Subject Name: TOTAL QUALITY MANAGEMENT

Subject Code: BA5107

Total Credits: 3
TOTAL: 45 PERIODS

OBJECTIVE:

 To learn the quality philosophies and tools in

the managerial perspective.
UNIT I : Introduction
UNIT II : Principles and Philosophies of Quality
Management
UNIT III : Statistical Process Control
UNIT IV : Tools and Techniques for Quality
Management
UNIT V : Quality Systems Organizing and
Implementation
Quality – Vision, Mission and Policy Statements
Customer Focus
Customer perception of quality
Translating needs into requirements
Customer retention
Dimensions of product and service quality
Cost of quality.
Quality :
A popular slogan of the quality movement is “quality
begins with the customer”.
 The quality that comes out of a process is affected by
the quality of what goes in and what happens at
every step along the way.
 We must collaborate with internal and external
suppliers and communicate with internal and
external customers to determine their needs.
 Quality is meeting the Customer’s needs and
expectations.
 Quality is defined as “conformance to
Specifications. Any product or service that
meets its specifications is a quality product or
service”- By David Butler

 Quality is defined as "The totality of features

and characteristics of a product or service that
bear on its ability to satisfy stated or implied
needs”- By American National Standard.
 " Quality is Conformance to requirements"
(Crosby)

 " Quality is The efficient production of the

quality that the market expects" (Deming)

 " Quality is Fitness for use"; (Juran)

Quality can be quantified as follows:

Q = P/E

Where, Q = Quality
P = Performance
E = Expectation

If Q is greater than 1.0, then the customer

has a good feeling about the product or service
A short declaration of what an organization
aspires to be tomorrow.
An ideal state that might never be reached but
which you continually strive to achieve
Successful visions are timeless, inspirational,
and become deeply shared within the
organization.
Answers the following questions:
◦Who we are
◦Who are the customers
◦What we do
◦How we do it.

Usually one paragraph or less in length

Easy to understand
Describe the function of the organization.
A guide for everyone in the organization as to
how they should provide products and service to
the customers.
It should be written by the CEO with feedback
from the workforce and be approved by the
quality council.
 Quality is first among equals.
 Meet the needs of internal & external customers.
 Equal or exceed the competition.
 Continually improve the quality.
 Utilize the entire work force.
For example,
 “ Xerox is a quality company. Quality is the basic
business principle for Xerox. Quality means providing
our external and internal customers with innovative
products and services that fully satisfy their
requirements. Quality is the job of every employee.”
(XEROX CORPORATION)
 A customer is an individual or business that
purchases the goods or services produced by a
business.
 The people for whom a product or service is
produced; these people can be either external
or internal to a Company. A customer could be
a person, a department, a company, etc.
 There are two distinct types of customers are
external and internal customers.
 The one who uses the product or service
 The one who purchases the product or service
 The one who influence the sale of the product
or service.
 An external customer exists outside the
organization
 Generally falls into three categories: current,
prospective and lost customers.
 External customers purchase the product,
financially supporting the company
Examples:
 Your suppliers
 Your vendors
 The organizations / people you sell your
product or service
 The public in general
 Any person or organization outside your direct
organization
 Every function, whether it be engineering, order
processing, or production, has an internal customer
 Each receives a product or service and in exchange,
provides a product or service.
 Every person in a process is considered a customer of
the preceding operation.
 Internal customers are the other employees to whom
you pass on your work.
Examples:
 Your secretary or assistant
 Your co-workers
 The employees who report to you
 Your immediate supervisor
 Any person who has a need that you supply.
The orientation of an organization toward serving its
clients' needs.
Usually a strong contributor to the overall success of a
business
Involves ensuring that all aspects of the company put
its customers' satisfaction first.
Usually includes maintaining an effective customer
relations and service program
Customer satisfaction is the customers felt of mind
resulting from the perceived performance of
product in relation to the expectation(P.K. Sinha )
The buyer’s satisfaction is a function of the
closeness between the consumer’s product
expectations (E) and the product’s perceived
performance (P).(John E. Swan and Linda Jones
Combs )
S = f (E, P)
If the product matches expectations, the
consumer is satisfied;
if it exceeds them, the consumer is highly
satisfied;
if it falls short, the consumer is dissatisfied.
 Contributes to the profitability of the firm by
allowing firms to change higher prices, by reducing
advertising expenditure, by reducing the number of
product faults, and by enlarging the firm’s
reputation.
 Reduces the number of customer complaints.
 Builds customer loyalty towards the firm.
 Comparison with competitors.
 Customer oriented management
 Reduced costs.
 Ideas for new development.
 The circle represents the customer’s needs
 The square depicts the product or service
offered by the organization
 Total satisfaction is achieved when the offer
matches the needs, or the circle is
superimposed on the square.
 Core products
 Product and service features
 Value addition
 Price and perceived benefits
 Contextual factors
 Consumer emotions
 Attributions for service success or failure
 Perceptions of equity or fairness
 Complaints and suggestion systems
 Sales activity and after-sales service
 How does a company analyze customer needs?
 How can it easily determine what delights
customer?
 what their basic needs are?
 The Kano Analysis
 For some customer requirements, customer
satisfaction is proportional to the extent to
which the product or service is fully functional.
 The Kano model addresses the three types of
requirements:
 Satisfying basic needs: Allows a company to
get into the market.
 Satisfying performance needs: Allows a
company to remain in the market.
 Satisfying excitement needs: Allows a
company to excel, to be world class.
 The horizontal axis of this figure indicates how
fully functional a product/service is.
 The vertical axis indicates how satisfied the
customer is.
 The line going through the origin at 45 degrees,
represents the situation in which customer
satisfaction is directly proportional to how fully
functional the product/service is.
 Kano terms such requirements as “one-
dimensional” requirements.
 A 10 percent improvement in functionality
results in a 10 percent improvement in customer
satisfaction.
 Requirements Type Definition
Must Be (Expected Quality) Requirement that can dissatisfy
(expected, but cannot increase
satisfaction)
One-Dimensional (Desired The more of these requirements
Quality) that are met, the more a client is
satisfied
Delighters (Excited Quality) If the requirement is absent, it
does not cause dissatisfaction, but it
will delight clients if present
Indifferent Client is indifferent to whether
the feature is present or not
Reverse Feature actually causes
dissatisfaction
 Perceived quality defined as the customer
perception of the overall quality of the
product or service with respect to its
intended purpose, relative to alternatives.
 Performance
 Features
 Service
 Warranty
 Price
 Reputation
 Perceived service quality:
◦ Customer orientation
◦ Competence
◦ Tangibility
◦ Convenience
 Perceived product quality
◦ Benefits
◦ Intentions
 Brand Image
 Complaints point out areas that need
improvement.
 Complaints give you a second chance to
provide service and satisfaction to
dissatisfied customers.
 Complaints are a wonderful opportunity to
strengthen customer loyalty.
 Seek out and welcome complaints.
 Take every complaint seriously
 Get people at the top actively involved in both
listening to and helping resolve customer complaints.
 Consider setting up a system to document and
classify complaints.
 Set goals for resolving complaints.
 Learn and get better from complaints.
 Make it easy for clients to complain
 Respond quickly to complaints
 Resolve complaints on the first contact
 Use computers to manage complaints
 Recruit the best for customer service jobs
 To discover customer dissatisfaction
 To identify customer‘s needs
 To discover relative priorities of quality
 To compare performance with the
competition
 To determine opportunities, for improvement
 Comment card - Low cost method, usually attached to warranty
card
 Questionnaire - Popular tool, costly and time consuming - by
mail or telephone preferably multiple choice questions or a point
rating system (1 to 5) or (1 to 10)
 Customer Focus groups - Meeting by a representative of the
company with the group of customers
 Phone - Toll free Telephone numbers
 Customer visits - Visit customer's place of business.
 Report cards - Usually, send to customer on a quarterly basis.
 The internet and computer - It includes newsgroups, electronic
bulletin board mailing lists, Employee feedback.
 Mass Customization - Capturing the voice of customers using
data of what customer want instead of what customer is thinking
about buying and manufacturing exact what they want.
 Complaints can be collected from all sources
 Develop procedures for complaint resolution
 Analyze complaints
 When a survey response is received, a senior manager should
contact the customer and strive to resolve the concern.
 Establish customer satisfaction measures and constantly
monitor them.
 Communicate complaint information, as well as the result of
all investigation solution, to all people in the organization.
 Provide a monthly complaint report to the quality council for
their evaluation and needed, the assignment of process
improvement teams.
 Identify customer's expectations beforehand rather than
afterward through complaint analysis
 Customer retention is more powerful and
effective than customer satisfaction.
 Customer retention represents the activities
that produce the necessary customer
satisfaction that creates customer loyalty,
which actually improves the bottom line.
 Top management commitment to the customer
satisfaction.
 Identify and understand the customers what they like and
dislike about the organization.
 Develop standards of quality service and performance.
 Recruit, train and reward good staff.
 Always stay in touch with customer.
 Work towards continuous improvement of customer
service and customer retention.
 Reward service accomplishments by the front-line staff.
 Customer Retention moves customer satisfaction to the
next level by determining what is truly important to the
customers.
 Customer satisfaction is the connection between customer
satisfaction and bottom line.
 Level 1- financial bonds: financial incentives
and reduced prices.
 Level-2 Social bond: deeply attached between
organization and customers.
 Level 3- Customisation bond: enhance
customer loyality, deep knowledge of
potential customer.
 Level 4: structural bonds: develop along with
previous bonds.
 Reducing Attrition
 Sell and then sell again
 Bring back the “lost sheep”
 Frequent Communications Calendar
 Extraordinary Customer Service
 Courtesy system
 Product or service integrity
 Measure lifetime value
 A complaint is a gift
 Blogs
 CRM Systems
 Loyalty Programs
 Magic Moments
 Overcome Buyers Remorse
 Personal Touches
 Premiums and Gifts
 Questionnaires and Surveys
 Regular Reviews
 Social Media
 Welcome Book
Dimensions of product quality Dimensions of service
quality
Performance Time
Features Timeliness
Usability Completeness
Conformance Consistency
Reliability Accessibility/Convenience
Durability Accuracy
Maintainability/Serviceability Responsiveness
Efficiency Courtesy
Aesthetics Competency/Expertise
Reputation
Safety
 Performance: primary product
characteristics, e.g. picture brightness in
TV.
 Features: secondary characteristics, added
features, e.g. remote control, picture-in-
picture.
 Usability: ease of use with minimum
training.
 Conformance: meeting specifications,
industry standards,. (E.g. ISI specs.,
emission norms).
 Reliability: consistency of performance over
a specified time period under specified
conditions.
 Durability: extent of useful life.
 Maintainability/Serviceability: ease of
attending to maintenance, repairs
 Efficiency: ratio of output to input. E.g.
mileage, braking distance, processing
time.
 Aesthetics: sensory characteristics, e.g.
appearance, exterior finish, texture,
color, shape, etc.
 Reputation: subjective assessment
based of past performance, brand
image, industry ranking.
 Safety: in items like pressure cookers,
electrical items, toys, cranes, etc.
 Time: how much time a customer must wait /
undergo service.
 Timeliness: whether service will be performed
when promised.
 Completeness: whether all items in the order are
included
 Consistency: consistent service every time, and for
every customer and reliability of service.
 Accessibility/Convenience: ease of obtaining the
service.
 Accuracy: absence of mistakes.
 Responsiveness: quick response, resolution of
unexpected problems.
 Courtesy: cheerful, friendly service.
 Competency/Expertise: In professions like doctors,
lawyers, mechanics, etc.
 Cost of Quality is the amount of money a
business loses because its product or service was
not done right in the right place
 The cost associated in providing poor quality
product and services is known as 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.
 I. Preventive Cost Category
 II. Appraisal Cost Category
 III. Internal Failure Cost Category
 IV. External Failure Cost Category
 The cost incurred in keeping failure and appraisal costs to a
minimum.
 1. Marketing/Consumer/User:
◦ Costs are incurred in the accumulation and continued
evaluation of customer and user quality needs and
perceptions affecting user satisfaction with the
organizations product or service.
 2. Product/Service/Design Development:
◦ Costs are incurred to translate customer and user needs in
to reliable quality standards and requirements and to
manage the quality of new product or service.
 3. Purchasing:
◦ Costs are incurred to assure conformance requirements of
supplier parts, materials or processes and to minimize the
impact of supplier non conformance on the quality of
delivered products or services.
 4. Operations (Manufacturing or service):
◦ Costs are incurred in assuring the capability and readiness
of operations to meet quality standards and requirements
and to impart quality education to operating personnel.
 5. Quality Administration:
◦ Costs are incurred in the overall administration of the
quality management function
 The cost incurred in determining the degree of
conformance to quality requirement.
 1. Purchasing Appraisal Costs:
◦ Purchasing appraisal costs can generally be considered
the costs incurred for the inspection and test of
purchased supplies or service to determine acceptability
to use.
 2. Operations (Manufacturing or service)
Appraisal Costs:
◦ Operations appraisal costs can generally be considered
the costs incurred for the test or audit required to
determine and assure the acceptability of product or
service.
 The cost incurred in determining the degree of
conformance to quality requirement.
 3. External Appraisal Costs:
◦ External appraisal costs are incurred for field set up or
installation and check out for the acceptance of
customers.
 4. Review of Test & Inspection:
◦ Costs are incurred for regular reviewing inspection and
test data, prior to release of the product for shipment.
 5. Miscellaneous Quality Evaluations:
◦ Costs involved in quality audits to assure continued
ability to provide acceptable support to the production
process.
 The cost associated with defects that are found
prior to transfer of the product to the customer.
 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:
◦ Costs which are incurred due to the rejects of purchased
items.
 3. Operations (Product or Service) Failure Costs:
◦ The costs associated with nonconforming product or
service discovered during the operations process. It is
categorized in to three distinct areas: material review
and corrective action rework or repair costs and scrap
costs.
 The cost associated with defects that are found after
product is shipped to the customer.
 1. Complaint Investigations of Customer or User Service:
◦ It includes the total cost of investigating, resolving and
responding to individual customer and user complaints.
 2. Returned Goods:
◦ Costs incurred in evaluating, repairing and replacing goods.
 3. 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.
 4. Warranty Claims
◦ Warranty costs include the total costs of claims paid to the
customer or user after acceptance to cover expenses, including
repair costs, such as removing defective hardware from a system,
or cleaning costs, due to flood or chemical service accident.
 5. Liability Costs
 Liability costs are organization-paid costs due to liability claims,
including the cost of product or service liability insurance.
 6. Penalties
 Penalty costs are those costs incurred because less than full
product or service performance is achieved as required by
contracts with customers or by government rules and
regulations.
 7. Customer or user good will
 This category involves costs incurred that customers are not
satisfied with quality of delivered product or service because the
customer’s quality expectations were
 8. Lost Sales
 Lost sales comprise the value of the contribution to profit that is
lost due to sales reduction because of quality problems.
 Total = Made up of whole
 Quality= Degree of Excellence a product or service
provides
 Management = Quality can and must be managed.
 TQM = Act, art, or manner of handling, controlling,
directing, etc.
 TQM is the art of managing the whole to achieve
excellence.
 TQM is a management philosophy that seeks to
integrate all organizational functions (marketing,
finance, design, engineering, and production,
customer service, etc.) to focus on meeting customer
needs and organizational objectives.
 Total means that everyone participates and
that it is integrated into all business
functions.
 Quality means meeting or exceeding
customer (internal or external) expectation.
 Management means improving and
maintaining business systems and their
related processes or activities. (International
Encyclopedia of Justice Studies)