Basic Concepts of Quality

Basic Concepts of Quality
I- Continuous Improvement
How to take your products, services and processes to the next level through an
ongoing cycle of activities that capitalize on improvement opportunities.
Continuous improvement is an ongoing effort to improve products, services or
processes. These efforts can seek incremental improvement over time or
breakthrough improvement all at once.
Among the most widely used tools for continuous improvement is a four-step quality
modelthe plan-do-check-act (PDCA) cycle, also known as Deming Cycle or
Shewhart Cycle:
Plan: Identify an opportunity and plan for change.

Do: Implement the change on a small scale.
Check: Use data to analyze the results of the change and determine whether it
made a difference.
Act: If the change was successful, implement it on a wider scale and
continuously assess your results. If the change did not work, begin the cycle
again.
Other widely used methods of continuous improvement such as Six Sigma, Lean,
and Total Quality Management emphasize employee involvement and teamwork;
measuring and systematizing processes; and reducing variation, defects and cycle
times.
Continuous or Continual?
The terms continuous improvement and continual improvement are frequently used
interchangeably. But some quality practitioners make the following distinction:
Continual improvement: a broader term preferred by W. Edwards Deming to

refer to general processes of improvement and encompassing discontinuous
improvementsthat is, many different approaches, covering different areas.
Continuous improvement: a subset of continual improvement, with a more

specific focus on linear, incremental improvement within an existing process.
Some practitioners also associate continuous improvement more closely with
techniques of statistical process control.
II- Cost of Quality (COQ)

Quality doesnt cost money. Its poor-quality products and services that pile up extra
costs for your organization. Heres how to get started eliminating these expensive
shortcomings.
Its a term thats widely used and widely misunderstood.
The cost of quality isnt the price of creating a quality product or service. Its the cost of NOT
creating a quality product or service.
Every time work is redone, the cost of quality increases. Obvious examples include:
The reworking of a manufactured item.

The retesting of an assembly.
The rebuilding of a tool.
The correction of a bank statement.
The reworking of a service, such as the reprocessing of a loan operation or the
replacement of a food order in a restaurant.
In short, any cost that would not have been expended if quality were perfect contributes to the
cost of quality.
Total Quality Costs
As the figure below shows, quality costs are the total of the cost incurred by:
Investing in the prevention of nonconformance to requirements.

Appraising a product or service for conformance to requirements.
Failing to meet requirements.
Quality Costsgeneral description

Prevention Costs
Failure Costs
The costs of all activities specifically

designed to prevent poor quality in products
or services.
The costs resulting from products or services not

conforming to requirements or customer/user
needs. Failure costs are divided into internal and
external failure categories.
Examples are the costs of:

Internal Failure Costs
New product review

Quality planning
Supplier capability surveys
Process capability evaluations
Quality improvement team meetings
Quality improvement projects
Quality education and training
Failure costs occurring prior to delivery or

shipment of the product, or the furnishing of a
service, to the customer.
Appraisal Costs
The costs associated with measuring,
evaluating or auditing products or services to
assure conformance to quality standards and
Scrap
Rework
Re-inspection
Re-testing
Material review
performance requirements.
These include the costs of:
Downgrading
External Failure Costs
Incoming and source inspection/test

of purchased material
In-process and final inspection/test
Product, process or service audits
Calibration of measuring and test
equipment
Associated supplies and materials
Failure costs occurring after delivery or shipment

of the product -- and during or after furnishing of
a service -- to the customer.
Processing customer complaints

Customer returns
Warranty claims
Product recalls
Total Quality Costs:

The sum of the above costs. This represents the difference between the actual cost of a product
or service and what the reduced cost would be if there were no possibility of substandard
service, failure of products or defects in their manufacture.
III- Customer Satisfaction

Tips and resources for helping you identify your customers and what it will take to
satisfy them.
Organizations of all types and sizes have come to realize that their main focus must be
to satisfy their customers.
This applies to industrial firms, retail and wholesale businesses, government bodies,
service companies, nonprofit organizations and every subgroup within an
organization.
Two important questions:
1. Who are the customers?
2. What does it take to satisfy them?
Who Are the Customers?
Customers include anyone the organization supplies with products or services. The
table below illustrates some supplier-customer relationships. (Note that many
organizations are simultaneously customers and suppliers.)
Supplier-customer relationship examples
Supplier
Customer
Product or Service
Automobile manufacturer Individual customers
Cars
Automobile manufacturer Car dealer
Sales literature, etc.
Bank
Checking account holders Secure check handling
High school
Students and parents
Education
County recorder
Residents of county
Maintenance of records
Hospital
Patients
Healthcare
Hospital
Insurance company
Data on patients
Insurance company
Hospital
Payment for services
Steel cutting department
Punch press department
Steel sheets
Punch press department
Spot weld department
Shaped parts
All departments
Payroll department
What Does It Take to Satisfy Customers?
Data on hours worked, etc.
Dont assume you know what the customer wants. There are many examples of errors
in this area, such as new Coke and car models that didnt sell. Many organizations
expend considerable time, money and effort determining the voice of the customer,
using tools such as customer surveys, focus groups and polling.
Satisfying the customer includes providing what is needed when its needed. In many
situations, its up to the customer to provide the supplier with requirements. For
example, the payroll department should inform other departments of the exact format
for reporting the numbers of hours worked by employees. If the payroll department
doesnt do this job properly, it bears some responsibility for the variation in reporting
that will occur.
IV-
Quality Assurance and Quality Control
Whats the difference? In the world of quality, these terms have very different
meanings.
The terms quality assurance and quality control are often used interchangeably to
refer to ways of ensuring the quality of a service or product. The terms, however, have
different meanings.
Assurance: The act of giving confidence, the state of being certain or the act
of making certain.
Quality assurance: The planned and systematic activities implemented in a
quality system so that quality requirements for a product or service will be
fulfilled.
Control: An evaluation to indicate needed corrective responses; the act of
guiding a process in which variability is attributable to a constant system of
chance causes.
Quality control: The observation techniques and activities used to fulfill
requirements for quality.
V- Supplier Quality
The quality of what goes into a product or service determines the quality of what
comes out. Heres how to keep costs low and quality high.
Performance means taking inputs (such as employee work, marketplace requirements,
operating funds, raw materials and supplies) and effectively and efficiently converting
them to outputs deemed valuable by customers.
Its in your best interest to select and work with suppliers in ways that will provide for
high quality.
Supplier performance is about more than just a low purchase price:
The costs of transactions, communication, problem resolution and switching

suppliers all impact overall cost.
The reliability of supplier delivery, as well as the suppliers internal policies
such as inventory levels, all impact supply-chain performance.
It used to be common to line up multiple suppliers for the same raw material, over
concern about running out of stock or a desire to play suppliers against one another
for price reductions. But this has given way, in some industries, to working more
closely with a smaller number of suppliers in longer-term, partnership-oriented
arrangements.
Benefits of supplier partnerships include:
Partnership arrangements with fewer suppliers mean less variation in vital

process inputs.
If your suppliers have proven to be effective at controlling their output, you
dont need to monitor the supplier and their product as closely.
Establishing an effective supplier management process requires:
Support from the top management of both companies involved.

Mutual trust.
Spending more money now to develop the relationship, in order to prevent
problems later.
The manufacturing industry is in a special situation: Much of what manufacturers

purchase is then incorporated into their products. This means there is a higher inherent
risk, or potential impact, in the manufacturing customer-supplier relationship. For this
reason, manufacturers often develop detailed supplier-management processes.
Many of those same methods have been adapted by non-manufacturing organizations.
This is especially true of partnerships and alliances, which are becoming a widespread
way of sharing expertise and resources -- and spreading risk -- in a complex global
environment.
VI-
Variation
In simple yet profound terms, variation represents the difference between an ideal and
an actual situation.
An ideal represents a standard of perfectionthe highest standard of excellence[1]
that is uniquely defined by stakeholders, including direct customers, internal
customers, suppliers, society and shareholders. Excellence is synonymous with
quality, and excellent quality results from doing the right things, in the right way.
The fact that we can strive for an ideal but never achieve it means that stakeholders
always experience some variation from the perfect situations they envision. This,
however, also makes improvement and progress possible. Reducing the variation
stakeholders experience is the key to quality and continuous improvement.
According to the law of variation as defined in the Statistical Quality Control
Handbook:
Everything varies. In other words, no two things are exactly alike.

Groups of things from a constant system of causes tend to be predictable.
We cant predict the behavior or characteristics of any one thing. Predictions
only become possible for groups of things where patterns can be observed.
If outcomes from systems can be predicted, then it follows that they can be
anticipated and managed.
Managing Variation
In 1924, Dr. Walter Shewhart of Bell Telephone Laboratories developed the new
paradigm for managing variation. As part of this paradigm, he identified two causes
of variation:
Common cause, or noise, variation is inherent in a process over time. It affects

every outcome of the process and everyone working in the process. Managing
common cause variation thus requires improvements to the process.
Special cause, or signal, variation arises because of unusual circumstances and
is not an inherent part of a process. Managing this kind of variation involves
locating and removing the unusual or special cause.
Shewhart further distinguished two types of mistakes that are possible in managing
variation: treating a common cause as special and treating a special cause as common.
Later, W. Edwards Deming estimated that a lack of an understanding of variation
resulted in situations where 95% of management actions result in no improvement
Referred to as tampering, action taken to compensate for variation within the control
limits of a stable system increases, rather than decreases, variation.
Resource: www.asq.org

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Basic Concepts of Quality

Plan: Identify an opportunity and plan for change.

Continual improvement: a broader term preferred by W. Edwards Deming to

Continuous improvement: a subset of continual improvement, with a more

II- Cost of Quality (COQ)

The reworking of a manufactured item.

Investing in the prevention of nonconformance to requirements.

Quality Costsgeneral description

The costs of all activities specifically

The costs resulting from products or services not

Examples are the costs of:

New product review

Failure costs occurring prior to delivery or

External Failure Costs

Incoming and source inspection/test

Failure costs occurring after delivery or shipment

Processing customer complaints

Total Quality Costs:

III- Customer Satisfaction

Automobile manufacturer Individual customers

Automobile manufacturer Car dealer

Sales literature, etc.

Checking account holders Secure check handling

Students and parents

Payment for services

Steel cutting department

Punch press department

Punch press department

Spot weld department

Data on hours worked, etc.

Quality Assurance and Quality Control

The costs of transactions, communication, problem resolution and switching

Partnership arrangements with fewer suppliers mean less variation in vital

Establishing an effective supplier management process requires:

Support from the top management of both companies involved.

The manufacturing industry is in a special situation: Much of what manufacturers

Everything varies. In other words, no two things are exactly alike.

Common cause, or noise, variation is inherent in a process over time. It affects

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