Quality Management System (IE 20)
CHAPTER 1: OVERVIEW
•
Purpose of the Book:
o
Use of statistical methods and problem-solving techniques to improve quality.
o
Applies to both manufactured goods (e.g., automobiles, computers, clothing) and
services (e.g., energy, transportation, banking, health care).
o
Quality improvement methods can be used across all organizational functions:
o
▪
Manufacturing, Process Development, Engineering Design
▪
Finance, Accounting, Marketing, Distribution & Logistics
▪
Customer Service, Field Service
Focus on technical tools to achieve quality improvement.
1.1 The Meaning of Quality and Quality Improvement
•
•
1.
2.
3.
Quality:
o
Commonly viewed as desirable characteristics of a product or service.
o
A key decision factor for consumers.
o
Impacts all kinds of consumers (individuals, businesses, defense programs).
o
Leads to business success, growth, and competitiveness.
o
Offers high return on investment when integrated into strategy.
Dimensions of Quality (Garvin, 1987):
Performance:
▪
Ability to perform intended functions.
▪
Example: Spreadsheet software's speed in data manipulation.
▪
Frequency of failure.
▪
Example: A car needing frequent repairs is unreliable.
▪
Length of service life.
Reliability:
Durability:
▪
4.
Serviceability:
5.
Ease and cost of repairs or maintenance.
▪
Example: Time taken by a credit card company to correct billing errors.
▪
Visual and sensory appeal.
▪
Example: Beverage packaging differentiation.
▪
Additional functions beyond basic expectations.
▪
Example: Built-in statistical tools in spreadsheet software.
Features:
7.
Perceived Quality:
8.
▪
Reputation of company/product.
▪
Influenced by product failures, recalls, customer service.
▪
Example: Preference for an airline with consistent service.
Conformance to Standards:
•
2.
▪
Aesthetics:
6.
1.
Important in automotive and appliance industries.
▪
Precision of manufacturing against design.
▪
Example: Fit of car hood against fender.
Traditional Definition of Quality:
o
Fitness for use.
o
Two aspects:
Quality of Design:
▪
Planned variations in quality levels.
▪
Example: Cars differ by size, materials, performance.
Quality of Conformance:
▪
How well product meets design specifications.
▪
Influenced by:
▪
Manufacturing processes
▪
Workforce training and supervision
▪
Process controls, inspections, and adherence
▪
•
•
•
Workforce motivation
o
Problem: Overemphasis on conformance, less on design and customer
perspective.
o
Misconception: Quality = Manufacturing responsibility only or "gold-plating."
Modern Definition of Quality:
o
Quality is inversely proportional to variability.
o
Less variability = Higher quality.
o
Example: U.S. vs. Japanese transmission study:
▪
Both centered at target value.
▪
U.S.: 75% of spec width used.
▪
Japan: 25% of spec width used.
▪
Result: Japanese transmissions had lower costs, fewer repairs, better
performance, higher customer satisfaction.
▪
Key Point: Customers see variability, not mean.
Reasons for Japanese Success:
o
Effective use of quality improvement methods.
o
Impact visible in costs, performance, warranty claims, and customer
perception.
Definition of Quality Improvement:
o
Reduction of variability in processes and products.
o
Reduces waste (time, money, effort).
o
Particularly useful in service industries:
[End of Notes]
▪
Errors and mistakes = Quality issues.
▪
Correcting them = Waste.
▪
Improving processes = Avoids wasted resources.
Quality Management System (IE 20) Notes
1.2 A Brief History of Quality Control and Improvement
•
Quality has always been part of products/services, but formal quality control and
improvement evolved over time.
•
Frederick W. Taylor (1875)
•
o
Introduced Scientific Management principles.
o
Emphasized dividing work into tasks to increase productivity and improve quality.
o
Led to standard work methods and introduction of work standards.
o
Impact:
Boost in productivity.
▪
Standardization helped quality.
▪
Risk: Over-standardization can hinder innovation and continuous
improvement.
Frank Gilbreth and others
o
•
▪
Extended work standard concepts to motion and work design.
Statistical Methods in Quality
o
1924: Walter A. Shewhart (Bell Labs) developed the control chart concept.
▪
o
Late 1920s: Harold F. Dodge and Harry G. Romig (Bell Labs)
▪
Developed acceptance sampling as alternative to 100% inspection.
o
Mid-1930s: Statistical quality control widely used at Western Electric.
o
WWII: Boosted acceptance and use of SQC.
▪
o
•
Seen as the formal start of statistical quality control (SQC).
Industry recognized need for statistical techniques in manufacturing.
1946: Formation of the American Society for Quality Control (ASQC).
▪
Promoted quality improvement in all sectors.
▪
Provided conferences, publications, and training.
1950s-60s Developments
o
Rise of reliability engineering.
•
o
Key textbooks published on SQC.
o
Shift in perspective: Quality as a management strategy.
Designed Experiments
o
Introduced in U.S. in 1950s, especially in chemical industry.
o
Benefits:
▪
o
•
•
Improved process/product design, reliability, performance, and tolerance
selection.
Late 1970s–1980s:
▪
Discovery: Japanese industries had used these methods since 1960s.
▪
Prompted U.S. industry to adopt and teach statistical experiment design.
Since 1980
o
Rapid growth in statistical methods for quality/business improvement.
o
Trigger: Market losses in the 1970s (e.g., U.S. auto industry nearly collapsed).
o
Revival of U.S. industry linked to adoption of statistical tools.
Management Systems
o
Emerged to support quality improvement.
o
Will be further discussed in next sections.
Table 1.1 - Timeline of Quality Methods
•
•
•
1700-1900
o
Quality determined by individual craftsmen.
o
Eli Whitney: Introduced standardized, interchangeable parts.
1875
o
Taylor: Scientific management.
o
Gilbreth & Gantt: Later contributors.
1900–1930
o
Henry Ford: Assembly line, mistake-proofing, in-process inspection.
o
1901: First standards laboratories in Great Britain.
o
1907–08: AT&T begins systematic inspection and testing.
o
•
•
1908: W.S. Gosset introduces t-distribution.
1915–1919
o
WWI: British government starts supplier certification program.
o
1919: Formation of Technical Inspection Association in England.
1920s
o
Bell Labs creates quality department.
o
Statistical methods used at General Electric (UK).
o
1922–23: R.A. Fisher publishes on designed experiments.
•
1924: Shewhart introduces control charts.
•
1928: Acceptance sampling developed by Dodge & Romig.
•
1931: Shewhart publishes "Economic Control of Quality of Manufactured Product".
•
1932: Shewhart gives lectures in London.
•
1932–33: British and German industries begin using designed experiments.
•
1933: Royal Statistical Society creates Industrial & Agricultural Research Section.
•
1938: Deming invites Shewhart for seminars.
•
1940s
o
1940: US War Dept publishes guide on control charts.
o
1940–43: Bell Labs develop military standard sampling plans.
o
1942: UK Ministry forms statistical methods group.
o
1942–46: 15+ quality societies formed in North America.
o
1944: Launch of Industrial Quality Control journal.
o
1946: Formation of ASQC and ISO.
o
▪
Deming invited to Japan by US forces.
▪
JUSE formed in Japan.
1946–49: Deming lectures on SQC in Japan.
•
1948: G. Taguchi begins work on experimental design.
•
1950:
o
Deming begins training Japanese managers.
o
Ishikawa introduces cause-and-effect diagram.
•
•
1950s:
o
Key SQC textbooks by Grant and Duncan.
o
1951: Feigenbaum publishes Total Quality Control.
o
JUSE establishes Deming Prize.
1951+
o
Box & Wilson: Response surface methodology.
o
Applications expand in chemical industry.
•
1954: Juran lectures in Japan.
•
1957: Juran & Gryna publish Quality Control Handbook.
•
1959:
•
•
o
Technometrics journal founded.
o
EWMA chart introduced by S. Roberts.
o
U.S. space program sparks need for reliable products.
1960s:
o
Box & Hunter publish on 2k-p factorial designs.
o
Ishikawa introduces quality control circle.
o
UK forms National Council for Quality and Productivity.
o
Zero Defects (ZD) programs start in U.S.
o
SQC becomes part of industrial engineering education.
1969:
o
•
•
Industrial Quality Control replaced by Quality Progress & Journal of Quality
Technology (JQT).
1970s:
o
UK: NCQP + Institute of Quality Assurance = British Quality Association.
o
1975–78: Engineer-focused experiment design books emerge.
o
Quality circles gain popularity, leading to TQM.
1980s:
o
Design methods adopted in electronics, aerospace, automotive.
o
Taguchi's work reaches the U.S.
o
1984: ASA forms Quality & Productivity Committee.
o
Quality and Reliability Engineering International journal begins.
o
1986: Box visits Japan, notes extensive use of design methods.
o
1987: ISO releases first quality systems standard.
▪
•
•
Motorola launches Six Sigma.
1988–89:
o
U.S. Congress creates Malcolm Baldrige National Quality Award.
o
EFQM and European Quality Award founded.
o
Quality Engineering journal begins.
1990s:
o
ISO 9000 certification rises.
o
More Baldrige applicants; U.S. states sponsor quality awards.
o
1995: SQC courses required in undergrad engineering.
o
1997: Six Sigma spreads beyond Motorola.
o
1998: ASQC becomes American Society for Quality (ASQ).
[End of Notes]
Quality Management System (IE 20)
1.3 Statistical Methods for Quality Control and Improvement
•
•
Focus Areas in the Textbook
o
Statistical Process Control (SPC)
o
Design of Experiments (DOE)
o
Acceptance Sampling (covered to a lesser extent)
o
Other useful statistical and analytical tools for quality problem analysis
Process as a System (Fig. 1.3)
o
Inputs:
▪
Controllable inputs (x1, x2, ..., xp): Process variables like temperature,
pressure, feed rates
▪
Uncontrollable inputs (z1, z2, ..., zq): Environmental factors, raw material
properties
•
•
•
o
Transformation: Process turns inputs into finished products
o
Output (y): Quality characteristic measuring product/process quality
Example - Financial Institution Loan Process
o
Inputs: Loan applications with customer info, car type, price, loan amount
o
Controllable Factors: Training of loan officers, loan rules/policies, number of
officers per period
o
Uncontrollable Factors: Interest rates, capital availability, volume of applications
o
Output Quality Characteristics: Loan approval, acceptance rate, cycle time (key
CTQ in services)
Control Chart (SPC Tool)
o
Plots average measurements over time or sample number
o
Includes:
Center Line (CL): Target process value
▪
Upper Control Limit (UCL) and Lower Control Limit (LCL): Define expected
variability range
o
Signals for investigation if sample averages fall outside control limits
o
Can also be applied to input variables
o
Helps identify and correct unusual variability sources
Designed Experiments (DOE)
o
Systematic variation of controllable input factors to study effect on output
o
Helps:
o
•
▪
▪
Discover key influencing variables
▪
Reduce output variability
▪
Optimize process performance
Often used off-line during development and early manufacturing stages
Factorial Designs
o
Factors are varied together to test all possible level combinations
o
Example - 2 Factors (Fig. 1.5a):
o
•
•
•
Two levels: Low and High
▪
Four combinations at square corners
Example - 3 Factors (Fig. 1.5b):
▪
Eight combinations at cube corners
▪
Some factor level combinations yield better performance
▪
E.g., Increasing x1 may improve output but shift it off-target; high levels of x2
and x3 reduce variability
Statistical Modeling Tools
o
Used to relate input variables to output characteristics
o
Key Techniques:
▪
Regression Analysis
▪
Time Series Analysis
Integration with SPC
o
Model relationships help guide process adjustments
o
Enables feedback control/engineering control:
▪
Routine process adjustments to keep outputs on target
▪
Covered further in Chapter 11
Acceptance Sampling
o
Involves testing sample units from a batch and deciding on batch disposition
o
Typically done:
o
•
▪
▪
Incoming inspection: On materials/components from suppliers
▪
Outgoing inspection: After production, before shipping
Lot Disposition Options (Fig. 1.6c):
▪
Accept
▪
Reject (scrap, rework, or replace units — "rectifying inspection")
Modern Quality Assurance Perspective
o
Less emphasis on acceptance sampling
o
More focus on SPC and DOE for proactive improvement
•
o
Acceptance sampling seen as promoting conformance-to-specification mindset
o
Lacks feedback loop to production/design for improvement
Organizational Evolution of Quality Techniques (Fig. 1.7)
o
o
o
o
•
▪
No organized quality effort
▪
Minimal use of acceptance sampling for incoming parts
Increasing maturity:
▪
More sampling inspection
▪
Realization: Quality can't be “inspected into” product
Process improvement phase:
▪
Focus on SPC and DOE
▪
Yields improvements in quality, cost, and productivity
High maturity:
▪
Intensive use of DOE and SPC
▪
Minimal reliance on acceptance sampling
Primary Objective of Quality Engineering
o
•
Low maturity:
Systematic reduction of variability in key quality characteristics
Reduction of Variability Over Time (Fig. 1.8)
o
o
o
Early stage:
▪
High fallout (non-conforming units)
▪
Reliance on acceptance sampling
SPC introduction:
▪
Stabilizes process
▪
Reduces variability
Beyond specification conformance:
▪
o
Further variability reduction improves product performance and
competitiveness
DOE + SPC:
▪
Used together to minimize variability in nearly all industrial settings
[End of Notes]
1.4 Management Aspects of Quality Improvement
•
•
•
Statistical Techniques for Quality
o
Include SPC (Statistical Process Control) and designed experiments
o
Serve as the technical foundation for quality control/improvement
Need for Integration with Management System
o
Techniques must be implemented within a quality-focused management system
o
Management system must direct and deploy quality philosophy throughout the
business
Three Essential Activities in Quality Management
o
o
Quality Planning
▪
A strategic activity as vital as product development, financial, marketing,
and HR plans
▪
Prevents waste of resources on design faults, defects, failures, complaints
▪
Involves:
▪
Identifying customers (external and internal)
▪
Determining customer needs (Voice of the Customer - VOC)
▪
Developing products/services that meet or exceed expectations
▪
Referring to eight dimensions of quality (from Section 1.1.1)
▪
Determining realization methods for products/services
▪
Planning specific and systematic quality improvement efforts
Quality Assurance
▪
Ensures proper maintenance of quality levels
▪
Addresses supplier and customer quality issues
▪
Relies on documentation of the quality system:
▪
Policy: What is done and why
▪
Procedures: Methods and personnel responsible
o
•
▪
Work Instructions/Specifications: Department, product, tool, or
machine-specific
▪
Records:
▪
Track product batches and compliance with policies
▪
Essential for complaints, corrective actions, recalls
▪
Important for capturing design/engineering changes
Quality Control and Improvement
▪
Activities to ensure product/service requirements are met and improved
▪
Variability is a major cause of poor quality
▪
Tools: Statistical methods, especially SPC and designed experiments
▪
Quality improvement:
▪
Done on a project-by-project basis
▪
Uses teams led by experts in statistical methods
▪
Projects selected for significant business impact
▪
Linked to strategic quality goals
Preview of Next Topics
o
Quality philosophies, systems, and standards
o
Quality links to productivity and cost
o
Economic/legal implications
o
Implementation strategies
1.4.1 Quality Philosophy and Management Strategies
•
•
Pioneers in Quality Management
o
W. Edwards Deming
o
J. M. Juran
o
A. V. Feigenbaum
W. Edwards Deming
o
Background:
▪
Studied engineering and physics (University of Wyoming, Yale)
•
▪
Influenced by Walter A. Shewhart (creator of the control chart)
▪
Worked in U.S. government and WWII efforts
▪
Post-WWII: Consultant to Japanese industry
▪
Helped Japan embrace statistical methods and quality as competitive
strategy
▪
Honored by Deming Prize from the Japanese Union of Scientists and
Engineers
▪
Advocated that management is primarily responsible for quality
improvement
Deming’s 14 Points for Management
1. Create constancy of purpose
▪
Focus on long-term product/service improvement
▪
Invest in R&D and innovation
2. Adopt a new philosophy
▪
Recognize we are in a new economic age
▪
Reject poor quality, rework, and defects
3. Cease reliance on inspection to control quality
▪
Prevent defects through process improvement
▪
Inspection is reactive and costly
4. Don’t award business based on price alone
▪
Consider total cost and quality
▪
Prefer suppliers with proven quality methods and long-term partnerships
5. Pursue continuous improvement
▪
Involve workforce, use statistical tools
6. Institute modern training methods
▪
Train all employees in technical tasks and quality improvement methods
7. Improve leadership and supervision
▪
Supervisors must help improve systems, not just monitor workers
8. Drive out fear
▪
Foster open communication to eliminate fear in the workplace
9. Break down barriers between departments
▪
Encourage teamwork across organizational units
10. Eliminate slogans, targets, and numerical goals
▪
Avoid meaningless goals like "zero defects" without a plan
11. Eliminate numerical quotas/work standards
▪
Such standards often ignore quality and reveal weak management systems
12. Remove barriers to pride in workmanship
▪
Encourage feedback, listen to employee input
13. Institute education and retraining
▪
Educate all employees in statistical tools like control charts
▪
Promote shared responsibility in quality improvement
14. Take action to accomplish transformation
•
▪
Top management must advocate and support all 13 points
▪
Include training, action plans, and visible commitment to continuous
improvement
Change Process Emphasis
o
Focus on organizational change led by management
o
Use statistical methods (e.g., control charts, designed experiments) to identify
and act on process variables
o
Collect data to identify controllable factors impacting quality (e.g., semiconductor
yield improvement)
Core Themes in Deming’s Philosophy
•
Emphasis on organizational change
•
Management’s role is central to driving change
Statistical Methods and Process Improvement
•
Improvement begins with:
o
Identifying controllable process factors
o
Collecting data and analyzing variable effects
o
Applying designed experiments and control charts
o
Implementing informed actions to improve outcomes
Table 1.2: Deming’s Seven Deadly Diseases of Management
1. Lack of constancy of purpose
2. Emphasis on short-term profits
3. Evaluation of performance, merit rating, annual reviews
4. Mobility of top management
5. Running a company on visible figures alone
6. Excessive medical costs
7. Excessive legal damage awards
Joseph M. Juran
•
One of the founding fathers of quality control and improvement
•
Worked for Walter A. Shewhart at AT&T Bell Laboratories
•
Chief industrial engineer at Western Electric (Bell System)
•
Assistant administrator for Lend-Lease Administration during WWII
o
Simplified administrative and paperwork processes
•
Head of the Department of Administrative Engineering at NYU post-WWII
•
Invited to Japan in early 1950s to aid industrial transformation
•
Founded the Juran Institute and co-authored Quality Control Handbook (1957)
Juran Trilogy (Three components of quality management):
1. Planning
o
Identify external customers and their needs
o
Design products/services and develop processes to meet needs
o
Include regular (annual) planning for quality improvement
2. Control
o
Ensure products/services meet requirements
o
Use Statistical Process Control (SPC) as a primary tool
3. Improvement
o
Achieve higher performance and quality levels
o
Must be done project-by-project, identified during planning
o
Types:
▪
Continuous (incremental) improvement
▪
Breakthrough improvement via designed experiments
Armand V. Feigenbaum
•
Introduced companywide quality control in Total Quality Control (1951)
•
Influenced early Japanese quality management
Feigenbaum's Three-Step Approach:
1. Quality Leadership
2. Quality Technology
o
Statistical and engineering methods
3. Organizational Commitment
o
•
Quality tied to organizational structure and systems approach
Developed a 19-step improvement process
o
Use of statistical methods was step 17
o
Initially emphasized centralized technical capability (now considered outdated)
o
Highlighted importance of management commitment over grassroots efforts
Comparison: Deming, Juran, Feigenbaum
•
Common themes:
o
Quality as a competitive advantage
o
Critical role of management
o
Importance of statistical methods
Total Quality Management (TQM)
•
Strategy for organizationwide quality improvement
•
Emerged in 1980s, rooted in Deming and Juran's philosophies
Key Features:
•
Participative work culture
•
Customer focus
•
Supplier quality improvement
•
Integration of quality with business goals
Organizational Structure in TQM:
•
Quality councils/high-level teams: handle strategic initiatives
•
Workforce-level teams: routine tasks
•
Cross-functional teams: specific issues
Reasons for Limited Success of TQM:
1. Lack of top-down management commitment
2. Inadequate use of statistical tools and failure to reduce variability
3. Focus on general objectives over specific, results-driven goals
4. Overemphasis on training over technical education
o
Often led by HR departments with little technical expertise
o
Success measured by training coverage instead of business impact
Misuse of TQM Concepts:
•
Treated as just another "program"
•
Past examples: Zero Defects, Value Engineering
•
Quality is Free initiative:
o
Focused on identifying cost of quality/nonquality
o
Lacked knowledge in statistical methodology
o
Poor understanding of quality improvement execution
Quality Systems and Standards
ISO (International Standards Organization)
•
Founded in 1946, Geneva, Switzerland
•
Published the ISO 9000 series in 1987 (current version: ISO 9000:2000)
•
Purpose: generic standard applicable across organizations to ensure process control
ISO 9000 Series:
1. ISO 9000:2000 – Fundamentals and Vocabulary
2. ISO 9001:2000 – Requirements
3. ISO 9004:2000 – Guidelines for Performance Improvement
•
Also recognized by ANSI and ASQ
ISO 9001:2000 Clauses (8 Total):
1. Scope
2. Normative References
3. Definitions
4. Quality Management Systems
5. Management Responsibility
6. Resource Management
7. Product/Service Realization
8. Measurement, Analysis, and Improvement
•
Clauses 4–8: Key components for certification
ISO Certification Process:
•
Select a registrar and prepare for certification audit
•
No universal authority to monitor/regulate registrars (problematic)
Certification Preparation Includes:
•
Phase I audit: assess existing system
•
Establishing teams for clause compliance
•
Personnel training
•
Creating necessary documentation
•
Developing/implementing required components
•
Certification audit followed by surveillance audits (annual or semi-annual)
Industry-Specific Standards:
•
AS 9100 (Aerospace)
•
ISO/TS 16949, QS 9000 (Automotive)
•
TL 9000 (Telecommunications)
Criticism of ISO 9000:
•
Focus on formal documentation over variability reduction
•
Overemphasis on paperwork and bookkeeping
•
Registrars and auditors often lack technical expertise
•
Quality assurance prioritized over actual process improvement
Real-World Example: Bridgestone/Firestone Tire Recall (1999–2000)
•
Ford Explorer accidents linked to defective tires
•
Nearly 300 U.S. deaths
•
Decatur, IL plant was QS 9000 and ISO 14001 certified
•
Despite certification, major quality failures occurred
•
ISO certification is not a guarantee of high-quality outcomes
Quality Management System (IE 20)
Section: 1.4.3 Quality Costs
•
Financial Controls and Quality Costs
o
Financial controls involve comparing actual vs. budgeted costs and analyzing
differences.
o
Traditionally applied at the department/functional level.
o
Historically, quality costs were not measured or tracked.
o
Now recognized and evaluated for multiple reasons:
o
•
▪
Increased complexity of products due to technological advances.
▪
Rising awareness of life-cycle costs (e.g., maintenance, spare parts, field
failures).
▪
Helps quality engineers/managers communicate with upper management.
Quality costs serve as:
▪
A financial control tool for management.
▪
A method to identify cost-reduction opportunities.
Definition of Quality Costs
o
Costs related to producing, identifying, avoiding, or repairing nonconforming
products.
o
Commonly classified into four categories:
1.
Prevention Costs
2.
Appraisal Costs
3.
Internal Failure Costs
4.
External Failure Costs
•
1. Prevention Costs
o
Incurred to prevent nonconformance during design and manufacturing.
o
Goal: "Make it right the first time".
o
Subcategories:
▪
▪
▪
▪
Quality Planning and Engineering:
▪
Creation of quality, inspection, and reliability plans.
▪
Development of manuals, procedures, system audits.
New Products Review:
▪
Preparation of bids, quality evaluation of new designs.
▪
Tests and experimental programs during development.
Product/Process Design:
▪
Selection of designs or processes to enhance quality.
▪
Example: choosing a more precise process or building in
redundancy.
Process Control:
▪
▪
Burn-in:
▪
▪
•
Preshipment operation to prevent early field failures.
Training:
▪
▪
Use of control charts and monitoring tools to reduce variation.
Development and implementation of formal training programs.
Quality Data Acquisition and Analysis:
▪
Data collection and analysis on product/process performance.
▪
Summarizing and publishing quality reports.
2. Appraisal Costs
o
Costs to measure, evaluate, or audit product conformance to standards.
o
Focused on quality condition verification.
o
Subcategories:
▪
Inspection and Test of Incoming Material:
▪
▪
▪
Product Inspection and Test:
▪
Quality checks during manufacturing, final tests, shipping checks.
▪
Includes life, environmental, and reliability testing.
Materials and Services Consumed:
▪
▪
Costs of materials used in destructive or devaluing tests.
Maintaining Accuracy of Test Equipment:
▪
•
Includes receiving inspections, vendor evaluations, intraplant
audits.
Operating a calibration system for measuring equipment.
3. Internal Failure Costs
o
Incurred when products fail before delivery to the customer.
o
Would be eliminated if all products met specifications.
o
Subcategories:
▪
Scrap:
▪
▪
Rework:
▪
▪
Idle production due to nonconformance (e.g., bad raw materials).
Yield Losses:
▪
▪
Determining causes of failures.
Downtime:
▪
▪
Cost of reinspection after rework.
Failure Analysis:
▪
▪
Cost of correcting nonconforming units.
Retest:
▪
▪
Loss due to irreparable defective products.
Losses from lower-than-optimal process yields (e.g., overfilled
bottles).
Downgrading/Off-Specing:
▪
Selling defective products at lower prices.
▪
Common in textiles, electronics.
•
4. External Failure Costs
o
Incurred when products fail after delivery to the customer.
o
Also eliminated if all products conform to requirements.
o
Subcategories:
▪
Complaint Adjustment:
▪
▪
Returned Product/Material:
▪
▪
Costs from product liability lawsuits.
Indirect Costs:
▪
•
Service costs under warranty agreements.
Liability Costs:
▪
▪
Handling and replacing defective products.
Warranty Charges:
▪
▪
Costs of investigating and resolving complaints.
Losses from customer dissatisfaction:
▪
Business reputation.
▪
Future sales.
▪
Market share.
Summary Table: Quality Costs (Table 1.5)
o
o
Prevention Costs:
▪
Quality planning and engineering
▪
New products review
▪
Product/process design
▪
Process control
▪
Burn-in
▪
Training
▪
Quality data acquisition and analysis
Appraisal Costs:
▪
Inspection and test of incoming material
o
o
▪
Product inspection and test
▪
Materials and services consumed
▪
Maintaining accuracy of test equipment
Internal Failure Costs:
▪
Scrap
▪
Rework
▪
Retest
▪
Failure analysis
▪
Downtime
▪
Yield losses
▪
Downgrading (off-specing)
External Failure Costs:
▪
Complaint adjustment
▪
Returned product/material
▪
Warranty charges
▪
Liability costs
▪
Indirect costs
[End of Notes]
Quality Management System (IE 20)
1.4.4 Legal Aspects of Quality
•
Consumerism and Product Liability
o
•
Key reasons why quality assurance is a critical business strategy.
Consumerism
o
o
Arises from:
▪
Numerous field failures in consumer products.
▪
Perception that service quality is declining.
Common questions raised:
▪
Are current products as good as previous ones?
▪
o
o
•
Manufacturers are concerned about field failures due to:
▪
High external failure costs.
▪
Threats to competitive position.
Product improvements have been made:
▪
Use of solid-state and integrated-circuit technology has reduced failures
in electronics (vs. earlier electron tube-based equipment).
▪
Modern product lines are generally superior to older models.
Reasons for Increased Consumer Dissatisfaction
o
o
Product explosion (more units → more total failures despite same failure rate):
▪
Example: 1% failure rate on 50,000 units = 500 failures.
▪
Same rate on 500,000 units = 5,000 failures.
▪
Higher production volume = higher liability exposure.
Decreased consumer tolerance:
▪
o
•
•
Are manufacturers still concerned about quality?
Increased sensitivity to:
▪
Minor defects.
▪
Aesthetic problems (blemishes, surface finish, noises).
Competitive pressures:
▪
Leads to early release of new designs before thorough evaluation/testing.
▪
These “early releases” often cause new product quality failures.
▪
Although problems get corrected later, the early high failure rate leads to
perceived quality decline.
Product Liability
o
Major social, market, and economic force.
o
Legal obligation of manufacturers/sellers to compensate for injury/damage due to
defective products.
o
Has existed for years; emphasis has evolved.
Key Legal Milestone
o
First major case (1916):
▪
New York Court of Appeals ruled:
▪
•
Negligence Principle
o
Liability incurred when a manufacturer is unreasonably careless or negligent:
▪
•
In design, production, or manufacturing process.
Strict Liability
o
1.
Auto manufacturer had liability even without a direct contract (sale
was via dealer).
Modern legal trend with two core principles:
Responsibility for product use:
2.
▪
Requires immediate response (e.g., service, repair, replacement).
▪
Covers:
▪
Product performance.
▪
Environmental effects.
▪
Safety aspects.
Responsibility for advertising and promotion:
•
▪
Claims must be supported by valid quality or certification data.
▪
Similar to automobile product identification regulations.
Implications of Strict Liability
o
o
Manufacturers, distributors, merchants must:
▪
Develop and maintain factual performance and safety data.
▪
Cover:
▪
Delivered product quality.
▪
Durability and reliability.
▪
Protection from side effects/environmental hazards.
▪
Safety in actual use.
A strong quality-assurance program helps ensure required data is available.
1.4.5 Implementing Quality Improvement
•
Quality as a Multifaceted Entity
o
Incorporates eight dimensions (from Section 1.1.1):
1. Performance
2. Reliability
3. Durability
4. Serviceability
5. Aesthetics
6. Features
7. Perceived Quality
8. Conformance to Standards
•
Strategic Quality Management
o
o
Management must:
▪
Recognize and select key quality dimensions to compete on.
▪
Develop quality niches for competitiveness.
Example: Japanese VCR industry:
▪
▪
o
•
•
▪
Prioritizing reliability and conformance.
▪
Later expanded to features, performance, serviceability,
aesthetics.
Raised entry barrier so high that new competitors struggled.
U.S. auto industry was severely impacted by competitors applying this strategy.
Supplier Role in Quality
o
Supplier selection and supply chain management are crucial.
o
Many parts are made by external suppliers.
o
Companies implement formal supplier quality-improvement programs.
o
Criteria for supplier selection:
▪
•
Not inventors of VCR but dominated the market by:
Quality, schedule, and cost (not just cost).
Total Company-Wide Involvement
o
Quality improvement must be a company-wide activity.
o
Responsibility of senior management to obtain participation.
Role of Quality-Assurance Organization
o
Assist management in ensuring product quality.
o
Acts as a technology warehouse:
▪
o
o
•
•
Stores skills/resources needed for acceptable products.
Uses quality-cost information to:
▪
Identify improvement opportunities.
▪
Communicate opportunities to higher management.
Does not bear responsibility for quality:
▪
Quality is not solely the job of the QA team.
▪
They do not design, manufacture, distribute, or service the product.
▪
Responsibility is distributed across the entire organization.
Philosophies of Deming, Juran, Feigenbaum
o
Quality is everyone’s responsibility.
o
Danger: If "quality is everybody’s job," then quality becomes nobody’s job.
o
Solution:
▪
Emphasize quality planning and analysis.
▪
Requires:
▪
Top management commitment.
▪
Clear responsibilities and accountability across units.
▪
Emphasis on quality improvement at all levels.
Strategic Management of Quality Must Involve:
1.
Quality Planning
2.
Quality Assurance
3.
Quality Control and Improvement
•
Understanding of Basic Tools
o
o
Everyone must understand basic statistical methods:
▪
Process control
▪
Process data analysis
Useful in:
▪
Manufacturing
o
•
•
▪
Engineering design and development
▪
Business processes
Some personnel (e.g., QA engineers/managers) must be experts in:
▪
Process control
▪
Reliability engineering
▪
Design of experiments
▪
Engineering data analysis
Philosophy of Statistical Methodology
o
Acts as a language of communication about problems.
o
Helps management mobilize resources and find efficient solutions.
Six Sigma Framework
o
Incorporates essential success elements.
o
Proven to be an effective framework for quality improvement.
[End of Notes]