QUALITY MANAGEMENT

The term Quality management has a specific meaning within many business sectors. This specific definition, which does not aim to assure 'good quality' by the more general definition (but rather to ensure that an organisation or product is consistent), can be considered to have four main components: quality planning, quality control, quality assurance and quality improvement. Quality management is focused not only on product/service quality, but also the means to achieve it. Quality management therefore uses quality assurance and control of processes as well as products to achieve more consistent quality. Investopedia explains Quality Management: 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. It is also referred to as total quality management (TQM). Quality management includes all the activities that organizations use to direct, control, and coordinate quality. These activities include formulating a quality policy and setting quality objectives. They also include quality planning, quality control, quality assurance, and quality improvement.

IMPORTANCE Quality management has become an essential part of all businesses. No matter what type of industry you call your executive home, this topic is sure to be on the forefront of all business processes you implement. Quality management is the process of controlling, ensuring, and improving quality; both in business operations and productivity. If customers are satisfied, chances are they feel they are receiving highquality products that are constantly improved upon in order to keep up with the ever-changing times. Quality management is crucial to the success of a business. It takes place throughout an organization in several different areas. Teams are often formed for the purpose of implementing programs. These programs cover the organization as a whole and encompass every aspect of the business. For example, managers must implement these processes in order to make sure their employees are performing up to the highest of standards. In order to make this happen, various tools must be put into place that will aid employees in completing various business tasks. These tools will then allow them to do this to the best of their abilities. Products and services are also important parts of quality management. No matter what a particular organization sells, quality is a necessary part of it. Customers expect good products and services and want to know that their hard earned money is going toward something that will not only benefit them now, but will also last for a long time.

A successful business is like a well-oiled machine. Team members work together to ensure their area turns out quality work. All those areas come together in one big corporation that offers customers products or services that serve a specific purpose. That is why it is important for managers to keep all areas informed of what is going on in the organization as a whole. If each area understands what the others are doing and why they exist, the work turned out will be more uniform and pointed toward a specific cause. High quality means success. Happy customers will be returning ones and that is what every organization strives for at the end of the day. Quality management is a process that must receive constant attention in order to be successful. That is why there are employees devoted to controlling, maintaining, and improving quality on an ongoing basis. Quality management is a principle that ensures quality in a company's products and services. There are various types of quality management programs which include but are not limited to Six Sigma, Theory of Constraints and TQM (Total Quality Management). Although the approach to solving quality issues vary with the different quality management programs, the goal remains the same--to create a high quality, high-performing product or service that meets and exceeds the customers' expectations. Quality management is important to companies for a variety of reasons: 1)Product quality: Quality management ensures product quality. Some primary aspects of product quality include: performance, reliability and durability. Through the use of a quality management program, the company can produce a product that performs according to its stated promises. The will endure normal, everyday use. Use quality management programs to improve the quality of a product and to design new products. Six Sigma has a specific component called DFSS (Design for Six Sigma) which is a methodology to build Six Sigma quality into a product or service. 2)Customer Satisfaction: Quality management ensures customer satisfaction. Conduct customer satisfaction surveys to understand the qualities of the product important to the customer. Also conduct surveys with those who are not the company's customers. This will also provide insight into why these businesses use the services of the competitor. Use customer surveys to target those features of a product or service that need improvement. The quality management program provides a methodology to use to create the type of product the customer desires. 3)Increased Revenues: Quality products and services give the company a spotless reputation in the industry. This reputation allows the company to gain new customers and sell additional products and services to existing customers. A quality management program also removes inefficient processes within the system. By removing unnecessary processes, employee productivity increases. The employee is spending less time on activities that do not contribute to the product's quality. As a result, the employee is producing more work in less time while the company has not increased the salary. Quality management programs help recapture lost monies due to inefficiencies. 4)Reduce Waste: A quality management program helps companies reduce waste. Companies that house inventory are paying for the storage, management and tracking of the inventory. The costs of having the inventory are built into the price of the product. Implementing a quality management program reduces

the amount of inventory that costs the company money and occupies valuable space. Quality management means that there is a systematic approach to keeping inventories at acceptable levels without incurring waste. Work closely with suppliers to manage inventory using a Just-in-Time (JIT) philosophy. In short, a JIT inventory system helps the suppliers and manufacturer remain in close communication to become more responsive to the customer. 5)Teamwork: Quality management systems force company departments to work as a team. Different areas of the company become reliant upon one another to produce a quality product that meets and exceeds the customers' expectations. A quality system incorporates measures that affect sales, finance, operations, customer service and marketing. The balanced scorecard is a one-stop-shop for evaluating how various departments are operating against their performance expectations. Use the balanced scorecard to show how close the company is to the financial, operational, customer service and learning/growth targets. Quality management evolution Quality management is a recent phenomenon. Advanced civilizations that supported the arts and crafts allowed clients to choose goods meeting higher quality standards than normal goods. In societies where art responsibilities of a master craftsman (and similarly for artists) was to lead their studio, train and supervise the on, the importance of craftsmen was diminished as mass production and repetitive work practices were instituted. The aim was to produce large numbers of the same goods. The first proponent in the US for this approach was Eli Whitney who proposed (interchangeable) parts manufacture for muskets, hence producing the identical components and creating a musket assembly line. The next step forward was promoted by several people including Frederick Winslow Taylor a mechanical engineer who sought to improve industrial efficiency. He is sometimes called "the father of scientific management." He was one of the intellectual leaders of the Efficiency Movement and part of his approach laid a further foundation for quality management, including aspects like standardization and adopting improved practices. Henry Ford was also important in bringing process and quality management practices into operation in his assembly lines. In Germany, Karl Friedrich Benz, often called the inventor of the motor car, was pursuing similar assembly and production practices, although real mass production was properly initiated in Volkswagen after World War II. From this period onwards, North American companies focused predominantly upon production against lower cost with increased efficiency. Walter A. Shewhart made a major step in the evolution towards quality management by creating a method for quality control for production, using statistical methods, first proposed in 1924. This became the foundation for his ongoing work on statistical quality control. W. Edwards Deming later applied statistical process control methods in the United States during World War II, thereby successfully improving quality in the manufacture of munitions and other strategically important products. Quality leadership from a national perspective has changed over the past five to six decades. After the second world war, Japan decided to make quality improvement a national imperative as part of rebuilding their economy, and sought the help of Shewhart, Deming and Juran, amongst others. W. Edwards Deming championed Shewhart's ideas in Japan from 1950 onwards. He is probably best known

for his management philosophy establishing quality, productivity, and competitive position. He has formulated 14 points of attention for managers, which are a high level abstraction of many of his deep insights. They should be interpreted by learning and understanding the deeper insights. These 14 points include key concepts such as: Break down barriers between departments Management should learn their responsibilities, and take on leadership Supervision should be to help people and machines and gadgets to do a better job Improve constantly and forever the system of production and service Institute a vigorous program of education and self-improvement In the 1950s and 1960s, Japanese goods were synonymous with cheapness and low quality, but over time their quality initiatives began to be successful, with Japan achieving very high levels of quality in products from the 1970s onward. For example, Japanese cars regularly top the J.D. Power customer satisfaction ratings. In the 1980s Deming was asked by Ford Motor Company to start a quality initiative after they realized that they were falling behind Japanese manufacturers. A number of highly successful quality initiatives have been invented by the Japanese (see for example on this page: Taguchi, QFD, Toyota Production System. Many of the methods not only provide techniques but also have associated quality culture (i.e. people factors). These methods are now adopted by the same western countries that decades earlier derided Japanese methods. Customers recognize that quality is an important attribute in products and services. Suppliers recognize that quality can be an important differentiator between their own offerings and those of competitors (quality differentiation is also called the quality gap). In the past two decades this quality gap has been greatly reduced between competitive products and services. This is partly due to the contracting (also called outsourcing) of manufacture to countries like India and China, as well internationalization of trade and competition. These countries amongst many others have raised their own standards of quality in order to meet International standards and customer demands. The ISO 9000 series of standards are probably the best known International standards for quality management. In recent times some themes have become more significant including quality culture, the importance of knowledge management, and the role of leadership in promoting and achieving high quality. Disciplines like systems thinking are bringing more holistic approaches to quality so that people, process and products are considered together rather than independent factors in quality management. The influence of quality thinking has spread to non-traditional applications outside of walls of manufacturing, extending into service sectors and into areas such as sales, marketing and customer service.

Cost of Quality

Cost of quality is the total price of all efforts to achieve product or service quality. This includes all work to build a product or service that conforms to the requirements as well as all work resulting from nonconformance to the requirements. Every time work is redone, the cost of quality increases. Obvious examples include: The reworking of a manufactured item. The retesting of an assembly. The rebuilding of a tool. The correction of a bank statement. The reworking of a service, such as the reprocessing of a loan operation or the replacement of a food order in a restaurant.

In short, any cost that would not have been expended if quality were perfect contributes to the cost of quality. Total Quality Costs The sum of the above costs. This represents the difference between the actual cost of a product or service and what the reduced cost would be if there were no possibility of substandard service, failure of products or defects in their manufacture. As the figure below shows, quality costs are the total of the cost incurred by: Investing in the prevention of nonconformance to requirements. Appraising a product or service for conformance to requirements. Failing to meet requirements.

Quality Costsgeneral description 1)Prevention Costs: The costs of all activities specifically designed to prevent poor quality in products or services. Examples are the costs of: New product review Quality planning Supplier capability surveys Process capability evaluations Quality improvement team meetings Quality improvement projects Quality education and training

2)Appraisal Costs :The costs associated with measuring, evaluating or auditing products or services to assure conformance to quality standards and performance requirements. These include the costs of: Incoming and source inspection/test of purchased material In-process and final inspection/test

Product, process or service audits Calibration of measuring and test equipment Associated supplies and materials

3)Failure Costs : The costs resulting from products or services not conforming to requirements or customer/user needs. Failure costs are divided into internal and external failure categories. 4)Internal Failure Costs: Failure costs occurring prior to delivery or shipment of the product, or the furnishing of a service, to the customer.Examples are the costs of: Scrap Rework Re-inspection Re-testing Material review Downgrading

5)External Failure Costs : Failure costs occurring after delivery or shipment of the product and during or after furnishing of a service to the customer. Examples are the costs of: Processing customer complaints Customer returns Warranty claims Product recalls