Total Quality Management - CII Institute of Logistics

Total Quality Management 

SEMESTER - IV 

TOTAL QUALITY MANAGEMENT 

COURSE MATERIAL 

CII Institute of Logistics 1 

Website: www.ciilogistics.com


CONTENT DEVELOPED BY 

P K Vishwanathan 

All rights reserved. No part of this work may be reproduced in any form, without the permission 

in writing from CII INSTITUTE OF LOGISTICS. Material adopted from the reading material 

prepared for the Post Graduate Diploma in Supply Chain Management, CII Institute of Logistics 

for the specific requirements of the course “PG Diploma in Logistics Management” offered for 

the Post Graduate students of MIM, Chennai. No part of this material could be shared by the 

intended readers with others. 

Further information about the course offered by CII INSTITUTE OF LOGISTICS may be 

obtained from the CII INSTITUTE OF LOGISTICS (Southern Regional Headquarters) at 

Velacherry Main Road, Guindy, Chennai – 600 032. 

For restricted circulation only. 




Course Content 

Module 1 

1. Introduction 

2. Approaches & Philosophies in TQM 

3. Quality & Competitiveness 

4. Enhancing Customer value through TQM 

5. Strategic Planning for Quality 

Module 2 

6. Implementation 

7. Leadership 

8. Teambuilding & Teamwork 

9. Employee empowerment 

Module 3 

10. Tools for Quality Improvement 

11. Quality Function Deployment 

12. Statistical Process Control 

13. Continuous Improvement 

Module 4 

14. Benchmarking 

15. JIT 

16. Six Sigma 

17. ISO Standards & Quality Management 

18. Quality Management & Ethics 





1.1 Introduction 

Total Quality Management (TQM) a sound methodology for continuous improvement 

has established itself very well over the years. It is deep rooted in the philosophy that 

status quo is painful and indeed going backwards. In-built in the minds of all of us is a 

strong desire to improve. TQM has evolved as a system, which can facilitate 

‘improvement-efforts’ within organizations. We are not merely talking about 

increased profits but more importantly interested in relentless improvement programs 

where excellence in service and product quality is paramount. 

Some organizations may begin their TQM journey from a position of financial strength 

or quality reputation. Others may begin from a position of survival in which there are 

two alternatives namely get smarter or go out of existence. In a lighter vein, Dr. 

Deming said, “Survival is not compulsory”. 

In this present challenging and changing world, remaining static is a definite passport 

for existence. [‘standing still’ is a definite recipe for going out of existence]. The 

climate today is such that any progressive organization that wants not only to survive 

but also to grow and prosper on a long-term time horizon must be able to cope with 

rising customer expectations, higher standards in product and service quality, and 

intense competition both in the domestic and international marketplace. In addition, the 

other important factors namely government policies and legislations, demographic 

changes, customer choices and tastes, and external environmental pressures will 

compulsorily kindle the desire to improve. 

TQM is a long-term strategy. It is not simply a matter of conformance to customer’s 

specifications. If developed and implemented correctly, TQM will positively impact the 

hearts and minds of all people in an organization who are involved in various tasks. 




Historical Perspective of TQM 

In the 1920s, W.A. Shewhart developed control charts for reducing and stabilizing 

process variation using statistical methods. Thus, he paved the way for what we call 

statistical process control (SPC). 

In the 1930s, Dr. W. Edward Deming and Dr. Joseph M. Juran started to develop best 

approaches to quality control and assurance. While Dr. Deming was focusing on the 

philosophical foundations of quality, Dr. Juran adopted a full systems approach to 

quality. In 1948, Deming went to Japan and conducted his first seminar having found 

virtually no acceptance for his ideas in USA, which was giving more importance to 

quantity than quality. Japanese Standards Association was formed in 1950 and in the 

following year the Deming Award Scheme was announced. 

The 1950s saw Japan consolidating its home market, adding value to product and 

copying ideas from the rest of the world. The low cost structure of the 1960s enabled 

Japan to export globally, continuously adapting and exploiting markets. Yet, the 

western perception about Japan was still one of poor-quality goods. In the following 

twenty years, in a dramatic manner, the perception about Japanese goods and services 

has changed from shoddy quality to reliability, and good value for money, with the 

result that the economic balance of power has shifted from the West to Japan and the 

East in industries that include motor vehicles, shipbuilding, consumer goods, electronic 

components, textiles, banking and financial services, photography, video and watch 

making among the many. 

In the mid 1060s, United States pointed to a slow development of conventional quality 

control techniques coupled with Quality Circles. During the same period, Philip B. 

Crosby introduced the concept of ‘zero defects’ as a performance yardstick within the 

conceptual framework of his quality absolutes. At the end of the 1970s, the first 




Fortune 500 companies started adopting the organization wide quality management 

processes and Tom Peters rejuvenated Total Quality Management movement through 

his famous book “In Search of Excellence”. 

In the United Kingdom in the year 1963, the National Productivity Council made 

pioneering efforts in quality management movement through its far-seeing film “Right 

First Time”, but with little success. The year 1966 was National Quality and Reliability 

Year, which raised awareness of the value of quality followed by Productivity Year in 

1967??. In 1978, the National Strategy for Quality was formed by the government, 

based on the belief or assumptions that enormous money was being wasted every year 

on account of bad quality. The campaign went out with the Labor Government in 1979, 

and was replaced four years later by The National Quality Campaign, which continues 

to this day to be the most sustained program in UK history. 

1.2 What is Total Quality Management? 

Total Quality Management popularly known as TQM was pioneered initially by the 

quality Guru Dr. Edward Deming and further strengthened by Dr. Juran, and Philip 

Crosby. These three luminaries can be considered to be the triple pillars of TQM who 

spread the TQM movement like a current of air. The following definition succinctly 

brings out the essence of TQM. 

TQM Definition 

TQM involves continuous improvement in quality to meet or exceed customer norms 

at the lowest cost by releasing the potential of employees of the concerned organization. 

If we read some of the Quality Policy Statements of the world’s leading organizations 

we will see words similar to those above recurring regularly. For the experienced TQM 




practitioner there are probably four elements in the definition, which stand out as being 

important. Please note that they are highlighted in bold. 

1) Continuous Improvement in Quality implies that TQM is not a short-term program 

but a long-term strategy focusing on the right way of operating for all time. 

2 )Customers are both internal and external, and in order to meet the requirements it is 

essential to articulate in a clear fashion what needs to be done so that all assumptions 

between the customers and suppliers have been eliminated. 

3) Lowest Cost means building quality into the products and services in every stage. 

This includes preventing defectives from being manufactured in the first place thus 

eliminating financial loss. Lowest cost implies lowest in relation to competition in the 

marketplace. 

4) Employees are concerned with reducing fear and creating a climate where ideas are 

encouraged, recognized, rewarded, and acted upon so that the full potential of the 

employees is realized. 

TQM Definition-Point to Ponder 

Each of the four elements is vitally important. However, their strength lies in their 

collective synergy. Organizations that would like to achieve long-term success cannot do 

so by choosing one or two of the elements and ignoring the rest; they have to vigorously 

pursue each of them without any compromise. There is no room for saying “sorry”. 




1.3 Approaches and Philosophies in TQM 

Deming’s Philosophy 

The Deming philosophy focuses on continual improvements in product and service 

quality by reducing uncertainty and variability in design, manufacturing and service 

processes, driven by the leadership of top management. 

Deming Chain Reaction Model 

The Deming "chain reaction" model is based on the conviction that, the only way to 

decrease cost is to improve quality of products and services. It states that by (a) 

improving quality, a firm can (b) decrease costs because of less rework, fewer mistakes, 

delays, and snags, and better use of time and materials, thus (c) improving productivity. 

The firm will therefore be able to (d) capture the ma rket with better quality at lower 

prices, and thus, not only (e) stay in business, but also (f) provide and create more jobs. 

(See Fig 1) 




Deming’s System of Profound Knowledge 

Deming's System of Profound Knowledge consists of four interrelated parts: (1) 

appreciation for a system; (2) understanding of variation; (3) theory of knowledge; and 

(4) psychology. Appreciating a system involves understanding how each component of 

the system works to produce the end product or service, and understanding how the 

system may be optimized for better or smoother performance. Understanding of 

variation involves knowing and anticipating factors (i.e. increasing personnel, the 

wearing out of tools) that may cause the system to change, for better or worse. Theory 

of knowledge involves understanding the system and current and possible variations 

within, to the point where past and present events and performances can suggest 

possible outcomes of future courses of action within the system. Psychology involves 

the understanding of ‘what motivates people’, including the facts such as, people must 

enjoy their work, be treated with respect, work within a system that promotes dignity 

and self-esteem, receive adequate recognition, not for just financial remuneration, and 

feel that they are part of a winning, high quality team that makes a difference. 

Deming’s 14 Points-Principles for Transformation 

These famous 14 points are the basis for transformation of any industry into the TQM 

philosophy. It will not suffice merely to solve problems, big or little. Adoption and 

action on the 14 points are a signal that the management intends to stay in business and 

aim to protect investors and jobs. Such a system formed the basis for lessons for top 

management in Japan in 1950 and in subsequent years. 

The ‘14 point principles’ apply to all organizations irrespective of its size [small and 

large] and type [service industry and manufacturing]. They also apply to a division 

within a company. 




Deming’s 14 Points 

1. Create constancy of purpose towards improvement of product and service, 

with the aim to become competitive; to stay in business; and to provide jobs. 

2. Adopt the new philosophy. We are in a new economic age. Modern 

management must awaken to the challenge, must learn their responsibilities 

and take on leadership for change. 

3. Cease dependence on inspection to achieve quality. Eliminate the need for 

inspection on a mass basis by building quality into the product in the first 

place. 

4. End the practice of awarding business on the basis of price tag alone. 

Instead, minimize total cost. Move toward a single supplier for any one 

item. On a long-term relationship of loyalty and trust. 

5. Improve constantly and forever the system of production and service, to 

improve quality and productivity, and thus constantly decrease costs. 

6. Institute training on the job. 

7. Institute leadership. The aim of supervision should be to help people, 

machines and gadgets to do a better job. 

8. Drive out fear, so that everyone may work effectively for the company. 

9. Break down barriers between departments. People in research, design, sales 

and production must work as a team to foresee problems of production and 

in use that may be encountered with the product or service. 

10. Eliminate slogans, exhortations and targets for the work force asking for 

zero defects and new levels of productivity. Such exhortations only create 

adversarial relationships, as the bulk of the causes of low quality and low 

productivity belong to the system and thus lie beyond the power of the work 

force. 

11. Eliminate work standards (quotas) on the factory floor. Substitute 

leadership. Eliminate management by objectives. Eliminate management by 

numbers and numerical goals. Substitute leadership. 

12. Remove barriers that rob the hourly worker of his right to pride of 

workmanship. The responsibility of supervisors must be changed from sheer 




numbers to quality. Remove barriers that rob people in management and in 

engineering of their right to pride of workmanship. 

13. Institute a vigorous program of education and self-improvement. 

14. Put everybody in the company to work to accomplish to transformation. The 

transformation is everybody’s job. 

Adapted from “Out of the Crisis”-Dr. Deming 

Connection between 14 Points of Deming and his Systems of Profound Knowledge 

Under appreciation for a system, points 1, 2, 4, 5, 9, 13, and 14 are most oriented 

towards systems. Numbers 1 and 2, relating to vision, commitment, and development 

of a new philosophy of leadership require a “big picture” view of the organization and 

its place in business and society. Number 4 relates to the requirement that total costs, 

not incremental costs, must be optimized throughout an organizational system. Number 

5 is a call to make improvements continuously throughout the system. Number 9 

requires the development of teamwork and breaking down of artificial barriers between 

departments and organizational units. Number 13 relates to broad education to benefit 

both the organization and society, in the long run. Point 14 calls for a major cultural 

change within the organization, and is similar to point 2. 

To understand variation, Deming established points 3, 5, 10, and 11. Point 3 requires 

that everyone understand inspection and use it to understand variation by avoiding mass 

inspection. Point 5 advises to “improve constantly and forever,” thus eliminating the 

causes of excessive variation and waste. Number 10 suggests that improvement does 

not take place by exhorting workers to do a better job, but by understanding the cause 

of poor quality and eliminating them. Point 11 makes a similar point that quotas and 

management by objectives are approaches that do not encourage improvement, but 

instead, create fear. 

When people don’t understand the theory of knowledge, they don’t know how to plan, 

accomplish learning, improve, change, or solve problems, despite their best efforts. 

Thus points 1, 2, 5, 6, and 13 may be seen as falling under theory of knowledge 




category. Deming’s concept in points 1 and 2 of constancy of purpose and learning his 

“new philosophy” are needed in order to effectively plan, learn and change. Point 5 

relating to constant improvement is also essential to knowledge, as is point 6 on 

instituting training, so that workers will be able to understand their work processes, 

predict the result of changes, and actively participate in problem solving and 

improvement. Point 13 is related in that it advises that education and self-improvement 

will assist the organization in learning, changing, improving and reaching 

organizational goals. 

An understanding and appreciation of psychology is a requirement for points 7 through 

13. Each of these has leadership and motivational characteristics that are essential to 

Deming’s new philosophy and to improved quality and productivity. Numbers 7 and 11 

are related to improving leadership; points 8, 9, 10, 11, and 12 advise removing barriers 

that keep workers from doing their best, most effective work; and number 13 advises 

that workers should be educated, not just trained. 

1.4 Dr. Juran’s Philosophy 

Juran's "Quality Trilogy," like most trilogies these days, consists of three parts: Quality 

planning--the process for preparing to meet quality goals; quality control--the process 

for meeting quality goals during operations; and quality improvement--the process for 

breaking through to unprecedented levels of performance. 

Quality planning begins with identifying customers, both external and internal, 

determining their needs, and developing product features that respond to customer 

needs. Quality goals are then established that meet the needs of customers and suppliers 

alike, and do so at a minimum combined cost. 

Quality control involves determining what to control, establishing units of measurement 

so that data may be objectively evaluated, establishing standards of performance, 




measuring actual performance, interpreting the difference between actual performance 

and the standard, and taking action on the difference. 

Juran specifies a program for quality improvement which involves proving the need for 

improvement, identifying specific projects for improvement, organizing guidance for 

the projects, diagnosing the causes, providing remedies for the causes, proving that the 

remedies are effective under operating conditions, and providing control to maintain 

improvements. 

Like Deming, Juran advocated company-wide quality management, with a neverending 

process of quality improvement, involving such activities as market research, 

product development, production process control, inspection and testing, and customer 

feedback. He emphasized the need for management commitment to quality 

improvement, and the need for training of all employees in quality techniques. Juran 

also asked workers to get to know their external and internal customers, and to identify 

and reduce causes of variation by determining the difference between standard and 

actual performance and taking action on the difference. 

Unlike Deming, Juran did not propose major cultural changes in the organization, but 

sought to improve quality within the system familiar to U.S. managers. His detailed 

plan was based on identifying areas for improvement and acting accordingly. Juran also 

recognized the different "languages," or trains of thought, which occupy different levels 

of an organization, and advocated communication between these "languages," where 

Deming proposed that statistics should be shared as a common language. 




1.5 Philip Crosby’s Philosophy 

The Central Idea of Crosby 

“Quality is free. It’s not a gift, but it is free. What costs money are the unquality things -- 

all the actions that involve not doing jobs right the first time.” 

The famous absolutes of quality management enunciated by Crosby are delineated below: 

(1) Quality means conformance to requirements, not elegance. Crosby sees requirements 

as being ironclad; they are communication devices which must be clearly stated so 

that they cannot be misunderstood. Once this is done, a company can take 

measurements to determine conformance to those requirements. 

(2) Crosby maintains there is no such thing as a quality problem. Those individuals or 

departments that cause them, so there are accounting problems, manufacturing 

problems, logic problems, etc, must identify problems. 

(3) There is no such thing as the economics of quality; it is always cheaper to do the job 

right the first time. Most of us will remember this one as a frequent and sometime 

annoying axiom, used by our mothers every time we had to perform some 

complicated chore. Crosby supports the premise that "economics of quality" has no 

meaning. Quality is free. What costs money are all actions that involve not doing jobs 

right the first time. 

(4) The only performance measurement is the cost of quality. The cost of quality is the 

expense of nonconformance. Crosby's program calls for measuring and publicizing 

the cost of poor quality. 

(5) The only performance standard is "Zero Defects." Zero Defects is a performance 

standard, NOT a motivational program. The idea behind ZD is to do it right the first 

time, to concentrate on preventing defects rather than just finding and fixing them. 

“Please remember that you should do the right thing right, first time every time”. 




(6) People are conditioned to believe that error is inevitable; thus they not only accept 

error, they anticipate it. Each of us has limits within which we can accept errors. 

Eventually we reach a point where the errors are unacceptable. This usually occurs 

when the errors affect us personally, such as when you discover that your bank has 

made a $100 error in your account, in their favor. 

Crosby's Basic Elements of Improvement include determination, education, and 

implementation. According to Crosby, most human error is caused by lack of 

attention rather than lack of knowledge. Lack of attention is created when we assume 

that error is inevitable. By determination, Crosby means that top management must be 

serious about quality improvement. Everyone must understand the Absolutes; this can 

be accomplished only through education. Finally, every member of the management 

team must understand the implementation process. 

Like Deming, Crosby advocated interior searches by individual departments (i.e. 

manufacturing, accounting) within a firm for sources of negative variation and acting 

to reduce these. He also advocated the policy of doing the job right the first time. 

Unlike Deming, Crosby's plan focuses on managerial thinking, calling for change 

within the current system, holding employees, as well as management accountable for 

reducing defects, and not requiring a complete organizational overhaul. 

1.6 Philosophy and Frameworks of Other Key People 

A.V. Feigenbaum is primarily known for three contributions to quality -- his 

international promotion of the quality ethic, his development of the concept of total 

quality control, and his development of the quality cost classification. 

Kaoru Ishikawa was instrumental in the development of the broad outlines of Japanese 

quality strategy, the concept of CWQC, the audit process used for determining whether 




a company will be selected to receive the Deming award, the quality control circle, and 

cause-and-effect diagrams--a principle tool for quality management. 

Taguchi’s contributions were centered on explaining the economic value of reducing 

variation. He maintained that the manufacturing-based definition of quality as 

conformance to specification limits is inherently flawed. He also contributed to 

improving engineering approaches to product design. By designing a product that is 

insensitive to variation in manufacture, specification limits become meaningless. 

Taguchi advocated certain techniques of experimental design to identify the most 

important design variables in order to minimize the effects of uncontrollable factors on 

product variation. Thus, his approaches attacked quality problems early in the design 

stage rather than react to problems that might arise later in production. 

Taguchi measured quality as the variation from the target value of a design 

specification, and then translated that variation into an economic "loss function" that 

expresses the cost of variation in monetary terms. In doing this, Taguchi offered a 

method of measuring the monetary loss resulting from creation of products or services 

that do not conform to quality standards. This method was used by Deming to compare 

the decreased costs of producing products or services with quality values closer to those 

of standard quality specifications. 




1.7 Quality and Competitiveness 

Attempt to Define and Delineate Quality 

Webster's definition of quality is vague and simplistic. "(Quality is) that which makes 

something what it is; characteristic element." 

The ANSI/ASQ definition states quality is "the totality of features and characteristics of 

a product or service that bears on its ability to satisfy given needs." No single definition 

is adequate because customer needs are constantly changing and because quality is 

"situational" -- e.g. a good design for one purpose, and in the eyes of one set of 

customers, may represent a poor design for another use or another set of customers. 

Reliance on a single definition of quality is frequently a source of problems. 

Formal definitions of quality followed by distilled practitioners are given in the 

following table: 

Popular Quality Definitions 

Transcendent definition: Excellence 

Product-based definition: Quantities of product attributes 

User-based definition: Fitness for intended use 

Value-based definition: Quality vs. price 

Manufacturing-based definition: Conformance to specifications 

Quality definitions, such as the user-based, value-based, and even manufacturingbased 

concepts are applicable both to products and services. For example, in a 

university setting, fitness for intended use may be seen by the example of a small 

liberal-arts college that provides an outstanding science curriculum for people who 




wish to go to work in industry. This example also can be related to the user-based 

definition, based on how well the product performs its intended function. Someone 

who chooses a respected regional university rather than attending an expensive 

nationally known private university, would be seen as applying the value-based 

definition, based on how well the selected university provides performance at an 

acceptable price or conformance to perceived quality standards at an acceptable cost. 

The manufacturing-based definition measures quality by the product's "conformance 

to specifications;" in other words, how much does the product resemble the perfected 

prototype when it rolls off the assembly line? Students may look at the catalog 

description or course syllabus, when doing a course evaluation, and make a judgment as 

to whether the resulting course “conformed to specifications” given in these documents. 

Quality Definition for a Hospital 

A particular hospital may like to differentiate itself by advertising its “rating” in a 

specialty, such as cardiac care, with an implied guarantee of better results, which is 

product-based claim. If the “intended use” for a patient were simply to treat a badly 

upset stomach, then a low-cost local emergency care clinic would be satisfactory. 

However, if the “intended use” is to have the best possible care, a person may want to go 

to the number one hospital in terms of the state of the art facilities. Money is no 

consideration. Quality of treatment is important. This is a classic “value-based” scenario. 

Finally, a “manufacturing-based” healthcare experience would be one that conformed 

to specifications. Typically this would mean a general hospital with an emergency room 

that will take care of any sort of trauma injury, from automobile accidents to gunshot 

wounds, quickly and efficiently. 




1.8 Competitiveness 

A firm's competitive advantage lies in its ability to achieve market superiority. It is a) 

driven by customer wants and needs; b) makes a significant contribution to the success of 

the organization; c) matches the organization’s unique resources with opportunities in the 

environment; d) is durable, lasting, and difficult for competitors to copy; e) provides a 

basis for further improvement; and f) provides direction and motivation to the entire 

organization. Quality supports a firm's competitive advantage by providing for more 

efficient use of resources and production methods within the company, thus producing 

products or services that are superior to those of competitors. 

Point to Ponder 

Quality is not a Competitive Edge. It is the Competitive Edge! It is worth remembering 

Dr. Deming’s chain reaction model, which emphatically declares that improvement in 

quality alone, will decrease the cost and that in turn will make a firm competitive in the 

market place. 

1.9 Enhancing Customer Value through TQM 

CRM is the Key 

A firm that is “market driven” would exhibit several customer-focused characteristics 

that a “marketing driven” compa ny might not have. In fact, it would be rare for a 

“marketing driven” firm to pay much attention to developing a customer relationship 

management (CRM) system. This attention to customer needs would be more typical of 

a “market driven” firm. A CRM system requires that an organization establish effective 

strategies for listening to, and learning from, customers, as well as developing 

approaches to measure satisfaction relative to competitors. The system must also be 

designed to build relationships, in order to understand present and future customer 

needs, and keep pace with changing markets. The “marketing driven” firm may be 




much more focused on “selling” the customer a product that may or may not meet the 

customer’s needs. Quality is directly related to market share and to profitability. Quite a 

few studies have shown that people are willing to pay more for products that they 

perceive as having high quality. Thus, without high quality, good marketing of products 

and services would appear to be impossible, since salespeople would have little to sell 

that would meet the needs of their customer. However, without good marketing, where 

salespeople listen and respond to the needs of customers, even the best-designed 

products will remain unsold. 

CRM at Amazon.com 

Amazon’s CRM software helps in multiple ways to gain market share and maintain 

competitive advantage over their rivals. The list of the characteristics that make up their 

vision of customer service points to numerous features that are hard to duplicate in 

conventional websites or store chains. For instance, Amazon: 

has deep selection that is unconstrained by shelf space. 

turns their inventory 19 times in a year. 

personalizes the store for every customer. 

trades real estate for technology 

displays customer reviews critical of their products. 

allows customers can make a purchase with a few seconds and one click. 

puts used products next to new ones so customers can choose. 

shares their prime real estate, their product detail pages, with third parties, 

and, if they can offer better value, they let them 

adopts leading-edge technology for the company’s website 

has served customer needs by being one of the early pioneers to develop 

software for “collaborative filtering” of customer data 

Advantages of CRM Approach to Amazon 

 

 

Segmenting markets based on demographic and behavioral characteristics, 

Tracking sales trends and advertising effectiveness by customer and 

market segment, 




 

 

 

 

 

Identifying which customers should be the focus of targeted marketing 

initiatives with predicted high customer response rates, 

Forecasting customer retention (and defection) rates and provides 

feedback as to why customers leave a company, 

Studying which goods and services are purchased together, leading to 

good ways to bundle them, and 

Studying and predicting what Web characteristics are most attractive to 

customers and how the Web site might be improved. 

The capabilities of its high-tech warehouses, such as its nearly perfect 

process for sorting multiple item orders. 

1.10 Customer Focus Delineations 

The Importance of Customers 

Organizations only continue to exist because of their ability to meet their external 

customer requirement. The needs of external customers must drive all the internal 

processes within the organization. It is no good continuously improving the 

effectiveness of the internal processes if, at the end of the day, they are not producing 

the outputs which the customer requires. It is essential that organizations understand: 

i. Who are their external customers and what are their requirements? 

ii. Who are the internal processes, which produce the service or product 

required by the external customer? 

iii. Their customers’ perceptions of current performance 

iv. How performance can be improved? 

When implementing a Quality Improvement Program [QIP], it is easy to fall into the 

trap of becoming focused internally; concentrating resource on improving internal 




processes and reducing costs at the expense of the needs of external customers. 

Understanding customer requirements is an essential part of any QIP. 

Understanding the Customer 

It is essential that a comprehensive picture of customer requirements is determined. 

This is not restricted to the product or service delivered to the customer, but covers the 

total service required from the organization as a supplier. There may be a number of 

different customers to consider, even within the same organization. The person who 

places the order has requirements; the receiving department where goods are delivered 

has requirements; the person who pays the invoice has requirements. A company, 

which wishes to succeed, must be aware of all these requirements and constantly 

improve its ability to meet them. 

There are a number of sources of information on customer requirements. Examples 

include: 

Customer surveys 

Trade surveys 

Working with selected customers 

Competitor analysis 

Focus groups 

Benchmarking 

Customer complaints 

Legal and guideline standards (for example, ISO 9000) 

Informal customer, or potential customer comments received from sources 

such as: the sales force after customer visits; feedback from other employees 

and comments heard at conferences, training courses and trade exhibitions 

Every contact with an existing, or potential, customer at any level in the organization is 

an opportunity to learn more about their requirements. It is important that this 




information is tapped and used to improve the ability of the business to meet customer 

requirements. 

Internal Processes 

An external customer requirement can only be met if internal processes within an 

organization are set up effectively to deliver the requirement. A breakdown in the 

internal supply chain often results in failure to meet external customer requirements. An 

important part of Quality Improvement is the analysis of the whole organization to 

ensure that it is set up effectively to meet the requirements of its customers. The 

following steps are useful guide to achieve this: 

Identify the basic purpose and objectives of the business. What customer 

requirements does it exist to fulfill? 

Identify existing and potential future customers of the business. Tap as many 

sources as possible to ensure their requirements are understood. This includes 

understanding why potential customers are not actual customers! 

Identify the overall role each department plays in meeting customer 

requirements and business objectives. This may reveal that changes are 

required in the roles of departments within the organization 

Identify the internal processes, which link together to meet the external 

customer requirements. Ensure the external customer requirements flow back 

through the supply chain to determine the customer requirements for each 

internal process. Only by doing this at each stage in the supply chain can the 

external customer requirements are met? 

Measure overall performance for each process 

Introduce improvements to each process to improve performance 




Customer Service Dimensions 

1) Tangibles 

Appearance of physical facilities, equipment, personnel, and communication materials. 

Examples of Specific Questions Raised by Customers 

 

 

 

 

Are the bank's facilities attractive? 

Is my stockbroker dressed appropriately? 

Is my credit card statement easy to understand? 

Do the tools used by the repair person look modern? 

2) Reliability 

Ability to perform the promised service dependably and accurately 


 

 

 

 

When a loan officer says she will call me back in 15 minutes, does she do so? 

Does the stockbroker follow my exact instructions to buy or sell? 

Is my credit card statement free of errors? 

Is my washing machine repaired right the first time? 

3) Responsiveness 

Willingness to help customers and provide prompt service 


 

 

 

 

When there is a problem with my bank statement, does the bank resolve the problem 

quickly? 

Is my stockbroker willing to answer my questions? 

Are charges for returned merchandise credited to my account promptly? 

Is the repair firm willing to give me a specific time when the repair person will show 

up? 




4) Competence 

Possession of the required skills and knowledge to perform the service 


 

 

 

 

Is the bank teller able to process my transactions without fumbling around? 

Does my brokerage firm have the research capabilities to accurately track market 

developments? 

When I call my credit card company, is the person at the other end able to answer 

my questions? 

Does the repairperson appear to know what he is doing? 

5) Courtesy 

Politeness, respect, consideration, and friendliness of contact-personnel 


 

 

 

 

Does the bank teller have a pleasant demeanor? 

Does my broker refrain from acting busy or being rude when I ask questions? 

Are the telephone operators in the credit card company consistently polite when 

answering my calls? 

Does the repairperson take off his muddy shoes before stepping on my carpet? 

6) Credibility 

Trustworthiness, believability, honesty of the service provider 


 

 

 

 

Does the bank have a good reputation? 

Does the broker refrain from pressuring me to buy? 

Are the interest rates/fees charged by my credit card company consistent with the 

services provided? 

Does the repair firm guarantee its services? 




7) Security 

Freedom from danger, risks, or doubt 


 

 

 

 

Is it safe for me to use the bank's automatic teller machine? 

Does my brokerage firm know where my stock certificate is? 

Is my credit card safe from unauthorized use? 

Can I be confident that the repair job was done properly? 

8) Access 

Approachability and ease of contact 


 

 

 

 

How easy is it for me to talk to senior bank officials when I have a problem? 

Is it easy to get through to my broker over the telephone? 

Does the credit card company have a 24-hour, toll-free telephone number? 

Is the repair service facility conveniently located? 

9) Communication 

Keeping customers informed in language they can understand and listening to them 


 

 

 

 

Can the loan officer explain clearly the various charges related to the mortgage loan? 

Does my broker avoid using technical jargon? 

When I call my credit card company, are they willing to listen to me? 

Does the repair firm call when they are unable to keep a scheduled repair 

appointment? 

10) Understanding the Customer 

Making the effort to know customers and their needs 





 

 

 

 

Does someone in my bank recognize me as a regular customer? 

Does my broker try to determine what my specific financial objectives are? 

Is the credit limit set by my credit card company consistent with what I can afford 

(i.e., neither too high nor too low)? 

Is the repair firm willing to be flexible enough to accommodate my schedule? 

The ultimate five dimensions of service quality are Reliability, Responsiveness, 

Assurance, Empathy, and Tangibles in the order of importance. The contribution made 

by these five dimensions is succinctly given in the following visual (Fig 2). 

Fig 2: 

Contribution By ServQual Dimensions 

11% 

16% 

19% 

22% 

32% 

Reliabilty 

Responsiveness 

Assurance 

Empathy 

Tangibles 

Please note that Reliability, Responsiveness, and Tangibles are independent 

dimensions. Assurance is obtained by collapsing Competence, Courtesy, Credibility, 

and Security of the original Servqual dimensions. Likewise, Empathy is an 

amalgamation of Access, Communication, and Understanding the Customer of the 

original Servqual dimensions. 

(Source: Delivering Quality Service by Dr. Parasuraman) 




1.11 Strategic Planning for Quality 

Strategy 

A strategy is a pattern or plan that integrates an organization's major goals, policies 

and action sequences into a cohesive whole. Formal strategies contain three elements: 

1. Goals to be achieved. 

2. Policies that guide or limit action. 

3. Action sequences, or programs, that accomplish the goals. 

The leading practices for firms that do effective strategic planning include: 

 

 

 

 

Both top management and employees actively participate in the planning 

process. 

They use customer wants and needs to drive the strategy. 

They involve suppliers in the strategic planning process. 

They have well-established feedback systems for continuous measurement 

and re-evaluation of the planning process. 

Steps in Strategic Planning 

The steps in the strategic planning process are shown in Figure 3. Once the company's 

mission, vision, and guiding principles have been determined, the organization must 

assess the gap as to where it is now, and where it wants to be as described in its vision. 

Using this assessment, it must then develop goals, strategies, and objectives that will 

enable it to bridge this gap. 




Fig 3 

The purpose, or mission, of the organization is a statement of "why the organization is 

in business" In the past, the purpose of the organization was frequently stated in terms 

of products or services produced or profitability to stockholders. TQ-focused firms are 

now stating their purpose in terms of their customer focus and their commitment to 

strive for higher levels of quality. 

The vision statement is a statement of guiding values, principles, and direction of 

expected growth of an organization or some segment of it, and is generally developed 

by key managers and others who are responsible for planning and carrying out that 

vision. Vision statements may be developed at any level within the organizational 

hierarchy from top to bottom. This is a worthwhile activity, as long as the statements 

are coordinated so as to fit with those of the next higher level and the overall 

organization's vision. 

Values, or guiding principles, guide the journey to that vision by defining attitudes 

and policies for all employees, that are reinforced through conscious and subconscious 




behavior at all levels of the organization. The mission, vision, and guiding principles 

serve as the foundation for strategic planning. Top management and others who lead, 

especially the CEO, must articulate them. They also have to be transmitted, practiced, 

and reinforced through symbolic and real action before they become "real" to the 

employees, and the people, groups, and organizations in the external environment that 

do business with the firm. 

Hoshin kanri, known as policy deployment or management by planning in the U.S.A., 

is the Japanese process of deploying management strategy. Various companies have 

various definitions for policy deployment. In all cases, it emphasizes organization-wide 

planning and setting of priorities, provides resources to meet objectives, and measures 

performance as a basis for improving performance. Essentially, it is a TQ-based 

approach to executing a strategy. 

Catchball is the term for the negotiating process used within an organization to 

determine long- and short-term quality objectives. Leaders communicate mid-term 

objectives and measures to middle managers who develop short-term objectives and 

recommend necessary resources, targets, and roles/responsibilities. Catchball is not an 

autocratic, top-down management style. It marshals the collective expertise of the 

whole organization and results in realistic and achievable objectives that do not 

conflict. 

Policy deployment is a planning and implementation method that ties improvement 

activities to long-term strategies of the organization. It is driven by data, supported by 

documentation, emphasizes company-wide planning, and includes setting of priorities 

for improvement. It is somewhat similar to MBO, but has a different focus. First, MBO 

focuses on the performance of the individual employee, while policy deployment 

focuses on the organization as a whole. Objectives in MBO are tied to performance 

evaluation and rewards. Second, MBO objectives do not support the company's 

objectives, but are set independently. Third, the focus of MBO is as a control 




mechanism between supervisors and subordinates. Fourth, MBO objectives usually are 

not emphasized in daily work, but are brought out only at performance review time. 

Key business factors in the environmental assessment include: 

the nature of a company's products and services, its principal customers, major 

markets, and key customer quality requirements 

position in market and competitive environment 

facilities and technologies 

suppliers 

other factors, such as the regulatory environment, industry changes, etc. 

Strategic plans must be consistent with the important business factors of the company. 

For example, plans for a company in a highly competitive, fast-changing market might 

include fast cycle time and more attention to understanding emerging customer needs 

than plans for a company with a low-cost focus on a mature market. 

1.5.2 The Seven Management Planning Tools 

1. Affinity diagrams--This is a tool for organizing a large number of ideas, opinions, and 

facts relating to a broad problem or subject area, i.e. a vision statement. 

2. Interrelationship digraphs--Identifies and explores casual relationships among related 

concepts or ideas. It shows that every idea can be logically linked with more than one 

idea at a time, and allows for "lateral thinking" rather than "linear thinking." 

3. Tree diagram--Maps out the paths and tasks necessary to complete a specific project or 

reach a specified goal. 

4. Matrix diagrams--These are "spreadsheets" that graphically display relationships 

between ideas, activities, or other dimensions in such a way as to provide logical 

connecting points between each item. 

5. Matrix data analysis--Takes data and arranges it to display quantitative relationships 

among variables to make them more easily understood and analyzed. 




6. Process decision program chart--A method for mapping out every conceivable event and 

contingency that can occur when moving from a problem statement to possible 

solutions. 

7 Arrow diagrams-- Arrow diagrams are another name for PERT/CPM project 

planning diagrams. Students who have had a basic operations management course may 

be familiar with the term network diagram 

1.12 Structure and Strategy 

The implications for quality are that the quality philosophy, systems, procedures, and 

people must be aligned with the organization structure and vice-versa. It has been said 

that “structure follows strategy,” so, the quality strategy will ideally “drive” the 

development of a structure in order to carry it out. In reality, structures that have been 

in place for a long time are often difficult to change when the strategy changes, which 

creates significant misalignment and organizational stress. For example, when a highly 

regulated industry, such as telecommunications or electric power is deregulated, then 

the need for customer focus, increased service quality, and organizational structural 

change becomes painfully apparent, but difficult to accomplish. 

Many variations of organization structure exist, but they are commonly based on one of 

the following three forms: 1) line organization, 2) line and staff organization, or 3) 

matrix organization forms. The line organization is a simple form that is most 

successful in small firms. It is not generally used in large organizations, where the line 

and staff structure is most prevalent. Neither the pure line organization nor line and 

staff organization works very well where the environment of the firm and its industry is 

changing very rapidly. That is because these types of organizations tend to be rigidly 

structured. The matrix organizational form is better suited to rapidly changing 

environments, but it is more difficult to develop effective control of outcomes in order 

to meet goals using this form of organization. 




TQ focused organizations are often taking a process view of organization. Therefore, 

they are increasingly structuring their organization around functional or crossfunctional 

teams. To carry out the work, high performance teams that focus on core 

processes, quality improvement or other targets are often formed. These are frequently 

coordinated through cross-functional coordinating committees, management (or quality 

management) councils, etc. to overcome the problems of lack of control and 

accountability inherent in such matrix-form organizations. 

Essence of Strategic Planning 

Strategic Planning focuses on drivers of customer satisfaction, customer retention, and 

market share that lead to higher competitiveness, profitability, and business success. The 

category is divided into two sections, labeled as Strategy Development and Strategy 

Deployment. Strategy Development requires applicants to outline how they create a view 

of the future that takes into account the market factors in which they compete and the 

process of “how” they compete. Strategy Deployment seeks information about specific 

action plans that a company develops, how they are deployed, and a projection of 

performance. The Strategic Planning category requirements are intended to encourage 

strategic thinking and action, but do not imply that formalized plans or planning systems 

must be developed. 




TQM Themes 

Introduction 

A Process such as TQM requires guidelines, which serve as a framework, upon which 

practitioners of the process may start their understanding. The more we learn, the more 

we come back to these central and fundamental themes. This module succinctly brings 

out the key themes that are the cornerstones of TQM 

2.1 Everyone has suppliers and customers 

Every task undertaken, every responsibility held and every process of which we are 

part, there is, or should be, somebody, somewhere who is dependent on the quality of 

the work carried out. 

TQM examines process and the customer / supplier interaction at each state within the 

process (Figure 2.1). Understanding the needs is a prerequisite to customer satisfaction. 

Fig 2.1 




Every process, which flows through an organization, is made up of customer supplier 

chains, whether it is a manufacturing process, a sales ordering process or a management 

reporting process (Figure 2.2). 

Fig 2.2 

2.2 People make quality 

People make quality, but Deming suggests that over 85% of failures are created by 

management systems, which have unclear requirements, inadequate training, 

inappropriate equipment, poor communications or no leadership. 

The responsibility for developing people to become committed to Total Quality rests 

with all managers. This includes understanding and agreeing the requirements of the 

job, knowing how to do the job and why it is being done, having the necessary 

materials, tools and information, being able to measure improvements and knowing 

what to do when things go wrong are also fundamental to this development. 




2.3 Teamwork 

Total Quality Management emphasizes that teamwork is essential for success. Teams 

can be as broad as a business or as narrow as two or three people working together in a 

department. Working in teams brings benefits that individuals cannot necessarily 

achieve and maximizes the use of skills resulting in better decisions. Lading 

commercial companies have found that cross-functional teams provide 80% plus of the 

benefits. This is not unreasonable as the major processes in an organization usually 

involve more than one function. 

2.4 Effective Communication 

The possibility of misinterpretation from the sender to the receiver is substantial in any 

communication. We all have the need to communicate with each other to explain our 

requirements to give feedback, to suggest ideas, to raise problems and so on. Effective 

communication requires sufficient forethought in order to eliminate assumptions on 

both sides. 

The two-dimensional model of communication, up and down, must be extended to 

include communication across the organization thus breaking down artificial 

boundaries (see Figure 2.3). Requirements, plans, changes, goals and objectives, 

progress, should all be considered within the scope of effective communication. 


Website: www.ciilogistics.com 

Fig 2.3


Effectiveness implies ‘doing the right things’. The key elements of effectiveness 

improvement include: 

Statement of a vision: how an organization sees itself in the future; this, 

together with a mission, focuses the whole organization on a clear direction. 

Identification of key processes: for delivering the mission and challenging the 

need to continue with processes, which do not add value. 

Identification of customer/supplier relationships: deciding who is the customer 

and their requirements. 

Measurement of performance: develops the understanding of how services 

will be measured leading to ‘internal contracts’. 

Clarity of authority and responsibility: establishes who are ‘owners’ and who 

are ‘contributors’ to a process and identifies weaknesses in the roles and 

responsibilities context. 

Improving effectiveness is a way of focusing effort and resources on providing customers 

with a product or service that meets their requirements. 

2.5 Departmental Purpose Analysis 

Departmental Purpose Analysis (DPA) is a technique giving a practical approach to 

improving effectiveness (Figure 2.4). The first part of this is a structural review defining 

the role and responsibilities of each function in relation to the mission. The second part 

looks at the customer/supplier relationship and identifies value-added processes or 

opportunities for quality improvement. The third and fourth stages quantify the cost of 

quality opportunities and an action plan to gain measurable improvement. 

It can be argued that all activities should add value to an organization. If they do not, why 

do them? Thus each person in the supply chain should add value to the process. The 

benefits associated with these activities may be financially quantifiable. In most cases, 

the benefits will be very much more subjective. 




Fig 2.4 

At the same time as looking inwards for effectiveness, the outside world is changing all 

the time through product and service innovation, thereby becoming more competitive. 

Figure 2.5 encapsulates the process of attaining quality improvement in terms of a time 

frame. 


Website: www.ciilogistics.com 

Fig 2.5


2. 6 Benchmarking 

How can we measure our organization’s effectiveness compared to external 

organizations? One structured approach is ‘benchmarking’ where current products, 

services and practices are measure against those competitors or organizations, which are 

recognized as leaders in their field, with the purpose that superior performance is 

realized. 

The process is dependent upon involvement, openness and commitment to make it work; 

also it requires a detailed understanding of what is happening internally through operating 

procedures, DPA and documented standards. See Figure 2.6 

Fig 2.6 




There are four basic types of benchmarking. Internal benchmarking is essentially a 

comparison within the organization, although it could be on different sites or between 

countries. Competitive benchmarking looks at direct competition and data is usually 

more difficult to obtain. Functional leader benchmarking is comparing a function or 

specific process, which occurs across services or industries, e.g. filling bottles with 

liquids. Generic benchmarking is taking a wider view where functions or processes are 

the same regardless of dissimilarities of industries. Order processing, billing, etc., are 

examples, which are common to all businesses. It is the possibility of uncovering readily 

transferable proven ideas with little or no adjustment, which is the breakthrough 

attraction. 

2.7 A Change of Culture 

An aspect of TQM that is less often considered is that this ‘process of change’ 

undoubtedly impacts the way we do things or the way we want things done, but what, 

therefore, are the requirements? 

Openness: Reflects on the ability of an organization to share and 

communicate information, which is contrary to the view that information is 

power and power should be retained by the few. Openness is about mutual 

trust, where only commercially sensitive or national interest type information 

cannot be disclosed. 

Involvement: Involvement is linked to openness on the basis of trust in 

people and where employees work as a true team, knowing that in the long 

run it is simply in their mutual best interest. Involvement is for all not just for 

the selected few. 




2.8 Key Requirements of Quality Management 

The idea that ‘prevention is better than cure’ is a truism that has been with us for a long 

time. It is based on the idea that it takes less effort, causes less pain and is undoubtedly 

less expensive in the long run. 

The concept of never having time to do something properly, but always having time to do 

it twice, is challenged. Resources applied to activities that help prevent error are 

explored. This requires an understanding of root causes of problems. 

Prevention is about knowing the requirements and the standards, having the skills and 

resources in place, monitoring or measuring performance, and taking ownership of the 

activity. 

Do we stop to think about whether we are doing something for a second time, which 

should not be necessary? Are we checking an on-line process to make sure it does not go 

wrong? Are we building-in activities that will prevent the process going wrong in the first 

place? 

Performance: is assessed by looking at the time and money being used under 

three headings: 

Prevention Activities, which are designed to ensure that work is done right 

first time (e.g. Training, Planning, Standards Specifications, Operating 

Procedures) 

Appraisal Activities, which are designed to see whether work has been done 

right first time (e.g. Checking, Inspecting, Surveillance, Audit) 

Failure Activities, which are made necessary by failure to do work right, first 

time (e.g. Reworking, Downtime, Chasing, Apologizing!) 




If we measure the relative time and resources dedicated to each, it may be a surprise as to 

how little attention we pay to prevention. We are used to dealing with complaints 

procedure, rework, managing wastage, shortages, grievances, etc. How much time, on the 

other hand, do we devote to planning, preparation, eliminating, assumptions, etc? 

The shift in culture of any organization not only lies with how much we think about 

prevention, but also what we should do and what we actually do about it. 

Cost of quality is the summation of prevention, appraisal and failure. The target is to 

reduce failure and appraisal activities and increase preventive measures over a period of 

time. Leading manufacturers no longer measure percentage defects, but have improved to 

a position where they measure defects in parts per million or even billion! 

Keeping Promises: No longer is it acceptable to promise delivery on the 21st only to 

deliver the goods on the 22nd or the 20th. The pursuit of pinpoint accuracy by the 

customer has forced Just in Time (JIT) activities on suppliers, who in turn are required to 

develop internal disciplines to keep the promise. It is not just a matter of on-time 

delivery, because suppliers should be trying to keep the promise on all seven critical 

dimensions of quality: 

Performance 

Reliability 

Conformance 

Durability 

Serviceability 

Features 

Aesthetics 

Some or all of these may be important to the customer; TQM requires that the quality 

promise related to each must be fulfilled. 

There is an eighth dimension of quality, which is the ‘Perception of the Customer’. This 

is the consumer’s impression of a product or service formed by images, conversations 

and past experiences. Customer surveys have discovered that only 4 out of every 100 

dissatisfied customer will complain. Each dissatisfied customer will tell ten other 

consumers, but only one in ten dissatisfied will continue to buy. It costs at least five time 

as much to attract new customers as it does to keep an existing one. 




Values: Values are the shared beliefs, which guide the actions and decisions towards the 

vision. From living the values and constantly referring to them, this determines in part the 

culture of the organization. Culture may be comprised of many components such as 

respect, honesty, integrity, profit, people, commitment, risk-taking initiative, mutuality, 

recognition and many others. Values qualify how the mission might be achieved. At the 

heart of the McKinsey 7-S Framework is shared values, which represents the conduct of 

how business will be transacted (Figure 2.7). 

Fig 2.7 

Values need to be developed at the same time as a mission statement and communicated 

to everyone in the organization. Above all, values are those unwritten rules of ‘the way 

we want things done’. 

Listening there is an old saying, which goes along the lines…. 




If I am listening, I have the advantage 

If I am talking, others have it 

The culture change for management is to be actively seen listening to work place 

problems and responding appropriately. No longer is it sufficient to respond with such 

phrases as ‘I hear what you say’ and then do nothing about it. 

Ownership TQM requires that employees are able to feel a sense of ownership of the 

organization. There are different ways of achieving this and there is no one formula. 

TQM sets out to create an excellence environment in which participation, on a voluntary 

basis, becomes the accepted norm. 

Ownership of problem requires managers and supervisors to think through their role more 

closely. Taking responsibility for decisions, willingness to take balanced risk and 

discovering information could be cultural shift. Upwards or downwards delegation or 

assuming other people will carry out the task or function are no longer the only options. 

Eliminating the ‘over the wall’ mentality is a culture change of significant proportions in 

many organizations. The required ethic is that of ‘me first’ in taking up responsibility. 




Implementation of TQM 

Introduction 

Before a Quality Improvement Program (QIP) can be successfully implemented, senior 

management must recognize the need for Quality Improvement and must understand the 

total commitment required from them if it is to succeed. 

Having committed themselves to implement Quality Improvement, they then need to put 

together a detailed plan to guide the implementation of the Program. 

3.1 Management Commitment and Involvement 

Having recognized the need for Quality Improvement, the first objective it to ensure 

management commitment to the new company culture, focusing on preventing errors, 

rather then merely fixing them once they have arisen. The commitment required from 

management to a QIP is absolute if the Program is to succeed. 

It is then necessary to gain the support and commitment of the entire workforce. The 

attitudes and actions of employees are generally determined by what they believe 

management wants of them. It is therefore essential that management defines clearly and 

unambiguously its requirements in relation to Quality. This is recorded formally in the 

Quality Policy of the Company. 

The Quality Policy is an important statement of management’s intention as regard 

Quality. But it is the demonstration by every manager in their day-to-day work that they 

are never prepared to compromise their commitment to the Quality Policy that will make 

a Quality Improvement Program succeed. 

Gaining the support and commitment of senior management is not easy and is one of the 

major reasons for the failure of a Quality Improvement Program. The go-ahead to 

implement a Program may be relatively easy to attain. It is the personal commitment and 




involvement from every manager that is difficult. Gaining this commitment requires 

persuasion, practical examples, reports on the benefits of a QIP and continuous effort! 

Any and every means possible should be used. They may include: 

estimate of the cost of non-conformance. This demonstrates the cost of not 

committing to continuous improvement. 

obtain customer input on current performance and how well their 

requirements are being met. 

describe accounts of other companies’ experiences and the benefits they have 

realized. 

consider using videos, articles and press clippings on Quality Improvement to 

reinforce the message. 

training and seminars 

a pilot run in a department committed to Quality Improvement to demonstrate 

the benefits 

Although management commitment may be difficult to attain, it generally gets easier as 

the Program develops and the benefits of success begin to be realized. The publication 

and celebration of early successes is an essential part of increasing the momentum of a 

Quality Improvement Program. 

3.2 Quality Improvement Structure 

In most companies, significant changes are required when implementing a Quality 

Improvement Program (QIP). In order to plan and pilot the implementation of the 

Program most companies form a Quality Improvement Team (QIT). The team should be 

composed of a chairman, an administrator and a representative of each department. 

Selection of the chairman and administrator is important since they will become deeply 

involved in the Program and will direct the running of the QIT. 




3.3 The Importance of Customers 

This area focuses on customers, how their requirements are identified and how these 

requirements are communicated throughout the business. 

Organizations only continue to exist because of their ability to meet their external 

customer requirement. The needs of external customers must drive all the internal 

processes within the organization. It is no good continuously improving the effectiveness 

of the internal processes if, at the end of the day, they are not producing the outputs 

which the customer requires. It is essential that organizations understand: 

v. Who are their external customers and what are their requirements? 

vi. Who are the internal processes, which produce the service or product 

required by the external customer? 

vii. Their customers’ perceptions of current performance 

viii. How performance can be improved? 

When implementing a Quality Improvement Program, it is easy to fall into the trap of 

becoming focused internally; concentrating resource on improving internal processes and 

reducing costs at the expense of the needs of external customers. Understanding customer 

requirements is an essential part of any QIP. 

Understanding the Customer 

It is essential that a comprehensive picture of customer requirements is determined. This 

is not restricted to the product or service delivered to the customer, but covers the total 

service required from the organization as a supplier. There may be a number of different 

customers to consider, even within the same organization. The person who places the 

order has requirements; the receiving department where goods are delivered has 

requirements; the person who pays the invoice has requirements. A company, which 

wishes to succeed, must be aware of all these requirements and constantly improve it s 

ability to meet them. 




There are a number of sources of information on customer requirements. Examples 

include: 

Customer survey s and trials 

Trade surveys and trials 

Working with selected customers 

Competitor analysis 

Focus groups 

Benchmarking 

Customer complaints 

Legal and guideline standards (for example, ISO 9000) 

Informal customer, or potential customer comments received from sources 

such as: the sales force after customer visits; feedback from other 

employees and comments heard at conferences, training courses and trade 

exhibitions 

Every contact with an existing, or potential, customer at any level in the organization is 

an opportunity to learn more about their requirements. It is important that this 

information is tapped and used to improve the ability of the business to meet customer 

requirements. 

Internal Processes 

An external customer requirement can only be met if internal processes within an 

organization are set up effectively to deliver the requirement. A breakdown in the internal 

supply chain often results in failure to meet external customer requirements. An 

important part of Quality Improvement is the analysis of the whole organization to ensure 

it is set up effectively to meet the requirements of its customers. The following steps are 

useful guide to achieving this: 




Identify the basic purpose and objectives of the business. What customer 

requirements does it exist to fulfill? 

Identify existing and potential future customers of the business. Tap as 

many sources as possible to ensure their requirements are understood. This 

includes understanding why potential customers are not actual customers! 

Identify the overall role each department plays in meeting customer 

requirements and business objectives. This may reveal that changes are 

required in the roles of departments within the organization 

Identify the internal processes, which link together to meet the external 

customer requirements. Ensure the external customer requirements flow 

back through the supply chain to determine the customer requirements for 

each internal process. Only by doing this at each stage in the supply chain 

can the external customer requirements be met? 

Measure performance overall, and for each process 

Introduce improvements to each process to improve performance 

3.4 Identifying quality costs 

The objective of the Quality Improvement Program is to develop an approach, which 

ensures goods, and services are produced which meet customer requirements for the 

minimum cost. 

The objective is to eliminate the costs associated with not getting this right the first time, 

the cost of non-conformance (CONC). 

The Importance of Identifying the CONC 

Recognizing the amount of money devoted to the CONC at the beginning of a QIP 

frequently underlines the strategic necessity of introducing the program. Findings from a 

number of businesses suggest that the CONC can amount to as much as 25 per cent of 




turnover in both manufacturing and in service industries. This is certainly a figure, which 

grabs management attention. 

Monitoring the CONC can provide a measure of the success of the QIP. However, it 

should be recognized that when a QIP is introduced the CONC frequently appears to rise 

initially. This is because people become more aware of non-conformance and its 

associated costs as they become able to identify them. Consequently costs become 

included which would not initially have been thought of as non-conformance costs. 

Knowing the CONC associated with individual activities can be used to help priorities 

corrective actions, focusing attention on the highest priority areas. 

Being aware of the cost associated with error helps every department and individual in 

their commitment to perform every task right first time. 

Calculating the Quality Related Costs 

One of the most useful ways of classifying Quality related costs is to distinguish between 

the costs of conformance and the costs of non-conformance. Costs of non-conformance 

are all the costs incurred because failure occurs; if there were no failures there would be 

no requirement for the activity. Costs of conformance are all the costs associated with 

preventing non-conformance arising. 

Cost of Non-Conformance (CONC) 

The most obvious element of CONC are the costs associated with failure to achieve 

conformance to requirements – the failure costs. 

Failure costs occur in all areas of the company. They are often accepted as pat of the 

normal course of events and so are easily overlooked. 




The fact that failure costs exist is generally well recognized in industry. In order to 

minimize failure costs many companies operate systems to find failures. There are 

inevitably costs associated with finding these errors. 

These are the Appraisal Costs 

Today many of us expect failures to happen and so we need appraisal activities to find 

them. If failure were eliminated the vast majority of appraisal activities would also no 

longer be necessary. 

Cost of Conformance 

To reduce the CONC we need to invest in prevention activities. Prevention activities 

inevitably result in some costs. These are prevention costs. Investing in the prevention of 

failure enables failure and associated appraisal costs to be minimized. This is the 

fundamental principle underlying Quality Improvement. 

The key feature of a QIP environment is that failures are not accepted as a normal 

occurrence. The root causes of any failures are identified and eliminated by the 

introduction of prevention activities. Failure is an exceptional occurrence rather than the 

norm. In this environment we do not need vast appraisal activity, we only need a small 

audit activity to ensure our prevention system is working correctly. So after focusing on 

reducing failure costs we can then look at reducing appraisal costs. 

The Role of the Quality Improvement Team 

The role of the QIT is to devise a method for identifying the Total Quality related costs 

across the company. It is important that all Quality related costs are included at this stage 

and not just the obvious costs associated with manufacturing. This analysis can then be 

used as a basis for measuring progress as the QIP is implemented. It can also be used to 

reinforce the need for implementing the Improvement Program when communicating 

with management and employees. The measurement of quality costs provides valuable 




management information and will require the active participation of every manager and 

supervisor if it is to be a meaningful measure of current business performance. 

The objective of the QIP is to eliminate the CONC by investing in prevention. 

3.5 Quality awareness 

This module explains the importance of involving everyone in the Quality Improvement 

Program and describes effective means for achieving this objective. 

The Individual Commitment to Quality 

To be successful, a Quality Improvement program often requires a complete change in 

the way an organization is run: 

i. All employees require a greater understanding of customer requirements and 

the internal processes required to meet these requirements 

ii. It will no longer be acceptable to reply on finding and fixing errors. The 

organization will have to become committed to investing resources in 

preventing errors arising and 

iii. Individuals should be empowered to take actions to improve the Quality of 

output from their own work areas 

To achieve these changes requires the commitment of every employee within the 

company. The required level of personal commitment is only likely to be achieved if 

every individual understands the aims and benefits of the Program, the role they can play, 

and how they can implement improvement in a successful QIP. A number of activities 

can help achieve this personal commitment to Quality Improvement: 

i. Education, Individuals need to understand the reasons for change, what it 

will mean to them and how they are equipped to contribute. The training 




ii. 

iii. 

must be relevant, interesting and enable people to understand and participate 

in Quality Improvement. 

Communication. A constant flow of information is necessary, describing 

progress made by the QIP, how and when individuals will be involved and 

the successes achieved. 

Recognition. A system to recognize and publicly reward those who make an 

outstanding contribution to Quality Improvement can play an important part 

in encouraging employee commitment. 

3.6 Measurements and targets for improvement 

This section explains the importance of introducing objective measurements in all 

departments throughout the organization, and then setting targets for the improvement of 

performance. 

Objectives of Performance Measurement 

Accurate measurement of the quality of all process is the cornerstone to improvement – 

until we know where we are today, we cannot improve. 

Objective measurements enable management and employees to focus attention on areas 

of weakness and to monitor progress. 

Since all departments are involved in meeting customer requirements and in generating 

and fixing errors, all departments should be involved in the Quality Improvement 

Program and all departments need to introduce appropriate measures to enable 

performance to be monitored. 

Measurements can be used to highlight opportunities for improvement and also to 

monitor the success of the Program. It is important that all measurements, which are 

introduced, fulfill two primary objectives: 




i. They should be meaningful to the business. Improvements in these areas 

should lead to improved business performance 

ii. The measurements should be owned by individuals or work groups 

It is often difficult to define measurements, which meet both these objectives. As a result, 

the introduction of measurement is often best approached from two angles: 

i. From the top down. These are the initial measurements introduced and 

owned by managers and their dependents. They are key functional measures 

where improvements will result in direct, tangible benefits to the business. 

These measurements effectively define the ‘big picture’ into which the other 

measurements will fit. 

ii. From the bottom up. These are measurements introduced directly by 

individuals and work groups as the program progresses and individuals 

become involved in the program. They are often measurements of smaller, 

more personal activities which are often more meaningful to the individuals 

than the ‘big picture’ measurements. 

With any Improvement Program it is important to have both types of measurements; one 

without the other reduces the benefits of the Improvement Program. Bottom up measures 

on their own can trivialize the Program as the benefits to the business may be relatively 

small. Top down measurements on their own can limit the extent to which individuals 

become involved in Quality Improvement. This can prevent individuals from realizing 

they have an important role to play. 

Fundamentals of Top Down Measurements 

Before introducing new measurements at the beginning of QIP, it is essential to focus 

attention on those areas, which have a real impact on the business. This helps set the 

scene for a forward looking Program, which individuals can recognize is driven by 




business needs. Once the Program has been running for a while, individuals and groups 

will begin to introduce measurements of their own. The following sequence has been 

found in practice to provide an effective way to identify appropriate measures: 

i. Identify the basic purpose of the business and its objective. The whole 

management team will need to be involved at this point. The results of this 

analysis should then be interpreted for each department. Functional analysis 

is a key technique to use at this stage. 

ii. Identify the key measure of performance for each department. For example, 

one of the key measures for the personnel department might be to ensure 

that each of the other departments has its full quota of staff. The appropriate 

measure in this case might be variances from target head count. 

iii. Each department then establishes a number of functional measures. 

Functional measures reflect the major activities of each department to meet 

the key objectives for the department. For the personal department one of 

the functional measures might be the time taken to agree the job 

specification once the vacancy has been identified. Improvement in these 

functional measures can be monitored. Progress in the functional measures 

supports the department’s over all business objectives. 

iv. As the program cascades through the organization these measurement will 

be developed and added to until everyone has establishes performance 

indicators within his own work area. 

v. These measurements should be reviewed as part of the annual business 

planning cycle to ensure they continue to reflect the overall business 

objectives. 

Each measurement should be agreed and owned by the department being measured. Only 

then is the department likely to take the measurement seriously. 




Measurement is only effective if it produces information, which people can easily 

understand and use. Data must therefore, be accurate and the operating and reporting 

methods must be straightforward. 

Once accepted by the departments concerned, all measurements should be prominently 

displayed for everyone to see. This ensures commitment to the measurements by the 

department being measured, and allows an opportunity for everyone interested to 

participate in the improvement program. Measurements are not just for managers, they 

are for everyone interested to participate in the improvement program. Measurements are 

not just for managers, they are everyone involved in the process. 

Measurements should be made regularly. The frequency depends on the specific 

measurement being made. 

3.8 The Measurement of Quality in Practice 

Most companies operates systems to measure performance within manufacturing 

divisions but have difficulty in deciding on measures to use within other areas. The 

following are examples of measures, which may be appropriate within other areas: 

Engineering : Number of engineering changes 

Software bugs reported in released software 

Number of weeks projects slip 

Sales : Time to respond to request for quotations 

Percentage of orders incorrectly entered 

Comparison of actual orders against forecast 

Service : Turn-around time for repairs 

Warranty claims after service 

Excessive service spares inventory 




Accounts : Incorrect invoices raised 

Debtor days outstanding 

Personnel : Time to fill vacancies 

Staff turnover rates 

Administration : Number of items returned due to typing errors 

Number of hours late producing the typed copy 

Time taken to pass messages to the recipient 

One of the most useful ways to display measurements is by the use of trend charts. These 

charts should be posted on a regular basis (daily, weekly, monthly) to record progress 

over time. 

The charts, however, only record status and progress. It is the action taken as a result of 

the information on the charts, which results in improvement. 

3.9 Prevention 

This section focuses attention on the need to adopt prevention as the system for Quality 

Improvement throughout the organization. It explains the Zero Defects Concept, and the 

importance of introducing effective corrective action systems to eliminate the causes of 

non-conformance and prevent their recurrence. 

The Zero Defects Concept 

The implementation of a successful Quality Improvement Program requires a company to 

adopt prevention as the system for managing Quality. Prevention requires everyone 

within the company to believe that errors are not an inevitable part of working life; that 

correct systems, training, equipment, materials and above all, personal attitudes, can 




prevent errors occurring. This belief is summarized in the Zero Defects concept. There is 

some question as to who first propounded the Zero Defects concept, but it is most closely 

associated with Philip Crosby, and has been extensively used by him, and his consultancy 

organization, in implementing Quality Improvements in many organizations world-wide. 

The fundamental principal underlying the Zero Defects concept is that it is possible to do 

all operations right the first time. Zero Defects does not mean that everything has to be 

gold plated or the place has to be crawling with inspectors. It simply means that each and 

every one of us has to believe it is possible to carry out activities without error. Errors are 

not inevitable. We should not anticipate errors and then build up massive systems to find 

and correct them. If we except errors to occur and build systems to deal with them, they 

will happen. We are then effectively saying that errors do not matter. We will find and fix 

them. This is a very costly path to tread. 

If errors are not expected to occur, and preventive actions are introduced to eliminate 

problems, the errors will not happen. The new attitude is that errors are not tolerated. A 

big fix-it outfit should not be available, just waiting for errors to happen. Everyone will 

be more careful and will work to eliminate the causes of errors so that eventually they 

will no longer occur. 

In our personal life we do not expect to put on odd shoes in the morning on a given 

number of days in a year. If we did expect this to happen then we could ask our partner to 

check our shoes every morning before going out and then rectify any errors found! This 

would prove very costly in terms of our partner’s time and patience. We do not, however, 

expect this to happen because we implement a preventive action such as putting our shoes 

in pairs when we take them off. 

The Zero Defects philosophy requires us to apply our personal standards to our work and 

asks everyone else in the company to do the same. 




By adopting the Zero Defects concept, employees underline their commitment to the 

attitude and belief that errors are not inevitable. Errors can be avoided by applying 

prevention techniques. 

The Fundamental Importance of Effective Corrective Action Systems 

The fundamental objective of corrective action is to ensure that having identified a 

problem the action taken ensures it does not recur. The corrective action should be 

designed to prevent the same type of error from happening again, not just today but 

forever. Although at the start of a Quality Improvement Program it is important to focus 

attention on major problems, in the long run no error is too small to require corrective 

action. 

We have already discussed the need to introduce measurements of performance in all 

areas of the company. These provide raw data to enable us to identify and evaluate the 

impact of problems. The correct use of effective measurements enables us to monitor the 

progress resulting from corrective actions taken to eliminate problems. 

However, it must be stressed that measurements only provide information. It is the action 

taken as a result of this information, which produce the necessary improvements. We 

therefore need to make sure that an adequate system is in place to ensure that effective 

corrective actions are taken when a problem is identified. 

The Failure of Typical Existing Correction Action Systems 

Most companies already operate corrective action systems. The resolution of audit 

deficiencies and meetings with suppliers to review the reasons for reject components and 

improve performance are two typical examples. However, existing systems in many 

companies fail to succeed for three main reasons: 




i. The action taken as a result of problems are often not really preventive 

actions. They may fix today’s problem but generally do not introduce the 

long-run improvements necessary to prevent the problem recurring in the 

future. 

ii. Many companies do not operate a mechanism for collecting details of the 

day-to-day problems faced by employees. This can be countered by 

introducing an Error Cause Removal (ECR) system. 

iii. The typical approach to resolving problems in many companies is to form a 

team of managers and supervisors. These teams are formed on an ad hoc 

basis and meet to try and resolve significant problems as they are identified. 

By only using managers and supervisors in these teams we restrict the 

number of problems which can be tackled and frequently do not get the 

benefit of the practical experience of the people actually doing the job on a 

day-to-day basis. 

Features of Effective Corrective Action System 

To be effective it is important that corrective actions are properly planned and carefully 

designed to result in the elimination of the problem concerned, once and for all. The 

following features typically need to be present in order for a corrective action system to 

be effective. 

i. An effective mechanism must exist to identify the problems to be solved. It 

is important systematically to analyze the features of a business and examine 

whether processes could be carried out more effectively. It is also important 

to establish a mechanism to identify practical problems facing the workforce 

(the ECR system). 

ii. Once a problem has been identified it is important to involve all the people 

concerned with the problem in developing corrective actions (corrective 

action groups). 




iii. Someone within each group, frequently the supervisor, needs to have some 

knowledge of problem solving methods. 

iv. The outcome from these meetings should be reported to team members 

regularly. 

v. Corrective actions should be carefully assessed to ensure they are the most 

effective means to eliminate the problem once and for all. Once introduced, 

the results of the corrective action must be monitored to ensure they achieve 

the objectives set for them. 

vi. Management must support the activity and demonstrate their commitment 

by taking an interest in the progress made. 

Corrective Action Groups 

In addition to improving the existing corrective action system, it is generally necessary to 

consider introducing formal problem solving groups. He two most important types of 

group are: 

i. Progress Groups (also known as Quality Circles): A progress group is 

generally a small group of individuals from within one department who 

carry out similar work. The group meets regularly to identify, implement 

and monitor the progress of corrective actions for problems arising within 

their work area. 

ii. Corrective Action Task Force: Complex problems frequently arise during 

the course of a Quality Improvement Program. A Corrective Action Task 

Force is an interdepartmental group with a member from each department 

affected by the problem. 




The Error Cause Removal System 

An important feature of a successful Quality Improvement Program is the introduction of 

a simple method, which allows any individual to bring out into the open problems, which 

prevent him performing error-free work. These problems can then be targeted by 

management with the objectives of finding a solution. This is the error cause removal 

(ECR) system. This type of system differs from a suggestion scheme because in this case, 

the employee need only identify the problem. In a suggestion scheme an individual is 

only asked to contribute if he can also propose a solution. In this way a whole host of 

problems go unidentified and unresolved. Many companies already operate an ECR 

system. In some cases this has fallen into disrepute because there is no real management 

commitment to solving the problems identified. As a result, individuals have to wait a 

long time for what is often an unsatisfactory answer. Eventually, the system is no longer 

used. Like quality circles, an ECR system is only likely to be successful as part of a 

Quality Improvement Program. In this case management actively wants to know about 

problems and is committed to effecting solutions. 

Fundamentals of an ECR System 

The following features should be present for an ECR system to work effectively: 

i. The ECR system should be introduced early in the Quality Improvement 

Program, so it is available for individual to use as they become involved in 

the Program. 

ii. The forms should be short, simple to complete and readily available. 

iii. ECRs should initially be submitted to the individual’s supervisor. An ECR 

should be acknowledged within two days of receipt. 

iv. If the problem cannot be resolved by the supervisor, then the form should be 

sent to the department responsible for the problem. The individual should 

receive a reply from the department within two weeks. This should give 




details of the decision or a report on the actions taken so far together with an 

estimated completion date. 

v. Whenever it is decided to do nothing about an ECR this should be cleared 

with al least the next level of management. The individual must be given a 

clear explanation of why no action is being taken. 

vi. Every ECR should be taken seriously. No one should be criticized for 

raising an ECR. 

vii. All corrective actions introduced must resolve the problem permanently 

through preventive action. They should not just fix the problem in the short 

term. 

viii. The system should ensure that each ECR is resolved at the lowest possible 

level of supervision. Of all ECRs raised, experience has shown that 85 per 

cent can frequently be resolved by the first level of supervision, 13 per cent 

at the next level and 2 per cent might need to be referred to the department 

head or the QIT. 

ix. The efficiency of the system should be monitored by the QIT. They should 

look particularly at the response time and the actions taken. If either of these 

is unsatisfactory, individuals will cease to use the system and the 

Improvement Program will lose its credibility. 

3.10 Education and training 

After the management team agrees on the need for Quality Improvement and accepts the 

Program in principle, the QIT should attend an intensive training course. This course 

should explain their responsibilities for implementing the Quality Improvement Program 

and ensure they thoroughly understand how it can be implemented. This course may be 

run internally or by an external trainer depending on the level of existing expertise within 

the company. 

Having been trained, the QIT should plan the education Program for the rest of 

workforce. It is important that the whole workforce is included in the training Program. 

Everyone has their part to play in a company. A receptionist may help to gain or lose a 




customer as easily as a manager. If a message is not passed on quickly, the customer may 

choose to look elsewhere for his need. Production line staffs are likely to know more 

about the things that are wrong where they work than their managers and supervisors. 

They have probably been living with the problem and fixing things for a number of years. 

Experience has shown that the most effective approach to training within a company is to 

cascade the learning process from the manager to the supervisors and then to individual 

employees. The duration and content of the education Program depends on the 

individuals being trained. But they should all understand why the Program is required and 

their personal involvement in the drive for Improvement. At each stage the supervisor 

should be actively involved in the training. This ensures that the supervisor fully 

understands the Program and how it affects his area of the business. It also provides an 

important opportunity to demonstrate his commitment to the Program to his team. This 

approach has the added advantage of helping to develop a team approach in all areas of a 

company. This can result in a dramatic improvement in performance as people become 

personally committed to their team. 

Once teams form and begin looking at areas requiring improvement they will need 

training in how to analyze and resolve problems. It is no good asking people to make 

improvements if they have not been given the tools to enable them to do so. The training 

Program should be designed to enable them to use the essential problem solving tools. 

The techniques taught will depend on the business, but may include functional analysis, 

data gathering, Pareto analysis, brainstorming, fishbone diagrams and process control. 

In view of the time and experience required to produce training material, many 

organizations use externally generated training materials. If external material is used it 

must be adapted to ensure it is relevant to the organization and to the individuals being 

trained. 




Statistical and Problem Solving Techniques 

4. 1 Basic Principles 

WIDELY USED TERMS IN SQC 

Frequency Distribution 

Normal distribution curve 

Fishbone diagram 

Chance causes or system causes 

Assignable causes or special causes 

Stable process 

Histogram 

Process spread 

Standard deviation 

Sigma () 

Control limits 

Variables chart 

Attribute Chart 

Average and range chart 

Average 

 

X 

Range 

R 

Upper control limit 

Lower control limit 

Out of control 

In control 

Percent defective chart 

Management solvable problem 

Floor solvable problem 

Have you ever been sick enough to be confined to a hospital bed, with a nurse coming 

around and taking your temperature, your pulse and your blood pressure? If you have, 

you already know something about statistical quality control. The readings that the 

nurse records on a chart are like the readings you will record on charts on your job. 

When you are sick, the doctor wants to know what is normal about you and what is not. 

With this information he will take the right steps to make you well. 

Jobs can get sick, just like people. Like the doctor, you need a picture of how the job is 

performing. You need a running record of what is happening on your job to tell when it 

is sick and when you must take action to make it well. 




Just as the doctor uses temperature and pulse charts to keep track of your condition, you 

will use control charts to monitor the condition of your job. When properly used, 

control charts will tell you three things: 

1. When you're doing something you shouldn't 

2. When you're not doing something you should 

3. When you're doing things right 

In short, control charts will indicate how "well" your job is. They'll show you: 

1. When the job is running satisfactorily 

Or 

2. When something has gone wrong which needs correction 

Control charts will provide you with "stop" and "go" signals. They'll enable you to 

"point with pride" or "view with alarm" (and look for the cause of the trouble!). 

To use these statistical tools effectively and profitably, you must understand some of 

the basic principles underlying statistical quality control techniques. You may be one of 

the many people who feel uncomfortable when the world "statistics" is mentioned, but 

in using statistical quality control techniques, you don't need to get deeply involved in 

mathematics. All you need to do is learn a few basic principles. An understanding of 

these principles will make it easier for you to understand and use the control chart 

techniques presented in this program. 




All the ideas and techniques in this program are based on six principles. The first 

principle is: 

1. No two things are exactly alike 

Experience has shown that things are never exactly alike. When two things seem to be 

alike, we often say that they're "like two peas in a pod". But when we open a pea pod 

and take a close look at the peas, we see slight differences. The peas are different in 

size, shape or freedom from blemish. If you're concerned with manufacturing parts, you 

know that no two manufactured parts are exactly alike either. In one way or another, the 

parts will be slightly different in size, shape or finish. 

We often want to make parts interchangeable. To do this, we want to make them 

identical, but no two things are exactly alike. Therefore, we want to keep the variation 

between parts as small as possible. To help ourselves do this, we use a second basic 

principle. 

2. Variation in a product or process can be measured 

Some variation is normal to your job, and this variation tends to increase. If you make 

no effort to measure or monitor the variation normally expected in your job, you could 

find yourself in a lot of trouble. That is, all processes that are not monitored "go 

downhill". Therefore, it's necessary to measure the output of any process or operation to 

know when trouble is brewing. 

When you check the output of process or operation, you will quickly notice one feature. 

This feature provides a basis for the third principle. 




3. Things vary according to a definite pattern 

If you want to see this pattern take shape, all you need to do is record the measurements 

of a dimension on parts from one of your operations on your job. If you record them in 

tally form, you will see a pattern begin to form after you have measured and recorded 

several parts. An easy way to demonstrate this principle is to roll a pair of dice 

fifty or more times and record the total number of spots that come up in each throw. 

After a while you will see a pattern begin to form. This pattern sometimes called a 

frequency distribution, and is shown in Figure 4.1 

12 x 

11 x 

10 xxxxx 

9 xxxx 

8 xxxxx xxx 

7 xxxxx xxxxx x 

6 xxxxx Xx 

5 xxxxx x 

4 xxxx 

3 xx 

2 x 

Figure 4.1 Frequency Distribution 

A frequency distribution curve is formed by enclosing the tally marks in a curved line. 

This curve shows that there are more measurements or numbers in the middle and 

fewer as you go away from the middle. As you can see, the curve is shaped like a bell 

(see Figure 4.2) 




12 x 

11 x 

10 xxxxx 

9 xxxx 

8 xxxxx xxx 

7 xxxxx xxxxx x 

6 xxxxx Xx 

5 xxxxx x 

4 xxxx 

3 xx 

2 x 

Figure 4.2 Bell-Shaped Curve 

A frequency distribution curve will repeat itself whenever you take groups of 

measurements. This fact leads to the fourth basic principle. 

4. Whenever things of same kind are measured, a large group of the 

measurements will tend to cluster around the middle 

Most measurements fall close to the middle. In fact, mathematicians can make a fairly 

accurate prediction of the percentage of measurements in various sections of the 

frequency distribution curve. This prediction is shown in Figure 1.3. 

Figure 4.3 Approximate Percentages of Different Measurements Within the 

Normal Distribution Curve 




How can we understand this curve in a practical way? 

 

 

 

 

If we measure each piece that comes from a machine or operation and make a 

tally of the measurements, we will eventually have a curve similar to the one 

in Figure 4.3 

If we don't measure, each piece, but merely reach into a tote pan, grab a 

handful of pieces and measure them, the chances are that 68 out of 100 

measures (34 % + 34%) will fall within the two middle sections of the graph 

in Figure 4.3. 

The chance are that 28 out of 100 pieces (14% + 14%) will fall into the next 

two sections, one on each sides of the middle sections. 

Finally, the chances are that 4 out of 100 of the pieces (2% + 2%) will fall into 

the two outside sections. 

This may sound a little complicated, but don't worry about it. Just remember that 

measures do tend to cluster around the middle, as shown by the bell shape of the curve. 

This particular curve is known as the normal distribution curve. 

All of this brings us to the fifth basic principle. 

5. It's possible to determine the shape of the distribution curve for parts 

produced by any process 

By making a tally or frequency distribution of the pieces produced by a process, we can 

compare it to the blueprint specification for that dimension. In this way we can learn 

what the process is doing, as compared to what we want it to do. If we don't like the 

comparison, we may have to change the process or the blueprint. 




CAUSES OF VARIATION 

The source of variation in a process can be found in one or more of five areas. These 

are the materials, the machines, the methods, the environment and the operators. 

All variation in a product is caused by variation in these five areas, as illustrated in 

Figure 4.4 

Figure 4.4 Fishbone Diagram 

The diagram in Figure 4.4 is sometimes called a fishbone diagram, which is very useful 

for searching out causes of trouble in a process. 

The variation seen when measuring pieces from a process is the result of two types of 

causes. In this book we will call them chance causes and assign causes. (Some people 

call them system causes and special causes). Chance causes are those we can normally 

do nothing about; they are continuously active in the process and are built in as part of 

the process. Assignable causes are those we can do something about. They can be 

detected because they are not always active in the process. 

If the variations in the product (caused by materials, machines, methods, environment 

and operators) are due to chance causes alone, the product will vary in a normal, 

predictable manner. The process is said to be stable. We want to know how the product 




varies under normal, state conditions - that is, when only chance causes are contributing 

to the variations. Then, if any unusual change occurs, we can see this change in our 

normal distribution curve. We can say that it's the result of an assignable cause and not 

due to chance causes alone. 

When assignable causes are present, the curve will be distorted and lose its normal bell 

shape. Figure 4.5 shows some typical distortions to the normal distribution curve. 

Figure 4.5 Distortions to the Normal Curve 

Normal 

Distribution 

Measurements tail off 

to the right 

Measurements from two 

different groups 

Measurements from two 

different 

Groups that overlap 

Measurements tail off 

to the left 

Tails of the distribution are 

chopped off. Parts were 

probably sorted. 

This brings us to the sixth basic principle. 

6. Variations due to assignable causes tend to distort the normal distribution 

curve 

A frequency distribution is a tally of measurements that shows the number of times 

each measurement is included in the tally. The tally you saw in Figure 4.1, which was 

made by rolling dice, is a frequency distribution. 

A frequency distribution helps us determine whether chance causes alone exist in a 

process or whether an assignable cause is also present. (We have statistical techniques 

that can detect when an assignable cause is present. Frequency distributions are a very 




good quality control tool because of their simplicity and they are a very good way to 

illustrate the six basic principles. 

These basic principles are the foundation stones upon which entire tools of quality have 

been built. Let's take another look at them before we move on. 

1. No two things are exactly alike. 

2. Variation in a product or process can be measured. 

3. Things vary according to a definite pattern. 

4. Whenever many things of the same kind are measured, a large group of the 

measurements will tend to cluster around the middle. 

5. It's possible to determine the shape of the distribution curve for parts produced 

by any process. 

6. Variation due to assignable causes tends to distort the normal distribution 

curve. 

4.2 TOOLS OF QUALITY- AN OVERVIEW 

To improve the quality of our products or to maintain current quality, your must have 

stable processes. The six basic principles we have discussed are the basis for the 

statistical techniques you will use to answer these questions: 

 

 

 

Are we doing something we shouldn't? 

Are we failing to do something we should? 

Is the process operating satisfactorily, or has something gone wrong which 

needs correction? 

The techniques we will discuss in this program can be used on a one-time basis to solve 

specific quality problems, but their greatest value comes from using them everyday to 

control quality. They must become a way of life in your workplace. 




Your goal should be to demonstrate that your job is operating in a stable manner. When 

the assignable causes have all been corrected, the variation in your products is due only 

to chance causes. 

When your operation is stable, then - and only then - can you know with confidence 

what your quality level is. When your operation is stable, your productivity and quality 

are the best they can be with your process. 

Statistical methods of quality control give you a way to picture and control quality 

through the use of these "tools of quality". 

1. The histogram or frequency distribution 

2. The control chart 

THE HISTOGRAM OR FREQUENCY DISTRIBUTION 

In many families it is a custom to have a picture taken each year. Just as a family 

picture is a snapshot of a group of people, the histogram is a "snapshot" of a group of 

parts from a manufacturing operation. It shows how a process is operating at a given 

time. 

A histogram is simple to construct. It is nothing more than a frequency distribution put 

into block form. Let's just say we want a picture of the diameters of 100 bushings being 

machined on a lathe. 

By the end of our check, the frequency distribution might be as it is shown in Figure 

4.6. Putting this distribution into graphic form produces the histogram shown in Figure 

4.7. Like the family picture, each histogram has a story to tell. 

SPE 

C. 

x 

x 

x 




x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

Figure 4.6 Frequency Distribution 

Three questions can be answered by a quick look at the pattern of the histogram: 

1. Is the process producing parts to the bell-shaped curve? 

2. Where is the process centered? 

3. Is the process capable of meeting the engineering specification? 




SPE 

C. 

.5623 

.5622 

.5621 

.5620 

.5619 

.5618 

.5617 

Figure 4.7 Histogram 

Let's review each of these questions in terms of the histogram in Figure 4.7 

1. Is the process producing parts to the bell-shaped curve? 

Because the histogram is roughly bell-shaped, then for practical applications we 

may say: 

a. The process appears "normal" and stable 

b. Variations are generally due to chance clauses. 

However when the histogram is not roughly bell-shaped: 

a. The process is not "normal" 

b. Assignable causes are influencing the variations. In special cases a frequency 

distribution or histogram of measurements from a stable process will not match 

the formal curve, but in most manufacturing operations, measurements from a 

stable process will make a good match to the normal curve. 




2. Where is the process centered? 

The average of the histogram and the specification midpoint are close together; 

therefore, the process is well centered. When the average of the histogram and the 

specification midpoint are far apart, then the process setting needs some 

adjustment. 

3. Is the process capable of meeting the engineering specification? 

The spread of the process falls within the specification limits; therefore, the 

process is estimated to be capable of meeting the engineering specification. 

Remember that the histogram is merely a snapshot of the process. If we take another set 

of data at another time, the picture may be different. However, the information we have 

on this process tells us that it is capable of meeting the engineering specification. 

People in manufacturing often form opinions about the quality of the parts they are 

making based on far less information than we had in the example above. It is much wiser 

and safer to use a statistical technique, as we did, to see what the job is doing before we 

decide how good or how bad the parts are. Remember the old saying, "One picture is 

worth a thousand words". Few people can look at a set of jumbled-up data and see the 

same things they can see after the data have been organized in pictorial form. 

Once you begin to think statistically about your job, you will find that you naturally want 

to get factual data and plot it in the appropriate form. With this method, you will make 

good decisions based on facts instead of giving opinions based on measurements from 

only a few pieces. 

The process spread is determined by the curve it forms. When this curve is compared to 

the specification, we can tell when the process is making parts outside the specification. 

When the spread of the curve is wider than the specification or when one tail of the curve 

goes outside of the specification, we can estimate the number of pieces that fall outside 

the specification. 




The curve in Figure 4.8 also shows standard deviations. The sections of the 

curve are labeled here with the symbol (sigma). This is the symbol for the standard 

deviation of the normal curve. The standard deviation is calculated mathematically and 

can be estimated in graphic form, but for now let's just say this is a number that describes 

how the measurements cluster around the middle of the normal curve. 

In Figure 4.8 a normal curve is compared to the specification; 2% of the pieces at each 

end or 4% will fall outside the specification. 

Specification 

2% 14% 34% 34% 14% 2% 

_ _ _ _ _ _ _ 

X-3 X-2 X-1 X X+1 X+2 X+3 

Figure 4.8 Normal Curve 

The frequency distribution and the histogram are used for the following purposes: 

 

 

 

 

 

 

Evaluating or checking processes 

Indicating the need to take corrective action 

Measuring the effects of corrective actions 

Comparing machine performances 

Comparing materials 

Comparing vendors 

The frequency distribution and histogram are like a snapshot or a picture of a process at a 

particular time. Because of the time required to gather and record measurements for a 

frequency distribution, it is not practical to make more than a few distributions per day. 




Between distributions the process may change and many defective parts may be 

produced. Any action to correct the process after the defective parts have been produced 

is like locking the barn after the horse has been stolen. 

For this reason frequency distributions or histograms are a good statistical tools for the 

purpose listed above, but they are not very good for monitoring the quality level of an 

ongoing manufacturing process. To monitor an ongoing process we have another useful 

tool - the control chart. 

4.3 THE CONTROL CHART 

If the frequency distribution is like a snapshot of process, then a control chart is like a 

movie - a continuous series of small pictures. A control chart is a record of the results of 

periodic small inspections. 

The control chart is a running record of the job - it tells us when the process is running 

smoothly and when it needs attention. You will find the control chart a very good tool to 

show when you have problem and when you have corrected the problem successfully. 

Some people think they can tell if a job is okay by looking at one or two pieces or by 

using some sort of mystical powers. Most of us find that we don't need mystical powers, 

but we do need control limits for our control charts. 

Control limits are the boundaries on a control chart within which we can operate safely. 

These limits are based on past performance and they show what we can expect from the 

process as long as nothing is changed. Each time we check the job, we compare the 

results to the control limits. If the results are within the limits - no problem. But if some 

of the points on a control chart fall outside the control limits, we know something has 

happened and the job is no longer operating normally. When this happens, we should take 

action to correct the situation. 




In other words, control limits are warning sings that tell us: 

1. When to take action 

2. When to leave the job alone. This doesn't necessarily mean you don't have a 

problem. It just means you must take a different tack to identify the problem. 

There are two general types of control charts. 

1. Variable chart: 

This type of chart is used where a dimension or characteristic is measured and 

the result is a number. 

2. Attribute Chart: 

This type of chart is used where a dimension or characteristic is not measured 

in numbers, but is considered either "good" or "bad". 

VARIABLE CHARTS: 

_ 

Average and Range Chart ( X and R Chart) 

The average and range chart is the most commonly used of the variable charts. Several 

other variable charts can be used, but we will use the average and range chart for 

illustration. 

The example shown here is taken from a bushing grinding operation. The 

diameter has been measured and the results of the measurements have been recorded on 

the control chart. (Se e Figure 4.9). The specified diameter for this bushing is 0.6250 

inches ± .0003 inch. The chart shows that parts were measured and recorded hourly. The 

performance of this job is shown for an eight-hour period. Let's see how this chart was 

developed. 

The operator, or an inspector, checked the job hourly by taking five pieces in a row from 

the operation and measuring the diameter of each. 




On the chart, where it says, "sample measurements", you will note that small numbers 

have been recorded. Obviously, these small numbers are not the whole measurement the 

operator read from the gauge. This job is a precision grinding operation, requiring 

measurements to one-tenth of a thousandth of an inch. 

_ 

VARIABLE CONTROL CHART (X& R) 

Part Name (Product): BUSHING 

OPERATOR MACHINE: GRINDER GAGE 

DATE: 8/4/99 

TIME 

SAMPLE 

MEASUREMENTS 

SUM 

AVERAGE 

RANGE 

NOTES 

1 

2 

3 

4 

5 

8.00 9.00 10.00 10.45 11.00 11.15 1.00 2.00 2.30 3.00 3.30 4.00 

-1 -2 -2 4 5 -2 1 -2 -1 -2 -2 1 

-2 0 -2 1 4 2 0 -2 -2 -1 1 0 

-3 0 -2 2 0 1 0 1 -3 -3 3 0 

-2 1 -2 -2 1 2 -1 -2 -2 -2 2 -1 

-2 1 0 0 5 2 0 -1 -2 -2 1 0 

-10 0 5 5 15 5 0 -5 -10 -10 5 0 

-2 0 1 1 3 1 0 -1 -2 -2 1 0 

2 3 6 6 5 4 2 3 2 2 5 2 




3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 

 

2 

UCL 

 

1 

 

 

0 

 

 

 

AVERAGES 

-1 

-2 

 

 

LCL 

 

 

 

 

UCL 

6 

 

 

RANGES 

4 

2 

 

 

 

 

 

 

 

 

0001 

 

Figure 4.9 

The numbers are small because it isn't easy to write the full reading in the space allotted 

on the control chart. It would be a nuisance to have to add and divide the full 

measurement numbers. Instead, the operator has used a technique of coding the 

measurements. The first piece measured and recorded at 8.00 was .6249 inches. This is 

0.0001 inch less than the specified diameter of 0.6250, and so it was recorded -1. The 

measurements recorded on this control chart are all coded to show the bushing diameter 

in tenths of thousandths of an inch. When the measured diameter is 0.6250, a zero is 

recorded. When the measured diameter is 0.6251, a plus 1 (+ 1 or 1) is recorded. When 

the measured diameter is 0.6248, a minus 2 ( -2) is recorded. This method greatly 

simplifies the arithmetic needed to use this chart. 




This chart makes use of a five-piece sample each hour. After the five measurements are 

recorded, they are added together and this total is recorded in the "sum" line. Next, figure 

the average of the five measurements by dividing the total, or sum, of the measurements 

by the number of parts measured (five, in this case) and enters it in the "average" line. 

The average is plotted as one point on the chart. 

Another point to be plotted on the chart is the range. We find the range (or R, as it is 

called) by subtracting the smallest of the five readings from the largest of the readings. 

This number is recorded on the "range" line of the chart and plotted as one point on the 

range chart. 

As you can see, the average and range chart actually consists of two charts. We use the 

average to monitor how well the operation is centered on the specified dimension, and we 

use the range to monitor the spread of the dimension around the average. 

You can see lines on the chart that are marked UCL and LCL. These letters stand for 

upper control limit and lower control limit. The upper control limit (UCL) and the lower 

control limit (LCL) are the limits within which we expect the plotted points to stay. If a 

point falls outside one of these limits, the job is said to be "out of control". 

In our example we can see that an average point fell outside the upper control limit at 

11:00. This is a signal that something was distorting the normal distribution of the 

diameter of the bushing. A grinding wheel adjustment was made, and the job was back in 

control again. 




ATTRIBUTE CHARTS 

We use attribute charts with "go / no go" or "good / bad" inspection results and we do this 

by finding ways to assign numbers to these results. When we can assign number to our 

information, we can use a statistical technique to monitor and control those numbers. 

While several different attribute charts are available, the widely used charts are the p- 

chart and the c-chart. Now, for a simple illustration, let's look at an attribute chart that 

was used to monitor an earlier operation on the bushing described above. 

This job was rough grinding operation, which prepared the bushing for the precision 

grinding operation. The diameter specified for bushing all this operation was 0.625 inches 

± 0.003 inch, a much larger tolerance than the one allowed for the precision operation. It 

is not unusual in such an operation to use a "go" and "no-go" snap gauge. Such a gauge 

tells when the part is within the limits established for gauging and when it is not. It gives 

no actual dimensional readings. 

An average and range chart cannot be used when this type of information is available. 

Instead we use an attribute chart. One commonly used type of attribute chart is the 

percent defective chart, which is shown in simplified form in Figure 4.10. 




20 

16 

12 

8 

4 

 

 

 

 

 

 

 

 

UCL 

 

 

 

LCL 

Date 8/4/ 

Time 

8:05 

9:00 

9:50 

10:30 

11:30 

11:15 

% Defective 

1:00 

1:40 

2:30 

3:00 

3:30 

4:00 

5:00 

Figure 4.10 

The points plotted on this chart were obtained by checking a sample of fifty pieces each 

time an inspection was called for. The operator or an inspector gauged the pieces, 

counted the number rejected by the gauge, and calculated the percent defective of the 

fifty-piece sample. The percentage value was then plotted on the percent defective chart. 

Here again, the points within the control limits indicate that everything is satisfactory, 

while the point outside the upper control limit (UCL) shows that something needs to be 

corrected. 




SUMMARY 

You will have to learn how to develop these control charts and their control limits and 

how to interpret them, but for now you can see that they are statistical tools, which are 

based on a few easy-to-understand basic principles. 

The greatest use of control charts is to demonstrate that the process is operating in 

statistical control (that is, all points on the chart fall between the upper and lower control 

limits), but is till producing parts that are out of specification. When this happens, it is a 

waste of time to try to find a solution to the problem by adjusting the process. You can 

make this type of adjustment or take this kind of corrective action only when assignable 

causes are present. 

When a process is in statistical control, the only variation seen in the process is due to 

chance causes. Even those parts that fall outside the specification limits are made as a 

result of chance. You will not find an assignable cause for that variation. The only way to 

solve such a problem effectively is to make a basic change in the process. This is often 

called a management solvable problem. 

On the other hand, if the control chart indicates that the process is out of statistical 

control, it means that an assignable cause is present, and it can be found and corrected. 

This is often called a floor solvable problem, and it's the type of problem most of you 

face each day on the job. 

It is often said that 85% of all quality problems are management solvable and 15% are 

floor solvable. Statistical methods of quality control will help you detect the existence of 

assignable or floor solvable causes, which you must identify and correct. 

Those who are uninformed in the use of statistical methods of quality control might say, 

"This is all well and good, but can I use it in my work area?". The answer can be given in 

one word: Yes! A control chart can be used on anything that can be assigned a number. 




If you intend to use control charts to help maintain and improve the quality of your work 

and your products, you must learn to think statistically. All the statistical techniques you 

will encounter in the context of quality have their foundation in the basic principles and 

an understanding of these principles will help you understand and use statistical control 

charts. 

4.4 ACCEPTANCE SAMPLING 

The Design and the Inspection of Individual Products 

In Industry, it is everyday experience that large items of (intermediary or finished) 

products or raw materials are inspected for their quality, for the purpose of arriving at a 

decision about their acceptance or rejection. This ACCEPTANCE may mean merely 

passing the intermediary products to the next stage of manufacture, or releasing the 

finished product to the market, or accepting the raw material for the purchase. In market 

purchases, if the product inspected is not satisfactory in quality, one may go elsewhere 

for the purchase; of course, the question of price of the product is interwoven with this 

decision of the acceptable quality. But it is perhaps easier and more scientific to make a 

decision about quality and consider the price acceptability separately. 

The Inspection Department in a factory, is usually charged with this specific function of 

declaring materials or product as acceptable (or otherwise) in quality at th e time of 

purchase or at suitable stages in manufacturing, including the last stage of actual shipping 

to the markets. The technological, engineering or chemical methods of testing are 

developed by the Inspection Department to suit each situation. Also, they have to have a 

clear notion about what is to be done when their verdict is "not to accept". Where every 

unit of product is inspected the procedure is said to be 100% inspection. In such cases, 

the accepted products are passed on to the next stage and the not accepted ones are 

suitably disposed off for re-work or as scrap. 




In declaring a submitted product as acceptable or not acceptable, the Inspection 

Department has to keep in focus the specifications (or the blue print) given by the Design 

Department. It is a very healthy rule, that at every inspection stage, there should be 

precise specifications for the quality of the individual product inspected; this drawing up 

of the specifications for the product quality, is the responsibility of the Design 

department. When the specifications are clearly set out, the devising of acceptance 

procedures should be the concern of the Inspection department, if necessary in 

consultation with the other departments (e.g., the Design and the Product Departments). 

The acceptance procedures devised should aim at passing all products that satisfy the 

design specifications and rejecting all the others. This is the ideal. 

100% Inspection Versus Sampling Inspection 

The inspection of every unit in mass produced articles may be uneconomical. For items 

like screws and bolts, 100 percent inspection method, even with gauges, may cost more 

than the cost of manufacture; also the 100 percent inspection may take considerable time. 

Added to these, the inspection fatigue may intervene in the case of large number of items 

and vitiate the quality assurance aimed at. Industrial experience has demonstrated that in 

many cases where time and costs are important considerations, a suitable sampling plan is 

able to give a pre-assigned quality assurance more effectively than 100 percent 

inspection, because of improved efficiency in the inspection of an individual product. If 

the item is critical and no individual product not conforming to the design specification, 

is to be passed as accepted, there is no other way than to insist on 100 percent inspection 

and improve the reliability by fighting away the fatigue with increases in costs, time and 

personnel. But such critical items are very exceptional and may not be amenable to the 

economics of mass production. Even in such cases, if the procedure involves destructive 

tests, obviously 100 percent inspection cannot be resorted to. In practice, including highly 

critical items, suitable sample tests (perhaps very stringent) have to be used on practical 

considerations. 




The feeling that 100 percent inspection always eliminates all unsatisfactory products has 

not been confirmed by industrial experiences. In many accepted aggregates or products 

after 100 percent inspections with their high costs and delay, certain amount of 

unsatisfactory (or non -conforming) products have been found, by properly designed 

sample checks. It would be more realistic to fix a limit to this proportion of nonconforming 

products among the accepted products and evaluate the quality assurance of 

100 percent inspection versus a suitable sampling plan. This limit may be as low as 

desired on practical considerations. Of course, the ideal for this limit is zero. But the ideal 

is not always achieved in the practical world; there may be some inevitable margin of 

non-conforming products in the best-inspected and passed aggregates of products in the 

long run. It would be scientific and desirable to keep this point in mind, while devising 

acceptance procedures. 

To devise a suitable acceptance procedure, we have to examine some preliminary 

concepts on decision making; for acceptance or rejection in this case. 

The Co-ordination 

The actual implementation of the acceptance procedures is the responsibility of the 

Inspection Department. But in the drawing up of the procedures, the other departments 

mainly the design and the production should play their due roles. It is advisable that the 

Design Department fully appreciates the acceptance specifications for the individual 

product and the aggregates so that the design specifications would be suitably reviewed 

to meet the performance of the product. 

All these departments should appreciate that the risk of a few non-confirming products 

escaping in accepted aggregates and the risk of a few conforming products being 

included in accepted aggregates, cannot altogether be removed. Even in very careful, 

slow and costly 100 percent inspection, these risks cannot be eliminated, but can be kept 

low and at any pre-assigned levels. These considerations bring us to face the difficult 

problem of making decisions with a some amount of risk, though the risk may be kept 




small. Here, the theory of probability has given us certain results, which are of use in the 

consideration of our decision. 

Key Terms used in Sampling Inspection 

Operating Characteristic Curve (OC) 

This curve depicts the probability of acceptance for various values of proportion 

defective. A typical diagram is given below: 

PROBABILITY OF ACCEPTANCE 

PA 

1.0 

0.95 

0.5 

0.1 

PRODUCERS RISK 

CONSUMERS RISK 

0 

AQL 

INDIFFERENCE QUALITY 

Proportion Defective (p) 

Producer's Risk 

This is the probability of rejecting a lot whose proportion defective is equal to the 

AQL (Acceptance Quality Level). Generally AQL is define as the value of proportion 

defective for which the probability of acceptance is 0.95. This implies that in practice, 

producer's risk is fixed at 0.05 (5%). 

Consumer's Risk 

This is the probability of acceptance of a lot whose proportion defective is equal to the 

rejectable quality level (also known as Lot Tolerance Percent Defective - LTPD). It is 

generally fixed at 0.10. 




Bird’s Eye View of Six Sigma 

5.1 Six Sigma 

In the last 25 years or more executives have been both exposed to and involved fairly 

extensively in the popular programs that include Quality Circles, Benchmarking, Zero 

Defects, Total Quality Management, Customer Satisfaction, Data Mining, and Business 

Process Reengineering. They are meant to provide answers to complex industry 

problems. Very often, in practice, the executives and staff in many enterprises view these 

training programs with trepidation, and they are confident that these will fade way as 

time passes. It seems the next wave of the quality revolution that is currently impacting 

us is Six Sigma! Now you won't be able to either do a presentation or conduct a program 

without using the term "Six Sigma" somewhere in the middle. 

One may wonder if this is yet another business term coined by management professionals 

and the elite corporate houses. No doubt a good degree of hype is associated with Six 

Sigma, as is generally encountered with every new management movement. It is in this 

context, we have to examine whether Six Sigma is a mere mantra or it is an effective 

action plan that can trigger a leapfrog jump in the corporate profitability. 

How Six Sigma is different from the rest? Is it a Breakthrough Strategy that can be 

likened to a renaissance in changing the mind set of the people in the organization? Is it 

entirely a new management tool or old wine in the new bottle? What distinguishes Six 

Sigma from the other methodologies of quality? In this section, an attempt is made to 

provide some kind of answers to these issues that are extremely important for any 

professional who is concerned with improving the bottom line as well as enhancing the 

quality image of his/her organization. 




5.2 What is Six Sigma? 

Six Sigma is a statistical measure that says that in a well-managed process be it 

manufacturing or service, you encounter only 3.4 Defects Per Million Opportunities 

(DPMO). In the parlance of Six Sigma, any thing that inhibits the attainment of customer 

expectation and satisfaction is a defect. First, we compute the ratio between the actual 

defects and the total number of opportunities for the organization to make mistakes from 

the customers’ angle. If this ratio is multiplied by one million, you get the Sigma level 

achieved by your organization. This level may be far from Six Sigma. For example, it 

may correspond to 2 Sigma, 3 Sigma or 3.5 Sigma. In the context of Six Sigma, we are 

99.99966% confident that the product or service delivered by us is defect free. Only 

0.00034% of the times the product or service delivered are defect prone. When multiplied 

by one million, this becomes 3.4 DPMO. 

Six Sigma measure is based on the bell shaped normal distribution. Normal distribution is 

the foundation stone upon which the entire statistical inference is built. The following 

diagram succinctly captures the meaning of Six Sigma 




Please note that 3.4 ppm is shown in the graduated scale corresponding to the number 6.0 

in the graph above. This is same as saying that there are 3.4 defects per million 

opportunities. 

Six Sigma entirely focuses on PROCESS IMPROVEMENT. The idea is to achieve 

Six-Sigma process performance with the help of Statistical Techniques to measure, 

monitor and control the actual performance of a process. 

A Process is a sequence of activities that transforms inputs to produce value for the 

stakeholders. It is the fulcrum of business that needs to be professionally managed so as 

to make the business add value to the inputs. 

One distinguishing feature of Six Sigma is that it emphasizes on measurement 

much more than the other quality management tools. In fact, it is interwoven with 

statistical analysis tools in every conceivable process with a view to meeting 

customer specifications. Everything starts from customers’ perspective; then the 

process performance is aimed at Six Sigma level so that virtually you produce 

zero defects, which in the parlance of Six Sigma implies 3.4DPMO. 

Six Sigma practices can be applied to manufacturing as well as service sector. 

A Motivating Story 

Motorola the pioneer in Six Sigma, in the year 1979, articulated openly “Our 

Quality Stinks” and therefore started the journey of Six Sigma with a view to 

achieving excellence in its products’ and services’ quality. At this point in time, 

many American firms believed that quality costs money. Motorola understood 




that the only way to decrease cost is to improve the quality of products and 

services, a philosophy and theme propounded by Dr. Deming the father of quality 

revolution. After the World War II, a large number of American companies 

focused on quantity instead of quality for a very long while. Motorola found that it 

was spending as much as 15% of its sales revenue for correcting poor quality. In 

terms of money value, it was $800 million to $1000 million each year. 




Motorola’s quest to reduce cost of quality began formally and vigorously in 1985. The 

company pioneered an implementable Six Sigma methodology that focused on making 

continuous improvements in all operations within a given process rather than an orthodox 

TQM practice that would focus on continuous improvements in individual operations 

with unrelated processes. This indeed proved to be a breakthrough strategy producing a 

quantum leap in corporate profitability. By the year 1993, Motorola was operating at 

nearly Six Sigma in most of its manufacturing operations. In the next four years, the 

company could save as much as $2.2 billions entirely on account of a full-fledged Six 

Sigma operation. Figure 5.1 captures the significant reduction accomplished by Motorola 

over the years in Cost of Poor Quality. 

The results following the implementation of Six Sigma in a long journey of 11 years from 

1986 to 1997 in Motorola are indeed astonishing. Table 5.1 succinctly captures the 

success story of this great organization. 

Figure 5.1 

Motorola story staggers us by its outstanding results(refer table 5.1) that would not have 

been possible by traditional quality improvement plans, which lack a strong focus on the 

bottom line of an enterprise. The moral of this story is “Six Sigma is a breakthrough 

strategy that requires real hard work involving a longer time horizon”. 




Please note that there are many organizations that are adopting Six Sigma Practices. The 

list includes among many the following: 

GE 

Kodak 

Allied Signal 

IBM 

ABB 

Texas Instruments 

Citibank 

Wipro 




Table 5.1 

Highlights of 11 Years Journey of Motorola(1986-1997) Culled out from the Company 

Records 

Financial Gains 

 

 

 

Sales (Up 5.05x) $29.8 Billion in 1997 representing an Average Compound Growth 

Rate of 16.9% Per Year 

Profits (Up 6.03x) $1.18 Billion in 1997 representing an Average Compound Growth 

Rate of 19.5% Per Year 

Stock (Up 7.0x) representing an Average Compound Growth Rate of 21.3% Per Year 

Breakthrough in Quality 

 

 

 

 

 

Eliminated more than 99.7% of In-Process Defects 

Reduced Cost of Poor Quality more than 84% on a Per Unit Basis 

Cumulative Savings in Manufacturing Cost over $13 Billion 

Employee Productivity increased 3-Fold representing a 12 % Average Per Year 

Product Reliability in terms of Mean Time Between Two Failures (MBTF) increased 

5-10 Fold 




5.3 Six Sigma and Total Quality Management (TQM) 

If we combine the wisdom of Dr. Deming, Dr. Juran, and Crosby, TQM could be 

explained as under: 

TQM involves continuous improvement in quality to meet or exceed customer 

norms at the lowest cost by releasing the potential of employees of the concerned 

organization. 

Let us ponder the expressions in bold. 

Continuous Improvement is based on the principle “Standing Still is Going 

Backwards”. This is very profoundly embedded in Six Sigma. Benchmarking Customer 

Satisfaction, Product, Process, and Service Quality are the corner stones upon which the 

entire Six Sigma is built. We also know that Benchmarking is an integral part of TQM. 

Customer Norms are the specifications and expectations of the customers. Six Sigma 

process starts from the voice of the customer and does everything to more than satisfy 

the customers. In fact, the cardinal principle of defects per million opportunities 

(DPMO) is deep rooted in the Six Sigma soil because anything that inhibits customer 

satisfaction is a defect. So, it focuses on opportunities to go wrong from the customers’ 

angle or perception. Metrics are built around Total Customer Satisfaction (TCS) in a 

very committed manner in Six Sigma. 

Cost of poor quality is an extremely important measure in Six Sigma. It is expressed as 

percentage to sales revenues. Please recall from the Motorola story, how reduction in 

cost of poor quality helped Motorola achieve a quantum jump in profit! This is a key 

area in Six Sigma that will produce results for the corporate. 




Employees play a pivotal role in Six Sigma as much as in TQM. The concept of 

empowerment, autonomy, accountability, teamwork, training workshops, and 

leadership are as vital in Six Sigma as they are in TQM. 

Then what are the differences? 

1. Six Sigma emphasizes much more on metrics and measurement than TQM and the 

feedback and control of information system is significantly more impeccable in Six 

Sigma than in TQM 

2. There is a clear focus on Corporate Profit that permeates through out Six Sigma 

operations which is not the case in TQM operations. 

3. Six Sigma is articulated and implemented as a breakthrough strategy that 

incorporates mind-boggling radical reforms in order to achieve significant 

improvements both in quality and in finance function. This is not the case in the 

orthodox TQM practices. 

3. TQM focuses on continuous improvement in individual operations with unrelated 

processes whereas Six Sigma focuses on continuous improvement in all operations 

within a process. As a result of this difference in approach, Six Sigma can get a 

company to perform phenomenally in profit enhancement and in elimination of 

defects. 

It is interesting to note that a modified TQM that incorporates a strong measurement 

system interwoven with statistical analysis, continuous improvement in all operations 

within a process, and a focus on corporate profitability is indeed Six Sigma! 




5.4 Important Six Sigma Themes 

1) Focus on the Customer 

In a Tennis Tournament, if a player has an eye only on the scoreboard instead of the 

ball, he or she cannot win the game. The player must focus on the ball. Likewise, if 

a company has an eye only on the bottom line instead of the customer, it can neither 

attain market leadership nor can improve its corporate profit substantially. The 

company is the tennis player, the customer is the ball, and the bottom line 

(corporate profit) is the scoreboard. This is the cardinal principle of Six Sigma. Six 

Sigma is emphatic about the importance of achieving a quantum jump in profits by 

meticulously and sincerely implementing everything from the customers’ 

viewpoint. The interesting difference in this tennis tournament is that one player is 

playing with many opponents and is trying to win the game. The many opponents 

mentioned here are the competitors in the marketplace. Thus Six Sigma is indeed a 

corporate strategy that aims to achieve and sustain market leadership through 

excellence in quality. 

2) Data and Information Based Decision 

All decisions in the Six Sigma environment are based on data, facts, and 

information and not on intuition or guess work. Benchmarking key activities 

using well-defined metrics against the best in class is at the heart of Six Sigma 

process. Of course, even TQM uses Benchmarking as a theme but the extent of 

metrics used with a clear focus on profits by eliminating failures and defects from 

the customers’ angle is far greater in Six Sigma than in TQM. This in a way is 

responsible for very high hit rate of success (83%) where as hit rate of success in 

TQM companies is reported to be just in the vicinity of 25% to 40%. In the words 

of Motorola , the connection between quality and benchmarking is succinctly 

described as under: 




Benchmarking Implies 

There are no secrets to quality. 

There are no “Silver Bullets” or short cuts to good quality. 

Quality doesn’t take time, it saves time. 

It is not only free, it pays dividends. 

Average company spends close to 25% of its revenue on waste -- non-value added. 

Quality process applies to the administrative side of business as well. 

Service companies are not different from manufacturing. 

3) DMAIC 

Define the goals of the improvement activity. 

Measure the existing system. 

Analyze the system to identify ways to eliminate the gap between the current 

performance of the system or process and the desired goal. 

Improve the system. 

Control the new system. 

This acronym stands for Define – Measure – Analyze – Improve – Control. Each term 

is briefly discussed in the table below: 

If you carefully examine each term in the table above, you will realize it is an adapted 

Deming’s PDCA cycle. PDCA stands for Plan-Do-Check-Act. Define the goals of the 

improvement activity in a verifiable manner is part of Plan in the Deming’s cycle. 

Measure the systems’ parameters using rigorous statistical formats amount to Do in the 

Deming’s cycle. Analyze the system using statistical tools extensively to eliminate gaps 

between actual performance and the desired goal is nothing but Check in the Deming’s 

cycle. Likewise, Improve and control the system is nothing but Act in the Deming’s 

cycle. 




4) Focus on Process and not on Outcome 

This is a very interesting and profoundly true theme that runs all through the Six 

Sigma operations within an enterprise. Outcomes or end results are determined by 

what happens during the process. When the organization over a period of time 

builds a better and robust process, it is in a position to eliminate opportunities for 

defects before they actually occur. 

Six Sigma simplifies systems, improves process capability, and in the end finds a way 

to optimize rather than automate the systems and processes so that defects and failures 

are eliminated and the concerned organization achieves the milestone of 3.4 Defects Per 

Million Opportunities (DPMO). Also the feedback and control mechanism implanted in 

the processes ensure sustainability of Six Sigma level (3.4DPMO) on a long-term time 

horizon. 

5) Change Agents as Facilitators 

Experts and Professional Mangers agree that change is difficult, pretty expensive, and 

is a major cause of error. So, why bother? Status quo is simply not possible. 

Organizations have to even embrace change in a proactive manner in view of 

Competition in the marketplace, Technological Advancement where new technologies 

make the existing ones obsolete, Training Needs, Customer Demands, and Quality 

Related Programs such as ISO, and QSO. It is in this context, the role of change 

agents looms large. A brief description of the important change agents is given below: 

Leadership 

David Kearns introduced the concept of Leadership Through Quality in Xerox 

Corporation in the context of a formal Benchmarking process for the first time in the 

US Industry to resurrect the company from the onslaught of the competitor -Canon 

Photocopier. Canon produced a machine that was as good in quality as one from Xerox 




but amazingly could set its selling price equal to the manufacturing cost of Xerox 

copier. This was possible for Canon because of superior quality management tools. 

More than 4000 people lost their jobs in Xerox and its market share dwindled steeply. 

David Kearns emerged as a champion leader and turned around Xerox in a span of 5 

years using benchmarking process. Yet, the truth of the matter is that Xerox 

benchmarked its key activities only when it was threatened and thus the company was 

reactive instead of proactive in its attitude. 

On the contrary, leadership is dynamic and proactive in Six Sigma. In fact, leadership 

and quality are the warp and woof of Six Sigma. Leadership is the foundation stone 

thorough which the organization’s strategic goals are to be achieved. Six Sigma focuses 

on changing key business value channels that cut across organizational barriers. Six 

Sigma can be successfully implemented only from the top down. Lip service or 

lukewarm style of leadership is the major cause of failure of Six Sigma endeavors in 

certain organizations. It is also a rarity to find any one organization where leadership 

from the top fully embraced Six Sigma. It must be noted that because Six Sigma 

focuses on cross-functional and company-wide quality processes, leadership from the 

top down is the key for its success. 

Black Belt 

A Black Belt is a person who may have emerged from any discipline to start with but 

has a very sound knowledge in using advanced statistical techniques to systems and 

processes. Depending upon the nature of the problem, the tools may range all the way 

from simple descriptive statistics to sampling distributions, control charts, process 

capability analysis, correlation and regression, hypothesis testing, and design of 

experiments. This individual should also be an expert in Six Sigma Strategies and 

Tools, and an Effective Leader capable of training, consulting, and mentoring 

subordinates. 




Green Belt 

Green Belts are typically Six Sigma Project Leaders who are capable of taking the 

organization from the concept stage of projects to their successful completion. They are 

trained by Black Belts in statistical data analysis, quality management tools, problem 

solving, and project management. These people are the key persons who would 

successfully implement Six Sigma practices within the enterprise. 

Master Black Belt 

This is the highest level in the echelon of Technical Expertise. A Master Black Belt 

must possess very superior knowledge in the use of advanced statistical analysis, the 

subtle intricacies of the key processes of Six Sigma, deep understanding in project 

management, and above all, outstanding leadership qualities to drive the Six Sigma in 

every stage by inspiring the Green Belts, and other Black Belts. Master Black Belts 

perform the role of Mentors as well as the role of training the trainers (A Master Black 

Belt trains the other Black Belts who in turn train the Green Belts). 




5.5 A Broad Picture of Six Sigma Process 

It is pertinent to point out here that a clear description of the process of Six Sigma is 

beautifully outlined by Motorola. The following diagram captures the six steps involved 

in the process. 

For an organization engaged in multi-products, you simply apply the 80-20 rule (Pareto 

Analysis) that will help you identify key products. These key products will produce 80% 

of the profits, For each of these key products/services, identify the customers and their 

expectations/requirements, determine your needs and suppliers, define the process that 

will consist of individual operations, eliminate defect sources and optimize the process. 

Continuously improve the Six Sigma level is the last step in the diagram above. This 

envisages a feedback mechanism to take you back to the previous step of defect 

elimination and optimization until you attain the Six-Sigma level. It may be mentioned in 

the passing that Six Sigma level corresponds to a Cp level of 2 or more and 

simultaneously a Cpk level of 1.5 or more in the orthodox process capability analysis. 

Please note that in the worst case, there will be no more than 3.4 DPMO with 

specification limits 4.5 sigma on one side and 7.5 sigma on the other side of the bell 




shaped normal distribution curve. The feedback loop also suggests that even after 

achieving a Six Sigma level, you have to keep on eliminating defects and keep on 

optimizing the process in order to sustain the magic number 3.4DPMO. 

5.6 Golden Rules for Successfully Implementing Six Sigma 

It is imperative to have Top down Commitment and Involvement of Management all 

through the Six Sigma Process. Professional managers can set the example by 

actively participating in the various stages of the process. 

The organization must have a strong measurement and monitoring system to keep a 

tag on the progress made. The measurement system will have to do both within and 

outside the organization. It would include for example, a comprehensive marketing 

research and information system to track customer preferences and expectations. 

Within the enterprise, a strong information system should be in place to review and 

take actions when required on the process. In this regard, a host of techniques that 

would include SQC, SPC, Design of Experiments, Supply Chain Optimization, 

Hypothesis Testing and so on will be used with an applied orientation. 

Tough and ambitious goals must be set on various critical to quality characteristics 

that impact the customer expectation and satisfaction. The company must take its 

people out of the comfort zone. Benchmarking process must be an integral part of the 

goal setting process wherein the targets on key dimensions are set based on what is 

being achieved by the best in class. 

Provide appropriate education and training that will pave the way for the attainment 

of the goals in the Six Sigma environment. The training modules will envisage a 

strong background in advanced statistical methods, resource optimization models, and 

analytical problem solving skills. The Six Sigma agents Master Black Belts, Black 

Belts, and Green Belts should be the champions and inspiring leaders in the entire 

gamut of the education and training programs to employees. 




Communicate through out the organization, the success stories that may take place in 

certain projects. They may reveal reduction in defects, increase in profits, and 

productivity. In the initial stages, the improvements witnessed may not be very 

substantial. But, it points to the fact that the enterprise is positively progressing in the 

Six Sigma process and spreading success stories will create a winning attitude 

through out the organization. This in turn, will lay a strong foundation upon which the 

company will maximize customer satisfaction. 

Deployment process must focus on empowerment, accountability for quality 

improvement, and reward and recognition for good performance. 

5.7 Concluding Remarks –Making Six Sigma an Effective Action Plan 

No organization should become too intoxicated with winning the metrics game. Just by 

applying a few out of the assorted Six Sigma methods, a company cannot be classified as 

a Six Sigma company. Likewise, a professionally managed company with a high degree 

of commitment and passion for quality may be classified as a Six Sigma company even if 

it has not achieved 3.4 DPMO! What is important to realize is that a cultural change 

required to transform an organization into a full-fledged Six Sigma organization is much 

more important than the mere metrics game. 

Customers’ priorities are paramount in Six Sigma. At no point in time, should a company 

become complacent and lose sight of the preferences and priorities of the customer. This 

is also the cardinal principle of marketing that is focused on the central theme “Customer 

is the Foundation of Business”. 

Organizations who are adopting Six Sigma will have to be careful in not allowing 

themselves to become supercilious once they reach the target. By benchmarking process 

and continuous improvement strategies, competitors can overtake you, if you remain 

status quo. This is also profoundly true in TQM practices. We are all aware that if 




reaching the top is difficult, it is even more difficult to remain on top for a longer time 

horizon. So, the moral of the story is that continuous improvement to eliminate defects, 

to optimize process, and to improve profits substantially is a never-ending process. Six 

Sigma focuses emphatically on all these three aspects. 

Just like TQM, Six Sigma is a long journey towards excellence in quality. It is not 

realistic to expect fantastic results within a very short time. Motorola took about 11 years 

to achieve Six Sigma level from scratch. Unlike other traditional quality tools, if you start 

the journey of Six Sigma with passion, involvement, and commitment, even in the short 

run say within three years you can have a reasonable jump in profits and there after, year 

after year you will start reporting phenomenal improvements in corporate profits. 

All factors considered, Six Sigma is not a mere mantra but an effective action plan that 

can pave the way for enhancing significantly the corporate profitability if implemented 

with total commitment. The results of Six Sigma practices will be far superior to other 

Quality Practices including TQM because of its focus on a breakthrough strategy that is 

highly radical in nature. Six Sigma strategy incorporates rigorous statistical measurement 

systems and powerful benchmarking metrics that are truly responsible for substantial 

improvements in performance in the twin elements of quality and profits. 

Six Sigma chases perfection and in the process catches excellence in all dimensions of 

quality! 




Bird’s Eye View of ISO 9000 Standards 

6.1 WHAT IS I. S. O? 

The International Organization for Standardization (ISO) is the specialized international 

agency for standardization, at present comprising of the national standards bodies of 91 

countries including INDIA. ISO is made up of approximately 180 technical 

committees. 

Each Technical Committee is responsible for one of the many areas of specialization. 

The object of ISO is to promote the development of standardization and relate world 

activities with a view to facilitating international exchange of goods and services and to 

develop co-operation in the sphere of intellectual, scientific, technological and 

economic activity. 

The results of ISO technical work are published as international standard. The standards 

discussed here are results of this process. 

6.2 WHAT ARE THE ISO 9000 SERIES STANDARDS? 

With increased focus on quality issue worldwide, various standard-developing 

organizations prepared standards and guidelines in the quality field. Although there 

were similarities among the many standards, the quality picture became quite cloudy. 

Terms such as Quality Management, Quality Control, Quality Systems, Quality 

Assurance and Quality Policy, had acquired different and sometimes conflicting 

meaning from country to country, within a country and even within an industry. 

Standardization was needed at the international level. Work was initiated within the 

International Organization for Standardization (ISO) and in 1987 six standards (Known 

as the ISO 9000 series) which clarify the relation between different quality concepts 

and present three model for quality assurance systems. 




ISO 9000 standard series tell suppliers and manufacturers what is required of a quality 

oriented system. It does not set out extra special requirements which only a very few 

firms can or need comply with, but is practical standard for quality systems which can 

be used by all Indian Organizations. 

The principles of ISO 9000 are applicable whether you employ 10 or 10,000 people. It 

defines the basic concepts and specifies the procedures and criteria to ensure, that what 

leaves your organization meets the customer requirement. 

6.3 WHY THEY SHOULD BE USED? 

ISO 9000 is an opportunity and a challenge to developing nations. They can now know 

with agood degree of certainty the level of quality that purchases expect. They also can 

learn the pre-requisites and characteristics of good quality assurance and quality 

management. The challenge to developing nation is to motivate processors and 

manufacturers to adopt and implement these standards, and to establish a credible 

national quality registration scheme, which will be recognized by trading partners. 

In an increasing number of markets and industries, third – party quality assessment and 

registration is becoming a prerequisite for doing business. ISO 9000 registration is 

considered the minimum acceptable level for a supplier, and those who cannot 

demonstrate this minimum level may not only have difficulty in selling in certain 

markets but also may be barred from those markets. A supplier without ISO 9000 

registration can face higher insurance rates, or be denied insurance in some markets. 

The reason for this attitude by insurers is the new approach to product liability recently 

instituted by 12 countries of the European Community and Austria. Not only must a 

defendant be able to demonstrate that his product is well designed and conforms to all 

standards and regulations, but he must be able to demonstrate that the product is 

manufactured consistently within a system that conforms at least, to internationally 

accepted standards. 




In addition ISO 9000 series standard also: 

Motivates exporters 

Sets a baseline 

Establishes reasonable standards for government procurement 

Sets General Market Procedure for regulating health and safety 

Reduce time-consuming audits by customers and regulators 

Improves their quality image 

Gives marketing advantage and EC92 positioning 

Raises levels of motivation, co-operation, workmanship and quality awareness 

Improves efficiency; reduces scrap and rework 

6.4 HOW DOES THE SERIES WORK? 

The standards are designed to be user-friendly. They are generic in nature and follow a 

logical, easily understood format. However, each company is unique and there may be 

wide differences in companies’ readiness to implement the standards. 

ISO 9000 is the road map for the series. Its purpose is to provide the user with 

guidelines for selection and use of ISO series standards. 

Line diagram and table given below illustrates the same 

Definition of 

Concepts 

ISO 8402 

Non-Contractual 

Situations 

Definition of 

Concepts 

Contractual 

Situations 

ISO 9000 

Quality Management 

Quality systems 

ISO 9004 

Three Quality ISO 9001 

assurance ISO 9002 models ISO 

9003 




EQUIVALENT QUALITY SYSTEM STANDARDS 

ISO IS 

EN Title 

(Indian 

Standards) 

(European 

Norms) 

9000 14000 29000 Quality Management and Quality Assurance 

Standards – Selection and Use 

9001 14001 29001 Model for Quality Assurance in Design / 

Development, Production, Installation, and 

Servicing all elements 

9002 14002 29002 Model for Quality Assurance in Production and 

Installation 

9003 14003 29003 Model for Quality Assurance in Final 

Inspection and Tests 

9004 14004 29004 Guidelines on development of Quality 

Management Systems to minimize costs and 

maximize benefits 

HOW MUCH WILL IT COST AND HOW LONG WILL IT TAKE TO IMPLEMENT 

THESE STANDARDS? 

Unfortunately there is no set answer. Each company is different. The answer really 

depends on how developed your present system is and the implementation strategy you 

adopt. 




6.5 WHEN SHALL AN ORGANIZATION BE REQUIRED TO USE THESE 

STANDARDS? 

While the ISO 9000 quality standards were written to be used in voluntary or two – 

party contractual situations, they are fast becoming pre-requisites for doing business in 

Europe and other regions. ISO 9000 is being incorporated into buyer / seller 

agreements, government regulations and certification procedures by many nations. The 

ISO 9000 quality management standards will have considerable impact on the markets 

throughout the world. 

WHERE DO I PURCHASE COPIES OF THE STANDARDS? 

ISO 9000 Series standards are available with the Bureau of Indian Standards and the 

Standards are known as IS 14000 to IS 14004 (BIS). They are available from their HQs 

in Delhi and branch offices all over India. You can address you enquiry to: 

Director – Sales, 

Bureau of Indian Standards, Manak Bhavan, 

9 Bahadur Zafar Marg, New Delhi 110 002. 

WHAT DOES ISO 9000 REGISTRATION MEAN? 

6.6 HOW TO ACHIEVE IT? 

ISO 9000 Registration-means the certification of Company Quality Systems by third 

Party through their mechanism of registration. Of all the questions about the ISO 9000 

Series, this is probably the one that causes the most concern. Increasingly, European 

customers expect Indian companies to have their quality systems registered to ISO 

9001, 9002 or 9003. This is generally done by having an accredited independent third 




party on – site audit of your company’s operations against the requirements of the 

appropriate standard. Upon successful completion of this audit, your company will 

receive a registration certificate that identifies your quality systems as being in 

compliance with ISO 9001, 9002 or 9003. Your company will also be listed in a 

register maintained by the accredited third party registration organization. You may 

publicize your registration and use the third party register’s certification mark on your 

advertising, letterheads and other publicity materials (but not on your products). 

At present BIS is available in India for Registration and also many other countries have 

established their registration bodies and are willing to extend the same to India. 

Invoking third party assessment and registration to ISO 9000 criteria is becoming a 

basic principle in the European Community to eliminate trade barriers within the 

world’s largest market. This EC focus on quality and third party assessment has been a 

major (Possibly the major) stimulus to adoption of IO 9000 in the rest of the world. 

THE STANDARD IN SERVICES – ISO 9004 PART II 

WHERE DOES IT APPLY? 

Catering 

Hotels 

Tourism 

Entertainment Media 

Air, Road, Rail and Sea Travel 

Telecommunications 

Postal 

Hospital 

Doctors 

Dentists, Opticians 

Public Services 

Legal and Education 

……and many more 




QUALITY IN SERVICES 

Service Requirements 

Delivery Requirements 

SERVICE REQUIREMENTS 

QUANTITATIVE 

Waiting Time 

Delivery Time 

Accuracy of Service 

Completeness of Service 

Accuracy of Billing 

QUALITATIVE 

Credibility 

Accessibility 

Security 

Responsiveness 

Courtesy 

Comfort 

Aesthetic 

Hygiene 

DELIVERY REQUIREMENTS 

QUANTITATIVE 

Service Capacity 

Quantity of Stores 




No. of Personnel 

Process Times 

QUALITATIVE 

Competence 

Dependability 

Communication 

Service requirements are directly observable by “THE CUSTOMER” while service 

delivery requirements may not always be observable, but will, “AFFECT THE 

SERVICE”. 

THE EELEMENTS IN THE STANDARDS 

Policy and Objectives 

System 

Resources 

Documentation 

POLICY AND OBJECTIVES 

Commitment to a quality policy from the top 

The customers needs, stated or implied 

A system of preventative action 

Creation of collective will for quality service review 

An independent review of the effectiveness of the quality system in meeting the 

policy is “DEMANDED” 




SYSTEM 

 

 

Market assessment – what others offer 

Customer / Consumer expectation 

o 

o 

o 

o 

o 

o 

o 

Taste 

Quality 

Reliability 

Legislation 

Research 

Changing Market 

New Technology 

 

Service Brief Documented 

o 

o 

o 

o 

o 

o 

Continuous system of appraisal 

Feedback 

Supplier assessment 

Customer reaction 

Complaints 

Audits 

The system is also expected to yield opportunities for improvement and seeks out the 

following: 

 

 

 

 

The area where improvements would give the most benefits 

Changing market attributes which could affect service 

Missing controls 

Opportunities for greater productivity 




RESOURCES 

The standard asks for a work environment, which will foster excellence, stability and 

security. It also asks for Training, Education and Employee motivation. 

DOCUMENTATION 

Documentations is demanded, particularly a Quality Manual, Quality Plans and records 

of all of the relevant activities which require measurement.

Total Quality Management - CII Institute of Logistics

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?