Productivity and Total Quality Management unit 3

Unit 3
Basics of Productivity
and Total Quality
Management (TQM)
1

Dr. Parveen Kaur Nagpal
Productivity
Productivity is an average measure of the efficiency of production.
Productivity, in simple words, is the quantitative relation between what we
produce and what we use as resources to produce them i.e., an arithmetic
ratio between the amount produced (output) and the amount of resources
used in course of production (input).
Productivity can be measured using the formula:
Quantity of goods and services produced (Output)
Resources Used (Inputs)
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Importance of Productivity
3
Productivity is a Key to Prosperity
Economic Growth and Social Progress
Elimination of Waste in all Forms
Minimise Level of Poverty and Unemployment
Limited Resource to be used for Maximum Output
Better value to the customers, higher sales, higher profits and higher market share

Benefits of Productivity
4
To the Workers/Employees:
• Better and more wages
• Better standard of living
• Improved morale
• Satisfied workforce resulting into
goodwill
To the Organization:
• Higher production of goods and
services
• Reduction in cost
• High turnover, more profits, dividend
• Face competition effectively
• Cheaper goods to customers
• Wider markets
To the Nation:
• Revenue to government
• Overall prosperity
• High employment opportunities.
• Increased Gross National Product.
• Improved utilization of resources.
To Consumers and Society in General:
• Increase in supply of quality goods
and services.
• Reasonable cost of goods and
services.
• Greater customer satisfaction

Ways to Enhance Productivity
• Programme Evaluation and Review Technique (PERT) and Critical Path
Method (CPM)
• Quality Circles
• Value Engineering (improve the operation by trying to keep costs low at
each step)
• Operation Research (application of scientific method to the study of
alternatives in a problem situation)
• Work Specification (avoid unwanted processes and operations which will
reduce production costs)
• Ergonomics (Human Factor Engineering): Man-machine relationship, It is
designed to match technology to human needs. 5

Ways to Enhance Productivity
• Job Enrichment: Designing a job in such a way that it provides the worker
greater autonomy for planning and controlling his performance
• Job Enlargement: Increases the scope of a job by adding more tasks to it.
• Job Evaluation: Determining the value of jobs within an organization
through an examination of job content
• Monetary and Non-monetary Incentive Plans: To improve employee
motivation
• Materials Management: To obtain materials of good quality at lowest price
• Inventory Control: Avoids under-stocking and over-stocking of materials
• Total Quality Management: Improves quality and productivity by trying to
perfect the entire manufacturing process. 6

Ways of Calculating Productivity
Productivity is usually expressed in one of three forms:
I. Partial Factor Productivity
II. Multifactor Productivity
III. Total Productivity
9

I. Partial Factor Productivity
The inputs in the production process comprise labour, material, capital,
energy etc.
Productivity of each resource can be measured separately. Such
measurement gives partial productivity.
The formula for Partial Factor Productivity would be the ratio of total output
to a single input.
Productivity measures that use one or more inputs or factors, but not all
factors, are called partial productivities.
10

i. Labour Productivity: Depends upon how the labour is utilized. It can be
higher or lower depending on factors like availability of work load,
material, working tools, availability of power, work efficiency, level of
motivation, level of training, level of working condition etc. Labour
productivity can be measured in terms of hours or money.
LABOUR PRODUCTIVITY = Total Output
Labour Input
Labour Productivity(in terms of hours) = Total Quantity Produced
Actual man hours required to produce that quantity
Labour Productivity(in terms of money) = Total Cost of Output
Produced Amount spent on workers (in rupees)
11

ii. Material Productivity:
Production system converts raw material into finished product with the help
of mechanical or chemical processes. Material productivity plays important
role in cost of production. Material productivity depends upon how the raw
material is effectively utilized in the conversion process. Material productivity
depends upon % age of rejection, creation of scrap, level of spoilage,
obsolescence, work wastage etc.
Material Productivity = Total Output
Material Input
Material Productivity = Number of units produced
Total material cost
Material productivity can be increased by using skilled workers, adequate
machine tools, good design of product etc.
12

iii. Machine Productivity:
Production system converts raw material into finished product through
mechanical or chemical process with the help of machines and equipment.
Machine productivity depends upon availability of raw material, power, skill
of workers, machine layout etc.
Machine Productivity = Total Output
Machine Hours
13

iv. Capital Productivity:
Capital productivity depends on how effectively the assets are utilized.
Therefore decision is necessary to take about replacement of fixed assets.
Early replacement of fixed assets brings down maintenance cost but requires
capital expenses. On the other hand, late replacement of fixed assets
improves ratio of production to capital expenditure, but it increases
maintenance cost. Therefore proper balance is necessary.
Capital Productivity = Total Output
Capital Input
Capital Productivity = Total Output
Capital Employed 14

v. Energy Productivity:
Energy is a measurement component that is closely related to the machines.
The use of energy in manufacturing processes provides great saving potential.
Energy productivity is an indicator of the amount of economic output that is
derived from each unit of energy consumed.
With current industry trend and growing consumerism, companies use bigger
machines and thus energy consumption becomes a cause of concern. Firms
prefer to have low energy consumption with high machine capabilities
Energy Productivity = Units of Output
Kilowatt hour
Energy Productivity = Cost of Product
Kilowatt hour 15

vi. Water Productivity:
Water productivity is estimated for an agricultural system or sub-system,
defined within a given area and time period. For agricultural systems, WP is a
measure of output of a given system in relation to the water it consumes.
Water Productivity = Output
Water used
vii. Land Productivity
Land productivity is of primary importance in countries where there is a high
density of population
Land Productivity = Output
Land Utilized 16

II. Multi-Factor Productivity
Productivity of all resources put together gives productivity on the total
factor basis. This method of calculating productivity considering all resources
is called multi-factor approach to measuring productivity.
Multifactor productivity (MFP) reflects the overall efficiency with which
labour and capital inputs are used together in the production process.
Scott D. Sink further developed the total factor productivity model MFP
model considers labour, material and energy as major inputs. Capital was left
out since it is very difficult to estimate how much capital is being consumed
in a unit of time
17

MFP = Output
Inputs (labour + energy + material)
Multifactor productivity ratios are used by businesses, governments and
economists to calculate and compare efficiency in relation to productivity for
a given sector, industry or economy.
18

III. Total Productivity
Total Productivity is the ratio of total output to the sum of all input factors.
Thus, a total productivity measure reflects the joint impact of all the inputs in
producing the output.
The formula used to calculate it is:
Total Productivity = Output in a given period
Total Inputs
19

Quality
Quality is not an absolute term and can only be judged or realized by
comparison with some pre-determined standards.
When such a standards have been specified, then the quality of the product
can be described as “better or worse” or “higher or lower” than the
established quality specifications.
Definitions:
“Quality is conformance to requirements” Philips B Crosby
“Quality is fitness for use or purpose” Joseph M. Juran.
20

Quality
Quality is the ongoing process of building and sustaining relationships by
assessing, anticipating, and fulfilling stated and implied needs.
“A predictable degree of uniformity and dependability at low cost and suited
to market” W. Edwards Deming
Quantified: Q= P
E
Where, P- Performance, E- Expectations
21

Dimensions of Quality
22
In the year 1987, David Garvin suggested that there are eight dimensions to
quality that can be used at a strategic level to gain competitive advantage.
Performance
Quality 1
Features
Quality 2
Reliability
Quality 3
Durability
Quality 4
Conformance
Quality 5
Serviceability
Quality 6
Aesthetics
Quality 7
Perceived Quality
Quality 8

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• Performance - Primary Characteristics, such as brightness
• Features – Secondary Characteristics, Remote Control
• Conformance -Meeting Specifications or Standards
• Reliability – Consistency of Performance over time-fail
• Durability- Useful life ,include Repair.
• Service- Resolution of problems, ease of repair
• Response- Human relations with customers.
• Aesthetics- Looks, beauty
• Reputation- Past performance, Company Image.

Evolution of Quality
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1975 1980 1985 1990 1995 2000
Operation Customers Innovations
Quality
of
Work life
Quality
Circle
Productivity
Employee
Involvement
Quality
Employees
Empowerment
Total
Quality
Self Directed
Teams
TQC/TQM
Self
Directed/Managed
Teams

Factors Affecting Quality
25
• Money
• Materials
• Management
• Men
• Market
• Machine and Methods
• Motivation
• Modern Information Methods

Quality Cost
The “Cost of Quality” is not the price of creating a quality product or service,
it is actually the cost of not creating a quality product or service.
Every time work is redone, the cost of quality increases.
Some of the examples are:
• Reworking of a manufactured item.
• Retesting of an assembly.
• Rebuilding of a tool.
• Correction of a bank statement
26

Types - Quality Cost
• Prevention Cost – Planning, Document, Control, Training
• Appraisal Cost – Inspection and Tests, Installation, Depreciation, Reports
and Rejects
• Internal Failure Cost – Scraps, Repair Rework, Design Changes, Defect
Failure Analysis, Retests and Re Inspection etc.
• External Failure Cost – Complaints, Goodwill, Failures, Services and
Replacement, Guarantee and Warranty, Compensation, Recall, Loss of
Sales, Second Sales. 27

Quality Management
Quality management is the act of overseeing all activities needed to maintain
a desired level of excellence. This includes the determination of a quality
policy, creating and implementing quality planning and assurance, quality
control and quality improvement.
Quality management ensures that an organization, product or service is
consistent. It has four main components: quality planning, quality assurance,
quality control and quality improvement.
It focuses on long-term goals through the implementation of short-term
initiatives.
Quality management tools ensure changes in the systems and processes
which eventually result in superior quality products and services
28

Terms Related to Quality Management
29
• Quality Assurance (QA)
QA is a way of preventing mistakes or defects in manufactured products and
avoiding problems when delivering solutions or services to customers.
QA is applied to physical products in pre-production to verify what will be
made meets specifications and requirements, and during manufacturing
production runs by validating lot samples meet specified quality controls
Two principles included in quality assurance are:
• “Fit for purpose” (the product should be suitable for the intended
purpose)
• “Right first time” (mistakes should be eliminated)

Thus Quality Assurance (QA) is any systematic process of determining
whether a product or service meets specified requirements.
QA provides confidence to the organization that its projects and programmes
are well managed. It validates the consistent use of procedures and
standards, and ensures that staff have the correct knowledge, skills and
attitudes to fulfil their roles and responsibilities in a competent manner
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Steps - Quality Assurance System
1. Identify Organizational Goals
2. Identify Critical Success Factors
3. Identify Internal and External Customers
4. Customer Feedback
5. Implement Continuous Improvements
6. Select Quality Management Software
7. Measure Results
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• Quality Policy:
In quality management system, a quality policy is a document developed by
management to express the directive of the top management with respect to
quality.
It is the top management's expression of its intentions, direction, and aims
regarding quality of its products and processes.
It states the organizations intention of satisfying customers’ requirements
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• Quality Planning:
Quality Planning involves the preparation of a quality management plan that
describes the processes that will be used. The quality management plan
needs to be discussed with all the stakeholders to ensure that their
expectations for quality are correctly identified.
• Quality Improvement (QI):
QI is a systematic approach to reduction or elimination of waste, rework, and
losses in production process.
It involves implementing methods to improve a production process by
changing or getting rid of parts of the process that do not work well
33

• Quality Control (QC):
QC is a process by which organizations review the quality of all factors
involved in production. ISO 9000 defines quality control as "A part of quality
management focused on fulfilling quality requirements".
Quality Control is the last stage, when periodic checks are done to see if
quality is improving or not.
It is a process through which a business seeks to ensure that product quality
is maintained or improved with either reduced or zero errors.
Quality Control consists of inspection, testing and measurement. It verifies
that the deliverables conform to specification, are fit for purpose and meet
stakeholder expectations
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Need and Importance - Quality Management
Superior Quality Products
Customer Feedback
Elimination of Defects
Higher Productivity
Improves Overall Efficiency
Reduction of Wastages
Team Spirit 35

Total Quality Management(TQM)
TQM is the art of managing the whole to achieve excellence.
TQM is composed of three paradigms:
✓Total – Made up of the whole (or) complete (Organization wide)
✓Quality – Degree of Excellence a product or service provides to the
customer
✓Management – Act, art, or manner of handling , planning, organizing,
controlling, directing, etc.

TQM
"TQM is a management approach for an organization, centered on quality,
based on the participation of all its members and aiming at long-term success
through customer satisfaction, and benefits to all members of the
organization and to society.”
“TQM is defined as an integrated approach in delighting the customer (both
internal and external) by meeting their expectations on a continuous basis,
through everyone involved in the organization, working on a continuous
improvement along with proper problem solving technology.”
“Total Quality Management (TQM) is a management strategy aimed at
embedding awareness of quality in all organizational processes.”

TQM
“TQM represents a customer – oriented, quality focused management
philosophy”
The basic principles for the TQM Philosophy are:
• Satisfy the customer
• Satisfy the supplier
• Continuously improve the business processes

Features of TQM
• Customer Focus - Both internal as well as external customer
• Continuous Process - To improve quality and reduce internal costs.
• Defect – Free Approach - Right first time, work smarter or zero defects.
• Employees Involvement
• Treating Supplier as partners
• Synergy in Team Work - Working together
• Recognition and Rewards - This leads to positive reinforcement.
• Techniques to Improve System - Such as quality circles, value engineering,
statistical process control, etc.
• Systems Approach - Starts with the commitment and leadership of the CEO.

Processes of TQM
❖Quality Process
Understanding the customer, his needs and satisfying the same.
❖Management Process: Constant PODC in order to meet -
• Changing requirements
• Competitive Environment
• Technological Advancements
❖People Process
Involves dedication and commitment on part of the personnel

Need & Importance of TQM
• Internal and External Customer Satisfaction
• Helps to Face Competition
• Goodwill
• Highly Motivated Staff
• Lower Rejection Rate
• Reduction in Customer Complaints
• Better Facilities to the Employees
• Expansion and Diversification
• High Sales, Profitability and Market Share

Problems of TQM in India
• Conservative Attitude of the Management
• Divide and Rule Policy
• Lack of Loyalty
• Master and Servant Relationship
• Failure to Recognize and Reward
• Problem of Trade Unions
• Lack of Continuous Training and Education
• Attitude of Indian Society

Gurus of TQM
Different approaches to TQM are based on teachings and writings of the
following Quality Gurus:
• W. Edwards Deming
• Joseph M. Juran
• Philips B. Crosby
• Kaoru Ishikawa
• A. Feiganbaum
• Taguchi G.
• Walter A. Shewhart

Edward Deming
Dr. Deming whose teachings and work revolutionized quality and productivity
of Japanese industry has recommended 14 points as the basis for
transformation of any industry (small or big, manufacturing or service
organization) willing to change towards quality and productivity.
Deming’s principles are the guidelines that describe the fundamental basis
for organizations culture.
They define a process by which managers seek out bad practices and replace
them with more effective practices.

Edward Deming’s 14 Principles
1. Create a constant purpose toward improvement
2. Adopt the new philosophy
3. Stop depending on inspections
4. Use a single supplier for any one item
5. Improve constantly and forever
6. Use training on the job
7. Implement modern methods leadership and supervision
8. Eliminate fear
9. Break down barriers between departments

Edward Deming’s 14 Principles
10. Get rid of unclear slogans and posters
11. Eliminate management by objectives
12. Remove barriers to pride of workmanship
13.Implement education and self-improvement
14.Make “transformation” everyone’s job

PDCA Cycle
PDCA was made popular by Dr. W. Edwards Deming, who is considered by
many to be the father of modern quality control; however it was always
referred to by him as the "Shewhart cycle." Later he modified PDCA to "Plan,
Do, Study, Act" (PDSA).
PDCA (plan-do-check-act) is a four-step problem-solving process used in
business process improvement.
It is also known as the Deming cycle, Shewhart cycle, Deming wheel, or plan-
do-study-act.

50
PLAN
CHECK
DO
ACT
The Deming Cycle or PDCA Cycle
Plan a change to the process. Predict
the effect this change will have and
plan how the effects will be measured
Implement the change
on a small scale and
measure the effects
Adopt the change as
permanent modification
to the process, or
abandon it.
Study the results to
learn what effect the
change had, if any.

JOSEPH JURAN’S TRIOLOGY
Joseph Juran, born in 1904 is an internationally acclaimed quality guru who
strongly influenced Japanese manufacturing practices.
Juran believed that there is no short cut to quality. The key steps in
implementing company-wide strategic goals are:
✓Identify customers and their needs – both internal and external – and work
to meet those needs
✓Create measures of quality, establish optimal quality goals
and organize to meet them.
✓Create processes capable of meeting quality
goals in “real” operating conditions.

Joseph Juran’s belief that “quality does not happen by accident” gave rise to
the Quality Trilogy:
1. Quality Planning
2. Quality Control
3. Quality Improvement

❖Quality Planning
Determining the customers needs and requirements and then accordingly
developing products.
This process of identification is known as “Designing for 6 Sigma” or
“Concurrent Engineering”
Steps:
1. Identify customers and their needs.
2. Translate the need into language
3. Develop a product that can meet the customers needs.
4. Optimize the product features for more customer satisfaction.

❖Quality Control
Sometimes there is chronic waste resulting from the process of
manufacturing. This waste arises due to deficiencies in quality planning. This
may cost a lot to the organization.
If the waste increases, the organization has to appoint a team of experts to
control it and detect the abnormal deviations.
The 3 areas of Quality Control are:
✓Controlling the Waste
✓Proving that the product can be produced with minimal inspection.
✓Transfer of the processes into fruitful operations

❖Quality Improvement
Production processes have to be constantly challenged and continuously
improved.
This results from corresponding improvements in quality.
Quality Improvement stresses on:
✓Waste Elimination
✓Reducing the possibility of re work
✓Reduction in the defects

Strengths Weaknesses
• Easy to understand and apply.
• Allows the use of different quality
improvement tools and
techniques.
• Paves way for continuous
improvement in the quality.
• All the three aspects of Jurans
Triology require trained people.
• Sometimes the quality
improvement program may not
produce the desired results.
Hence, all the efforts of conducting
such program goes waste.

PHILIP CROSBY
Philip Crosby was a businessman and author who contributed to
management theory and quality management practices.
Crosby emphasized that Quality is neither intangible nor immeasurable. It is a
strategic imperative that can be quantified and put back to work to improve
the bottom line. Acceptable quality or defect levels and traditional quality
control measures represent evidence of failure rather than assurance of
success. The emphasis, for Crosby, is on prevention, not inspection and cure.
The goal is to meet requirements on time, first time, every time.
He believed that the prime responsibility for poor quality lies
with management, and that management sets the tone for the
quality initiative from the top.

PHILIP CROSBY
Crosby’s response to the quality crisis was the principle of “doing it right the
first time” (DIRFT). He also included four major principles:
i. The definition of quality is conformance to requirements (requirements
meaning both the product and the customer’s requirements)
ii. The system of quality is prevention
iii. The performance standard is zero defects (relative to requirements).
iv. The measurement of quality is the price of non-conformance.
Crosby’s belief was that an organization that establishes good quality
management principles will have more savings than expenditure that they
incur for the cost of the quality system.
It is less expensive to do it right the first time than to pay for rework and
repairs

PHILIP CROSBY
Philip Crosby, the author of two popular books on quality, “Quality if free”
and “Quality without tears” recommends the following 14 steps for
improvement.
1. Management commitment to demonstrate that the top management is
committed to the programme.
2. Quality improvement team consisting of departmental heads with
chairperson who has easy access to the top management.
3. Quality measurement to identify areas of improvements and corrective
actions
4. Cost of quality to determine the price of non-conformance (i.e. expenses
incurred in correcting things done wrong) and price of conformance (i.e.
expenses incurred to make things come out right).

PHILIP CROSBY
5. Quality awareness to build a communication channel for employees to
talk about quality.
6. Corrective actions to identify and eliminate problems for ever.
7. Zero defects planning to provide the thrust and longevity to the quality
management process
8. Employees education to all levels of employees to give everybody clear
idea of what quality is and thereby make them committed to quality
improvement
9. Zero defects day is the day when management makes its commitment
known to all employees.
10. Goal setting after the quality measurement to achieve specific results
(e.g. 30, 60 or 90 day goals).

PHILIP CROSBY
11. Error-cause removal to let employees state the problem they face so that
quality improvement team can analyse them and remove their causes.
12. Recognition to set up system of recognizing those who meet their goals
or perform outstanding acts. Money, however, is a bad form of
recognition.
13. Quality councils to bring quality professionals together to share their
experiences and learn from each other.
14. Do it all over again to repeat the quality improvement programme and let
quality improvement become the culture of the company.

KAIZEN
Kaizen is the single most important concept in Japanese management that is
the key to Japanese competitive success.
Kaizen is the practice of continuous improvement, that was originally
introduced to the West by Masaaki Imai in his book Kaizen: The Key to
Japan’s Competitive Success in 1986.
Today Kaizen is recognized worldwide as an important pillar of an
organization’s long-term competitive strategy.
Kaizen is continuous improvement that is based on certain guiding principles
that must be achieved with 100% participation.

KAIZEN
A process of continuously
• Identifying
• Reducing
• Eliminating
the 3 types of waste under Kaizen:
1. Muda
2. Mura
3. Muri

KAIZEN
1. Muda = Any wasteful activity or any obstruction to smooth flow of work.
Activity = Work + Muda
Expenditure = Cost + waste
For each activity there is expenditure and for every work there is a cost
associated. Any expenditure on the Muda is a waste
Therefore, Less Muda = More happy clients as it impacts on quality, cost and
delivery of products and services.
2. Mura = Inconsistencies in the system
3. Muri = Physical Strain

PRODUCT & SERVICE QUALITY DIMENSIONS
Product and service quality are comprised of a number of dimensions which
determine how customer requirements are achieved. Therefore it is essential
to consider all the dimension that may be important to customers.
Product Quality has two dimensions.
1. Physical Dimension: A product’s physical dimension measures the tangible
product itself and includes such things as length, weight, and temperature.
2. Performance Dimension: A product’s performance dimension measures
how well a product works and includes such things as speed and capacity

PRODUCT & SERVICE QUALITY DIMENSIONS
Like product quality, service quality has several dimensions:
• Responsiveness: Reaction time of the service. Whatever the customers
expect should be done immediately without delay
• Assurance: Level of certainty a customer has regarding the quality of the
service provided. It is the ability to convey trust and confidence.
• Tangibles: The look or feel of service. It includes the physical facilities and
infrastructure
• Empathy: It is when a service employee shows that he/she understands
and sympathizes with the customer’s situation
• Reliability: Dependability of the service providers and their ability to keep
their promises.

SERVQUAL
The SERVQUAL service quality model was developed by a group of American
authors, ‘Parsu’ Parasuraman, Valarie Zeithaml and Len Berry, in 1988. It
highlights the main components of high quality service.
The SERVQUAL authors originally identified ten elements of service quality,
but in later work, these were put into five factors reliability, assurance,
tangibles, empathy and responsiveness that create the acronym RATER.
Businesses using SERVQUAL to measure and manage service quality deploy a
questionnaire that measures both the customer expectations of service
quality in terms of these five dimensions, and their perceptions of the service
they receive

SERVQUAL
The SERVQUAL authors identified five gaps that may cause customers to
experience poor service quality.
Gap 1: Between Consumer Expectation and Management Perception.
This gap arises when the management does not correctly perceive what the
customers want. For instance, hospital administrators may think patients
want better food, but patients may be more concerned with the
responsiveness of the nurse. Key factors leading to this gap are:
• Insufficient marketing research.
• Poorly interpreted information about the audience’s expectations.
• Research not focused on demand quality
• Too many layers between the front line personnel and the top level
management.

SERVQUAL
Gap 2: Between Management Perception and Service Quality Specification
Although the management might correctly perceive what the customer
wants, they may not set an appropriate performance standard. An example
would be when hospital administrators instruct nurses to respond to a
request ‘fast’, but may not specify ‘how fast’.
Gap 2 may occur due to the following reasons:
• Insufficient planning procedures.
• Lack of management commitment.
• Unclear or ambiguous service design.
• Unsystematic new service development process

SERVQUAL
Gap 3: Between Service Quality Specification and Service Delivery
This gap may arise through service personnel being poorly trained, incapable
or unwilling to meet the set service standard.
The possible major reasons for this gap are:
• Deficiencies in human resource policies such as ineffective recruitment,
role ambiguity, role conflict, improper evaluation and compensation
system.
• Ineffective internal marketing.
• Failure to match demand and supply.
• Lack of proper customer education and training

SERVQUAL
Gap 4: Between Service Delivery and External Communication
Consumer expectations are highly influenced by statements made by
company representatives and advertisements. The gap arises when these
assumed expectations are not fulfilled at the time of delivery of the service.
For example, the hospital printed on the brochure may have clean and
furnished rooms, but in reality it may be poorly maintained, in which case the
patients’ expectations are not met.
The discrepancy between actual service and the promised one may occur
due to the following reasons:
• Over-promising in external communication campaign.
• Failure to manage customer expectations.
• Failure to perform according to specifications

SERVQUAL
Gap 5: Between Expected Service and Experienced Service
This gap arises when the consumer misinterprets the service quality. For
example, a physician may keep visiting the patient to show and ensure care,
but the patient may interpret this as an indication that something is really
wrong

Techniques of Improving Performance
• Quality Circles
• Quality Assurance
• Just in Time
• Value Engineering
• Suggestion Schemes
• Customer Service
• Statistical Process Control
• Process Control etc.

QUALITY CIRCLES
Started in 1962 in Japan by Dr. Kaoru Ishikawa, the Q. C. Movement is
coordinated by Japanese Union of Scientists and Engineers (JUSE)
In India Quality Circle is promoted by QCFI (Quality Forum of India)
In U.S. it started in the early 1970’s.
Voluntary group of employees (8 - 10) who work on similar tasks or share an
area of responsibility. They agree to meet on a regular basis to discuss and
solve problems related to work. They operate on the principle that employee
participation in decision-making and problem-solving improves the quality of
work.

CHARACTERISTICS OF QUALITY CIRCLES
• Voluntary Participation
• Members set rules and priorities
• Decisions made by consensus
• Use of organized approaches to Problem-Solving
• All members of a Circle need to receive training
• Members need to be empowered and have the support of Senior
Management

ADVANTAGES OF QUALITY CIRCLES
A. To The Organization
• Improve Employer – Employee Relationships
• Develop Participative Culture and Team Spirit.
• Reduce Work Related Errors
• Increase Productivity and Reduce Costs
• Improve the Quality of Goods n Services produced
• Leads to Higher Efficiency
• Saves Resources of the Organization

ADVANTAGES OF QUALITY CIRCLES
B. To The Employees
• Provide job interest which is absent in Routine Work
• Give a sense of Participation
• Develop Latent problem Solving Capabilities of Employees and enhance
creativity.
• Improve Individuals’ Abilities
• Inculcate Team Spirit and improve their morale
• Encourage Employees

LIMITATIONS OF QUALITY CIRCLES
Why do Quality Circles fail?
• Inexperienced and new employees cannot solve complex problems and
that too at grass root level.
• Unions may be reluctant to get involved in Q.Cs
• May not be supported by the top management
• Lack of/ Inadequate training
• Not entirely voluntary
• Sometimes the employees are unsure of purpose.
• Decision making does not really take place.

CAUSE AND EFFECT DIAGRAM
The cause and effect diagram is also called the Ishikawa diagram or the
fishbone diagram.
It is a tool developed by Ishikawa for the purpose of representing the
relationship between an effect and the potential or possible cause
influencing it.
It shows the hierarchy of causes contributing to a problem.
The major purpose of this diagram is to act as a first step in problem solving
by creating a list of possible causes.
The diagram looks like a “Fish Skeleton”, hence the name Fishbone Diagram
There is no statistics involved and it helps to map out a process/problem.

STEPS - CAUSE AND EFFECT DIAGRAM
1. Define the problem
2. Brainstorm the main causes of the problem
3. Brainstorm the subordinate causes
4. Look for the root causes by identifying which are interrelated.
5. Propose solution to the root cause

ADVANTAGES - CAUSE AND EFFECT DIAGRAM
• It provides a structure and focus for open discussion of a specific quality
concern.
• It simplifies the process of problem solving
• It discovers many causes for a specific effect, making the process
understandable
• It encourages employees involvement at all levels and promotes better
communication.

CAUSE AND EFFECT DIAGRAM
Example: Problem of Incorrect Deliveries of Pizzas

Productivity and Total Quality Management unit 3

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