QUALITY-MANAGEMENT

1. QUALITY MANAGEMENT
MODULE 1

2. Quality-meaning.
• Dictionary meaning
• A peculiar & Essential Character
• Degree of Excellence.
• A distinguishable Attribute

3. • What is Quality?
Subjective phenomenon which results from perception
and expectation
Perception >Expectation ,Good quality
Perception <Expectation ,low quality
Perception =Expectation ,Normal quality
Quality is perceptual ,conditional and subjective Attribute
• .

4. Definitions-contd……
• The common element of the business definitions is that the
quality of a product or service refers to the perception of the
degree to which the product or service meets the customer's
expectations. Quality has no specific meaning unless related to a
specific function and/or object. Quality is a perceptual,
conditional and somewhat subjective attribute.
• The business meanings of quality have developed over time.
Various interpretations are given below:
• American Society for Quality: "A subjective term for which each
person has his or her own definition. In technical usage, quality
can have two meanings:
• a. The characteristics of a product or service that bear on its
ability to satisfy stated or implied needs;
• b. A product or service free of deficiencies."[1]

5. Quality (definitions)
• A measure of excellence or a state being free
from defects,deficiences and significant
variations brought about by the strict and
consistent adherence to measurable and
verifiable standards to achieve uniformity of
output that satisfies specific customer or user
requirements.

6. • Subir Chowdhury: "Quality combines people
power and process power."[2]
• Philip B. Crosby: "Conformance to
requirements."[3][1] The requirements may not
fully represent customer expectations; Crosby
treats this as a separate problem.

7. • W. Edwards Deming: concentrating on "the efficient
production of the quality that the market expects,"[4] and
he linked quality and management: "Costs go down and
productivity goes up as improvement of quality is
accomplished by better management of design,
engineering, testing and by improvement of processes."[5]
• Peter Drucker: "Quality in a product or service is not what
the supplier puts in. It is what the customer gets out and is
willing to pay for."[6]
• ISO 9000: "Degree to which a set of inherent characteristics
fulfills requirements."[7] The standard defines requirement
as need or expectation.
• ."

8. • Joseph M. Juran: "Fitness for use."[1] Fitness is
defined by the customer.
• Noriaki Kano and others, present a two-
dimensional model of quality: "must-be quality"
and "attractive quality."[8] The former is near to
"fitness for use" and the latter is what the
customer would love, but has not yet thought
about. Supporters characterize this model more
succinctly as: "Products and services that meet or
exceed customers' expectations

9. • Robert Pirsig: "The result of care."[9]
• Six Sigma: "Number of defects per million
opportunities."[10]
• Genichi Taguchi, with two definitions:
• a. "Uniformity around a target value."[11] The idea is to
lower the standard deviation in outcomes, and to keep the
range of outcomes to a certain number of standard
deviations, with rare exceptions.
• b. "The loss a product imposes on society after it is
shipped."[12] This definition of quality is based on a more
comprehensive view of the production system.
• Gerald M. Weinberg: "Value to some person".[13]
•

10. • Customers-specification quality
• Producers-conformation quality (degree to
which it is produced correctly)

11. Copyright 2006 John Wiley &
Sons, Inc.
3-11
Fitness for
Consumer Use
Producer’s Perspective Consumer’s Perspective
Quality of Conformance
• Conformance to
specifications
• Cost
Quality of Design
• Quality characteristics
• Price
Marketing
Production
Meaning of Quality
Meaning of Quality

12. Quality dimensions

13. Copyright 2006 John Wiley &
Sons, Inc.
3-13
 Conformance
 degree to which a product meets pre–established
standards
 Durability
 how long product lasts before replacement
 Serviceability
 ease of getting repairs, speed of repairs, courtesy and
competence of repair person
Dimensions of Quality:
Manufactured Products (cont.)

14. Copyright 2006 John Wiley &
Sons, Inc.
3-14
 Aesthetics
 how a product looks, feels, sounds, smells, or
tastes
 Safety
 assurance that customer will not suffer
injury or harm from a product; an especially
important consideration for automobiles
 Perceptions
 subjective perceptions based on brand name,
advertising, and the like
Dimensions of Quality:
Manufactured Products (cont.)

15. Copyright 2006 John Wiley &
Sons, Inc.
3-15
Dimensions of Quality:
Service
 Time and Timeliness
 How long must a customer wait for service, and is
it completed on time?
 Is an overnight package delivered overnight?
 Completeness:
 Is everything customer asked for provided?
 Is a mail order from a catalogue company
complete when delivered?

16. Copyright 2006 John Wiley &
Sons, Inc.
3-16
Dimensions of Quality:
Service (cont.)
 Courtesy:
 How are customers treated by employees?
 Are catalogue phone operators nice and are their
voices pleasant?
 Consistency
 Is the same level of service provided to each
customer each time?
 Is your newspaper delivered on time every morning?

17. Copyright 2006 John Wiley &
Sons, Inc.
3-17
 Accessibility and convenience
 How easy is it to obtain service?
 Does a service representative answer you calls quickly?
 Accuracy
 Is the service performed right every time?
 Is your bank or credit card statement correct every month?
 Responsiveness
 How well does the company react to unusual situations?
 How well is a telephone operator able to respond to a customer’s
questions?
Dimensions of Quality:
Service (cont.)

18. Quality management(definition)
ISO 9000 definition
• Quality management includes all the activities
that organizations use to direct ,control and
coordinate quality. The activities include
formulating a quality policy, quality control,
quality assurance and quality improvement.

19. Quality management (definitions)
• The act of overseeing all activities and tasks
needed to maintain a desired level of excellence.
This includes creating and implementing quality
planning and assurance, as well as quality control
and quality improvement.
• Management activity and functioning involved in
determination of quality policy and its
implementation through means such as quality
planning and quality assurance including quality
control.

20. QUALITY MANAGEMENT SYSTEM
• QMS is a set of interrelated or interacting
elements that organizations use to direct and
control how quality policies are implemented
and quality objectives are attained.
• A system by which an organization aims to
reduce and eventually eliminate non-
conformance to specifications.

21. Quality policy
• An organization’s quality policy defines top
management’s committentment to quality. A
quality policy statement should describe an
organization’s general quality orientation and
clarify its basic intentions.
• Quality policies should be used to generate
quality objectives and should serve as a general
frame work for action. It is based on ISO9000
principles and should be consistent with the
organization’s other policies.

22. Quality objective
• A quality objective is quality oriented goal. A
quality objective is something the organization
aim for or try to achieve. It is derived from
organization’s quality policy and must be
consistent with it. They are formulated at all
relevant levels within the organization.

23. Quality management -history

24. Quality Management principles
• “A quality management principle is a
comprehensive and fundamental rule/belief,
for leading and operating an
organisation,aimed at continually improving
performance over the long term by focusing
on customers while addressing the needs of
all other stake holders”. (ISO9000)

25. Quality Management
Principles
The eight quality management principles are:-
1. Customer focus
2. The role of Leadership
3. Involvement of People
4. Process Approach
5. System Approach to Management
6. Continual Improvement
7. Factual Approach to Decision Making
8. Mutual Beneficial Supplier relationship

26. The Principles
1. Customer focus
Organizations depend on their customers and
therefore should understand current and future
customer needs, should meet customer
requirements and strive to exceed customer
expectations.
Implication
Customer focused means putting your energy into
satisfying customers and understanding that
profitability comes from satisfying customers.

27. Application of the principle-customer focus
a) Researching ,establishing and understanding current
and future customer needs and expectations
b) Ensuring that the objectives of the organization are
linked to customer needs and expectations.
c) Communicating customer needs and expectations
throughout the organization.
d) Measuring customer satisfaction and acting on the
results
e) Ensuring a balanced approach between satisfying
customers and other interested parties.

28. 2. Leadership
Leaders establish unity of purpose and direction of
the organization. They should create and maintain the
internal environment in which people can become
fully involved in achieving the organization’s
objectives.
Implication
Leadership is providing role model behaviors consistent
with the values of the organization.
Behavior that will deliver the organizations objectives.
Internal environment includes the culture and climate,
management style, trust, motivation and support.

29. Application of the principle- Leadership
a) Considering the needs of all interested parties including customers,
owners, employees, suppliers, financier, local communities and
society as whole.
b) Establishing a clear vision of the organization’s future.
c) Setting challenging goals and targets.
d) Creating and sustaining shared values, fairness and ethical role
models at all levels of the organization.
e) Establishing trust and eliminate fear.
f) Providing people with the required resources training and freedom
to act with responsibility and accountability.
g) Inspiring, encouraging and recognizing people’ contributions.

30. 3. Involvement of People
People at all levels are the essence of an
organization and their involvement enables their
abilities to be used for the organization’s benefit.
implication
involving people means sharing knowledge, encouraging
and recognizing their contribution, utilizing their
experience and operating with integrity.

31. Application of the principle – Involvement of
people
a) People identifying constraints to their performance.
b) People evaluating their performance against
personal goals and objectives.
c) People actively seeking opportunities to enhance
their competence,knowledge and experience.
d) People freely sharing knowledge and experience
e) People openly discussing problems and issues.

32. 4. Process Approach
A desired result is achieved more efficiently when
activities and their related resources are
managed as a process
Implication
Processes are dynamic-they cause things to happen.
Processes within an organization should be structured in
order to achieve a certain objective in the most efficient
and effective manner.

33. Application of the principle - process
Approach
a) Systematically defining the activities necessary to
achieve/obtain desired results.
b) Establishing clear responsibility and accountability for
managing key activities.
c) Analyzing and measuring of the capabilities of key
activities
d) Identifying the interfaces of key activities within and
between the functions of the organization.
e) Evaluating risks,consequences and impacts of activities
on customers,suppliers and other interested parties.

34. 5. System Approach to Management
Identifying, understanding and managing
interrelated processes as a system contributes to
the organization’s effectiveness and efficiency in
achieving it’s objectives.
Implication
Systems are constructed by connecting interrelated
processes together to deliver the system objectives which
in the case of the QMS is the satisfaction of the interested
parties.

35. Application of the principle –
system Approach
a) Structuring a system to achieve the organizations
objectives in the most effective and efficient way.
b) Understanding the interdependencies between the
processes of the system
c) Structured approach that harmonize and integrate
processes.
d) Providing a better understanding of the roles and
responsibilities necessary for achieving common
objectives and thereby reducing cross functional barriers.
e) Targeting and defining how specific activities within a
system should operate.

36. 6. Continual Improvement
Continual improvement of the organization’s
overall performance should be a permanent
objective of the organization
Implication
Continual improvement is the progressive improvement in
organizational efficiency and effectiveness.

37. Application of the principle- continual
Improvement
 Employing a consistent organization-wide approach to
continuous improvement of the organizations’ tools of
continual improvement
 Providing people with the training in the methods and tools of
continual improvement
 Making continual improvement of products, processes,and
the system an objective for every individual in the
organization.
 Establishing the goals to guide and lead.

38. 7.Factual Approach to Decision Making
Effective decisions are based on the analysis of
data and information
Implication:
Facts are obtained from observations performed by
qualified people using qualified means of measurements
i.e. the integrity of the the information is known.

39. Application of the principle – Factual
Approach
• Ensuring that data/information is sufficiently accurate and
reliable.
• Making data accessible to those who need them.
• Analyzing data using appropriate tools.
• Making decision and taking actions based on factual
analysis,balanced with experience and intuition.

40. 8. Mutual Beneficial Supplier
relationships
An organization and it’s suppliers are
interdependent and a mutually beneficial
relationship enhances the ability for both to create
value
implication
beneficial relationships are those in which both parties
share knowledge,vision,values,and understanding.

41. Application of the principle - mutually
beneficial relationships
a) Establishing relationships that balance short-term gains
with long term considerations.
b) Pooling of expertise and resources with partners
c) Identifying and selecting key suppliers
d) Clear and open communication
e) Sharing information and future plans
f) Establishing joint development and improvement
activities.
g) Inspiring,encouraging and recognizing improvements and
achievement by suppliers.

42. Quality management (components)
• Four main components are concerned with
quality management. These are:
• Quality planning
• Quality assurance
• Quality improvement
• Quality control

43. Quality planning
Definition
• Systematicprocess that translates quality policy
into measurable objectives and requirements,
and lays down a sequence of steps for realizing
them within a specified timeframe.

44. • According to ISO 9000:2000 the definition of
Quality Planning is "art of quality
management focused on setting quality
objectives and specifying necessary
operational processes and related resources
to fulfil quality objectives.“

45. QUALITY PLANNING
• Quality Planning establishes the design of a
product, service, or process that will meet
customer, business, and operational needs to
produce the product before it enters
production.

46. Quality Planning
It involves identifying which quality
standards are relevant to the project and
determining how to satisfy them.

47. quality plan
• Definition
• Detailed document that sets forth practices and
sequence of activities aimed at translating an
organization's quality policy into operational
results, or conformance to a standard such as ISO
9000 within a specified timeframe

48. Quality planning(principles)
• Customer satisfaction comes first: Quality is
defined by the requirements of the customer.
• Prevention over inspection: It's better to avoid
mistakes than to inspect the result and repair the
defects.
• Management responsibility: Costs of quality
must be approved by the management.
• Continuous improvement: Becoming better is an
iteratively structured process.

49. Quality planning (STEPS)
– Identify customers and target markets
– Discover hidden and unmet customer needs
– Translate these needs into product or service requirements: a
means to meet their needs (new standards, specifications, etc.)
– Develop a service or product that exceeds customers' needs
– Develop the processes that will provide the service, or create
the product, in the most efficient way
– Transfer these designs to the organization and the operating
forces to be carried out

50. Tools/Techniques for Quality planning
 Cost-Benefit Analysis - Quality planning must consider cost-benefits
tradeoffs. The primary benefit of meeting quality requirements is less
rework, which means higher productivity, lower costs, and increased
stakeholder satisfaction
 Benchmarking - Benchmarking involves comparing actual or planned
project practices to those of other projects to generate ideas for
improvement and to provide a basis by which to measure performance
 Design of Experiments (DOE)- statistical method that helps identify which
factors may influence specific variables of a product or process under
development or in production.
 Cost of Quality (COQ)- Quality costs are the total costs incurred by
investment in preventing nonconformance to requirements, appraising the
product or service for conformance to requirements, and failing to meet
requirements (rework). Failure costs are often categorized into internal and
external. Failure costs are also called cost of poor quality.
 Additional Quality Planning Tools - brainstorming, affinity diagrams, force
field analysis, nominal group techniques, matrix diagrams, flowcharts, and
prioritization matrices

51. • Cost-Benefit Analysis
The analysis that defines the trade-
off between cost of quality and its
returns .

52. • Benchmarking is the process of comparing the actual
project to other projects for "generating ideas for
improvement" and "providing a basis by which to
measure performance"
• Design of experiments is a method for investigating
the influence of single parameters on the degree of
quality of the whole product / process
• Cost of quality "[...] are the total costs incurred in
preventing non-conformance to requirements,
appraising the product or service for conformance to
requirements, and failing to meet requirements".

53. Completion of the Quality Planning steps
produces these results:
• vital needs have been identified
• designs include features that meet the
customers' needs
• capable processes are in operation producing
desired product features

54. Quality assurance (QA)
• Quality assurance (QA) - Planned and
systematic activities implemented in a quality
system so that quality requirements for a
product or service will be fulfilled.
• It is defined as a procedure or a set of
procedures intended to ensure that a product
or service under development meets specified
requirements.

55. • "Quality assurance can be defined as a well
organized programme for all planned,
systematic and sequential activities which are
necessary to provide adequate confidence to
the management and customer that a
product/service will satisfy all those given
requirements of quality to the utmost
satisfaction of customer.”

56. Quality Assurance
Planned and systematic pattern of all actions
necessary to provide adequate confidence
that the product optimally fulfils customers'
expectations, i.e. that it is problem-free and
well able to perform the task it was designed
for.

57. • Two principles included in QA are: "Fit for
purpose", the product should be suitable for
the intended purpose; and "Right first time",
mistakes should be eliminated.
• (QA) is a process-centered approach ensuring
that a company or organization is providing
the best possible products or services.

58. • All those planned and systematic actions
necessary to provide adequate confidence
that a product or service will satisfy given
requirements for quality. (ISO9000)
• It is a set of preventive activities.
• Quality Assurance makes sure you are doing
the right things, the right way.
• QA is process oriented

59. • Quality assurance is about engineering
“processes“that assure quality.

60. Quality assurance-steps
• test of previous articles
• plan to improve
• design to include improvements and
requirements
• manufacture with improvements
• review new item and improvements
• test of the new item

61. QUALITY CONTROL
• Quality control is a process that is used to ensure a
certain level of quality in a product or service.
• It includes all the actions a business takes for the
control and verification of certain characteristics of a
product or service.
It involves thoroughly examining and testing the quality
of products or the results of services.
The basic goal of this process is to ensure that the
products or services that are provided meet specific
requirements and characteristics, such as being
dependable, satisfactory, safe and fiscally sound.

62. • QC is a procedure or a set of procedures intended
to ensure that a manufactured product or
performed service adheres to a defined set of
quality criteria or meets the requirements of the
clients or customers.
• It ensures a certain level of quality in a
product/service.
• it includes actions necessary to provide control
and verification of certain characteristics.

63. • The ISO definition states that quality control is the
operational techniques and activities that are used to
fulfil requirements for quality.
• Quality control is a process for maintaining standards
and not for creating them.
• Standards are maintained through a process of
selection, measurement and correction of work.
• Quality control can be applied to particular products,
to processes which produce the products or to the
output of the whole organization by measuring the
overall quality performance of the organization.

64. • Quality control is a post event activity. i.e. a
means of detecting whether quality has been
achieved and taking action to correct any
deficiencies.

65. Quality Control(steps)
• The process of managing operations to meet quality
goals.
• The process of Quality Control involves:
– Choosing control subjects
– Choosing units of measurement
– Establishing a measurement procedure
– Measuring
– Interpreting differences between measurement and goal.
– Taking action to correct significant differences

66. QC Throughout Production Systems
Raw Materials,
Parts, and
Supplies
Production
Processes
Products and
Services
Inputs Conversion Outputs
Control Charts
and
Acceptance Tests
Control Charts
and
Acceptance Tests
Control Charts
Quality of
Inputs
Quality of
Outputs
Quality of
Partially Completed
Products

67. Quality improvement
• The ISO definition of quality improvement- It
is the actions taken throughout the
organization to increase the effectiveness of
activities and processes to provide added
benefits to both the organization and its
customers.
• In simple terms, quality improvement is
anything which causes a beneficial change in
quality performance.

68. • Quality Improvement is a formal approach to the
analysis of performance and systematic efforts to
improve it.
• Is the purposeful change of processes to improve
the reliability of achieving an outcome.
• The systematic approach to reduction or
elimination of waste, rework, and losses in
production process

69. • The object of quality improvement is to reduce
chronic waste to a much lower level.
The steps in Quality Improvement:
– Prove the need for improvement
– Identify specific projects for improvement
– Organize to guide the projects
– Organize for diagnosis -- discovery of causes
– Diagnose the causes
– Provide remedies
– Prove that the remedies are effective under operating conditions
– Provide for control to maintain the gains.

70. 14 Steps to Quality Improvement (Crosby)
• Management commitment
• Quality improvement teams
• Quality measurement
• Cost of Quality evaluation
• Quality awareness
• Corrective action
• Zero defects program
• Supervisor training
• Zero Defects day
• Goal setting
• Error cause removal
• Recognition
• Quality councils
• Do it all over again

71. QA ,QC,QI
• QA-Establish organizational procedures and
standards for quality.
• QC-Ensure that procedures and standards are
followed by the organization
• QI-Select applicable procedures and standards
and modify these as required

72. • Quality trilogy-(Juran)- A three-legged
approach for managing for quality. The three
legs are quality planning (developing the
products and processes required to meet
customer needs), quality control (meeting
product and process goals) and quality
improvement (achieving unprecedented levels
of performance).

73. Slide 3.17
Juran’s Quality Trilogy
• Quality planning
– Preparing to meet quality goals
• Quality control
– Meeting quality goals during operations
• Quality improvement
– Reaching unprecedented levels
of performance
Q.P
Q.C. Q.I.

74. Juran: Quality Trilogy
Managing for quality consists of three basic quality-oriented processes:
• quality planning,
• quality control, and
• quality improvement.
The role of quality planning is to design a process that will be able to meet
established goals under operating conditions.
The role of quality control is to operate and when necessary correct the
process so that it performs with optimal effectiveness.
The role of quality improvement is to devise ways to take the process to
unprecedented levels of performance.

75. Juran Trilogy
1. Quality Planning
• Quality planning stems from a unity of purpose that spans all
functions of an organization.
• The subject of planning can be anything -- an engineering
process for designing new products, a production process for
making goods, or a service process for responding to
customer requests.
• Quality Planning involves
– Identifying customers, both internal and external
– Determining their needs
– Specifying the product features that satisfy those needs at minimum cost.
– Designing the processes that can reliably produce those features.
– Proving that the process can achieve its goals under operating conditions.

76. Juran Trilogy
2. Quality Control
• The process of managing operations to meet quality
goals.
• The process of Quality Control involves:
– Choosing control subjects
– Choosing units of measurement
– Establishing a measurement procedure
– Measuring
– Interpreting differences between measurement and goal.
– Taking action to correct significant differences

77. Juran Trilogy
3. Quality Improvement
• Assuming the process is under control, any waste that occurs must be
inherent in the design of the process.
• The object of quality improvement is to reduce chronic waste to a much
lower level.
• The steps in Quality Improvement:
– Prove the need for improvement
– Identify specific projects for improvement
– Organize to guide the projects
– Organize for diagnosis -- discovery of causes
– Diagnose the causes
– Provide remedies
– Prove that the remedies are effective under operating conditions
– Provide for control to maintain the gains.

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Quality Tools
• Tools that Support Quality Management
within a company. There are for 7 Basic Tools.
They are
• 1)Histograms.
• 2)Pareto charts
• 3)Run charts
• 4)Scatter diagrams.
• 5)Control charts
• 6)Flow charts
• 7)Cause&effect diagram(Fish- Bone Diagram)

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Histograms
What is it?
• A Histogram is a bar graph
• usually used to present frequency data
How does it Work?
• Define Categories for Data
• Collect Data, sort them into the categories
• Count the Data for each category
• Draw the Diagram. each category finds its place on the x-Axis.
• The bars will be as high as the value for the category
What is its use?
• Histograms provide an easy way to evaluate the distribution of Data over
different categories
LSL USL

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Pareto Charts
What is it?
• A Pareto Chart is a Histogram
• + a cumulative line
How does it Work?
• Similar like a Histogram
• First define categories, collect Data and sort them into the Categories.
Count the occurrences for each category.
• Now rank the categories starting with highest value.
• Draw cumulative points above all the bars and connect them into a line.
What is its use?
• Pareto Charts are used to apply the 80/20 rule of Joseph Juran which states
that 80% of the problems are the result of 20% of the problems. A Pareto Chart can
be used to identify that 20% route causes of problem.
Type
X

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Run Charts
What is it?
• Run Charts are representing change
in measurement over a sequence or time
How does it Work?
• Gather Data
• Organize Data
» Measurements (y) must be confronted with time or
sequence of the events.
• Chart Data
• Interpreting Data
What is its use?
• Determining Cyclic Events and their average character
Time
Measurement

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Scatter Diagrams
What is it?
• Statistical tool showing a trend in a series of values.
How does it Work?
• Gain values series
• Draw graph with value points
• Draw trend line: m*x+a
» Calculate m value
» Calculate a value
» Calculate points for trend line.
What is its use?
• Demonstrating correlations between values and showing trends for value
changes.
Y
X

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Control Charts
What is it?
• Statistical tool, showing whether
a process is in control or not
How does it Work?
• Define Upper limit, lower limit and medium value
• Draw Chart.
• Gather values and draw them into chart
What is its use?
• Taking samples of a process and detect possibility of process being out of control
Y
X
Upper limit
Lower limit
Average/Spec

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Flow Charts
Example:
• You intend to repair a certain machine.
• First you perform the repair thought to be necessary
• Then You check it
• If it does not work you continue with repairs
• If it works you finish
Input Within
Spec?
Process Output
adjust
Yes
No
start
Repair machine
OK?
end
Yes
No
Check machine

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Cause and Effect Diagrams
What is it?
• It’s a diagram that demonstrates
the relationship between Effects
and the categories of their causes
• The Diagram looks like a fishbone it is therefore also called fish-
bone diagram
How does it Work?
• Determine the Effect or Problem you would like to examine
• Categorize the possible causes
• find subcategories
• Describe the possible causes
effect
Cause b
Cause a
Cause d
Cause c

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Cause and Effect Diagrams
effect
Man
Machine
Method
Measurement
Milieu

88. Quality costs
• Costs that are incurred to prevent defective
products from falling into the hands of
customers or that are incurred as a result of
defective units.
• Preventing, detecting and dealing with defects
cause costs. They are called quality costs or
costs of quality.

89. • Quality costs are all those costs that arise
from not performing a task the right way the
first time.

91. • Cost of Good Quality- These are the costs
companies incur to ensure they are producing
quality products. It consists of Appraisal Costs
(AC) and Prevention Costs (PC).

92. • Cost of Poor Quality.
• These are the traditional quality costs
companies measure. Examples would include
scrap, rework, and returned materials. To give
this part of the equation more structure we
think of Poor Quality as having two different
terms: Internal Failure Costs (IFC) and External
Failure Costs (EFC).

93. • Prevention Costs are the costs associated with all
activities specifically designed to prevent poor
quality in products or services. Activities that fall
into this category include: Quality Planning, Risk
Management, Continuous Improvement Team
Activities, Corrective and Preventive Actions,
Audit Management, and more. Again, to measure
these costs it is helpful to break them down into
3 broad categories: percentage of Employee
Costs, percentage of Software Costs, and
percentage of Equipment Costs devoted to these
activities.

94. • Prevention costs are associated with design,
implementation, maintenance and planning prior to
actual operation in order to avoid defects from
happening. The emphasis is on the prevention of
defects in order to reduce the probability of
producing defective products. Prevention activities
lead to reduction of appraisal costs and both type of
failures (internal and external). The motto is
“Prevention rather than appraisal” .
•

95. • Appraisal Costs are the costs associated with
measuring, evaluating or auditing products or
services to assure conformance to quality
standards and performance requirements.
Activities that fall into this category include:
Inspections, Testing, and Calibration. To measure
these costs it is helpful to break them down into
3 broad categories: percentage of Employee
Costs, percentage of Software Costs, and
percentage of Equipment Costs devoted to these
activities.

96. 9/26/2022 96
Cost of Quality
• Appraisal cost activities
– Inspecting
– Testing
– Monitoring
– Auditing software/hardware processes
– Maintaining test machines/equipment

97. • Appraisal costs are spent to detect defects to
assure conformance to quality standards.
Appraisal cost activities sums up to the “cost
of checking whether things are correct” . The
appraisal costs are focused on the discovery of
defects rather than prevention of defects

98. 9/26/2022 98
Cost of Quality
• Prevention cost activities
– Analyzing requirements
– Planning for quality
– Process control
– Quality audits
– Conducting supplier evaluations
– Attending training
– Consulting

99. • Internal failure costs:
• IInternal failure costs occurs when results of work fail
to reach designated quality standards, and are
detected before transfer to the customer takes
place.
• External failure costs:
• External failure costs occur when the product or service
from a process fails to reach designated quality standards,
and is not detected until or after transfer to the customer.

100. 9/26/2022 100
Cost of Quality
• Internal failure cost activities
– Scrap
– Rework
– Failure analysis
– Re-inspection and retest
– Expediting
– Time away from development or
manufacturing

101. 9/26/2022 101
Cost of Quality
• External failure cost activities
– Paying warranty costs
– Providing a help desk
– Non billable consulting time
– Cancelled licenses or orders
– Making allowances

104. • Size of quality costs:
• The organizations which do not follow TQM, there is less
emphasis on prevention and their main quality efforts are
on appraisal with very little control on internal and external
failure costs. Various studies have shown that quality cost
in manufacturing companies world over range from 25% to
35% of turnover and in the case of service companies it can
go up to 40 %.
• Size of various quality cost elements:
• Size of various quality cost elements Preventive 1%
Appraisal 4-6% Internal Failure 10-12% External Failure 10-
15% The total quality costs 25-35 % of turnover.

105. • Good Quality and Poor Quality
• At the highest level there are two different
terms in the Cost of Quality equation: the Cost
of Good Quality (CoGQ) and the Cost of Poor
Quality (CoPQ). This can be understood in the
below formula:
• CoQ = CoGQ + CoPQ
•

106. • CoGQ = AC + PC, where:
• AC = % of labor, software, and equipment
costs focused on appraisal activitiesPC = % of
labor, software, and equipment costs focused
on prevention activities

107. • Cops = IFC + EXC, where:
• IFC = Scrap Costs + Rework Costs
• EFC = Returned Product Costs + Warranty
Costs + Product Recall Costs

108. Taguchis Philosophy of Quality
(Dr.Genichi Taguchi(1924-2012))
• Japanese Engineer & Statistician.
Contributions
• Quality Loss Function.
• Robust design Method.
• Innovations in Design of Experiments.

109. Robust product design is a concept from the
teachings of Dr. Genichi Taguchi, a Japanese quality
guru. It is defined as reducing variation in a product
without eliminating the causes of the variation. In
other words, making the product or process
insensitive to variation.

110. Design of Experiments
This branch of applied statistics deals with
planning, conducting, analyzing and
interpreting controlled tests to evaluate
the factors that control the value of a
parameter or group of parameters

111. Taguchi’s philosophy.
• 1. We cannot reduce cost without affecting quality.
2. We can improve quality without increasing cost.
3. We can reduce cost by improving quality.
4. We can reduce cost by reducing variation. When we do
so,
performance and quality will automatically improve.
• In Taguchi’s view, quality is not defined by specific limits,
but rather on whether or not it creates a financial loss to
society. An example given is a defective automobile exhaust
system creating air pollution.
• "Quality is the avoidance of financial loss to society after
the product is shipped”. (TAGUCHI)

112. • What are the losses to society from poor quality?
• Taguchi's key argument was that the cost of poor
quality goes beyond direct costs to the manufacturer
such as reworking or waste costs. Traditionally
manufacturers have considered only the costs of
quality up to the point of shipping out the product.
Taguchi aims to quantify costs over the lifetime of the
product. Long term costs to the manufacturer would
include brand reputation and loss of customer
satisfaction leading to declining market share. Other
costs to the consumer would include costs from low
durability, difficulty interfacing with other parts, or the
need to build in safety margins.

113. QUALITY LOSS FUNCTION
• Mathematical formula that estimates the loss of
quality resulting from the deviation of a product
characteristic from its target value.
• Developed by Dr. Genichi Taguchi of Japan, it is
often expressed in terms of money lost, and
suggests that such losses increase geometrically
as the square of the deviation from the target.

114. Key Concept: Taguchi Loss Function
• Taguchi measures quality as the variation from the target value
of a design specification and then translats that variation into
an economic “loss function” that expresses the cost of
variation in monetary terms
Where :
x = is the actual value of the product dimension
T = target limit
L(x) = the monetary value of the loss associated with deviating from the target
limit “T”
k = the constant that translates the deviation into dollars
Designing a product with a smaller design tolerance = better quality
2
)
(
)
( T
x
k
x
L 


115. • A parabolic approximation of the quality loss
that occurs when a quality characteristic
deviates from its target value. ....

116. Taguchi’s Vs Traditional Approach
Taguch’s Traditional
When a product
moves from its Target
will cause the loss
even if the product
lies or not within
Limits
There is Good or Bad
Products only as per
Limits

117. Taguchi’s Quadratic Quality Loss Function
• Quality Loss Occurs when a product’s deviates
from target or nominal value.
• Deviation Grows, then Loss increases.
• Taguchi’s U-shaped loss Function Curve.

120. The Goalpost (Traditional) View of
Quality
• Traditionally, companies measure quality by the
number of defects or the defect rate. In this system,
defects are identified through inspections of the
materials and products. Upper and lower quality limits
are established. Everything that does not fall within the
limits is considered a defect.
• This view is referred too as the goalpost view because
it can be conformed to the use of goalposts in football.
If the extra point goes between the goal posts it is
considered a success. It does not matter whether or
not it is in the center or close to the sides. However, if
the ball goes wide, left or right, it is unsuccessful.
Exhibit 1 shows this view.

121. • Quality loss function A parabolic approximation
of the quality loss that occurs when a quality
characteristic deviates from its target value. The
quality loss function is expressed in monetary
units: the cost of deviating from the target
increases quadratically the farther the quality
characteristic moves from the target. The formula
used to compute the quality loss function
depends on the type of quality characteristic
being used. The quality loss function was first
introduced in this form by Genichi Taguchi.
[Quality]

122. 122
• The traditional model for quality losses
– No losses within the specification limits!
The Taguchi Quality Loss Function (I)
• The Taguchi loss function
– the quality loss is zero only if we are on target
Scrap Cost
LSL USL
Target
Cost

123. Taguchi’s U-shaped loss Function Curve.
LTL Nominal
Measured
characteristic
UTL
Taguchi loss Fn
Scrap or Rework Cost.
Loss

125. Example: A quality engineer has a manufacturing specification (in cm)
of 0.200 plus or minus 0.05. Historical data indicates that if the quality
characteristic takes on values larger than .25 cm or smaller than .15 cm, the
product fails and a cost of $75 is incurred. Determine the Taguchi Loss Function
and estimate the loss for a dimension of 0.135 cm.
75
.
126
$
)
200
.
0
135
.
0
(
000
,
30
)
135
(. 2



L
T = 0.2 (cm); X< 0.15 (cm) or X> 0.25 (cm); L (X) = $75
75 = k (0.15-0.2)2 or 75 = k (0.25-0.2)2
K = 30,000 Taguchi Loss Function: L(X) =30,000 (x-T)2
2
)
(
)
( T
x
k
x
L 

75= k (± 0.05)2

126. 126
Define
C = The unit repair cost when the deviation from target equals the
maximum tolerance level
 = Tolerance interval (allowable parameter variation from target to SL)
T = Target value
Y = The actual metric value for a specific product
V = Deviation from target = Y-T
L(V) = Economic penalty incurred by the customer as a result of quality
deviation from target (The quality loss)
Computing The Taguchi QLF
The Loss Function
L(V) = C(V/)2
Example: The repair cost for an engine shaft is $100. The shaft diameter is required
to be 101 mm. On average the produced shafts deviates 0.5 mm from target.
Determine the mean quality loss per shaft using the Taguchi QLF.
Solution: L(0.5) = C·(V/)2 = 100·(0.5/1)2 = 100·0.25 = $25 per unit

127. Quality loss function

130. The Taguchi Loss Function is:
L(x) = k(x - T)2
(x-T)2 = ( 0.020)2
150 = k( 0.02)2 or k = 375,000
Example: A quality characteristic has a specification (in inches) of
0.200  0.020. If the value of the quality characteristic exceeds 0.200
by the tolerance of 0.020 on either side, the product will require a
repair of $150. Develop the appropriate Taguchi loss function (k).

131. Example: Suppose that the specifications for a part (in inches) are 7.00 ± 0.25,
and that the Taguchi Loss Function is estimated to be L(x) = 8,500(x-T)2.
Determine the estimated loss if the quality characteristic under study takes on
a value of 7.50 inches. Is the loss greater at 7.50 as opposed to 7.25?
T= 7.00 ; 6.75 < specification range < 7.25,
Since the upper limit of specification for the part should be <7.25, a part with
x=7.5 is way exceeded that limt.
L(x) = 8500 (7.50-7.00)2 = $2125 when x=7.5 inches
L(x) = 8500 (7.25 -7)2 = $531.25 when x=7.25 inches

132. Uses of QLF
• There are three ways that managers can use
QLF to reduce costs.
• 1. Move the average of the actual distribution
closer to the target value.
2. Reduce variability.
3. Do a combination of both.