Quality Management

Topic 2a
Operations Management

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 The Quality Gurus
• Quality Gurus
– Individuals who have been identified as
making a significant contribution to improving
the quality of goods and services.

Walter A. Shewhart Philip Crosby

W. Edwards Deming Genichi Taguchi
Joseph M. Juran Kaoru Ishikawa
Armand Feigenbaum

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Three of the Quality Gurus Compared

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Source: Modified from John S. Oakland, Total Quality Management (London: Heinemann Professional Publishing Ltd., 1989), pp. 291–92.
 Three of the Quality Gurus Compared cont.

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Source: Modified from John S. Oakland, Total Quality Management (London: Heinemann Professional Publishing Ltd., 1989), pp. 291–92.
Three of the Quality Gurus Compared (cont)

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Source: Modified from John S. Oakland, Total Quality Management (London: Heinemann Professional Publishing Ltd., 1989), pp. 291–92.
The Quality Gurus (cont.)
• Walter A. Shewhart
–Statistician at Bell Laboratories
• Developed statistical control process methods
to distinguish between random and nonrandom
variation in industrial processes to keep
processes under control.
• Developed the “plan-do-check-act” (PDCA) cycle
that emphasizes the need for continuous
improvement.
• Strongly influenced Deming and Juran.

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 Shewhart’s Plan-Do-Check-
Act (PDCA) Cycle

Source: “The PDCA Cycle” from Deming Management at Work by Mary Walton, copyright © 1990
by Mary Walton. Used by permission of G. P. Putnam’s Sons, a division of Penguin Putnam, Inc. 7
Exhibit 9.2
 Key Idea
The Shewhart cycle focuses on
both short-term continuous
improvement and long-term
organizational learning.

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 Plan (1 of 2)
1. Define the process: its start, end, and what it does.
2. Describe the process: list the key tasks performed
and sequence of steps, people involved, equipment
used, environmental conditions, work methods, and
materials used.
3. Describe the players: external and internal customers
and suppliers, and process operators.
4. Define customer expectations: what the customer
wants, when, and where, for both external and
internal customers.
5. Determine what historical data are available on
process performance, or what data need to be
collected to better understand the process.
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 Plan (2 of 2)
1. Describe the perceived problems associated
with the process; for instance, failure to meet
customer expectations, excessive variation,
long cycle times, and so on.
2. Identify the primary causes of the problems
and their impacts on process performance.
3. Develop potential changes or solutions to the
process, and evaluate how these changes or
solutions will address the primary causes.
4. Select the most promising solution(s).

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 Do
1. Conduct a pilot study or experiment
to test the impact of the potential
solution(s).
2. Identify measures to understand
how any changes or solutions are
successful in addressing the
perceived problems.

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 Study
1. Examine the results of the pilot
study or experiment.
2. Determine whether process
performance has improved.
3. Identify further experimentation
that may be necessary.

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 Act
1. Select the best change or solution.
2. Develop an implementation plan: what
needs to be done, who should be involved,
and when the plan should be
accomplished.
3. Standardize the solution, for example, by
writing new standard operating
procedures.
4. Establish a process to monitor and
control process performance.
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The Quality Gurus (cont.)
• W. Edwards Deming
–Advocated Statistical Process Control (SPC)
• Methods which signal shifts in a process that will
likely lead to products and/or services not
meeting customer requirements.
• Emphasized an overall organizational approach to
managing quality.
• Demonstrated that quality products are less
costly than poor quality products.
• Identified 14 points critical for improving quality.
–The Deming Prize
• Highest award for industrial excellence in Japan.
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 Deming’s 14-Point Program for
Improving Quality
1. Create constancy of purpose for improvement of product and service.
2. Adopt the new philosophy.
3. Cease dependence on mass inspection.
4. End the practice of awarding business on the price tag alone.
5. Improve constantly and forever the system of production and training.
6. Institute training.
7. Institute leadership.
8. Drive out fear.
9. Break down barriers between staff areas.
10. Eliminate slogans, exhortations, and targets for the workforce.
11. Eliminate numerical quotas.
12. Remove barriers to pride in workmanship.
13. Institute a vigorous program of education and retraining.
14. Take action to accomplish the program.
Source: “14 Point System” from Deming Management at Work by Mary Walton, copyright © 1990 by Mary Walton. Used by permission of G. P. 15
Putnam’s Sons, a division of Penguin Putnam, Inc.
 The Quality Gurus (cont’d)
• Joseph M. Juran
–Emphasized the importance of producing
quality products through an approach focused
on quality planning, control, and improvement.
–Defined product quality as “fitness for use”
as viewed by the customer in:
• Quality of design • Quality of conformance
• Availability • Safety • Field use
–Categorized the cost of quality as:
• Cost of prevention
• Cost of detection/appraisal
• Cost of failure 16
Juran’s Breakthrough
Sequence
1. Proof of the need
2. Project identification
3. Organization for
breakthrough
4. Diagnostic journey
5. Remedial journey
6. Holding the gains
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 The Quality Gurus (cont.)
• Armand Feigenbaum
–Proposed the concept of “total quality
control,” making quality everyone’s
responsibility.
• Stressed interdepartmental communication.
• Emphasized careful measurement and report of
quality costs
• Philip Crosby
–Preached that “quality is free.”
–Believed that an organization can reduce
overall costs by improving the overall quality
of its processes. 18
 The Quality Gurus (cont.)

• Genichi Taguchi
–Emphasized the minimization of variation.
• Concerned with the cost of quality to society.
• Extended Juran’s concept of external failure.
• Kaoru Ishikawa
–Developed problem-solving tools such as
the cause-and-effect (fishbone) diagram.
–Called the father of quality circles.

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 Defining the Dimensions
of Quality
• Quality in Goods • Quality in
Services
1. Performance
1. Reliability
2. Features
2. Tangibles
3. Reliability
3. Responsiveness
4. Durability
4. Assurance
5. Conformance
5. Empathy
6. Serviceability
7. Aesthetics
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8. Perceived quality
Additional Views of Quality
in Services
• Technical Quality versus Functional Quality
– Technical quality—the core element of the good
or service.
– Functional quality—customer perception of how
the good functions or the service is delivered.
• Expectations and Perceptions
– Customers’ prior expectations (generalized and
specific service experiences) and their
perception of service performance affect their
satisfaction with a service.
• Satisfaction = (Perception of Performance) –
(Expectation) 21
Service Quality and Satisfaction

Service quality:
“...consumer’s judgement (across multiple
service encounters) about an the businesses’
overall excellence or superiority ... it is a
form of attitude, related but not equivalent
to satisfaction.”

Services Marketing: Australia and New Zealand, Lovelock, et al., 1998, p.151

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Determinants of Perceived Service Quality

Word-of-mouth
Determinants of Promotion
Service Quality
Personal Needs
4. Tangibles
Past Experience

6. Reliability
Service Quality

8. Responsiveness Expected
Level of Service

10. Assurance
Perceived
Service Received
12. Empathy
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Dimensions of Service Quality
• Reliability:
Perform promised service dependably
and accurately.
– Example: receive mail at same time each
day.
• Responsiveness:
Willingness to help customers promptly.
– Example: avoid keeping customers waiting
for no apparent reason.
Dimensions of Service Quality
• Assurance:
Ability to convey trust and confidence.
– Example: being polite and showing respect
for customer.
• Empathy:
Ability to be approachable.
– Example: being a good listener.
• Tangibles:
Physical facilities and facilitating goods.
– Example: cleanliness.
 Perceived Service
Quality
Word of mouth Personal needs Past experience

Service Quality Expected Service Quality Assessment

Dimensions service
1.Expectations exceeded
4. Reliability Perceived ES<PS (Quality surprise)
5. Responsiveness service 2.Expectations met
6. Assurance ES~PS (Satisfactory quality)
7. Empathy 3.Expectations not met
8. Tangibles ES>PS (Unacceptable quality)
 Gap

A difference between expected

service quality and perceived service
quality.

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Conceptual Model of Service Quality
Word-of-mouth
Personal Needs Past Experience
Communications

Expected Service
Consumer
Gap 5
Perceived Service

Service Delivery External

Marketer (including pre- and Communications
post contact) to Consumers
Gap 3 Gap 4
Translation of Per-
ceptions into Service
Gap 1 Quality Specifications
Gap 2
Management
Perceptions of
Consumer Expectations
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 Diagnosing Failure -
Gaps in Service Quality
• Service Gap (5)
• Knowledge Gap (1)
• Standards Gap (2)
• Delivery Gap (3)
• Communications Gap (4)

Each of these gaps can only be closed

through identifying the reasons for
service failure!!

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 The Cost of Quality
• Cost of Quality
–Framework for identifying quality
components that are related to producing
both high quality products and low quality
components, with the goal of minimizing
the total cost of quality.
–Costs of poor quality:
• Detection/appraisal costs
• Internal failure costs
• External failure costs
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 Typical Quality Cost Ratios

Source: A. V. Feigenbaum, Total Quality Control, 3rd ed. (New York:

McGraw-Hill, 1983), p. 112; and Joseph M. Juran and F. M. Gryna,
Quality Planning and Analysis (New York: McGraw-Hill, 1970), p. 60. Exhibit31
9.4
 Two Views of the Cost of
Improved Quality

Source: Eric W. Skopec, Strategic Visions Inc. (used by permission). Exhibit32

9.5
 The Cost of Quality
(Juran’s Model)
Cost Category
Cost of prevention Costs associated with the development of
programs to prevent defectives from
occurring in the first place
Cost of detection/ Costs associated with the test and
appraisal inspection of subassemblies and products
after they have been made.
Cost of failure Costs associated with the failure of a
defective product.
Internal failure costs—producing
defective products that are identified
before shipment.
External failure costs—producing
defective products that are delivered to
the customer. 33
Assuring Customer Satisfaction
• Service Recovery
– How quickly a firm rectifies a service mistake has
a strong effect on establishing customer loyalty
and creating customer satisfaction.
• Service Guarantees
– Provide customer feedback on service operations
– Effective guarantees
• Unconditional
• Easy to understand
• Meaningful
• Easy and painless to invoke
• Easy and quick to collect on 34