QUALITY MANAGEMENT – BCO 411
TOPIC 1 & 2:
INTRODUCTION TO QUALITY
Quality is a management process where all organizations activities are aimed at optimizing customer
satisfaction, through continuous process improvement, hence, increase competitiveness and the value it
provides to customers. Quality therefore leads to a well-coordinated management process that result in
lower production costs, as well as increased efficiency and effectiveness of output in production, which
leads to improved overall business performance
The continuous improvement process is built on the premise that work is the result of a series of
interrelated steps and activities that result in an output. In its implementation, the process improvement is
carried out based on the following: Plan, Do, Check, and Action known as (PDCA model/cycle) which
rotate continuously to prevent recurrence of the damages or loss. The cycle is elaborated into interrelated
activities, namely:
1. Define problem
2. Identify the resulting product.
3. Identify customers.
4. Identify the requirements - the requirements desired by the customer
Overview of Quality Management
The quality management field has been studied for more than 100 years dating back to the early 1900s
when Fredrick W. Taylor known as the father of Scientific Management, stressed the important of quality
inspection. Quality does not mean “best” but “best for the customer use and selling price”. It is defined as
conformance to requirements. That means that, a product or service must be produced with the customers‟
need in mind; and a product or service is not what the supplier put in. It is what the customer gets out and
is willing to pay for.
Quality management has been defined as “philosophy or an approach to management” made up of a “set
of mutually reinforcing principles, each of which is supported by a set of practices and techniques” Thus,
Quality management is about all aspects of the overall management function that determine the quality
policy objectives and responsibilities, and implement them by means such as quality planning, quality
control, quality assurance and quality improvement within the quality system of an organization.
Class Notes by Sam Mangwana; Lecturer, School of Business & Economics – BCO 411
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A number of studies in recent years have focused on accessing the integration of quality management
approach, tools and techniques such as performance measurement matters, quality management in
manufacturing industry (i.e. Agile manufacturing), and quality management link to service quality. This
indicates that the studies have been conducted to measure or validate quality management from
customers‟ perspectives or managers‟ perspectives with attention given in examining quality from the
perspective of development and evolution of quality itself, which has lead to most organizations abandoning
traditional management to adopt Total Quality Management. The main differences being:
No
Total Quality Management
Traditional Management
1
Entirely customer oriented
Stresses on other resources
2
Focuses on quality first
Put growth on sales and profits first
3
Quality is composed of multi dimensional attributes
Quality is conformance to specifications
4
Economy of time and scope is pursued
Economy of scale is desirable
5
Emphasizes on flexible multi skilled workers
Strong division of labour
6
Culture of networking among functions
Proposed hierarchical structure of org.
7
TQM is process based
TM is result based from management
The Historical Evaluation and thinking behind Total Quality Management
The origin of quality management is linked with time series; i.e., from Inspection Era to Statistical Quality
Control Era, Quality Assurance Era and the latest Strategic Quality Management Era. Traditionally quality is
used for inspection as a method of measurement to detect the errors in production manufacturing.
According to Foster (2001) and Garvin (1988) the driving force of inspection activities was inspired by
Frederick Taylor (the father of Scientific Management) in the early 1900s. Through the years, the interest in
quality has evolved when G.S Radford publishing his book named The Control of Quality in Manufacturing
in 1922. It defined quality as a distinct management responsibility and as an independent function yet, at
that time, the primary focus was inspection. Meanwhile Henry Ford developed the Model T which later
became the Ford car and introduced the moving assembly line, which lead to the concept of mass
production.
Class Notes by Sam Mangwana; Lecturer, School of Business & Economics – BCO 411
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The Model T was described as the first product of mass production, which was developed to produce the
Model T in great quantities. This interchange ability reflected the quality in the form of standardisation,
which reduced the variation in the parts.
Between 1930s and 1940s, statistics became the main method of influence for the quality management
discipline. In 1938, Deming published a technical book and taught courses in the use of his statistical
methods. Deming thinking was centred to problem solving in process management, when he proposed the
Deming Cycle (Plan-Do-Check-Act). This was influenced by Shewhart who at that time was concerned with
the use of Statistical Quality Control (SQC) in reducing the deviation in production. He published Economic
Control of Quality of Manufacturing Product, in which he gave a precise and measurable definition of
manufacturing control, developed powerful techniques for monitoring and evaluating day-to-day production,
and suggested a variety of ways of improving quality. Shewhart‟s book is considered by many to be the
origin of the basic principles of quality.
Moreover, the book was considered by statisticians to be a landmark contribution to the effort to improve
the quality of manufactured goods and he made the utmost valuable contribution to quality development
with the concepts of Statistical Control or processes known today as Statistical Process Control (SPC).
The 1950s could be considered as the turning point of the quality management field. During that decade,
the Japanese Industrial Revolution had rapidly begun. Earlier in 1946 the Union of Japanese Scientist and
Engineers was founded, which went on to introduce the Deming Prize in 1951.
At this time, the Japanese Industrial Standards Committee was established, and they have played a major
role in the development of the quality movement in Japan. As such, several tools and techniques were
implemented and are still being practiced across the world. These include Statistical Process Control
(originated from Statistical Quality Control), Reliability Engineering, Kaizen and Genba-Kaizen, Failure
Mode and Effect Analysis, Poka-Yoke (mistake proofing), Jidoka and Just-in-Time and Total Preventive
Maintenance
During the 1990s, Total Quality Management (TQM) became central in the agenda of top management.
According to Dahlgaard, Total Quality Management (TQM) is a relatively new management philosophy,
which has evolved from the rather narrow and mechanistic approach of Statistical Quality Control (SQC).
The concept of TQM is a logical development of the concept of Total Quality Control (TQC).
Class Notes by Sam Mangwana; Lecturer, School of Business & Economics – BCO 411
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Slowly but gradually, by this time, there seems to be more attention given to people with the system
(people spin), in the development of quality journey. As these can be seen with the increased focus on
Investors in People (1991) for the Best Training and Development Practices, European Foundation for
Quality Management (1992) for the Business Excellence Model (BEM); e.g. leadership with excellent
mindset and OHSAS 18000 (1996) for Occupational Health and Safety Management System.
Following on from this, the emphasis on system focus still continued with Six Sigma and Lean
Manufacturing made the headlines during the 1990s. Mikel Harry (Motorola) first published “The Nature of
Six Sigma” in 1986 and commercialised Six Sigma as a vibrant quality-improvement methodology. The
technique was given global boost in 1998 by Jack Welch then CEO of General Electric. Another
philosophy emerging at that time was Lean Manufacturing which derives from the Toyota Production
System (TPS) or Just in Time (JIT) manufacturing. The lean manufacturing concept was popularised in
American factories in large part by the Massachusetts Institute of Technology, who studied the movement
from mass production toward Lean production as described in “The Machine That Changed the World: The
Story of Lean Production”.
Systems have further developed with the implementation of TickIT, originally set up by UK Department of
Trade and Industry and administered by British Standards Institution (BSI). This standard applies to
suppliers of all types of information systems that involve software development processes. Further, the
International Automotive Task Force (IATF) has developed ISO/TS 16949 for automotive related products.
The system enables continuous improvement, emphasizing defect prevention and reduction of variation
and waste in the supply chain. ISO/TS 16949 mainly applies to design/development, production, installation
and servicing of automotive related products, and is the replacement of QS 9000: 1998 - International
Automotive Task Force (IATF, 2002). Therefore, this was the time when overlapping occurred within the
quality movement journey with the focus on both systems and people.
Moving to the late of 2000, there seems to be an increased awareness of Corporate Social and
Environmental Responsibility that obliges the business sector to play a sensible yet not solely profitoriented role. This includes social and environmentally driven actions, where the business sector has been
expected to go beyond its moneymaking and commercial activities to commit to the well-being of the
community. This has led to the introduction of ISO 26000 (standards for Social Responsibility), which published in 2010 that act as a guideline for dealing with corporate social responsibility and the environment.
Class Notes by Sam Mangwana; Lecturer, School of Business & Economics – BCO 411
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Defining Quality
Quality as customer-oriented is defined as „fitness for use‟. It explicitly addresses the customer and it is
aimed at the needs of the customer, present and future.
As per International Organization for Standardization ISO – 9000:2000: Quality means “The degree
to which a set of inherent characteristics fulfils requirements”. Here,
Quality also means a totality of characteristics of an entity that bear on its ability to satisfy stated and
implied needs. In some references,
Dimensions of Quality: Quality has different dimensions; these dimensions are somewhat –
Independence. Therefore a product can be excellent in one dimension and average or poor in another.
These dimensions include:
1. Conformance
It is one of the dimensions of Quality. It means meeting the specifications of the customer or
Industry standards, workmanship. When new designs or models are developed, dimensions are
set for parts and purity standards for materials. These specifications are normally expressed as
a target or “centre”; deviance from the centre is permitted within a specified range.
2. Performance
It refers to Primary product functions or characteristics, subjective preferences for e.g. clarity of
voice received in mobile phone. In service businesses say, fast food and airlines performance
often means prompt service
3. Features
Features are those characteristics of product or services that supplement the basic function of
the product. Example includes free drinks on a plane.
4. Durability
Durability can be defined as the amount of use one gets from a product before it deteriorates.
After so many hours of use, the filament of a light bulb burns up and the bulb must be replaced.
Lifetime of the product
5. Reliability
The probability of a product performing its intended duty under stated conditions without failure
for a given period of time. This dimension reflects the probability of a product malfunctioning or
failing within a specified time period. Example could be reliability of war equipment.
Class Notes by Sam Mangwana; Lecturer, School of Business & Economics – BCO 411
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6. Serviceability
Speed, courtesy, competence and ease of repair for a product. In those cases where problems
are not immediately resolved and complaints are filed, a company‟s complaint-handling
procedures are also likely to affect customers‟ ultimate evaluation of product and service quality.
7. Reputation
This is customer‟s perception about the product which can be understood from a market
research survey.
8. Aesthetics
This is a process where external finish is given to a product to attract the customer. For e.g.
food, it could taste natural, good aroma, and looks appetizing.
9. Response
This is Human to Human interface, such as the courtesy of the dealer.
Quality is a multi-faceted and intangible construct that has been subject to many interpretations and
perspectives in our everyday life, in academia, as well as in industry and the public domain. In industry,
most organisations have well-established quality departments, but the method of organising quality work
for best results is still being questioned. These questions are about the need for a separate quality
profession, the quality practices that best influence business results, and competencies that the quality
practitioners need to have.
Quality Management has its roots in the manufacturing industry that has changed significantly in the last
century, especially regarding the role of the customer. Moreover, new concepts and approaches related
to Quality Management have been proposed over the years. They have impacted the notion of quality
regarding the dominant principles and practices. It is also evident that society, in which organisations
exist, changes, and poses demands such as sustainability and digitalisation. This influences the
operationalization of quality.
Importance of Quality

Good quality of goods and services can provide an organization with competitive edge.

Good quality reduces costs due to product returns, rework and scrap.

Good quality increases productivity, profits and other measures of success such as brand
image, product image and company goodwill.

Most importantly, good quality generates satisfied customers today and tomorrow.
Class Notes by Sam Mangwana; Lecturer, School of Business & Economics – BCO 411
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
Good quality creates an atmosphere for high employee morale, which improves productivity
The Meaning of Product and Service Quality Dimensions
Service quality means the ability of a service provider to satisfy customer in an efficient
manner through which he can better the performance of business. In the service sector too „quality‟ is an
important element for the success of business. It is because of the realization of its positive link with
profits, increased market share, customer satisfaction. In the case of tangible goods, quality can be
assessed by examining the goods. Quality control can be used to check specifications and reject
defective goods. But service quality cannot be assessed in the same way as a tangible product due to
particular feature of service such as, intangibility, in separability etc. As in the case of products, the service
provider cannot undertake quality check before the service is finally delivered to the customer. In order to
assess the service quality the customer judges the expected service quality against the perceived quality
when they receive it. There are mainly two methods for measuring service quality:.
 Gap Analysis Service
 Performance Measures
Gap Analysis Service
The model indicated that customer perception of quality was influenced by a series of five distinct gaps.
They are mentioned as follows:
Gap - I - Gap between customer expectation and Management perception
The reasons for this gap are lack of adequate market research and lack of upward communication. This
gap can be narrowed by adopting adequate research programs to know customer needs and to improve
the communication system. It can be measured by using the SERVQUAL scale (Service Quality) and
comparing the scores obtained from the management and customers.
Gap - 2 - Gap between Management perception and service quality specification
This gap exists in service firms because of the lack of whole hearted commitment of management to
service quality, inadequate service leadership etc. It can be closed by standardizing service delivery
process and setting proper organizational goals.
Class Notes by Sam Mangwana; Lecturer, School of Business & Economics – BCO 411
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Gap - 3 - Gap between Service quality specification and service delivery
The third gap originates from the discrepancies in the actual service delivery, that is, the service providers
or employees do not perform at the level expected by the management. It is because of the ineffective
recruitment, lack of proper incentives and motivations etc. This gap can be eliminated by providing the
employees with adequate support system, better human resource management system etc.
Gap - 4 - Gap between Service delivery and external communication
The gap between service delivery and external communication occurs due to exaggerated promise or
ineffective communication to the customer, which raise customer expectations. This can be narrowed by
efficient and effective communication system.
Gap - 5 - Gap between expected quality and perceived quality
This gap exists because of the inequality in the service expectation of customer and his service
perception. This can be overcome by identifying, quantifying and monitoring customer expectations and
perceptions through the effective use of marketing and marketing research tools.
Performance Measures
An alternative to using gap theory methodology for measuring service quality is the service performance
measures. The two types of performance measures under this method include:
Soft Measures of Service Quality
Soft measures are those that cannot easily be observed and must be collected by talking to
customers, employees or others.
1. Customer satisfaction surveys
Under this method individual customers or corporate customer may be asked to rate their specific and
overall impression of service delivery.
For this a questionnaire or interview schedule can be
used. Besides this, focus group interviews and other market research techniques can be utilized for this
purpose.
2. Internal business performance analysis
In this method employee surveys are conducted to determine perception of the quality of
service delivered to customers on specific dimensions. Also, feedback from quality circles, performance
evaluation reports, customer retention levels etc., provides information to monitor quality of services.
Class Notes by Sam Mangwana; Lecturer, School of Business & Economics – BCO 411
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Hard Measures of Service Quality
This method includes those characteristics and activities that can be counted, timed or measured through
audits. For Example - Such measures may include waiting time for the pass book to be updated by a bank,
time taken to issue a demand draft, delay in clearing and crediting a cheque deposited by the customer etc.
Dimensions of Service Quality
The concept 'service quality' is not an independent term, means; its formation depends upon several
factors related to service and service firms. These factors are:
 Reliability
This is the process to perform the promised service dependably and accurately
 Responsiveness
Responsiveness is the willingness to help customers and to provide prompt service. This
dimension focuses in the attitude and promptness in dealing with customer requests.
 Assurance
This is the process of employee's knowledge, courtesy and the ability of the firm and its employees
to inspire trust and confidence in their customers. This dimension is important in banking,
insurance services because customers feel uncertain about their ability to evaluate outcome.
 Empathy
Another dimension of service quality is the Empathy dimension. It is defined as the caring,
individualized attention provides to the customers by their banks or service firms .
 Tangibility
This is the appearance of physical facilities, equipments, communication materials and technology.
All these provide enough hints to customers about the quality of service of the firm
The Essence of Total Quality in Business Management
Total Quality Management (TQM) is a management system for a customer-focused organization that
involves all employees in continual improvement. It uses strategy, data, and effective communications to
integrate the quality discipline into the culture and activities of the organization. TQM uses 8 principles of
total quality management:
1. Customer Focused
Class Notes by Sam Mangwana; Lecturer, School of Business & Economics – BCO 411
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2. Total Employee Involvement
3. Process Centred
4. Integrated System
5. Strategic and Systematic Approach
6. Continual Improvement
7. Fact-based Decision Making
8. Communication
TQM activities are aimed at meeting customer expectations. Its purpose is to enable organizations to
eliminate waste, simplify processes, and focus on the use of quality practices, which ultimately affect
every management activity; so that customer satisfaction is achieved and the company can achieve a
competitive advantage.
The Cost of Quality
Cost of Quality (COQ) plays a critical role in every manufacturing firm. Monitoring and controlling are critical
component of quality improvement programs. Estimation of the COQ can be used to decide the limits of
budgets. The COQ analyses help organization to identify measure and control consequences of the poor
quality. Organizations must identify; measure and analyse, to ensure that the product not only meet the
required level of quality, and also satisfy the customer in terms of the cost competitiveness. Quality cost
accounting should be conducted systematically on the basis of the cost accounting system existing in the
enterprise. The quality cost system should be integrated with the accounting department. Most quality costs
are hidden and invisible; therefore it is necessary to introduce new information carriers, documents and
subaccounts in the accounting system. The source of information about their existence is the cost recording
system and non-accounting materials. It is necessary to mark source documents as quality costs (QC) for
recording purposes. The recording of quality costs should be conducted on a continuous basis (a constant
and uniform cost recording method), which allows their comparison over time. These costs should be
recorded in set 4 on the additionally created control account “quality costs” (account 406) within the
applicable chart of accounts: depreciation (account 400), material and energy consumption
(account 401), external services (account 402), taxes and charges (account 403), payroll (account 404),
social insurance and other benefits (account 405), other costs by type (account 409).
Class Notes by Sam Mangwana; Lecturer, School of Business & Economics – BCO 411
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Service companies have to deal with considerable difficulties related to the proper identification of quality
costs and places where they arise. The structure of quality costs is determined by the processes taking
place in individual entities. The complexity of processes occurring in a given enterprise depends on its
size and the type of services it provides. Each process consists of events, actions and tasks that are
performed by responsible employees, and the final effect is the service provided to the customer.
The following strategies can be followed to reduce quality costs:
 Evaluating issues with all affected personnel.
 Creating a request for a solution.
 Providing directive support in planning and research.
 Following up ongoing problems.
Prevention Costs
Prevention quality costs are the sum of the cost incurred by investing in the prevention of nonconformances to requirement. Preventive costs are the expenses paid to avoid low quality of products
before and after the manufacturing process. Quality engineering, quality training of workers, quality
maintenance of tools, quality planning, quality reporting, evaluation of suppliers, quality control, design
reviews are included in the prevention costs. It is accrued in order to avoid low quality of the manufactured
goods or services. If the costs of avoidance rise, the costs of loss are projected to decline.
Quality and Other Functional Areas of Management
Operation function is responsible for producing products and delivering. But it needs support and input
from others areas of the organization. In the standard business organization we can distinguish three
basic functional areas that include: Finance, Marketing and Operations. Quality control and Quality
assurance play a very key role in the function areas of management. Quality control can be defined as
"part of quality management focused on fulfilling quality requirements." While quality assurance relates to
how a process is performed or how a product is made, quality control is more the inspection aspect of
quality management. But both are required to ensure that finished goods meet the rigorous and exacting
quality standards that customers and consumers expect.
The role of Quality Control is:

Enhance product quality

Reduce risks
Class Notes by Sam Mangwana; Lecturer, School of Business & Economics – BCO 411
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
Gain production efficiencies

Garner customer loyalty
The role of Quality Assurance is:

Documenting and reporting product or service quality levels.

Developing and implementing standards for inspection

Developing a workflow for product inspection

Developing plans to help a company manage waste
Basic Functional Areas of the Business Organization
Functional Area
Finance
Description
Is responsible for securing financial resources at favourable prices and allocating
those resources throughout the organization, as well as budgeting, analyzing
investment proposals, and providing funds for operations.
Marketing
Is responsible for assessing consumer wants and needs, and selling and
promoting the organization‟s goods or services. Marketing‟s focus is on selling
and/or
promoting
the
goods
or
services
of
an
organization.
Marketing is also responsible for assessing customer wants and needs, and for
communicating those to operations people (short term) and to design people (long
term). Marketing, design, and production must work closely together to
successfully implement design changes and to develop and produce new
products. Marketing can provide valuable insight on what competitors are doing.
Marketing also can supply information on consumer preferences so that design will
know the kinds of products and features needed; operations can supply
information about capacities and judge the manufacturability of designs.
Operation
Is responsible for producing the goods or providing the services offered by the
organization.
Class Notes by Sam Mangwana; Lecturer, School of Business & Economics – BCO 411
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Take Away Assignment (To be returned after a Week)
Mr.Salim has recently established Sweet Baby Bakery in Bungoma town. He has received complaints from
customers that the Party Cakes are not delivered on time. After a detailed analysis, he came up with the
following causes for the delayed delivery of party cakes:
1. Frequent breakdowns of machine
2. Few skilled workers to bake cakes
3. Inappropriate procedures
4. Unavailability of materials
5. Heavy pressure from supervisor
6. Miscommunication between salesmen and Chef.
7. Poor transportation
a) Advice Mr Salim explaining the importance of feedback that he requires to restore confidence to his
customer. (10 marks)
b) How will he determine that the customers being served by Sweet Baby bakery are satisfied? (5 marks)
Class Notes by Sam Mangwana; Lecturer, School of Business & Economics – BCO 411
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