Chapter 1
Fundamentals of Quality
Gitlow, Oppenheim, Oppenheim and Levine
Chapter 1
Fundamentals of Quality
Learning Objectives
– Understand the definition of a process
– Understand variation and its causes in a process
• Special causes of variation
• Common causes of variation
– Understand the two definitions of quality
• Goal post view
• Continuous improvement view
– Understand the quality environment
Chapter 1
Fundamentals of Quality
Learning Objectives
– Understand the three types of quality
• Quality of design or redesign
• Quality of conformance
• Quality of performance
– Understand the relationship between Quality and Cost
• Features and price
• Uniformity and dependability
– Understand the relationship between Quality and
Productivity
– Understand the benefits of improving quality
– Know how to apply take-away knowledge
Process Basics
• Definition of a process
– A process is a collection of interacting
components that transform inputs into
outputs toward a common aim called a
mission statement.
Inputs
Manpower
Equipment
Materials/Goods
Process
Transformation of
inputs, value (time,
place, form) is added
or created
Outputs
Manpower
Equipment
Materials/Goods
Methods
Methods
Environment
Environment
Definition of a process
– It is management’s job to optimize the
entire process toward its aim.
– This may require the sub-optimization of
selected components of the process.
Definition of a Process
– Processes exist in all facets of organizations and
our understanding of them is crucial
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Administration
Sales and service
Human resources
Maintenance
Communication
Production
– Relationships between people are processes
– All processes can be studied, documented,
defined, improved, and innovated
Definition of a process
– An organization is a multiplicity of micro subprocesses, all synergistically building to the macro
process of that firm.
– All processes have customers and suppliers;
these customers and suppliers can be internal or
external to the organization.
Variation in a Process
– The outputs from all processes and their
component parts vary over time.
Number of
Accidents
Actual Values
(Variation among
actual values)
Variation between Ideal and Actual Values
Ideal Value = 0
Time
Variation in a process
– Special causes of variation are due to
events external to the usual functioning of
a system.
– Examples could include (if they are not part of the system):
• New raw materials
• A drunk employee
• A new operator
Variation in a process
– Common causes of variation are due to the
process itself.
– Process capability is determined by inherent
common causes of variation.
– Examples of common causes of variation include:
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Hiring, training and supervisory practices
Lighting
Stress
Management style
Policies and procedures
Design of products or services
Variation in a process
– Employees cannot control a common
cause of variation and should not be held
accountable for, or penalized for, its
outcomes.
– Managers must realize that unless a
change is made in the process (which only
they can make) the process’s capability will
remain the same.
Process Basics
Workshop:
The Drunk Employee
More About the Feedback Loop
– A feedback loop relates information about
outputs from any stage or stages back to
another stage or stages so that an analysis of
the process can be made.
Input
Process
Feedback Loop
Output
More About the Feedback Loop
– There are three feedback loop situations
• no feedback loop
• special cause only feedback loop
• special and common cause feedback loop
DEFINITION OF QUALITY
• Goal Post View
• Continuous Improvement View
Goal post view
– Conformance to valid customer
requirements, that is, as long as an output
fell within acceptable limits, called
specification limits, around a desired
value, called the nominal value (denoted
by “m”), or target value, it was deemed
conforming, good, or acceptable.
Definition of Quality
No
No
Good,
Good,
Good,
Loss
Loss
Loss
No Loss
LSL
Nominal
m
USL
Quality
Characteristic
• Goal post view (example)
– The desired diameter of stainless steel ball
bearings is 25 mm (the nominal value).
– A tolerance of 5 mm above or below 25 mm is
acceptable to purchasers.
– Thus, if a ball bearing diameter measures
between 20 mm and 30 mm (inclusive), it is
deemed conforming to specifications.
– If a ball bearing diameter measures less than 20
mm or more than 30 mm, it is deemed not
conforming to specifications, and is scrapped at a
cost of $1.00 per ball bearing.
Continuous Improvement View
– Quality is a predictable degree of
uniformity and dependability, at low cost
and suited to the market.
– Losses begin to accrue as soon as a
quality characteristic of a product or
service deviates from the nominal value.
– As with the “goal post” view of quality, once
the specification limits are reached the loss
suddenly becomes positive and constant,
regardless of the deviation from the
nominal value beyond the specification
limits.
• Continuous improvement view
– L(y) = k(y-m)2 = loss of deviating (y-m) units from
the nominal value of “m”
– y= the value of the quality characteristic for a
particular item of product or service
– m = the nominal value for the quality characteristic
– k = a constant, A/d2
– A = the loss (cost) of exceeding specification limits
(e.g., the cost to scrap a unit of output)
– d = the allowable tolerance from “m” that is used
to determine specification limits.
• Continuous improvement view
– Under the Taguchi Loss Function the
continuous reduction of unit-to-unit variation
around the nominal value is the most
economical course of action, absent capital
investment
• Continuous improvement view
(example)
– Returning to the production of stainless
steel ball bearings. Every millimeter higher
or lower than 25 mm causes a loss that
can be expressed by the following Taguchi
loss function:
L(y) = k(y-m)2 = (A/d2)(y-m)2 =
($1.00/5mm2)(y-25mm)2 = (.04)(y-25mm)2
Diameter of Ball Bearing (y)
Value of Taguchi Loss
Function L(y)
18
1.00
19
1.00
20
1.00
21
0.64
22
0.36
23
0.16
24
0.04
25
0.00
26
0.16
27
0.36
28
0.64
29
1.00
30
1.00
31
1.00
32
1.00
The Quality Environment
• The pursuit of quality requires that
organizations globally optimize their
system of interdependent
stakeholders.
• This system includes employees,
customers, investors, suppliers and
subcontractors, regulators, the
environment, and the community.
• Employees are the most critical stakeholders
of an organization.
• According to quality expert Kaoru Ishikawa:
“In management, the first concern of the
company is the happiness of people who are
connected with it. If the people do not feel
happy and cannot be made happy, that
company does not deserve to exist. . . The
first order of business is to let the employees
have adequate income. Their humanity must
be respected, and they must be given an
opportunity to enjoy their work and lead a
happy life.”
Types of Quality
• There are three types of quality:
– Quality of design / redesign
– Quality of conformance
– Quality of performance
• The above types of quality create the
never ending spiral of continuous
improvement of products, services or
processes
• Quality of design
– Quality of design / redesign focuses
on determining the quality
characteristics of products that are
suited to the needs and wants of a
market, at a given cost; that is, quality
of design develops products from a
customer orientation.
• Quality of design / redesign
– Quality of design studies begin with consumer
research, service call analysis, and sales call
analysis, and lead to the determination of a
product concept that meets the consumer’s needs
and wants.
– Next, specifications are prepared for the product
concept.
• Quality of conformance
– Quality of conformance is the extent to
which a firm and its suppliers can produce
products with a predictable degree of
uniformity and dependability, at a cost that
is in keeping with the quality characteristics
determined in a quality-of-design study.
– The ultimate goal of process improvement
and innovation efforts is to create products
and services whose quality is so high that
consumers (both external and internal)
extol them.
• Quality-of-performance
– Quality of performance studies focus on
determining how the quality characteristics
determined in quality-of-design studies, and
improved and innovated in quality-of-conformance
studies, are performing in the marketplace.
– The major tools of quality-of-performance studies
are consumer research and sales/service call
analysis.
– These tools are used to study after-sales service,
maintenance, reliability, and logistical support, as
well as to determine why consumers do not
purchase the company’s products.
Relationship between
Quality and Cost
• Features and Price
– Features and price determine whether a
consumer will initially enter a market
segment; hence features and price
determine market size.
– Dependability and uniformity determine a
product’s success, and therefore its market
share, within a market segment.
– Generally, products or services with more
features or fancier features have higher
costs to the manufacturer and higher
prices to the consumer than products or
services with fewer or simpler features.
• Dependability and Uniformity
– Uniformity and dependability create an
inverse relationship between quality and
cost. When the degree of uniformity and
dependability of a product is high, the
quality of the product is high, and the
overall cost to both the manufacture and
the consumer is less.
– This relationship is explained by the
Taguchi Loss Function.
1.5 Relationship between
Quality and Cost
• Conclusion
– Managers must balance the cost of having
many market segments with the benefits of
high consumer satisfaction caused by
small deviations between an individual
consumer’s needs and the product
characteristic package for his market
segment. Also, managers must continually
strive to reduce variation in product
characteristics for all market segments.
• Stressing productivity often has the
opposite effect of what management
desires
• Management’s ability to improve the
process results in a decrease in
defectives, yielding an increase in good
units, quality, and productivity
Benefits of Improving Quality
• Several benefits result from improving a process:
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rework decreases
productivity rises
quality improves
cost per good unit is decreased
price can be cut
workers’ morale goes up because they are not seen as the
problem. This last aspect leads to further benefits:
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less employee absenteeism
less burnout,
more interest in the job
increased motivation to improve work.
• This is called the chain reaction of quality