representative of the company with the group of customers Phone - Toll free Telephone numbers Customer visits - Visit customer's place of business. Report cards - Usually, send to customer on a quarterly basis. The internet and computer - It includes newsgroups, electronic bulletin board mailing lists, Employee feedback. Mass Customization - Capturing the voice of customers using data of what customer want instead of what customer is thinking about buying and manufacturing exact what they want. Complaints can be collected from all sources Develop procedures for complaint resolution Analyze complaints When a survey response is received, a senior manager should contact the customer and strive to resolve the concern. Establish customer satisfaction measures and constantly monitor them. Communicate complaint information, as well as the result of all investigation solution, to all people in the organization. Provide a monthly complaint report to the quality council for their evaluation and needed, the assignment of process improvement teams. Identify customer's expectations beforehand rather than afterward through complaint analysis Customer retention is more powerful and effective than customer satisfaction. Customer retention represents the activities that produce the necessary customer satisfaction that creates customer loyalty, which actually improves the bottom line. Top management commitment to the customer satisfaction. Identify and understand the customers what they like and dislike about the organization. Develop standards of quality service and performance. Recruit, train and reward good staff. Always stay in touch with customer. Work towards continuous improvement of customer service and customer retention. Reward service accomplishments by the front-line staff. Customer Retention moves customer satisfaction to the next level by determining what is truly important to the customers. Customer satisfaction is the connection between customer satisfaction and bottom line. Level 1- financial bonds: financial incentives and reduced prices. Level-2 Social bond: deeply attached between organization and customers. Level 3- Customisation bond: enhance customer loyality, deep knowledge of potential customer. Level 4: structural bonds: develop along with previous bonds. Reducing Attrition Sell and then sell again Bring back the “lost sheep” Frequent Communications Calendar Extraordinary Customer Service Courtesy system Product or service integrity Measure lifetime value A complaint is a gift Blogs CRM Systems Loyalty Programs Magic Moments Overcome Buyers Remorse Personal Touches Premiums and Gifts Questionnaires and Surveys Regular Reviews Social Media Welcome Book Dimensions of product quality Dimensions of service quality Performance Time Features Timeliness Usability Completeness Conformance Consistency Reliability Accessibility/Convenience Durability Accuracy Maintainability/Serviceability Responsiveness Efficiency Courtesy Aesthetics Competency/Expertise Reputation Safety Performance: primary product characteristics, e.g. picture brightness in TV. Features: secondary characteristics, added features, e.g. remote control, picture-in- picture. Usability: ease of use with minimum training. Conformance: meeting specifications, industry standards,. (E.g. ISI specs., emission norms). Reliability: consistency of performance over a specified time period under specified conditions. Durability: extent of useful life. Maintainability/Serviceability: ease of attending to maintenance, repairs Efficiency: ratio of output to input. E.g. mileage, braking distance, processing time. Aesthetics: sensory characteristics, e.g. appearance, exterior finish, texture, color, shape, etc. Reputation: subjective assessment based of past performance, brand image, industry ranking. Safety: in items like pressure cookers, electrical items, toys, cranes, etc. Time: how much time a customer must wait / undergo service. Timeliness: whether service will be performed when promised. Completeness: whether all items in the order are included Consistency: consistent service every time, and for every customer and reliability of service. Accessibility/Convenience: ease of obtaining the service. Accuracy: absence of mistakes. Responsiveness: quick response, resolution of unexpected problems. Courtesy: cheerful, friendly service. Competency/Expertise: In professions like doctors, lawyers, mechanics, etc. Cost of Quality is the amount of money a business loses because its product or service was not done right in the right place The cost associated in providing poor quality product and services is known as Cost of Quality. Quality costs are defined are those costs associated with the non-achievement of product or service quality as defined by the requirements established by the organization and its contracts with customers and society. Simply stated, quality cost is the cost of poor products or services. I. Preventive Cost Category II. Appraisal Cost Category III. Internal Failure Cost Category IV. External Failure Cost Category The cost incurred in keeping failure and appraisal costs to a minimum. 1. Marketing/Consumer/User: ◦ Costs are incurred in the accumulation and continued evaluation of customer and user quality needs and perceptions affecting user satisfaction with the organizations product or service. 2. Product/Service/Design Development: ◦ Costs are incurred to translate customer and user needs in to reliable quality standards and requirements and to manage the quality of new product or service. 3. Purchasing: ◦ Costs are incurred to assure conformance requirements of supplier parts, materials or processes and to minimize the impact of supplier non conformance on the quality of delivered products or services. 4. Operations (Manufacturing or service): ◦ Costs are incurred in assuring the capability and readiness of operations to meet quality standards and requirements and to impart quality education to operating personnel. 5. Quality Administration: ◦ Costs are incurred in the overall administration of the quality management function The cost incurred in determining the degree of conformance to quality requirement. 1. Purchasing Appraisal Costs: ◦ Purchasing appraisal costs can generally be considered the costs incurred for the inspection and test of purchased supplies or service to determine acceptability to use. 2. Operations (Manufacturing or service) Appraisal Costs: ◦ Operations appraisal costs can generally be considered the costs incurred for the test or audit required to determine and assure the acceptability of product or service. The cost incurred in determining the degree of conformance to quality requirement. 3. External Appraisal Costs: ◦ External appraisal costs are incurred for field set up or installation and check out for the acceptance of customers. 4. Review of Test & Inspection: ◦ Costs are incurred for regular reviewing inspection and test data, prior to release of the product for shipment. 5. Miscellaneous Quality Evaluations: ◦ Costs involved in quality audits to assure continued ability to provide acceptable support to the production process. The cost associated with defects that are found prior to transfer of the product to the customer. 1. Product or Service Design Failure Costs (Internal): ◦ Design failure costs are the unplanned costs that are incurred because of inherent design inadequacies. 2. Purchasing Failure Costs: ◦ Costs which are incurred due to the rejects of purchased items. 3. Operations (Product or Service) Failure Costs: ◦ The costs associated with nonconforming product or service discovered during the operations process. It is categorized in to three distinct areas: material review and corrective action rework or repair costs and scrap costs. The cost associated with defects that are found after product is shipped to the customer. 1. Complaint Investigations of Customer or User Service: ◦ It includes the total cost of investigating, resolving and responding to individual customer and user complaints. 2. Returned Goods: ◦ Costs incurred in evaluating, repairing and replacing goods. 3. Retrofit and Recall costs ◦ Retrofit and recall costs are those costs required to modify or update products or field service facilities to a new design change level, based on major redesign due to design deficiencies. 4. Warranty Claims ◦ Warranty costs include the total costs of claims paid to the customer or user after acceptance to cover expenses, including repair costs, such as removing defective hardware from a system, or cleaning costs, due to flood or chemical service accident. 5. Liability Costs Liability costs are organization-paid costs due to liability claims, including the cost of product or service liability insurance. 6. Penalties Penalty costs are those costs incurred because less than full product or service performance is achieved as required by contracts with customers or by government rules and regulations. 7. Customer or user good will This category involves costs incurred that customers are not satisfied with quality of delivered product or service because the customer’s quality expectations were 8. Lost Sales Lost sales comprise the value of the contribution to profit that is lost due to sales reduction because of quality problems. Total = Made up of whole Quality= Degree of Excellence a product or service provides Management = Quality can and must be managed. TQM = Act, art, or manner of handling, controlling, directing, etc. TQM is the art of managing the whole to achieve excellence. TQM is a management philosophy that seeks to integrate all organizational functions (marketing, finance, design, engineering, and production, customer service, etc.) to focus on meeting customer needs and organizational objectives. Total means that everyone participates and that it is integrated into all business functions. Quality means meeting or exceeding customer (internal or external) expectation. Management means improving and maintaining business systems and their related processes or activities. (International Encyclopedia of Justice Studies)