Professional Documents
Culture Documents
1. A committed and involved top management to provide long-term, top to bottom organizational
support.
The leaders of an organization play a vital role in the development of quality culture in the organization. The
quality culture of an organization is the reflection of the traits of the top management. Top management must
participate in the quality program. A quality council must be established in the organization to develop a
clear vision, set long term goals and direct the program..
2. Focus on internal and external customers:
Managers must listen to the suggestions and recommendations made by the employees to improve
quality. This aspect of listening to the voice of customers leads to the emphasis of design quality and defect
prevention. Every function in an organization should be done right the first time and every time because
customer satisfaction is the most important consideration in TQM.
3. Effective involvement of the entire work force:
TQM is everyone’s responsibility in an organization. All workers in an organization must be oriented
towards TQM and all personnel must be trained in TQM, statistical process control and other
appropriate quality improvement skills so that they can effectively & efficiently participate in TQM
as a team.
4. Continuous improvement of the business and production process:
Continuous improvement refers to constant refinement and improvement of products, services
and organizational systems to yield improved value to consumers. A disciplined improvement that
can hold the gains made through quality orientation is necessary.
Servqual Model
INTRODUCTION
• Service quality is an approach to manage business processes in order to ensure full satisfaction of the
customers & quality in service provided. It works as an pioneer of customer satisfaction.
• If expectations are greater than performance, then perceived quality is less than satisfactory and
hence customer dissatisfaction occurs.
• SERVQUAL is a service quality framework, developed in the 80’s by Zeithaml, Parasuraman &
Berry, aiming at measuring the scale of Quality in the service sectors.
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increases an organization’s database of loyal customers who would not go anywhere, no matter what.
without customers a business can’t even exist.
In case of physical products, customers are satisfied when the products are:
• Durable
• Reliable
• Easy to Use
• Adaptable
• Appropriate
In case of service industry customers are satisfied only when:
• Employees are friendly and polite
• Employees are honest and do not make fake promises
• Employees are easy approachable
• Employees are willing to listen and address customer grievances
• Organizations respond to customer requests on time.
Continuous Improvement
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. Also stated as:
Continuous improvement, or Kaizen, is a method for identifying opportunities for streamlining work and
reducing waste.
Among the most widely used tools for continuous improvement is a four-step quality model—the 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.
Benefits of Continuous Improvement:
1. Streamline Workflows
2. Reduce Project Costs and Prevent Overages
3. Gain Flexibility
W. Edwards Deming
W Edwards Deming was an American statistician who was credited with the rise of Japan as a
manufacturing nation, and with the invention of Total Quality Management (TQM). Deming went to
Japan just after the War to help set up a census of the Japanese population. While he was there, he
taught ‘statistical process control’ to Japanese engineers – a set of techniques which allowed them to
manufacture high-quality goods without expensive machinery.
Deming returned to the US and spent some years in obscurity before the publication of his book
“Out of the crisis” in 1982. In this book, Deming set out 14 points which, if applied to US
manufacturing industry, would he believed, save the US from industrial doom at the hands of the
Japanese.
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In the 1970s, some of Deming's Japanese proponents summarized his philosophy in a two-part
comparison:
1. Organizations should focus primarily on quality, which is defined by the equation ‘Quality =
Results of work efforts/total costs’. When this occurs, quality improves, and costs plummet,
over time.
2. When organizations' focus is primarily on costs, the costs will rise, but over time the quality
drops.
Also known as the Shewhart Cycle, the Deming Cycle, often called the PDCA , was a result of the
need to link the manufacture of products with the needs of the consumer along with focusing
departmental resources in a collegial effort to meet those needs.
1. Plan: Design a consumer research methodology which will inform business process
components.
2. Do: Implement the plan to measure its performance.
3. Check: Check the measurements and report the findings to the decision makers
4. Act/Adjust: Draw a conclusion on the changes that need to be made and implement them.
Deming’s other chief contribution came in the form of his 14 Points for Management, which
consists of a set of guidelines for managers looking to transform business effectiveness.
1) Create constancy of purpose for improvement of product and service - Inspire the workers to stay
competitive in the market and remind about the importance of stability in jobs and new opportunities which
may come up in later stages, as inducing a sense of purpose in producing quality products will work as the
inspiration to work efficiently.
2) Adopt the new philosophy - The customer demands and taste change very fast and the competition in the
market grow at a rapid rate today, and we have to accept new philosophies according to the market trends
and technology revolutions.
3) Cease dependence on mass inspection - Instead of inspecting the product for quality after production,
infuse quality at the beginning itself with production quality control, as this will ensure no raw materials are
wasted for the sake of quality.
4) End the practice of awarding business on price tag alone - Instead, minimize total cost - move towards
a single supplier for any item, on trust.
5) Constantly and forever improve the system of production and service - Enterprise systems and
services must keep growing indefinitely in order to catch up with the competitive market.
6) Institute modern methods of training on the job - A trained worker has more productivity and quality
than an untrained one, so giving training sessions will drastically improve the quality of the person and
directly it helps in better product quality performance.
7) Institute modern methods of supervision - A company can display stunning growth if potential leaders
are identified and encouraged.
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8) Drive out fear - Creating a fearful impression in the employees does not give more quality and
productivity to work. If a person is not working willingly with satisfaction then he can never do a work
perfectly even if he has the intention to be perfect in conscious mind, so driving out fear is essential.
9) Break down barriers between staff areas - The workers in design, sales, and production must work
together to face problems and resolve them, which takes the company to better quality assurance
management and also other profit with better planning.
10) Eliminate numerical goals for the work force - Slogans or exhortations call for more quantity in
production than focusing on quality control in manufacturing, which will severely damage the quality
management process. Employees should have a calm and quiet quality atmosphere in the company.
11) Eliminate work standards and numerical quotas - This focuses on quantity rather than quality of
product.
12) Remove barriers that hinder the hourly worker - Supervisor responsibility must be focused on
quality, not numbers. Abolish annual or merit rating and MBO completely.
13) Institute a vigorous program of education and training - A person must grow after joining a
company, and letting them learn new technology and techniques will increase employee longevity.
14) Create a situation in top management that will push every day on the above points - Just like
products and services, every employee in a company must work to accomplish the transformation.
Philip Crosby
Born in 1926, Philip Crosby was an author and businessman who contributed to management theory
and quality management practices. He started his career in quality much later than Deming and
Juran. He founded Philip Crosby and Associates, which was an international consulting firm on
quality improvement.
He wrote the best-seller Quality is free in 1979, at a time when the quality movement was a rising,
innovative force in business and manufacturing. In the 1980s his consultancy company was advising
40% of the Fortune 500 companies on quality management.
Zero Defects
Crosby's Zero Defects is a performance method and standard that states that people should commit
themselves to closely monitoring details and avoid errors. By doing this, they move closer to the
zero defects goal. According to Crosby, zero defects was not just a manufacturing principle, but was
an all-pervading philosophy that ought to influence every decision that we make.
His approach to quality was laid out in Quality is free and is often summarized as the 14 steps:
1. Management commitment
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First and foremost, management must be committed to improving the quality in a company. This
commitment must also be transparent to all employees so that proper attitudes towards a Zero
Defect product or service line are modeled.
Representatives from each department or function should be brought together to form a quality
improvement team. These should be people who have sufficient authority to commit the area
they represent to action.
3. Quality measurement
The status of quality should be determined throughout the company. This means establishing quality
measures for each area of activity that are recorded to show where improvement is possible,
and where corrective action is necessary.
The cost of quality is not an absolute performance measurement, but an indication of where the
action necessary to correct a defect will result in greater profitability.
5. Quality awareness
This involves, through training and the provision of visible evidence of the concern for quality
improvement, making employees aware of the cost to the company of defects. Crosby
stresses that this sharing process is a - or even the - key step in his view of quality.
6. Corrective action
Discussion about problems will bring solutions to light and also raise other elements for
improvement. People need to see that problems are being resolved on a regular basis.
Corrective action should then become a habit.
Zero Defects is not a motivation programme - its purpose is to communicate and impart the notion
that everyone should do things right first time. You need to create a committee to ensure that there
are zero defects in your products and services.
8. Supervisor training
All managers should undergo formal training on the 14 steps before they are implemented. A
manager should understand each of the 14 steps well enough to be able to explain them to his
or her people.
It is important that the commitment to Zero Defects as the performance standard of the company
makes an impact, and that everyone gets the same message in the same way. Zero Defects Day,
when supervisors explain the programme to their people, should make a lasting impression as a 'new
attitude' day.
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Each supervisor gets his or her people to establish specific, measurable goals to strive for. Usually,
these comprise 30, 60, and 90-day goals. By bringing everyone in the company in on setting goals
for improvement, you can ensure greater commitment to achieving zero defects.
Employees are asked to describe, on a simple, one-page form, any problems that prevent them from
carrying out error-free work. Problems should be acknowledged within twenty-four hours by
the function or unit to which the problem is addressed.
It is important to recognize those who meet their goals or perform outstanding acts with a prize or
award, although this should not be in financial form. The act of recognition is what is
important.
The quality professionals and team-leaders should meet regularly to discuss improvements and
upgrades to the quality programme.
During the course of a typical programme, lasting from 12 to18 months, turnover and change will
dissipate much of the educational process. It is important to set up a new team of representatives
and begin the programme over again, starting with Zero Defects day. This 'starting over again' helps
quality to become ingrained in the organization .
Dr Joseph M Juran
Dr Joseph M Juran developed the quality trilogy – quality planning, quality control and quality
improvement. Good quality management requires quality actions to be planned out, improved and
controlled. The process achieves control at one level of quality performance, then plans are made to
improve the performance on a project by project basis, using tools and techniques such as Pareto
analysis.
Quality Trilogy:
Juran believed quality is associated with customer satisfaction and dissatisfaction with the product,
and emphasised the necessity for ongoing quality improvement through a succession of small
improvement
projects carried out throughout the organisation. His ten steps to quality improvement are:
• Build awareness of the need and opportunity for improvement
• Set goals for improvement
• Organise to reach the goals
• Provide training
• Carry out projects to solve problems
• Report progress
• Give recognition
• Communicate results
• Keep score of improvements achieved
• Maintain momentum
He concentrated not just on the end customer, but on other external and internal customers. Each
person along the chain, from product designer to final user, is a supplier and a customer. In addition,
the person will be a process, carrying out some transformation or activity.
portions of space for variety of food items. Also, when they receive a gift they unwrap it neatly so that the
wrapper can be reused. It’s an expression of gratitude to the giver. All the factories have “zero defect” as a
goal to be achieved. They are such perfectionists that they don’t work by the clock. Completion of work is
far more important to them than going home at the allotted time
REASON 4 – Curiosity and emphasis on Innovation:
Japanese look at the minutest of details. Nothing is too small for them. They have an information thirst
syndrome. For the Japanese new is better than old. That is the reason why they rebuild their symbol of
nation, “Ise Shrine” every 20 years. Almost all the companies have “new business development” divisions.
Kaizen, also known as continuous improvement, originated in Japan and is today followed the world
over. For instance, production engineers adopt numerical control devices, flexible manufacturing methods,
etc. to achieve cost reduction, quality improvement and increased productivity. Curiosity may have killed
the cat but not the Japanese. The Japanese have a never ending interest in how their counterparts in foreign
countries do their work, what is their experience and outcomes. They flock to trade fares to scour for new
knowledge. They love to create and recreate things, which are convenient to them. It’s not the same as
innovation. While innovation is dramatic and perhaps a one time phenomenon, Kaizen is subtle and
continuous.
REASON 5 – Respect for form and hana yori dango :
Japanese observe rituals and customs almost to a fault. These range from first time meetings to the
presentation of souvenirs, from employee induction to retirement parties. The businessperson will first bow
instead of shaking hands. Schools stipulate uniform clothing and hair length. Offices demand everyone, the
CEO to the janitor to wear the same work clothes.
REASON 6 – A mind for competition and outlook on rewards:
From barbers to chefs workmen pit their skills against their peers. They tend to be more competitive when in
groups than as individuals. They hold diverse opinions on money and profit. On one hand, they place a high
value not on money, but on other things like honor, trust etc. On the other, they look for rewards. Victory in
competition is still a virtue worthy of great respect. They welcome competition. The belief is that this will
bring out the best in them
REASON 7 – Silence as eloquence:
Japanese generally speak less often. Americans associate silence in a negative context: anxiety, hostility or
awkwardness but in Japan it means respect for the person who has spoken. They place importance on
writing as well. They don’t prepare too much of note; they prefer less notes to elaborate ones. For them
silence is golden.
REASON 8 – Perception of time:
Meetings, private or business, start on schedule. Products are delivered on time, every time. The so-called
“Keiretsu” is an example of companies seeking direct or indirect benefits as a result of business relations of
a long-term nature. Also for them, what is happening at that moment is more important than what may
happen in future. They constantly strive to reduce the production cycle. They are quick on product
development.
Third-party certification bodies provide independent confirmation that organizations meet the requirements
of ISO 9001.
Objectives of ISO 9000 Standards
1. Achieve, maintain, and improve product quality
2. Improve quality of operations to continually meet customers’ and stakeholders’ needs
3. Provide confidence to management, employees, customers, and stakeholders that quality
requirements are fulfilled
4.
Thus, “ISO 9001 certified” means an organization has met the requirements in ISO9001.
Time to complete
The typical certification process may last from six to twelve months.
The ISO 14000 series is based on a voluntary approach to environmental regulation. The series includes the
ISO 14001 standard, which provides guidelines for the establishment or improvement of an EMS. The
success of the system depends on commitment from all levels and functions of the organization, and
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especially from top management. A system of this kind enables an organization to develop an environmental
policy, establish objectives and processes to achieve the policy commitments, take action as needed to
improve its performance and demonstrate the conformity of the system to the requirements of this
International Standard
HACCP
Hazard Analysis and Critical Control Point (HACCP) is an internationally recognized system for reducing
the risk of safety hazards in food. A HACCP System requires that potential hazards are identified and
controlled at specific points in the process. This includes biological, chemical or physical hazards. Any
company involved in the manufacturing, processing or handling of food products can use HACCP to
minimize or eliminate food safety hazards in their product.
Building a HACCP System
Implementing a HACCP System requires that both Prerequisite Programs and HACCP Plans are
implemented.
Prerequisite programs are programs that are put in place in the facility to control hazards in the
environment, preventing contamination of the product. Prerequisite programs ensure a hygienic
environment, and good manufacturing processes for personnel that reduce the risk of contamination of the
food product.
HACCP Plans are prepared for each process or product, and identify possible hazards and controls in place
to make sure the hazards are eliminated or controlled to ensure acceptable levels in the food product.
2. Identify the Critical Control Points - At what steps in your process can controls be applied to prevent or
eliminate the hazards that have been identified? These are your critical control points.
For each critical control point you will identify the preventive measure. How will you prevent the hazard?
Ex: Use of specific Temperature, pH, time, procedures etc…
3. Establish Critical Limits – The next step is to establish criteria for each critical control point. Establish
the limits for temperature, time, pH, salt level, chlorine level or other processing characteristic that will
control the hazard. This is the critical limit for the critical control point.
4. Establish Monitoring Procedures- What will you measure and how will you measure it? You need to
monitor the process at the critical control point and keep records to show that the critical limits have been
met.
The monitoring program will be made up of physical measurement
5. Establish Corrective Actions - Establish what actions needs to be taken if a critical limit is not met. This
will be identified ahead of time for each CCP. The action must make sure that no unsafe product is released.
There must also be an evaluation of the process to determine the cause of the problem and an elimination of
the cause.
6. Establish Record Keeping Procedures – Determine what records are needed to show that the critical
limits have been met, and the system is in control. Address regulatory requirements and include records from
the development of the system and the operation of the system.
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7. Establish Verification Procedures - The HACCP plan must be validated. Once the plan is in place, make
sure it is effective in preventing the hazards identified. Test the end product, verify that the controls are
working as planned.
QUALITY STATEMENTS
Quality statements are part of strategic planning process and once developed, are occasionally reviewed and updated.
There are three types of quality statements:
1. Vision statement
2. Mission statement
3. Quality policy statement
Once developed, they are only occasionally reviewed and updated.
They are the part of the strategic planning process.
The utilization of the three statements varies considerably from organization to organization.
1. Vision Statement:
The vision is a short declaration of what an organization aspires to be tomorrow.
It is the ideal state that might never be reached but which we continually strive to achieve.
Successful visions are timeless, inspirational and become deeply shared within the organization.
Successful vision provides a guide line for decision making.
It is important that the leader articulate and act upon the vision and those employees understand the
vision and can connect their work with the well-being of the organization
An example of Vision statement is:
Apple’s – Computing for the masses
Disney – theme park’s the happiest place on the earth, and
Marriott’s – To become the premiere provider and facilitator of leisure & vacation experiences in the world.
Walt Disney Company – Mission is to be one of the world's leading producers and providers of entertainment and
information.
Variations
Nominal group technique – Open to all and rejection through votes
The nominal group technique is a type of brainstorming that encourages all participants to have an
equal say in the process. It is also used to generate list of ideas.
Participants are asked to write their ideas anonymously. Then the moderator collects the ideas and
the group votes on each idea.
After distillation, the top ranked ideas may be sent back to the group or to subgroups for further
brainstorming. For example, one group may work on the color required in a product. Another group
may work on the size, and so forth. may take a few practice sessions to train the team in the method
before tackling the important ideas.
This method of brainstorming works by the method of association. It may improve collaboration and
increase the quantity of ideas, and is designed so that all attendees participate and no ideas are
rejected.
The process begins with a well-defined topic. Each participant brainstorms individually, then all the
ideas are merged onto one large idea map. During this consolidation phase, participants may discover
a common understanding of the issues as they share the meanings behind their ideas. During this
sharing, new ideas may arise by the association, and they are added to the map as well. Once all the
ideas are captured, the group can prioritize and/or take action.
Pareto Analysis
What is a Pareto Chart?
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The Pareto Chart is named after Vilfredo Pareto, a 19 century economist who postulated that a
large share of wealth is owned by a small percentage of the population. This basic principle
translates well into quality problems.
A Pareto Chart is a series of bars whose heights reflect the frequency or impact of problems. The
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bars are arranged in descending order of height from left to right. This means the categories
represented by the tall bars on the left are relatively more significant than those on the right.
• A Pareto Chart can answer the following questions:
o What are the largest issues facing our team or business?
o What 20% of sources are causing 80% of the problems?
o Where should we focus our efforts to achieve the greatest improvements?
1. Surroundings
2. Suppliers
3. Systems
4. Standard documentation skills
5. Scope of work
Csíkszentmihályi outlines his theory that people are happiest when they are in a state of flow—a state of
concentration or complete absorption with the activity at hand and the situation. It is a state in which people
are so involved in an activity that nothing else seems to matter. The idea of flow is identical to the feeling of
being in the zone or in the groove (channel
Csíkszentmihályi describes flow as "being completely involved in an activity for its own sake. The ego falls
away. Time flies. Every action, movement, and thought follows inevitably from the previous one, like
playing music, dancing, playing football etc. Your whole being is involved, and you're using your skills to
the utmost."
Definition - Flow is the mental state of operation in which a person performing an activity is fully immersed
in a feeling of energized focus, full involvement, and enjoyment in the process of the activity. In essence,
flow is characterized by complete absorption in what one does.
KAIZEN
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kaizen, is the Japanese word for "improvement". In business, kaizen refers to activities that continuously
improve all functions and involve all employees from the CEO to the assembly line workers. It also applies
to processes, such as purchasing and logistics, that cross organizational boundaries into the supply chain. It
has been applied in healthcare, psychotherapy, life-coaching, government, banking, and other industries..
The key features of Kaizen include:
Improvements are based on many, small changes rather than the radical changes that might arise
from Research and Development
As the ideas come from the workers themselves, they are less likely to be radically different, and
therefore easier to implement
Small improvements are less likely to require major capital investment than major process changes
The ideas come from the talents of the existing workforce, as opposed to using R&D, consultants or
equipment – any of which could be very expensive
All employees should continually be seeking ways to improve their own performance
5S Methodology
5S represents Japanese words that describe the steps of a workplace organization process.
Seiri (Sort)
Seiton (Straighten, Set)
Seiso (Shine, Sweep)
Seiketsu (Standardize)
Shitsuke (Sustain)
2. Each of the 5Ws & 1H above relate to the following questions to ask relating to the
problems being investigated
Customer Satisfaction?
Customer satisfaction is the state of mind that customers have about a company when their expectations
have been met or exceeded over the lifetime of the product or service. The achievement of customer
satisfaction leads to company loyalty and product repurchase.
The following sections outline a sound and simple approach for measuring and managing customer
satisfaction:
1. Know who your customers are;
2. Understand your customers’ needs;
3. Measure your customer service performance;
4. Focus on priorities;
5. Improve your processes.
Purpose
to set a context in which you can produce reliable and useful measures of service performance
Process
1. identify all your current customers
2. gather all the relevant information you have to describe the relationship of each customer to your business
3. use this information to define market segments that group similar customers together
Outcomes
• a clear segmentation of your customer base
• a ‘customer frame’ or list of customers from which to select a representative sample (or census) for
research
Understand your customers’ needs:
Purpose
to determine how customers define ‘quality of service’ and therefore what you should be measuring to
monitor your quality of service
Process
1. enlist the help of qualified researchers (to ensure reliability and validity of the information obtained)
2. choose an appropriate method for exploring what customers feel are the most important attributes of
the type of service you provide to them
3. select a small number of customers from each market segment and invite them to participate in this
research
Outcomes
• a list of approximately 10 key service attributes (which together constitute how customers define quality of
service)
Purpose
to determine what are the priority areas you need to focus on to improve your quality of service (and
therefore business performance)
Process
1. enlist the help of qualified researchers (to ensure reliability and validity of the measures)
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2. choose an appropriate method for obtaining measures from your customers (eg telephone interviews, face
to face interviews, self-completion questionnaires, etc...)
3. decide on any supplementary information that you might need from customers to interpret their
satisfaction (eg industry, geographical location, size)
Outcomes
Focus on priorities
Purpose
to avoid wasting valuable resources and instead focus those resources on improvements and changes that
will generate the greatest improvement in overall customer satisfaction
Process
Outcomes
Purpose
to translate the customer satisfaction priorities into action that results in future increases in customer
satisfaction
Process
1. identify which of your core processes impact on the customer satisfaction priorities
2. establish improvement teams to map and analyze those processes to find out specifically where to make
improvements
Outcomes
• Survey Customers
• Understand Expectation
• Pinpoint Specifics
Waste Management
Much of the waste created in hotels is generated from within the kitchen (organic food waste, packaging,
aluminum cans, glass bottles, corks and cooking oils), or from the housekeeping department (cleaning
materials and plastic packaging). Waste is not only created in guest rooms but also in public areas, hotel
gardens (engine oils, pesticides, paints and preservatives to grass and hedge trimmings) and offices (toner
cartridges, paper and cardboard waste). And refurbishment and renovation projects undertaken at the hotel
contribute further to the waste generated by the property.
Hotel waste comprises of two components, Biodegradable (Wet) waste and Non-biodegradable (Dry) waste.
The wet waste comprises of food, vegetable and non-veg waste whereas the dry waste comprises of plastic
bottles, papers, plastic wrappers, bags etc.
Cost of Quality
Quality costs are defined are those costs associated with the non-achievement of product or service quality
as defined by the requirements established by the organization and its contracts with customers and society.
Simply stated, quality cost is the cost of poor products or services.
Cost of Quality = Cost of Prevention + Cost of Appraisal +Cost of Failure
External appraisal costs are incurred for field set up or installation and check out for the acceptance of
customers.
Review of Test & Inspection:
Costs are incurred for regular reviewing inspection and test data, prior to release of the product for shipment.
Miscellaneous Quality Evaluations:
Costs involved in quality audits to assure continued ability to provide acceptable support to the production
process.
III. Internal Failure Cost Category
• 1. Product or Service Design Failure Costs (Internal):
• Design failure costs are the unplanned costs that are incurred because of inherent design
inadequacies.
• 2. Purchasing Failure Costs:
IV. External Failure Cost Category
Complaint Investigations of Customer or User Service:
It includes the total cost of investigating, resolving and responding to individual customer and user
complaints.
Returned Goods:
Costs incurred in evaluating, repairing and replacing goods.
Retrofit and Recall costs
Retrofit and recall costs are those costs required to modify or update products or field service facilities to a
new design change level, based on major redesign due to design deficiencies.
Warranty Claims
Warranty costs include the total costs of claims paid to the customer or user after acceptance to cover
expenses, including repair costs, chemical service accident.
Reengineering Definition
“Reengineering is the fundamental rethinking and radical redesign of business processes to achieve
dramatic improvements in critical, contemporary measures of performance such as cost, quality, service,
and speed.”
Where:
1. Radical– thorough
2. Dramatic – when need arises
BPR derives its existence from different disciplines, and four major areas can be identified as being
subjected to change in BPR – organization, technology, strategy, and people – where a process view is
used as common framework for considering these dimensions.
Overview
• Business process re-engineering (BPR) originally pioneered in the early 1990s
• BPR began as a private sector technique to help organizations fundamentally rethink how they do
their work in order to dramatically improve customer service, cut operational costs, and become
world-class competitors.
• In the mid-1990s, as many as 60% of the Fortune 500 companies claimed to either have initiated
reengineering efforts, or to have plans to do so.
• A key stimulus for re-engineering has been the continuing development and deployment of
sophisticated information systems and networks. Leading organizations are becoming bolder in
using this technology to support innovative business processes, rather than refining current ways of
doing work.
• BPR seeks to help companies radically restructure their organizations by focusing on the ground-up
design of their business processes.
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• According to Davenport (1990) a business process is a set of logically related tasks performed to
achieve a defined business outcome.
• Re-engineering emphasized a holistic focus on business objectives and how processes related to
them, encouraging full-scale recreation of processes rather than repeating optimization of sub-
processes.
• Reengineering starts with a high-level assessment of the organization's mission, strategic goals, and
customer needs.
• Basic questions are asked, such as "Does our mission need to be redefined? Are our strategic
goals aligned with our mission? Who are our customers?"
• An organization may find that it is operating on questionable assumptions, particularly in terms of
the wants and needs of its customers. Only after the organization rethinks what it should be doing,
does it go on to decide how best to do it