Productivity and Quality

Management
 Chapter 1
Productivity Concepts and
Management
 BASICS

Resources employed for achieving

productivity are 5 M’s
Materials
Machines
Men
Methods
Money
Productivity

Defined as a ratio between output and

input.

Input factors are men, materials, tools,

knowledge level, machinery and methods,
processes, systems, management , other
resources.
Productivity Improvement

Increase Decrease No change

1) Output - Input

2) - Input Output

3) Output Input -
Productivity Improvement

Input Output
60 minutes 5 chairs
30minutes 5 chairs
60 minutes 6 chairs
30 minutes 6 chairs
 Improvement in Employee Productivity

Personnel selection.
Time control
Organization structuring
Human resource development
Motivation
Employee Motivation
Maslow’s Need Hierarchy Theory

Self
actualization

Self esteem

Social needs

Security needs

Physiological needs
Types of productivity

Partial Productivity :
Output quantity / One class of input

Total Productivity :
Output quantity / input quantity
Calculation of Productivity

PPM : Partial Productivity Measure

It is the ratio of real gross output to one

type of real input.

PPM = Gross Real Output

Total hrs worked
Calculation of Productivity

TPM : Total Productivity Measure

It is the ratio of Real Gross Output to all
the real inputs

TPM = Real Gross Output

Real Gross Input
Calculation of Productivity
 TFP : Total Factor Productivity
It is the ratio of the Net Output to the sum of
Labour and capital inputs

TFP = Net Output

Labour + Capital

Net output = Gross output – materials –

intermediate goods and services used in the
production of raw materials
Chapter 2
Quality Fundamentals
Quality means quality of the delivered
product, work content, quality of service ,
quality of systems, quality of processes,
quality of people, in short the quality of the
entire organization

Quality can be defined as a ratio of

performance (P) and expectation (E)
of the customer.
Statistical Quality Control – SQC
 Use of statistical methods such as
control charts and sampling
inspection****.
 Problems with SQC
1. Difficult to follow by experienced workers
2. Standards were to be set which was a
difficulty due to innumerable factors.
3. Was over emphasized .
4. Top management was hardly involved
Small ‘q’ and Big ‘Q’

Small ‘q’ focuses primarily on the product

quality .
Big ‘Q’ focuses on several issues of
process quality , product, systems,
delivery, documentation and every single
aspect of commitment to the customer.
Quality Loop

For the big ‘Q’ to happen, an organization

identifies customer needs and preferences
and then design , develop, manufacture
and sell the products fulfilling customer
requirements.
 Quality Loop

Inspection

prodn mrktg

Purchasing service Customers

Vendors

Mfg Mrkt
engineering studies
Prod
devlpmt
Quality circles - Ishikawa

QC is a small group of employees, mostly

at worker level formed to perform quality
control and improvement activities within
their workplace.

Conviction that workers at the shop floor

level can significantly contribute to
management levels to improve
productivity.
Quality circles - Ishikawa

 Helps in developing
1. Mutual trust among workers
2. Improve the operations
3. Employee involvement and motivation
4. Infinite possibilities
Steps performed by QC
 Decide on theme
 Establish the goals
 Clarify reasons
 Assess the current
situation
 Probe causes and
analyze them
Steps performed by QC
 Find corrective
measures
 Implement the
measures
 Evaluate results
 Make changes if
required
 Plans for the future
Quality Control

 Includes
1. Drawing Quality Plans.
2. Test Procedures.
3. Test Schedules.
4. Inspection of materials.
5. Non conformities.
6. Customer complaints
Quality Assurance
 Assuring the quality in the product and service
so that the customer can buy it with
confidence.
 Quality Assurance can be done through the
following :
1. Development of quality plans.
2. Vendor quality surveys.
3. Product quality audits.
4. Review disposition of Non conforming
products.
5. Initiation of customers future needs.
Chapter 3
Quality Management Philosophies
Definition : Quality is meeting product
specifications.
Quality is performance as per customer
expectations
Quality is doing the right thing right first
time.
TQM : Armand V Feigenbaum
 Originator of Total Quality Management
 Talks about 9 M’s of quality
1. Money
2. Men
3. Methods
4. Machines
5. Materials
6. Markets
7. Management
8. Motivation
9. Meeting product requirements
Deming’s 14 points for management
quality transformation
Create constancy of purpose for
improvement in product and service.
Adopt new philosophies
Cease dependence on inspection to
achieve quality.
End practice of awarding the business
purely on price tag
Improve constantly and for every process
Deming’s 14 points for management
quality transformation
Institute training on the job.
Adopt and institutionalize leadership.
Drive out fear
Breakdown barriers between staff areas.
Eliminate slogans, exhortations and
targets for the workforce.
Deming’s 14 points for management
quality transformation

 Eliminate numerical quotas for the workforce

and numerical goals for the mgmt.
 Remove barriers that rob people of pride and
workmanships ( annual rating or merit system)
 Institute programme of education and self-
improvement for everyone.
 Put everyone in the company to work to
accomplish the transformation.
Deming’s 7 Deadly Diseases
1. Lack of constancy of purpose
2. Emphasis on short term profits
3. Over emphasis on performance
appraisal and merit rating
4. Excessive staff mobility
5. Overdependence on figures
6. Excessive medical costs
7. Excessive legal costs
PCDA Cycle

Plan Check

Act Do
Crosby’s Absolutes of quality
management
Quality is defined as conformance to
requirements.
The system for causing quality is
prevention.
The performance standard is zero defects.
The measurement of quality is price of non
conformance.
Crosby’s 14 steps for organizational
improvement.
1. Management commitment
2. Quality improvement teams
3. Measurement
4. Cost of quality
5. Awareness
6. Corrective action
7. Zero defect planning
Crosby’s 14 steps for organizational
improvement.
8. Employee education
9. Zero defects day
10. Goal setting
11. Error cause removal
12. Recognition
13. Quality councils
14. Do it all again
Crosby’s 6C’s
Comprehension : ability to understand
quality related activities.
Commitment : by one and all
Competence : of employees
Corrections : rectification abilities.
Communication : without ambiguity,
honesty and with no confusion.
Continuance: of good performance and
further improvement.
Juran’s philosophy
 Embracing quality planning, quality
control and quality improvement.

 It covers
1. QC is analogous to financial control.
2. Quality planning is analogous to financial
planning and budgeting
3. Quality improvement is analogous to cost
reduction.
Juran’s ‘Project by Project approach’

 Path breaking ideas were :

1. Survival and growth are dependent on
“breakthrough” to new levels of
performance.
2. Breakthrough is defined as an organized
creation of a beneficial change.
3. Customer needs are translated into
process and product features.
Juran’s ‘Project by Project approach’

Cost of poor quality needs constant

attention.
Chronic waste must be identified and
eliminated.
Over 80% of quality related problems
emanate from managers, and not workers.
 Chapter 4
Quality and costs
Cost of Poor Quality

Doing things wrong or doing them again

and again can cost around 20% or more
than the sales turnover.
Price of conformance –cost to make things
come out right .3- 4 % of the sales
Price of non conformance – cost to correct
wrong things done,20% or more of the
sales.
Group of COPQ
Price of non conformance
Expenses involved when things are done
wrong.
To correct the procedures
To correct the product or the services
20% or more of the sales in mfg
companies.
35% or more of the operating costs in
service companies
Groups of COPQ
Price of Conformance
Money spend to make things come out
right.
Professional quality functions
Prevention efforts
3 to 4%
Price of conformance

1. Prevention costs – to prevent the defects

. Egs: Market research, audits, quality
training, quality planning and control etc
2. Appraisal costs – the costs incurred in
detection of defects . Egs : testing,
inspections and measurements,
incoming raw material testing, quality
audits.
Price of non conformance
 Internal failures
1. Scrap, excluding planned waste
2. Rework and repair
3. Retesting
4. Breakdown maintenance
 External failures
1. Rejected and returned products
2. Loss of customers goodwill
3. Transit damages
Cause wise distribution of COPQ

Cause %of total COPQ

Design faults 36
Bad specifications 16
Poor planning 14
Human error 12
Bad inspection 10
Others 12
Distribution of poor quality costs
Prevention: 5% of total quality costs
Appraisal: 30%
Failure: 65%
Components of COPQ
Visible poor quality costs
Hidden poor quality costs

•Scrap

Visible •Rework
•Warranty costs
•Excessive use of material
•High inventory
•Low plant utilization
•Cost of redesign and reinspection
hidden •Cost of resolving customer problems
•Interest charged due to delayed payments
•Opportunity cost due to lost customers
Cost of Poor Quality (APIE)

COPQ

Price of Price of
conformance non conformance

Appraisal costs Internal failures

Preventive costs External failures
Effect of quality system on the costs
 Chapter 5
FOCUS ON THE
WORKFORCE
Productivity Incentives
 Wage structure

 Compensation
system

 Incentive pay
(individual, group,
plant wise)
Job Analysis

Systematic exploration of the activities

within a job.

Description of what practically happens in

the job and identifying the appropriate
tasks, knowledge, skills necessary for
performing the job and the conditions
under which the job is performed.
Focus on the workforce includes
Human Resource Planning
Recruiting
Employee training and development
Career development
Performance appraisal
Compensation
employee relations
Safety and health
Job Rotation

Moving employees to various positions in

the organisation.
Aim is to explore their abilities, skills and
knowledge.
Can be vertical or horizontal.
Work study / Time and Motion Study

Techniques used in examination of human

work in all its contexts, which helps in
assessing all factors affecting the
efficiency in order to effect improvement.
Used to increase the amt produced from a
given quantity of resources without further
investment.
Types of Work Study

Method study – examination of existing

and proposed ways of doing work as a
means of developing easier and better
methods and reducing costs.

Work measurement – techniques used to

establish the time required by a qualified
worker to carry out a specific job.
 Work
Method
measurem Work study
study
ent
Work Study Steps
 Select the job to be studied
 Record from direct observation
 Examine the facts recorded
 Develop the most economic method
 Measure the quantity of work in method selected
 Calculate the std time
 Define the new method and time
 Install the new method
 Develop proper control procedures
 Maintain the new std practices
Lateral Thinking

Breaking the rules

Risk taking
Attitude adjustments
Checking assumptions
Imagination
Intuition
Creative beliefs
Blocks in lateral thinking

 Negative attitude
 Following the rules
 Making assumptions
 Stress
 Fear
 No creativity
 Over reliance on logic
 Chapter 6
Customer Supplier Relationship
Customer Focus

Customer buys utility and productivity

components of a product.
It is an important aspect in quality
management.
Customer feedback for improvements.
Questions that organisations may ask their
customers for effective feedback.
Customer Service

Internal and external

Study of the end customer requirements
Solving queries and providing service as
per their needs
Efficient and effective customer service.
10 Beliefs to Ensure Customer Service
1. Treat customers like life time partners.
2. Give them what they want again and again
3. Create system to guarantee consistence
service.
4. Keep your word to customers
5. Always be helpful to them
6. Respect and be polite
7. Measure reactions
8. Give them an opportunity to express what they
feel wrong about you.
9. Train staff to handle complaints
10. Consider them as partners for continuous
improvement.
Customer Loyalty

Long lasting and mutually beneficial

customer interaction.
Making product or service available at all
points.
Improvements as per the customer
expectations or demands
Timely feed back
SCM –Supply Chain Management
 It helps organisations in ensuring product and
services of right quality and quantity , delivered
at right place in time, covering every process
step, leading to enhanced customer satisfaction
at lowest cost.

 Network of organisations involved from the

process of buying raw materials till the product is
sold to the consumers. ie from the first point of
input to the last point of output.
SCM –Supply Chain Management
 Activities involved like movement of materials,
storage, work in process, inventory and finished
goods etc
 Planning and management activities involved in
sourcing, procurement , storage, conversion and
logistics management
 Collaboration with business partners , including
suppliers, manufacturing and service
departments and customers.
Materials Management

Deals with purchasing , inventory and

stores related activities.
Planning coordination and control during
these activities is also a part
Acquisition, control and use of materials
needed and flow of goods and services,
connected with production process.
Materials Management

Objectives of material management

primary secondary
• Ensuring quality and quantity •Alternate sourcing
of materials ,cost reduction and
coordination
Functions of Material management

Material Budgeting, planning

programming.
Scheduling , purchasing and procurement.
Receiving material and inspection
Inventory control, storage and
warehousing.
Material handling
Dispatch , shipping and disposal
TQM Principles and Practices
 Feigenbaum defined TQM as ‘ an effective
system for integrating the quality development ,
quality improvement efforts of various groups in
an organisation so as to enable production and
service at the most economical levels, which
allows customer satisfaction’.
TQM Principles and Practices
Evolution of TQM
 Inspection
1. Post production exercise
2. Rework , correction and upgradation
3. Grading
 Quality control
1. Statistical process control
2. Control in product quality
3. Standards evolution
Evolution of TQM
Quality assurance
1.Process approach
2.SQC
3.Standards compliance
Total quality management
1.Customer focus
2.Company wide management
3.Total employee involvement
4.Continuous improvement