Explain the meaning of total quality management (TQM).
Identify costs of quality.
Describe the evolution of TQM.
Identify key leaders in the ﬁeld of quality and their
Identify features of the TQM philosophy.
Describe tools for identifying and solving quality problems.
Describe quality awards and quality certiﬁcations.
studying this chapter you should be able to
Deﬁning Quality 138 Links to Practice: The Kroger Company; Meijer
Stores Limited Partnership 153
Links to Practice: General
Electric Company; Motorola, Inc. 140
Quality Awards and Standards 159 Cost of Quality 140 Why TQM Efforts
Fail 162 OM Across the Organization 162
The Evolution of Total Quality Management
(TQM) 142 Inside OM 163 The Philosophy of TQM 147
Case: Gold Coast Advertising (GCA) 166
Links to Practice: The Walt
Disney Case: Delta Plastics, Inc. 167
has had experiences of poor quality when dealing with business
organizations. These experiences
might involve an airline that has lost a passenger’s luggage, a dry
cleaner that has left clothes wrinkled or stained, poor course
offerings and scheduling at your college, a purchased product that
is damaged or broken, or a pizza delivery service that is often late
or delivers the wrong order. The experience of poor quality is
exacerbated when employees of the company either are not empowered
to correct quality inadequacies or do not seem willing to do so. We
have all encountered service employees who do not seem to care. The
consequences of such an attitude are lost customers and
opportunities for competitors to take advantage of the market need.
Successful companies understand the powerful
impact customer-deﬁned quality can have on business. For this reason
many competitive ﬁrms continually increase their quality standards.
For example, both the Ford Motor Company and the Honda Motor Company
have recently announced that they are making customer satisfaction
their number one priority. The slow economy of 2003 impacted sales
in the auto industry. Both ﬁrms believe that the way to rebound is
through improvements in quality, and each has outlined speciﬁc
changes to their operations. Ford is focusing on tightening already
strict standards in their production process and implementing a
quality program called Six-Sigma. Honda, on the other hand, is
focused on improving customer-driven product design. Although both
ﬁrms have been leaders in implementing high quality standards, they
believe that customer satisfaction is still what matters most.
In this chapter you will learn that making
quality a priority means putting customer needs ﬁrst. It means
meeting and exceeding customer expectations by involving everyone in
the organization through an integrated effort. Total quality
management (TQM) is an integrated organizational effort designed to
improve quality at every level. In this chapter you will learn about
the philosophy of TQM, its impact on organizations, and its impact
on your life. You will learn that TQM is about meeting quality
expectations as deﬁned by the customer; this is called customer-deﬁned
quality. However, deﬁning quality is not as easy as it may seem,
because different people have different ideas of what constitutes
high quality. Let’s begin by looking at different ways in which
quality can be deﬁned.
Total quality management (TQM)
An integrated effort designed to
improve quality performance at every level of the organization.
The meaning of quality as deﬁned by
Conformance to speciﬁcations
How well a product or service meets the
targets and tolerances determined by its designers.
Fitness for use
A deﬁnition of quality that evaluates
how well the product performs for its intended use.
Value for price paid
Quality deﬁned in terms of product or
service usefulness for the price paid.
Quality deﬁned in terms of the support
provided after the product or service is purchased.
The deﬁnition of quality depends
on the role of the people deﬁning it. Most consumers have a difﬁcult
time deﬁning quality, but they know it when they see it. For
example, although you probably have an opinion as to which
manufacturer of athletic shoes provides the highest quality, it
would probably be difﬁcult for you to deﬁne your quality standard in
precise terms. Also, your friends may have different opinions
regarding which athletic shoes are of highest quality. The difﬁculty
in deﬁning quality exists regardless of product, and this is true
for both manufacturing and service organizations. Think about how
difﬁcult it may be to deﬁne quality for products such as airline
services, child day-care facilities, college classes, or even OM
textbooks. Further complicating the issue is that the meaning of
quality has changed over time.
Today, there is no single
universal deﬁnition of quality. Some people view quality as
“performance to standards.” Others view it as “meeting the
customer’s needs” or “satisfying the customer.” Let’s look at some
of the more common deﬁnitions of quality.
Conformance to speciﬁcations
measures how well the product or service
meets the targets and tolerances determined by its designers.
For example, the dimensions of a machine part may be speciﬁed by
its design engineers as 3 .05 inches. This would mean that the
target dimension is 3 inches but the dimensions can vary between
2.95 and 3.05 inches. Similarly, the wait for hotel room service
may be speciﬁed as 20 minutes, but there may be an acceptable
delay of an additional 10 minutes. Also, consider the amount of
light delivered by a 60 watt light bulb. If the bulb delivers 50
watts it does not conform to speciﬁcations. As these examples
illustrate, conformance to speciﬁcation is directly measurable,
though it may not be directly related to the consumer’s idea of
- Fitness for use focuses on how well the
product performs its intended function or use. For example, a
Mercedes Benz and a Jeep Cherokee both meet a ﬁtness for use
deﬁnition if one considers transportation as the intended
function. However, if the deﬁnition becomes more speciﬁc and
assumes that the intended use is for transportation on mountain
roads and carrying ﬁshing gear, the Jeep Cherokee has a greater
ﬁtness for use. You can also see that ﬁtness for use is a
user-based deﬁnition in that it is intended to meet the needs of
a speciﬁc user group.
- Value for price paid is a deﬁnition of
quality that consumers often use for product or service
usefulness. This is the only deﬁnition that combines economics
with consumer criteria; it assumes that the deﬁnition of quality
is price sensitive. For example, suppose that you wish to sign
up for a personal ﬁnance seminar and discover that the same
class is being taught at two different colleges at signiﬁcantly
different tuition rates. If you take the less expensive seminar,
you will feel that you have received greater value for the
- Support services provided are often how
the quality of a product or service is judged. Quality does not
apply only to the product or service itself; it also applies to
the people, processes, and organizational environment associated
with it. For example, the quality of a university is judged not
only by the quality of staff and course offerings, but also by
the efﬁciency and accuracy of processing paperwork.
Psychological criteria is a subjective
deﬁnition that focuses on the judgmental evaluation of what
constitutes product or service quality. Different factors contribute
to the evaluation, such as the atmosphere of the environment or the
perceived prestige of the product. For example, a hospital patient
may receive average health care, but a very friendly staff may leave
the impression of high quality. Similarly, we commonly associate
certain products with excellence because of their reputation; Rolex
watches and Mercedes-Benz automobiles are examples.
Differences Between Manufacturing and
Deﬁning quality in manufacturing organizations
is often different from that of services. Manufacturing
organizations produce a tangible product that can be seen, touched,
and directly measured. Examples include cars, CD players, clothes,
computers, and food items. Therefore, quality deﬁnitions in
manufacturing usually focus on tangible product features.
The most common quality
deﬁnition in manufacturing is conformance, which is the
degree to which a product characteristic meets preset standards.
Other common deﬁnitions of quality in manufacturing include
performance — such as acceleration of a vehicle; reliability
— that the product will function as expected without failure;
features — the extras that are included beyond the basic
characteristics; durability — expected operational life of
the product; and serviceability — how readily a product can
be repaired. The relative importance of these deﬁnitions is based on
the preferences of each individual customer. It is easy to see how
different customers can have different deﬁnitions in mind when they
speak of high product quality.
In contrast to manufacturing,
service organizations produce a product that is intangible. Usually,
the complete product cannot be seen or touched. Rather, it is
experienced. Examples include delivery of health care, experience of
staying at a vacation resort, and learning at a university. The
intangible nature of the product makes deﬁning quality difﬁcult.
Also, since a service is experienced, perceptions can be highly
subjective. In addition to tangible factors, quality of services is
often deﬁned by perceptual factors. These include responsiveness to
customer needs, courtesy and friendliness of staff,
promptness in resolving complaints, and atmosphere. Other
deﬁnitions of quality in services include time — the amount
of time a customer has to wait for the service; and consistency
— the degree to which the service is the same each time. For
these reasons, deﬁning quality in services can be especially
challenging. Dimensions of quality for manufacturing versus service
organizations are shown in Table 5-1.
A way of deﬁning quality that focuses on
judgmental evaluations of what constitutes product or service
Dimensions of Quality for Manufacturing Versus
do not make quality a priority risk long-run survival.
World-class organizations such as General Electric and
Motorola attribute their success to having one of the best
quality management programs in the world. These companies
were some of the ﬁrst to implement a quality program called,
Six-Sigma, where the level of defects is reduced to
approximately 3.4 parts per million. To achieve this,
everyone in the company is trained in quality. For example,
individuals highly trained in quality improvement principles
and techniques receive a designation called “Black Belt.”
The full-time job of Black Belts is to identify and solve
quality problems. In fact, Motorola was one of the ﬁrst
companies to win the prestigious Malcolm Baldrige National
Quality Award in 1988, due to its high focus on quality.
Both GE and Motorola have had a primary goal to achieve
total customer satisfaction. To this end, the efforts of
these organizations have included eliminating almost all
defects from products, processes, and transactions. Both
companies consider quality to be the critical factor that
has resulted in signiﬁcant increases in sales and market
share, as well as cost savings in the range of millions of
Today’s customers demand
and expect high quality. Companies
Costs incurred in the process of
preventing poor quality from occurring.
Costs incurred in the process of
Internal failure costs
Costs associated with discovering
poor product quality before the product reaches the customer.
The reason quality has
gained such prominence is that organizations have gained an
understanding of the high cost of poor quality. Quality
affects all aspects of the organization and has dramatic
cost implications. The most obvious consequence occurs when
poor quality creates dissatisﬁed customers and eventually
leads to loss of business. However, quality has many other
costs, which can be divided into two categories. The ﬁrst
category consists of costs necessary for achieving high
quality, which are called quality control costs.
These are of two types: prevention costs and
appraisal costs. The second category consists of the
cost consequences of poor quality, which are called
quality failure costs. These include external failure
costs and internal failure costs. These costs of
quality are shown in Figure 5-1. The ﬁrst two costs are
incurred in the hope of preventing the second two.
Prevention costs are all
costs incurred in the process of preventing poor quality
from occurring. They include quality planning costs, such as
the costs of developing and implementing a quality plan.
Also included are the costs of product and process design,
from collecting customer information to designing processes
that achieve conformance to speciﬁcations. Employee training
in quality measurement is included as part of this cost, as
well as the costs of maintaining records of information and
data related to quality.
Appraisal costs are
incurred in the process of uncovering defects. They include
the cost of quality inspections, product testing, and
performing audits to make sure that quality standards are
being met. Also included in this category are the costs of
worker time spent measuring quality and the cost of
equipment used for quality appraisal.
Internal failure costs are
associated with discovering poor product quality before the
product reaches the customer site. One type of internal
failure cost is rework, which is the cost of
correcting the defective item. Sometimes the item is so
defective that it cannot be corrected and must be thrown
away. This is called scrap, and its costs include
Costs of quality
all the material, labor, and
machine cost spent in producing the defective product. Other
types of internal failure costs include the cost of machine
downtime due to failures in the process and the costs of
discounting defective items for salvage value.
External failure costs are
associated with quality problems that occur at the customer
site. These costs can be particularly damaging because customer
faith and loyalty can be difﬁcult to regain. They include
everything from customer complaints, product returns, and
repairs, to warranty claims, recalls, and even litigation costs
resulting from product liability issues. A ﬁnal component of
this cost is lost sales and lost customers. For example,
manufacturers of lunch meats and hot dogs whose products have
been recalled due to bacterial contamination have had to
struggle to regain consumer conﬁdence. Other examples include
auto manufacturers whose products have been recalled due to
major malfunctions such as problematic braking systems and
airlines that have experienced a crash with many fatalities.
External failure can sometimes put a company out of business
Companies that consider
quality important invest heavily in prevention and appraisal
costs in order to prevent internal and external failure costs.
The earlier defects are found, the less costly they are to
correct. For example, detecting and correcting defects during
product design and product production is considerably less
expensive than when the defects are found at the customer site.
This is shown in Figure 5-2.
Costs associated with quality
problems that occur at the customer site.
Cost of defects
Marketing, Finance, Accounting
costs tend to be particularly high for service
organizations. The reason is that with a service the
customer spends much time in the service delivery system,
and there are fewer opportunities to correct defects than
there are in manufacturing.
Examples of external failure in services include an airline
that has overbooked ﬂights, long delays in airline service,
and lost luggage.
The concept of quality has
existed for many years, though its meaning has changed and
evolved over time. In the early twentieth century, quality
management meant inspecting products to ensure that they met
speciﬁcations. In the 1940s, during World War II, quality
became more statistical in nature. Statistical sampling
techniques were used to evaluate quality, and quality
control charts were used to monitor the production process.
In the 1960s, with the help of so-called “quality gurus,”
the concept took on a broader meaning. Quality began to be
viewed as something that encompassed the entire
organization, not only the production process. Since all
functions were responsible for product quality and all
shared the costs of poor quality, quality was seen as a
concept that affected the entire organization.
The meaning of quality for
businesses changed dramatically in the late 1970s. Before
then quality was still viewed as something that needed to be
inspected and corrected. However, in the 1970s and 1980s
many U.S. industries lost market share to foreign
competition. In the auto industry, manufacturers such as
Toyota and Honda became major players. In the consumer goods
market, companies such as Toshiba and Sony led the way.
These foreign competitors were producing lower-priced
products with considerably higher quality.
To survive, companies had
to make major changes in their quality programs. Many hired
consultants and instituted quality training programs for
their employees. A new concept of quality was emerging. One
result is that quality began to have a strategic meaning.
Today, successful companies understand that quality provides
a competitive advantage. They put the customer ﬁrst and
deﬁne quality as meeting or exceeding customer expectations.
Since the 1970s,
competition based on quality has grown in importance and has
generated tremendous interest, concern, and enthusiasm.
Companies in every line of business are focusing on
improving quality in order to be more competitive. In many
industries quality excellence has become a standard for
doing business. Companies that do not meet this standard
simply will not survive. As you will see later in the
chapter, the importance of quality is demonstrated by
national quality awards and quality certiﬁcations that are
coveted by businesses.
The term used for
today’s new concept of quality is total quality
management or TQM. Figure 5-3 presents a timeline
of the old and new concepts of quality. You can see that the
old concept is reactive, designed to correct quality
problems after they occur. The new concept is proactive,
designed to build quality into the product and process
design. Next, we look at the individuals who have shaped our
understanding of quality.
To fully understand the TQM movement, we need
to look at the philosophies of notable individuals who have shaped
the evolution of TQM. Their philosophies and teachings have
contributed to our knowledge and understanding of quality today.
Their individual contributions are summarized in Table 5-2.
Early 1900s 1940s 1960s
1980s and Beyond
Inspection Statistical sampling Organizational quality focus
Customer driven quality
Old Concept of Quality: Inspect for quality after
New Concept of Quality: Build quality into the process.
Identify and correct causes of quality problems.
Timeline showing the differences
between old and new concepts of quality
Walter A. Shewhart
Walter A. Shewhart
a statistician at Bell Labs during the 1920s and 1930s. Shewhart
studied randomness and recognized that variability existed in all
manufacturing processes. He developed quality control charts that
are used to identify whether the variability in the process is
random or due to an assignable cause, such as poor workers or
miscalibrated machinery. He stressed that eliminating variability
improves quality. His work created the foundation for today’s
statistical process control, and he is often referred to as the
“grandfather of quality control.”
W. Edwards Deming
W. Edwards Deming
is often referred to as the “father of quality control.” He was a
statistics professor at New York University in the 1940s. After
World War II he assisted many Japanese companies in improving
quality. The Japanese regarded him so highly that in 1951 they
established the Deming Prize, an annual award given to ﬁrms
that demonstrate outstanding quality. It was almost 30 years later
that American businesses began adopting Deming’s philosophy.
A number of elements of Deming’s
philosophy depart from traditional notions of quality. The ﬁrst is
the role management should play in a company’s quality
Quality Gurus and Their
improvement effort. Historically,
poor quality was blamed on workers — on their lack of productivity,
laziness, or carelessness. However, Deming pointed out that only 15
percent of quality problems are actually due to worker error. The
remaining 85 percent are caused by processes and systems, including
poor management. Deming said that it is up to management to correct
system problems and create an environment that promotes quality and
enables workers to achieve their full potential. He believed that
managers should drive out any fear employees have of identifying
quality problems, and that numerical quotas should be eliminated.
Proper methods should be taught, and detecting and eliminating poor
quality should be everyone’s responsibility.
Deming outlined his philosophy on
quality in his famous “14 Points.” These points are principles that
help guide companies in achieving quality improvement. The
principles are founded on the idea that upper management must
develop a commitment to quality and provide a system to support this
commitment that involves all employees and suppliers. Deming
stressed that quality improvements cannot happen without
organizational change that comes from upper management.
Joseph M. Juran
Edwards Deming, Dr. Joseph Juran is considered to have had the
greatest impact on quality management. Juran originally worked in
the quality program at Western Electric. He became better known in
1951, after the publication of his book Quality Control Handbook.
In 1954 he went to Japan to work with manufacturers and teach
classes on quality. Though his philosophy is similar to Deming’s,
there are some differences. Whereas Deming stressed the need for an
organizational “transformation,” Juran believes that implementing
quality initiatives should not require such a dramatic change and
that quality management should be embedded in the organization.
One of Juran’s signiﬁcant
contributions is his focus on the deﬁnition of quality and the cost
of quality. Juran is credited with deﬁning quality as ﬁtness for use
rather than simply conformance to speciﬁcations. As we have learned
in this chapter, deﬁning quality as ﬁtness for use takes into
account customer intentions for use of the product, instead of only
focusing on technical speciﬁcations. Juran is also credited with
developing the concept of cost of quality, which allows us to
measure quality in dollar terms rather than on the basis of
Juran is well known for
originating the idea of the quality trilogy: quality planning,
quality control, and quality improvement. The ﬁrst part of the
trilogy, quality planning, is necessary so that companies
identify their customers, product requirements, and overriding
business goals. Processes should be set up to ensure that the
quality standards can be met. The second part of the trilogy,
quality control, stresses the regular use of statistical control
methods to ensure that quality standards are met and to identify
variations from the standards. The third part of the quality trilogy
is quality improvement. According to Juran, quality
improvements should be continuous as well as breakthrough. Together
with Deming, Juran stressed that to implement continuous improvement
workers need to have training in proper methods on a regular basis.
Armand V. Feigenbaum
quality leader is Armand V. Feigenbaum, who introduced the concept
of total quality control. In his 1961 book Total Quality Control,
he outlined his quality principles in 40 steps. Feigenbaum took
a total system approach to quality. He promoted the idea of a work
environment where quality developments are integrated throughout the
entire organization, where management and employees have a total
commitment to improve quality, and people learn from each other’s
successes. This philosophy was adapted by the Japanese and termed
“company-wide quality control.”
Phillip B. Crosby
Philip B. Crosby
is another recognized guru in the area of TQM. He worked in the area
of quality for many years, ﬁrst at Martin Marietta and then, in the
1970s, as the vice president for quality at ITT. He developed the
phrase “Do it right the ﬁrst time” and the notion of zero
defects, arguing that no amount of defects should be considered
acceptable. He scorned the idea that a small number of defects is a
normal part of the operating process because systems and workers are
imperfect. Instead, he stressed the idea of prevention.
To promote his concepts, Crosby
wrote a book titled Quality Is Free, which was published in
1979. He became famous for coining the phrase “quality is free” and
for pointing out the many costs of quality, which include not only
the costs of wasted labor, equipment time, scrap, rework, and lost
sales, but also organizational costs that are hard to quantify.
Crosby stressed that efforts to improve quality more than pay for
themselves because these costs are prevented. Therefore, quality is
free. Like Deming and Juran, Crosby stressed the role of management
in the quality improvement effort and the use of statistical control
tools in measuring and monitoring quality.
is best known
for the development of quality tools called cause-and-effect
diagrams, also called ﬁshbone or Ishikawa diagrams. These diagrams
are used for quality problem solving, and we will look at them in
detail later in the chapter. He was the ﬁrst quality guru to
emphasize the importance of the “internal customer,” the next person
in the production process. He was also one of the ﬁrst to stress the
importance of total company quality control, rather than just
focusing on products and services.
Dr. Ishikawa believed that
everyone in the company needed to be united with a shared vision and
a common goal. He stressed that quality initiatives should be
pursued at every level of the organization and that all employees
should be involved. Dr. Ishikawa was a proponent of implementation
of quality circles, which are small teams of employees that
volunteer to solve quality problems.
Taguchi is a Japanese quality expert known for his work in the area
of product design. He estimates that as much as 80 percent of all
defective items are caused by poor product design. Taguchi stresses
that companies should focus their quality efforts on the design
stage, as it is much cheaper and easier to make changes during the
product design stage than later during the production process.
Taguchi is known for applying a
concept called design of experiment to product design. This
method is an engineering approach that is based on developing robust
design, a design that results in products that can perform over a
wide range of conditions. Taguchi’s philosophy is based on the idea
that it is easier to design a product that can perform over a wide
range of environmental conditions than it is to control the
Taguchi has also had a large
impact on today’s view of the costs of quality. He pointed out that
the traditional view of costs of conformance to speciﬁcations is
A design that results in a product that
can perform over a wide range of conditions.
Taguchi loss function
Costs of quality increase as a quadratic
function as conformance values move away from the target.
Target 5.00 tolerances
incorrect, and proposed a
different way to look at these costs. Let’s brieﬂy look at Dr.
Taguchi’s view of quality costs.
Recall that conformance to
speciﬁcation speciﬁes a target value for the product with speciﬁed
tolerances, say 5.00 0.20. According to the traditional view of
conformance to speciﬁcations, losses in terms of cost occur if the
product dimensions fall outside of the speciﬁed limits. This is
shown in Figure 5-4. However, Dr. Taguchi noted that from the
customer’s view there is little difference whether a product falls
just outside or just inside the control limits. He pointed out that
there is a much greater difference in the quality of the product
between making the target and being near the control limit. He also
stated that the smaller the variation around the target, the better
the quality. Based on this he proposed the following: as conformance
values move away from the target, loss increases as a quadratic
function. This is called the Taguchi loss function and is shown in
Figure 5-5. According to the function, smaller differences from the
target result in smaller costs: the larger the differences, the
larger the cost. The Taguchi loss function has had a signiﬁcant
impact in changing the view of quality cost.
Taguchi view of the cost of
nonconformance — the Taguchi loss function
What characterizes TQM is the
focus on identifying root causes of quality problems and correcting
them at the source, as opposed to inspecting the product after it
has been made. Not only does TQM encompass the entire organization,
but it stresses that quality is customer driven. TQM attempts to
embed quality in every aspect of the organization. It is concerned
with technical aspects of quality as well as the involvement of
people in quality, such as customers, company employees, and
suppliers. Here we look at the speciﬁc concepts that make up the
philosophy of TQM. These concepts and their main ideas are
summarized in Table 5-3.
The ﬁrst, and overriding, feature of TQM is
the company’s focus on its customers. Quality is deﬁned as meeting
or exceeding customer expectations. The goal is to ﬁrst identify and
then meet customer needs. TQM recognizes that a perfectly produced
product has little value if it is not what the customer wants.
Therefore, we can say that quality is customer driven.
However, it is not always easy to determine what the customer wants,
because tastes and preferences change. Also, customer expectations
often vary from one customer to the next. For example, in the auto
industry trends change relatively quickly, from small cars to sports
utility vehicles and back to small cars. The same is true in the
retail industry, where styles and fashion are short lived. Companies
need to continually gather information by means of focus groups,
market surveys, and customer interviews in order to stay in tune
with what customers want. They must always remember that they would
not be in business if it were not for their customers.
Another concept of the TQM philosophy is the
focus on continuous improvement. Traditional systems operated on the
assumption that once a company achieved a certain level of quality,
it was successful and needed no further improvements. We tend to
think of improvement in terms of plateaus that are to be achieved,
Marketing, Human Resources, Engineering
Continuous improvement (Kaizen)
A philosophy of never-ending
Concepts of the TQM Philosophy
passing a certification test or
reducing the number of defects to a certain level. Traditionally,
change for American managers involves large magnitudes, such as
major organizational restructuring. The Japanese, on the other hand,
believe that the best and most lasting changes come from gradual
improvements. To use an analogy, they believe that it is better to
take frequent small doses of medicine than to take one large dose.
Continuous improvement, called kaizen by the Japanese, requires that
the company continually strive to be better through learning and
problem solving. Because we can never achieve perfection, we must
always evaluate our performance and take measures to improve it. Now
let’s look at two approaches that can help companies with continuous
improvement: the plan – do – study – act (PDSA) cycle and
Plan – do –study–act
The plan – do – study – act (PDSA) cycle
(PDSA) cycle scribes the
activities a company needs to perform in order to incorporate
continuous A diagram that describes the
improvement in its operation. This
cycle, shown in Figure 5-6 is also referred to as the
activities that need to be
Shewhart cycle or the Deming
wheel. The circular nature of this cycle shows that con-
performed to incorporate
tinuous improvement is a
never-ending process. Let’s look at the speciﬁc steps in the
continuous improvement into the operation. cycle.
The ﬁrst step in the PDSA cycle is to plan. Managers must
evaluate the current process and make plans based on any
problems they ﬁnd. They need to document all current procedures,
collect data, and identify problems. This information should
then be studied and used to develop a plan for improvement as
well as speciﬁc measures to evaluate performance.
- Do The next step in the cycle is
implementing the plan (do). During the implementation
process managers should document all changes made and collect
data for evaluation.
- Study The third step is to study
the data collected in the previous phase. The data are evaluated
to see whether the plan is achieving the goals established in
the plan phase.
- Act The last phase of the cycle is to
act on the basis of the results of the ﬁrst three phases.
The best way to accomplish this is to communicate the results to
other members in the company and then implement the new
procedure if it has been successful. Note that this is a cycle;
the next step is to plan again. After we have acted, we need to
continue evaluating the process, planning, and repeating the
The plan – do – study – act cycle
companies implement continuous improvement is by studying business
practices of companies considered “best in class.” This is called
benchmarking. The ability to learn and study how others do things is
an important part of continuous improvement. The benchmark company
does not have to be in the same business, as long as it excels at
something that the company doing the study wishes to emulate. For
example, many companies have used Lands’ End to benchmark catalog
distribution and order ﬁlling, because Lands’ End is considered a
leader in this area. Similarly, many companies have used American
Express to benchmark conﬂict resolution.
Part of the TQM philosophy is to empower all
employees to seek out quality problems and correct them. With the
old concept of quality, employees were afraid to identify problems
for fear that they would be reprimanded. Often poor quality was
passed on to someone else, in order to make it “someone else’s
problem.” The new concept of quality, TQM, provides incentives for
employees to identify quality problems. Employees are rewarded for
uncovering quality problems, not punished.
In TQM, the role of employees is
very different from what it was in traditional systems. Workers are
empowered to make decisions relative to quality in the production
process. They are considered a vital element of the effort to
achieve high quality. Their contributions are highly valued, and
their suggestions are implemented. In order to perform this
function, employees are given continual and extensive training in
quality measurement tools.
To further stress the role of
employees in quality, TQM differentiates between external and
internal customers. External customers are those that
purchase the company’s goods and services. Internal customers
are employees of the organization who receive goods or services from
others in the company. For example, the packaging department of an
organization is an internal customer of the assembly department.
Just as a defective item would not be passed to an external
customer, a defective item should not be passed to an internal
that quality is an organizational effort. To facilitate the solving
of quality problems, it places great emphasis on teamwork. The use
of teams is based on the old adage that “two heads are better than
one.” Using techniques such as brainstorming, discussion, and
quality control tools, teams work regularly to correct problems. The
contributions of teams are considered vital to the success of the
company. For this reason, companies set aside time in the workday
for team meetings.
Teams vary in their degree of
structure and formality, and different types of teams solve
different types of problems. One of the most common types of teams
is the quality circle, a team of volunteer production employees and
their supervisors whose purpose is to solve quality problems. The
circle is usually composed of eight to ten members, and decisions
are made through group consensus. The teams usually meet weekly
during work hours in a place designated for this purpose. They
follow a preset process for analyzing and solving quality problems.
Open discussion is promoted, and criticism is not allowed. Although
the functioning of quality circles is friendly and casual, it is
serious business. Quality circles are not mere “gab sessions.”
Rather, they do important work for the company and have been very
successful in many ﬁrms.
Studying the business practices of other
companies for purposes of comparison.
A team of volunteer production
employees and their supervisors who meet regularly to solve
The importance of exceptional
quality is demonstrated by The
Walt Disney Company in oper
ating its theme parks. The
of the parks is customer satis
faction. This is accomplished
through meticulous attention
to every detail, with
focus on the role of employees
in service delivery. Employees
are viewed as the most impor
tant organizational resource
and great care is taken in employee hiring and training. All
employees are called “cast members,” regardless of whether they
are janitors or performers. Employees are extensively trained in
customer service, communication, and quality awareness.
Continual monitoring of quality is considered important, and
employees meet regularly in teams to evaluate their
effectiveness. All employees are shown how the quality of their
individual jobs contributes to the success of the park.
You can see that TQM places a great deal of
responsibility on all workers. If employees are to identify and
correct quality problems, they need proper training. They need to
understand how to assess quality by using a variety of quality
control tools, how to interpret ﬁndings, and how to correct
problems. In this section we look at seven different quality tools.
These are often called the seven tools of quality control and are
shown in Figure 5-7. They are easy to understand, yet extremely
useful in identifying and analyzing quality problems. Sometimes
workers use only one tool at a time, but often a combination of
tools is most helpful.
are charts that identify potential causes for
particular quality problems. They are often called ﬁshbone diagrams
because they look like the bones of a ﬁsh. A general
cause-and-effect diagram is shown in Figure 5-8. The “head” of the
ﬁsh is the quality problem, such as damaged zippers on a garment or
broken valves on a tire. The diagram is drawn so that the “spine” of
the ﬁsh connects the “head” to the possible cause of the problem.
These causes could be related to the machines, workers, measurement,
suppliers, materials, and many other aspects of the production
process. Each of these possible causes can then have smaller “bones”
that address speciﬁc issues that relate to each cause. For example,
a problem with machines could be due to a need for adjustment, old
equipment, or tooling problems. Similarly, a problem with workers
could be related to lack of training, poor supervision, or fatigue.
Cause-and-effect diagrams are
problem-solving tools commonly used by quality control teams.
Speciﬁc causes of problems can be explored through brainstorming.
The development of a cause-and-effect diagram requires the team to
think through all the possible causes of poor quality.
is a schematic diagram of the sequence of steps involved in an
operation or process. It provides a visual tool that is easy to use
and understand. By seeing the steps involved in an operation or
process, everyone develops a clear picture of how the operation
works and where problems could arise.
A chart that identiﬁes potential causes
of particular quality problems.
A schematic of the sequence of steps
involved in an operation or process.
1. Cause-and-Effect Diagram 4.
The seven tools of quality control
6. Pareto Chart
A checklist is a list of common defects and
the number of observed occurrences of these defects. It is a simple
yet effective fact-ﬁnding tool that allows the worker to collect
speciﬁc information regarding the defects observed. The checklist in
Figure 5-7 shows four defects and the number of times they have been
observed. It is clear that the biggest problem is ripped material.
This means that the plant needs to focus on this speciﬁc problem —
for example, by going to the source of supply or seeing whether the
material rips during a particular production process. A checklist
can also be used to focus on other dimensions, such as location or
time. For example, if a defect is being observed frequently, a
checklist can be developed that measures the number of occurrences
per shift, per machine, or per operator. In this fashion we can
isolate the location of the particular defect and then focus on
correcting the problem.
A list of common defects and the
number of observed occurrences of these defects.
A general cause-and-effect
Charts used to evaluate whether a
process is operating within set expectations.
Graphs that show how two variables are
related to each other.
are a very
important quality control tool. We will study the use of control
charts at great length in the next chapter. These charts are used to
evaluate whether a process is operating within expectations relative
to some measured value such as weight, width, or volume. For
example, we could measure the weight of a sack of ﬂour, the width of
a tire, or the volume of a bottle of soft drink. When the production
process is operating within expectations, we say that it is “in
To evaluate whether or not a
process is in control, we regularly measure the variable of interest
and plot it on a control chart. The chart has a line down the center
representing the average value of the variable we are measuring.
Above and below the center line are two lines, called the upper
control limit (UCL) and the lower control limit (LCL). As long as
the observed values fall within the upper and lower control limits,
the process is in control and there is no problem with quality. When
a measured observation falls outside of these limits, there is a
graphs that show how two variables are related to one another. They
are particularly useful in detecting the amount of correlation, or
the degree of linear relationship, between two variables. For
example, increased production speed and number of defects could be
correlated positively; as production speed increases, so does the
number of defects. Two variables could also be correlated
negatively, so that an increase in one of the variables is
associated with a decrease in the other. For example, increased
worker training might be associated with a decrease in the number of
The greater the degree of
correlation, the more linear are the observations in the scatter
diagram. On the other hand, the more scattered the observations in
the diagram, the less correlation exists between the variables. Of
course, other types of relationships can also be observed on a
scatter diagram, such as an inverted . This may be the case when one
is observing the relationship between two variables such as oven
temperature and number of defects, since temperatures below and
above the ideal could lead to defects.
technique used to identify quality problems based on their degree of
importance. The logic behind Pareto analysis is that only a few
quality problems are important, whereas many others are not
critical. The technique was named after Vilfredo Pareto, a
nineteenth-century Italian economist who determined that only a
small percentage of people controlled most of the wealth. This
concept has often been called the 80 – 20 rule and has been extended
to many areas. In quality management the logic behind Pareto’s
principle is that most quality problems are a result of only a few
causes. The trick is to identify these causes.
One way to use Pareto analysis is
to develop a chart that ranks the causes of poor quality in
decreasing order based on the percentage of defects each has caused.
For example, a tally can be made of the number of defects that
result from different causes, such as operator error, defective
parts, or inaccurate machine calibrations. Percentages of defects
can be computed from the tally and placed in a chart like those
shown in Figure 5-7. We generally tend to ﬁnd that a few causes
account for most of the defects.
is a chart that shows the frequency distribution of observed values
of a variable. We can see from the plot what type of distribution a
particular variable displays, such as whether it has a normal
distribution and whether the distribution is symmetrical.
In the food service industry the
use of quality control tools is important in
identifying quality problems. Grocery store
chains, such as Kroger and Meijer, must record and monitor the
quality of incoming produce, such as tomatoes and lettuce. Quality
tools can be used to evaluate the acceptability of product quality
and to monitor product quality from individual suppliers. They can
also be used to evaluate causes of quality problems, such as long
transit time or poor refrigeration. Similarly, restaurants use
quality control tools to evaluate and monitor the quality of
delivered goods, such as meats, produce, or baked goods.
A critical aspect of building quality into a
product is to ensure that the product design meets customer
expectations. This typically is not as easy as it seems. Customers
often speak in everyday language. For example, a product can be
described as “attractive,” “strong,” or “safe.” However, these terms
can have very different meaning to different customers. What one
person considers to be strong, another may not. To produce a product
that customers want, we need to translate customers’ everyday
language into speciﬁc technical requirements. However, this can
often be difﬁcult. A useful tool for translating the voice of the
customer into speciﬁc technical requirements is quality function
deployment (QFD). Quality function deployment is also useful in
enhancing communication between different functions, such as
marketing, operations, and engineering.
A technique used to identify quality
problems based on their degree of importance.
A chart that shows the frequency
distribution of observed values of a variable.
The Kroger Company
Meijer Stores Limited Partnership
Quality function deployment (QFD)
A tool used to translate the
preferences of the customer into speciﬁc technical requirements.
QFD enables us to view the
relationships among the variables involved in the design of a
product, such as technical versus customer requirements. This
can help us analyze the big picture — for example, by running
tests to see how changes in certain technical requirements of
the product affect customer requirements. An example is an
automobile manufacturer evaluating how changes in materials
affect customer safety requirements. This type of analysis can
be very beneﬁcial in developing a product design that meets
customer needs, yet does not create unnecessary technical
requirements for production.
QFD begins by identifying
important customer requirements, which typically come from the
marketing department. These requirements are numerically scored
based on their importance, and scores are translated into
speciﬁc product characteristics. Evaluations are then made of
how the product compares with its main competitors relative to
the identiﬁed characteristics. Finally, speciﬁc goals are set to
address the identiﬁed problems. The resulting matrix looks like
a picture of a house and is often called the house of
quality. Next we will consider the example of manufacturing
a backpack to show how we would use QFD. We will start with a
relationship matrix that ties customer requirements to product
characteristics, shown in Figure 5-9.
Requirements Remember that our goal is to make a product that
the customer wants. Therefore, the ﬁrst thing we need to do is
survey our customers to ﬁnd out speciﬁcally what they would be
looking for in a product — in this case, a backpack for
students. To ﬁnd out precisely what features students
No. of Zippers& Compartments
Weight of Backpack
Strength of Backpack
Grade of Dye Color
Cost of Materials
Competitive Evaluation X Relationship Strong
Positive Positive Negative Strong Negative X
B A US 1 2 3 4 5
A US/B 1 2 3 4 5
BUS/A 1 2 3 4 5
B AUS 1 2 3 4 5
B AUS 1 2 3 4 5
US = Our Backpack A =
Competitor A B = Competitor B
would like in a backpack, the
marketing department might send representatives to talk to
students on campus, conduct telephone interviews, and maybe
conduct focus groups. Let’s say that students have identiﬁed ﬁve
desirable features: the backpack should be durable, lightweight
and roomy, look nice, and not cost very much. These are shown in
Figure 5-10. The importance customers attach to each of these
requirements is also determined and shown in the ﬁgure. This
part of the ﬁgure looks like the chimney of the “house.” You can
see that durability and roominess are given the greatest
On the far
right of our relationship matrix is an evaluation of how our
product compares to those of competitors. In this example
there are two competitors, A and B. The evaluation scale is
from one to ﬁve — the higher the rating, the better. The
important thing here is to identify which customer
requirements we should pursue and how we fare relative to
our competitors. For example, you can see that our product
excels in durability relative to competitors, yet it does
not look as nice. This means that in designing our product,
we could gain a competitive advantage by focusing our design
efforts on a more appealing product.
- Product Characteristics Speciﬁc
product characteristics are on top of the relationship
matrix. These are technical measures. In our example these
include the number of zippers and compartments, the weight
of the backpack, strength of the backpack, grade of the dye
color, and the cost of materials.
- The Relationship Matrix The strength
of the relationship between customer requirements and
product characteristics is shown in the relationship matrix.
For example, you can see that the number of zippers and
compartments is negatively related to the weight of the
backpack. A negative relationship means that as we increase
the desirability of one variable we decrease the
desirability of the other. At the same time, roominess is
positively related to the number of zippers and
compartments, as is appearance. A positive relationship
means that an increase in desirability of one variable is
related to an increase in the desirability of another. This
type of information is very important in coordinating the
- The Trade-off Matrix You can see how
the relationship matrix is beginning to look like a house.
The complete house of quality is shown in Figure 5-10. The
next step in our building process is to put the “roof ” on
the house. This is done through a trade-off matrix, which
shows how each product characteristic is related to the
others and thus allows us to see what tradeoffs we need to
make. For example, the number of zippers is negatively
related to the weight of the backpack.
- Setting Targets The last step in
constructing the house of quality is to evaluate
competitors’ products relative to the speciﬁc product
characteristics and to set targets for our own product. The
bottom row of the house is the output of quality
function deployment. These are speciﬁc, measurable product
characteristics that have been formulated from general
The house of quality has been
found to be very useful. You can see how it translates everyday
terms like “lightweight,” “roominess,” and “nice looking,” into
speciﬁc product characteristics that can be used in
manufacturing the product. Note also how the house of quality
can help in the communication between marketing, operations, and
House of quality
The probability that a product,
service, or part will perform as intended.
An important dimension of product design is that the product
functions as expected. This is called reliability. Reliability
is the probability that a product, service, or part will perform
as intended for a speciﬁed period of time under normal
conditions. We are all familiar with product reliability in the
form of product warranties. We also know that no product is
guaranteed with 100 percent certainty to function properly.
However, companies know that a high reliability is an important
part of customer-oriented quality and try to build this into
their product design.
Reliability is a probability,
a likelihood, or a chance. For example, a product with a 90
percent reliability has a 90 percent chance of functioning as
intended. Another way to look at it is that the probability that
the product will fail is 1 .90 .10, or 10 percent. This also
means that 1 out of 10 products will not function as expected.
The reliability of a product is a direct
function of the reliability of its component parts. If all the
parts in a product must work for the product to function, then
the reliability of the system is computed as the product
of the reliabilities of the individual components:
reliability of the product or system.
R1... n reliability of components 1 through
Notice in the previous
example that the reliability of the “system” is lower than that
of individual components. The reason is that all the components
in a series, as in the example, must function for the product to
work. If only one component doesn’t work, the entire product
doesn’t work. The more components a product has, the lower its
reliability. For example, a system with ﬁve components in
series, each with a reliability of .90, has a reliability of
only (.90)(.90)(.90)(.90)(.90) (.90)5 0.59.
The failure of certain
products can be very critical. One way to increase product
reliability is to build redundancy into the product
design in the form of backup parts. Consider the blackout during
the summer of 2003, when most of the northeastern part of the
United States was out of power for days. Critical facilities,
such as hospitals, immediately switched to backup power
generators that are available when the main systems fail.
Consider other critical systems, such as the navigation system
of an aircraft, systems that operate nuclear power plants, the
space shuttle, or even the braking system of your car. What
gives these systems such high reliability is the redundancy that
is built into the product design and serves to increase
Redundancy is built into the
system by placing components in parallel, so that when one
component fails the other component takes over. In this case,
the reliability of the system is computed by adding the
reliability of the ﬁrst component to the reliability of the
second (backup) component, multiplied by the probability of
needing the backup. The equation is as follows:
Probability Rs of 1st of 2nd of
Notice that if the reliability
of the 1st component is .90, the probability of needing a
second component is equal to the ﬁrst component failing, which is (1
.90) .10. Now let’s look at an example.
Reliability with Redundancy
Quality at the source
The belief that it is best to
uncover the source of quality problems and eliminate it.
According to TQM a quality product
comes from a quality process. This means that quality should
be built into the process. Quality at the source is the
belief that it is far better to uncover the source of
quality problems and correct it than to discard defective
items after production. If the source of the problem is not
corrected, the problem will continue. For example, if you
are baking cookies you might ﬁnd that some of the cookies
are burned. Simply throwing away the burned cookies will not
correct the problem. You will continue to have burned
cookies and will lose money when you throw them away. It
will be far more effective to see where the problem is and
correct it. For example, the temperature setting may be too
high; the pan may be curved, placing some cookies closer to
the heating element; or the oven may not be distributing
Quality at the source
exempliﬁes the difference between the old and new concepts
of quality. The old concept focused on inspecting goods
after they were produced or after a particular stage of
production. If an inspection revealed defects, the defective
products were either discarded or sent back for reworking.
All this cost the company money, and these costs were passed
on to the customer. The new concept of quality focuses on
identifying quality problems at the source and correcting
In Chapter 6 we will learn
how to monitor process quality using quality tools, such as
Managing Supplier Quality
TQM extends the concept of quality to a
company’s suppliers. Traditionally, companies tended to have
numerous suppliers that engaged in competitive price
bidding. When materials arrived, an inspection was performed
to check their quality. TQM views this practice as
contributing to poor quality and wasted time and cost. The
philosophy of TQM extends the concept of quality to
suppliers and ensures that they engage in the same quality
practices. If suppliers meet preset quality standards,
materials do not have to be inspected upon arrival. Today,
many companies have a representative residing at their
supplier’s location, thereby involving the supplier in every
stage from product design to ﬁnal production.
The Malcolm Baldrige National Quality Award
The Malcolm Baldrige National Quality
Award was established in 1987, when Congress
passed the Malcolm Baldrige
National Quality Improvement Act. The award is named af-National
Quality Award An award given annually to
ter the former Secretary of Commerce, Malcolm
Baldrige, and is intended to reward and
companies that demonstrate
stimulate quality initiatives. It is designed
to recognize companies that establish and
demonstrate high quality standards. The award
is given to no more than two companies
establish best-practice in each of three
categories: manufacturing, service, and small business. Past
winners in-standards in industry. clude Motorola Corporation,
Xerox, FedEx, 3M, IBM, and the Ritz-Carlton. To compete for the
Baldrige Award, companies must submit a lengthy application,
which is followed by an initial screening. Companies that pass
this screening move to the next step, in which they undergo a
rigorous evaluation process conducted by certiﬁed Baldrige
examiners. The examiners conduct site visits and examine
numerous company documents. They base their evaluation on seven
categories, which are shown in Figure 5-11. Let’s look at each
category in more detail. The ﬁrst category is leadership.
Examiners consider commitment by top management, their effort to
create an organizational climate devoted to quality, and their
active involvement in promoting quality. They also consider the
ﬁrm’s orientation toward meeting customer needs and desires, as
well as those of the community and society as a whole.
Malcolm Baldrige National
Quality Award criteria
A Japanese award given to companies to
recognize efforts in quality improvement.
A set of international quality standards and a
certiﬁcation demonstrating that companies have met all the
The second category is
strategic planning. The examiners look for a strategic
plan that has high quality goals and speciﬁc methods for
implementation. The next category, customer and market
focus, addresses how the company collects market and
customer information. Successful companies should use a
variety of tools toward this end, such as market surveys and
focus groups. The company then needs to demonstrate how it
acts on this information.
The fourth category is
information and analysis. Examiners evaluate how the
company obtains data and how it acts on the information. The
company needs to demonstrate how the information is shared
within the company as well as with other parties, such as
suppliers and customers.
The ﬁfth and sixth
categories deal with management of human resources and
management of processes, respectively. These two categories
together address the issues of people and process. Human
resource focus addresses issues of employee involvement.
This entails continuous improvement programs, employee
training, and functioning of teams. Employee involvement is
considered a critical element of quality. Similarly,
process management involves documentation of processes,
use of tools for quality improvement such as statistical
process control, and the degree of process integration
within the organization.
The last Baldrige category
receives the highest points and deals with business
results. Numerous measures of performance are
considered, from percentage of defective items to ﬁnancial
and marketing measures. Companies need to demonstrate
progressive improvement in these measures over time, not
only a one-time improvement.
The Baldrige criteria have
evolved from simple award criteria to a general framework
for quality evaluation. Many companies use these criteria to
evaluate their own performance and set quality targets even
if they are not planning to formally compete for the award.
Deming Prize is a Japanese award given to companies to
recognize their efforts in quality improvement. The award is
named after W. Edwards Deming, who visited Japan after World
War II upon the request of Japanese industrial leaders and
engineers. While there, he gave a series of lectures on
quality. The Japanese considered him such an important
quality guru that they named the quality award after him.
The award has been given
by the Union of Japanese Scientists and Engineers (JUSE)
since 1951. Competition for the Deming Prize was opened to
foreign companies in 1984. In 1989 Florida Power & Light was
the ﬁrst U.S. company to receive the award.
Increases in international trade during the 1980s created a
need for the development of universal standards of quality.
Universal standards were seen as necessary in order for
companies to be able to objectively document their quality
practices around the world. Then in 1987 the International
Organization for Standardization (ISO) published its ﬁrst
set of standards for quality management called ISO 9000. The
International Organization for Standardization (ISO) is an
international organization whose purpose is to establish
agreement on international quality standards. It currently
has members from 91 countries, including the United States.
To develop and promote international quality standards, ISO
9000 has been created. ISO 9000 consists of a set of
standards and a certiﬁcation process for companies. By
receiving ISO 9000 certiﬁcation, companies demonstrate that
they have met the standards speciﬁed by the ISO. The
standards are applicable to all types of companies and have
gained global acceptance. In many industries ISO
certiﬁcation has become a requirement for doing business.
Also, ISO 9000 standards have been adopted by the European
Community as a standard for companies doing business in
In December 2000 the ﬁrst
major changes to ISO 9000 were made, introducing the following
three new standards:
- ISO 9000:2000 –
Quality Management Systems – Fundamentals and Standards:
Provides the terminology and deﬁnitions used in the
standards. It is the starting point for understanding the
system of standards.
- ISO 9001:2000 – Quality Management
Systems – Requirements: This is the standard used for
the certiﬁcation of a ﬁrm’s quality management system. It is
used to demonstrate the conformity of quality management
systems to meet customer requirements.
- ISO 9004:2000– Quality Management
Systems – Guidelines for Performance: Provides
guidelines for establishing a quality management system. It
focuses not only on meeting customer requirements but also
on improving performance.
These three standards are the
most widely used and apply to the majority of companies.
However, ten more published standards and guidelines exist as
part of the ISO 9000 family of standards.
To receive ISO certiﬁcation, a
company must provide extensive documentation of its quality
processes. This includes methods used to monitor quality,
methods and frequency of worker training, job descriptions,
inspection programs, and statistical process-control tools used.
High-quality documentation of all processes is critical. The
company is then audited by an ISO 9000 registrar who visits the
facility to make sure the company has a well-documented quality
management system and that the process meets the standards. If
the registrar ﬁnds that all is in order, certiﬁcation is
received. Once a company is certiﬁed, it is registered in an ISO
directory that lists certiﬁed companies. The entire process can
take 18 to 24 months and can cost anywhere from $10,000 to
$30,000. Companies have to be recertiﬁed by ISO every three
One of the shortcomings of ISO
certiﬁcation is that it focuses only on the process used and
conformance to speciﬁcations. In contrast to the Baldrige
criteria, ISO certiﬁcation does not address questions about the
product itself and whether it meets customer and market
requirements. Today there are over 40,000 companies that are ISO
certiﬁed. In fact, certiﬁcation has become a requirement for
conducting business in many industries.
for standardization of quality created an impetus for the
development of other standards. In 1996 the International
Standards Organization introduced standards for evaluating a
company’s environmental responsibility. These standards, termed
ISO 14000, focus on three major areas:
- Management systems
standards measure systems development and integration of
environmental responsibility into the overall business.
- Operations standards include the
measurement of consumption of natural resources and energy.
- Environmental systems standards measure
emissions, efﬂuents, and other waste systems.
With greater interest in green
manufacturing and more awareness of environmental concerns, ISO
14000 may become an important set of standards for promoting
A set of international standards and a
certiﬁcation focusing on a company’s environmental
In this chapter we have
discussed the meaning of TQM and the great beneﬁts that can
be attained through its implementation. Yet there are still
many companies that attempt a variety of quality improvement
efforts and ﬁnd that they have not achieved any or most of
the expected outcomes. The most important factor in the
success or failure of TQM efforts is the genuineness of the
organization’s commitment. Often companies look at TQM as
another business change that must be implemented due to
market pressure without really changing the values of their
organization. Recall that TQM is a complete philosophy that
has to be embraced with true belief, not mere lip service.
Looking at TQM as a short-term ﬁnancial investment is a sure
recipe for failure.
Another mistake is the
view that the responsibility for quality and elimination of
waste lies with employees other than top management. It is a
“let the workers do it” mentality. A third common mistake is
over- or under-reliance on statistical process control (SPC)
methods. SPC is not a substitute for continuous improvement,
teamwork, and a change in the organization’s belief system.
However, SPC is a necessary tool for identifying
quality problems. Some common causes for TQM failure are
- Lack of a
genuine quality culture
- Lack of top management support and
- Over- and under-reliance on
statistical process control (SPC) methods
Companies that have
attained the beneﬁts of TQM have created a quality culture.
These companies have developed processes for identifying
customer-deﬁned quality. In addition, they have a systematic
method for listening to their customers, collecting and
analyzing data pertaining to customer problems, and making
changes based on customer feedback. You can see that in
these companies there is a systematic process for
prioritizing the customer needs that encompass the entire
and appraisal, are preventive costs; they are
intended to Purchasing
is another important part of the TQM
prevent internal and external failure costs. Not invest-process.
Whereas marketing is busy identifying what ing enough in
preventive costs can result in failure the customers want and
engineering is busy translating costs, which can hurt the
company. On the other hand, that information into technical
speciﬁcations, purchasinvesting too much in preventive costs may
not yield ing is responsible for acquiring the materials needed
to added beneﬁts. Financial analysis of these costs is criti-make
the product. Purchasing must locate sources of cal. You can see
that ﬁnance plays a large role in evalu-supply, ensure that the
parts and materials needed are ating and monitoring the ﬁnancial
impact of managing of sufﬁciently high quality, and negotiate a
purchase the quality process. This includes costs related to
pre-price that meets the company’s budget as identiﬁed by
venting and eliminating defects, training employees, re-ﬁnance.
viewing new products, and all other quality efforts.
Human resources is
critical to the effort to hire
is important in the TQM process
be-employees with the skills necessary to work in a TQM cause of
the need for exact costing. TQM efforts cannot environment. That
environment includes a high degree be accurately monitored and
their ﬁnancial contribu-of teamwork, cooperation, dedication,
and customer tion assessed if the company does not have accurate
commitment. Human resources is also faced with chalcosting
methods. lenges relating to reward and incentive systems. Re-
efforts are critical in TQM because of
wards and incentives are different in TQM from those the need to
properly translate customer requirements found in traditional
environments that focus on re-into speciﬁc engineering terms.
Recall the process we warding individuals rather than teams.
followed in developing quality function deployment
Information systems (IS)
is highly important in (QFD). It was not
easy to translate a customer require-TQM because of the
increased need for information ment such as “a good looking
backpack” into speciﬁc accessible to teams throughout the
organization. IS terms such as materials, weight, color grade,
size, and should work closely with a company’s TQM
develop-number of zippers. We depend on engineering to use ment
program in order to understand exactly the type general customer
requirements in developing technical of information system best
suited for the ﬁrm, includspeciﬁcations, identifying speciﬁc
parts and materials ing the form of the data, the summary
statistics avail-needed, and identifying equipment that should
be used. able, and the frequency of updating.
Implementing total quality management requires broad and
sweeping changes throughout a company. It also affects all other
decisions within operations management. The decision to
implement total quality management concepts throughout the
company is strategic in nature. It sets the direction for the
ﬁrm and the level of commitment. For example, some companies may
choose to directly compete on quality, whereas others may just
want to be as good as the competition. It is operations strategy
that then dictates how all other areas of operations management
will support this commitment.
The decision to implement TQM affects areas
such as product design, which needs to incorporate
customer-deﬁned quality. Processes are then redesigned in order
to produce products with higher quality standards. Job design is
affected, as workers need to be trained in quality tools and
become responsible for rooting out quality problems. Also,
supply chain management is affected as our commitment to quality
translates into partnering with suppliers. As you can see,
virtually every aspect of the operations function must change to
support the commitment toward total quality management.
quality management (TQM) is different from the old concept
of quality because its focus is on serving customers,
identifying the causes of quality problems, and building
quality into the production process.
are four categories of quality costs. The ﬁrst two are
prevention and appraisal costs, which are incurred by a
company in attempting to improve quality. The last two costs
are internal and external failure costs, which are the costs
of quality failures that the company wishes to prevent.
seven most notable individuals who shaped today’s concept of
quality are: Walter A. Shewhart,
W. Edwards Deming, Joseph M. Juran, Armand
V. Feigenbaum, Philip B. Crosby, Kaoru
Ishikawa, and Genichi Taguchi.
W. Edwards Deming Philip B.
Crosby Joseph Juran
total quality management (TQM) 137
customer-deﬁned quality 137 conformance to speciﬁcations 138
ﬁtness for use 138 value for price paid 138 support services 138
psychological criteria 139 prevention costs 140 appraisal costs
140 internal failure costs 141 external failure costs 141 Walter
A. Shewhart 143
W. Edwards Deming 143
Reliability of parts in series:
Seven features of TQM combine to create
the TQM philosophy: customer focus, continuous improvement,
employee empowerment, use of quality tools, product design,
process management, and managing supplier quality.
Quality function deployment (QFD) is a
tool used to translate customer needs into speciﬁc
engineering requirements. Seven problem-solving tools are
used in managing quality. Often called the seven tools of
quality control, they are cause-and-effect diagrams,
ﬂowcharts, checklists, scatter diagrams, Pareto analysis,
control charts, and histograms.
Reliability is the probability that the
product will function as expected. The reliability of a
product is computed as the product of the reliabilities of
the individual components.
The Malcolm Baldrige Award is given to
companies to recognize excellence in quality management.
Companies are evaluated in seven areas, including quality
leadership and performance results. These criteria have
become a standard for many companies that seek to improve
quality. ISO 9000 is a certiﬁcation based on a set of
quality standards established by the International
Organization for Standardization. Its goal is to ensure that
quality is built into production processes. ISO 9000 focuses
mainly on quality of conformance.
Joseph M. Juran 144
Armand V. Feigenbaum 144 Philip B. Crosby
145 Kaoru Ishikawa 145 Genichi Taguchi 145 robust design 145
Taguchi loss function 146 continuous improvement (kaizen)
147 plan–do–study–act (PDSA) cycle 148 benchmarking 149
quality circle 149 cause-and-effect diagram 150 ﬂowchart 150
checklist 151 control charts 152 scatter diagrams 152 Pareto
analysis 153 histogram 153 quality function deployment (QFD)
153 reliability 156 quality at the source 158 Malcolm
Baldrige National Quality
Award 159 Deming Prize 160 ISO 9000 160
ISO 14000 161
2. Reliability of parts
with redundancy (in parallel):
Reliability Reliability Probability
. . . (Rn)
of 1st of 2nd
Deﬁne quality for
the following products: a university, an exercise facility,
spaghetti sauce, and toothpaste. Compare your deﬁnitions
with those of others in your class.
- Describe the TQM
philosophy and identify its major characteristics.
- Explain how TQM is different from the
traditional notions of quality. Also, explain the
differences between traditional organizations and those that
have implemented TQM.
- Find three local companies that you
believe exhibit high quality. Next, ﬁnd three national or
international companies that are recognized for their
- Describe the four dimensions of quality.
Which do you think is most important?
- Describe each of the four costs of
quality: prevention, appraisal, internal failure, and
external failure. Next, describe how each type of cost would
change (increase, decrease, or remain
the same) if we designed a
higher quality product that was easier to manufacture.
- Think again about
the four costs of quality. Describe how each would change if
we hired more inspectors without changing any other aspects
- Explain the meaning of the plan – do –
act – study cycle. Why is it described as a cycle?
- Describe the use of quality function
deployment (QFD). Can you ﬁnd examples in which the voice of
the customer was not translated properly into technical
- Describe the seven tools of quality
control. Are some more important than others? Would you use
these tools separately or together? Give some examples of
tools that could be used together.
- What is the Malcolm Baldrige National
Quality Award? Why is this award important, and what
companies have received it in the past?
12. What are ISO 9000
standards? Who were they set by and why? Can you describe other
certiﬁcations based on the ISO 9000 certiﬁcation?
1. A CD
player has 5 components that all must function for the player to
work. The average reliability of each component is
0.90. What is the reliability
of the CD player?
- A jet engine has 10
components in series. The average reliability of each
component is 0.998. What is the reliability of the engine?
- An ofﬁce copier has 4 main components in
a series with the following reliabilities: 0.89, 0.95, 0.90,
and 0.90. Determine the reliability of the copier.
- An engine system consists of 3 main
components in a series, all having the same reliability.
Determine the level of reliability required for each of the
components if the engine is to have a reliability of 0.998.
- A bank loan processing system has 3
components with individual reliabilities as shown:
What is the reliability of the
bank loan processing system?
- What would be the
reliability of the bank system above if each of the 3
components had a backup with a reliability of 0.80? How
would the total reliability be different?
- An LCD projector in an ofﬁce has a main
light bulb with a reliability of .90 and backup bulb, the
reliability of which is .80.
13. Who are the seven
“gurus” of quality? Name at least one contribution made by
at least three of them.
The system looks as
What is the reliability of
- A University
Web server has 5 main components each with the same
reliability. All 5 components must work for the server
to function as intended. If the University wants to have
a 95 percent reliability what must be the reliability of
each of each of the components?
- BioTech Research Center is working
to develop a new vaccine for the West Nile Virus. The
project is so important that the ﬁrm has created 3 teams
of experts working on the project from different
perspectives. Team 1 has a 90 percent chance of success,
team 2 an 85 percent chance of success, and team 3 a 70
percent chance. What is the probability that BioTech
will develop the vaccine?
- The following system of components
has been proposed for a new product. Determine the
reliability of the system.
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Crosby, Philip. Quality
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Evans, James R., and William M. Lindsay.
The Management and
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4th ed. Cincinnati: South-Western,
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ity,” Harvard Business Review, Nov. –
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N.J.: Prentice-Hall, 1995.
Hall, Robert. Attaining
Manufacturing Excellence. Burr Ridge, Ill.: Dow-Jones Irwin,
Juran, Joseph M. “The Quality
Trilogy,” Quality Progress 10, no. 8(1986), 19 – 24.
Juran, Joseph M. Quality
Control Handbook. 4th ed. New York: McGraw-Hill, 1988.
Juran, Joseph M. Juran on
Planning for Quality. New York: Free Press, 1988.
Kitazawa, S., and Sarkis, J.
“The Relationship Between ISO 14001 and Continuous Source
Reduction Programs,” International
Journal of Operations and Production Management,
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Medori, D., and D.
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Measurement Systems,” International Journal of Operations
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Rosenberg, Jarrett. “Five
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Total Quality Management (TQM) –
a puzzle with nine pieces
Quality management, Total Quality Management
(TQM) and the European Foundation for Quality
Management Excellence Model (EFQM-Model) are
concrete tools that continually challenge us to
excellence. It is a puzzle with nine pieces.
Leadership. We self critically assess our
management style. A patriarchal system no longer
meet the requirements of a modern heart centre.
Policy and strategy. We realize that there are
heart centres other than ours. We do not fear
transparency or competition and are at all times
willing to have the quality of our work
People. Keeping abreast with state-of-the-art
developments and advancements is imperative at
a high-tech medical institution. Professional
development and close collaboration with other
departments is therefore crucial.
Partnerships and resources. National and
international cooperation in research, health
care as well as management is maintained and
encouraged. We share information and learn from
Processes. Diagnosis and treatment is more than
the sum of its individual steps. The improvement
of this process is a constant obligation.
Customer results. Over and beyond successful
medical results, we take into account of the
personal opinion of our patients and the
referring physicians as well as self help groups
People results. The satisfaction of our patients
is dependent on the satisfaction of our
employees. Although not only because of this, we
try to provide optimal working conditions.
Society results. Our mission, the
state-of-the-art medical treatment and care of
patients with cardiovascular disorders, is one
we always have accomplished successfully. We are
interested that the general public also be made
aware of this.
Key performance results. For more than 30 years
excellent medical and scientific results are a
matter of course for us.
We will and must continue to provide such
results in accordance to our guidelines for
thrift and economising requirements.