Total Quality Management for IV ECE
Unit IV
TQM TOOLS & TECHNIQUES
TQM Tools & Techniques II
II
Unit IV
Date:
Quality circle
A quality circle is a volunteer group composed of workers (or even students), usually
under the leadership of their supervisor (but they can elect a team leader), who are trained to
identify, analyze and solve work-related problems and present their solutions to management in
order to improve the performance of the organization, and motivate and enrich the work of
employees. When matured, true quality circles become self-managing, having gained the
confidence of management.
Quality circles are an alternative to the dehumanizing concept of the division of labor,
where workers or individuals are treated like robots. They bring back the concept of
craftsmanship, which when operated on an individual basis is uneconomic but when used in
group form can be devastatingly powerful. Quality circles enable the enrichment of the lives of
the workers or students and creates harmony and high performance. Typical topics are improving
occupational safety and health, improving product design, and improvement in the workplace
and manufacturing processes.
The term quality circles derives from the concept of PDCA (Plan, Do, Check, Act)
circles developed by Dr. W. Edwards Deming.
Quality circles are not normally paid a share of the cost benefit of any improvements but
usually a proportion of the savings made is spent on improvements to the work environment.
They are formal groups. They meet at least once a week on company time and are trained
by competent persons (usually designated as facilitators) who may be personnel and industrial
relations specialists trained in human factors and the basic skills of problem identification,
information gathering and analysis, basic statistics, and solution generation.[1] Quality circles are
generally free to select any topic they wish (other than those related to salary and terms and
conditions of work, as there are other channels through which these issues are usually
considered).
Quality circles have the advantage of continuity; the circle remains intact from project to
project. (For a comparison to Quality Improvement Teams, see Juran's Quality by Design).
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Quality circles were first established in Japan in 1962; Kaoru Ishikawa has been credited
with their creation. The movement in Japan was coordinated by the Japanese Union of Scientists
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History
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and Engineers (JUSE). The first circles were established at the Nippon Wireless and Telegraph
Company but then spread to more than 35 other companies in the first year.[5] By 1978 it was
claimed that there were more than one million quality circles involving some 10 million Japanese
workers. They are now in most East Asian countries; it was recently claimed that there were
more than 20 million quality circles in China.
Quality circles have been implemented even in educational sectors in India, and QCFI
(Quality Circle Forum of India) is promoting such activities. However this was not successful in
the United States, as it (was not properly understood and) turned out to be a fault-finding
exercise although some circles do still exist. ref Don Dewar who together with Wayne Ryker and
Jeff Beardsley first established them in 1972 at the Lockheed Space Missile Factory in
California.
There are different quality circle tools, namely:
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

The Ishikawa or fishbone diagram - which shows hierarchies of causes contributing to a
problem
The Pareto Chart - which analyses different causes by frequency to illustrate the vital cause,
Process Mapping, Data gathering tools such as Check Sheets and graphical tools such as
histograms, frequency diagrams, spot charts and pie charts
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Student quality circles work on the original philosophy of Total Quality Management[6].
The idea of SQCs was presented by City Montessori School (CMS) Lucknow India at a
conference in Hong Kong in October 1994. It was developed and mentored by duo engineers of
Indian Railways PC Bihari and Swami Das in association with Principal Dr. Kamran of CMS
Lucknow India. They were inspired and facilitated by Jagdish Gandhi, the founder of CMS after
his visit to Japan where he learned about Kaizen. The world's first SQC was made in CMS
Lucknow with then 13-year- old student, Ms. Sucheta Bihari as its leader. CMS conducts
international conventions on student quality circles which it has repeated every 2 years to the
present day. After seeing its utility, the visionary educationalists from many countries started
these circles. The World Council for Total Quality & Excellence in Education was established in
1999 with its Corporate Office in Lucknow and head office at Singapore. It monitors and
facilitates student quality circle activities to its member countries which are more than a dozen.
SQCs are considered to be a co-curricular activity. They have been established in India,
Bangladesh, Pakistan, Nepal, Sri Lanka, Turkey, Mauritius, Iran, UK (Kingston University), and
USA. In Nepal, Prof. Dinesh P. Chapagain has been promoting this innovative approach through
QUEST-Nepal since 1999. He has written a book entitled "A Guide Book on Students' Quality
Circle: An Approach to prepare Total Quality People", which is considered a standard guide to
promote SQCs in academia for students' personality development
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Student quality circles
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Unit IV
Quality Function Deployment
CONCEPT, DEFINITION OF QFD
 Quality Function Deployment (QFD) is the latest approach to product design.
 QFD is a systematic and organized approach of taking customer needs and demands into
consideration while designing new products and services (or while improving the existing
products and services).
 QFD focuses on the 'voice of the customer' i. e., customer expectations or requirements.
That's why QFD is sometimes called as 'customer driven engineering'.
 The QFD translates this voice of the customer into technical and functional requirements
at every stage of design and manufacture.
 Thus in QFD, the requirements of the customers are 'deployed' to the desired function,
which in turn, is used to yield the engineering characteristics of the product.
 Definition: Quality Function Deployment may be defined as a system for translating
consumer requirements into appropriate requirements at every stage, from research
through product design and development, to manufacture, distribution, installation and
marketing, sales and service.
 The first application of QFD was at Mitsubishi, Heavy Industries Ltd., in the Kobe
Shipyard, Japan, in 1972.
 QFD Team: QFD teams are composed of members from marketing, design, quality,
finance, and production departments.
QFD and other Technical Tools in a TQM programme
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Where: DOE - Design of Experiments,
FTA - Fault Trace analysis
DFM - Design for Manufacturing, SPC - Statistical Process Control
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QFD Vs Other TQM Tools
Figure illustrates QFD and other technical tools in a TQM programme.
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OBJECTIVES OF QFD
The objectives of QFD are:

To identify the true voice of the customer and to use this knowledge to develop products
which satisfy customers.

To help in the organisation and analysis of all the pertinent information associated with
the project.
Where:
In short, the QFD aims at translating the customer’s voice (or requirements) into product
specifications.
THE VOICE OF THE CUSTOMER
 QFD begins with marketing to determine what exactly the customer desires from a
product.
 The various sources for determining customer expectations are focus groups, surveys,
complaints, consultants, standards, and federal regulations.
HOUSE OF QUALITY
 The primary planning tool used in QFD is the House of Quality (HOQ).
 The house of quality converts the voice of the customer into product design
characteristics.
 QFD uses a series of matrix diagrams, also called, 'quality tables’ that resemble
connected houses.
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Basic Structure of House of Quality
The house of quality has six sections, as shown in below figure.
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Section I: Customer Requirements
 The exterior walls of the house are the customer requirements.
 On the left hand side, the voice of the customer i.e., what the customer expect from the
product is listed.
Section II: Prioritized Customer Requirements

On the right hand side, the prioritized customer requirements or planning matrix are
listed.

Some of the listed items include customer benchmarking, customer importance rating,
target value, scale-up factor, and sales point.
Section III: Technical Descriptors
 The second floor, or ceiling, of the house contains the technical descriptors.
 Product design characteristics, expressed in engineering terms, are located 111 this ceiling.
Section IV: Relationship Matrix
 The interior walls of the house are the relationships between customer requirements and
technical descriptors.
 This relationship matrix correlates customer requirements with product characteristics.
Section V: Trade-off Matrix
 The roof of the house is the interrelationship between technical descriptors.
 Trade-offs between similar and / or conflicting technical descriptors are identified.
Section VI: Prioritized Technical Descriptors
 The foundation of the house is the prioritized technical descriptors.

Some of the items included are the technical benchmarking, degree of technical
difficulty, and target value.
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The detailed basic house of quality matrix ix illustrated in below figure.
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TQM TOOLS & TECHNIQUES
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QFD METHODOLOGY (CONSTRUCTING THE HOUSE OF QUALITY)
The steps required for building the house of quality are listed below:
Step 1. List Customer Requirements (WHATs)
 Define the customer and establish full identification of customer wants and dislikes.
 Measure the priority of these wants and dislikes using weighing scores.
 Summarize these customer wants into a small number of major (primary) wants,
supported by a number of secondary and tertiary wants.
Step 2. List Technical Descriptors (HOWs)

Translate the identified customer wants into corresponding 'how’s' or design
characteristics. Express them in terms of quantifiable technical parameters or product
specifications.
Step 3. Develop a Relationship Matrix Between WHATs and HOWs

Investigate the relationships between the customers' expectations (WHATs) and the
technical descriptors (HOWs).
 If a relationship exists, categories it as strong, medium or weak (or by assigning scores).
Step 4. Develop an Interrelationship Matrix Between HOWs
 Identify any interrelationships between each of the technical descriptors.
 These relationships are marked in the correlation matrix by either positive or negative.
Here a positive correlation represents a strong relationship and a negative correlation
represents a weak relationship.
Step 5. Competitive Assessments
 Compare the performance of the product with that of competitive products.
 Evaluate the product and note the strong and weak points of the product against its
competitor's product according to the customer.
 This competitive assessment tables include two categories: customer assessment and
technical assessment.
Step 6. Develop Prioritized Customer Requirements

Develop the prioritized customer requirements corresponding to each customer
requirement in the house of quality on the right side of the customer competitive
assessment.


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
Develop the prioritized technical descriptors corresponding to each technical descriptor
in the house of quality below the technical competitive assessment.
These prioritized technical descriptors include degree of technical difficulty, target value,
and absolute and relative weights.
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These prioritized customer requirements contain columns for importance to customer,
target value, scale-up factor, sales point, and an absolute weight.
Step 7. Develop Prioritized Technical Descriptors
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At the end of house of quality analysis, the completed matrix contains much information
about which customer requirements are most important, how they relate to proposed new
product features, and how competitive products compare with respect to these input and
output requirements.
QFD PROCESS

There are four phases of product development:
1. Product planning,
2. Part development,
3. Process planning and
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
4. Production planning.
The House of quality matrix focuses on product definition. So it guides all steps of
product development. Therefore the overall success of the product depends on a good
product definition (using House of quality) leading to a better design.
The House of quality marks the completion of phase I of QFD. Similar matrices are
constructed for each of the remaining phases as shown in below figure.
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various steps required in the QFD process are summarized below:
.
I
Phase I: Product Planning
Step 1. List customer requirements (WHATs)
Step 2. List technical descriptors (HOWs)
Step 3. Develop a relationship matrix between WHA Ts and HOWs.
Step 4. Develop an interrelationship matrix between HOWs.
Step 5. Do competitive assessments.
Step 6. Develop prioritized customer requirements.
Step 7. Develop prioritized technical descriptors.
Phase II : Part Development
Step 8. Deploy QFD process down to sub-components level both in terms of
requirements and characteristics.
Step 9. Deploy the component deployment chart. Relate the critical sub-component
control characteristics.
Phase III: Process Planning
Step 10. Develop the relationship between the critical characteristics and process used to
create the characteristics.
Step 11. Develop the control plan relating critical control to critical processes.
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Phase IV: Production Planning
Step 12. Tabulate operating instructions from process requirements.
Step 13. Develop prototype and do testing.
Step 14. Launch the final product to the market.
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Unit IV
Taguchi's Quality Loss Function
TAGUCHI METHODS
 Taguchi methods are statistical methods developed largely by Genichi Taguchi to
improve the quality of manufactured goods.
 Taguchi methods are controversial among many conventional western statisticians.
 Taguchi's principle contributions to statistics are:
1. Taguchi loss function;
2. The philosophy of off-line quality control; and
3. Innovations in the design of experiments.
TAGUCHI LOSS FUNCTION
 Taguchi defines quality as "the loss imparted by the product to society from the time the
product is shipped."
 This loss includes costs to operate, failure to function, maintenance and repair costs,
customer dissatisfaction, injuries caused by poor design, and similar costs.
 Defective products / parts that are detected, repaired, reworked, or scrapped before
shipment are not considered part of this loss.
 The essence of the loss function concept is that whenever a product deviates from its
target performance, it generates a loss to society. This loss is minimum when
performance is right on target, but it grows gradually as one deviates from the target.
 Therefore the loss function philosophy says that for a manufacturer, the best strategy is to
produce products as close to the target as possible, rather than aiming at "being within
specifications".
TAGUCHI'S APPROACH VS TRADITIONAL APPROACH
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Taguchi disagrees with this traditional approach. He believes that when a product moves
from its target value, that move causes a loss no matter if the move falls inside or outside the
specified limits.
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Consider two products and one is within the specified limits and the other is just outside
of the specified limits. In the traditional approach, the product within the limits is considered as a
good product while the outside one is considered as bad product.
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Explanation of the Taguchi Method:Illustration: Suppose the manufacturing specifications for a widget is 20 ± 3 mm. Under the
traditional manufacturing perspective, if the widget actually produced is less than 17 mm or
greater than 23 mm, then it must be discarded. For any widget within the 17 mm to 23 mm range,
the traditional manufacturing perspective recognizes no quality loss cost. This traditional
perspective is illustrated by the box shape in below figure 2 (Second figure).
Under the Taguchi perspective, a quality loss is incurred whenever the actual widget does
not reach the exact target value 20 mm. Variations from this target value (even 19 mm or 21 mm
value) will produce the quality loss cost. The area of customer dissatisfaction is illustrated by the
U shape curve shown in below first figure.
TAGUCHI'S QUADRATIC QUALITY LOSS FUNCTION
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 As discussed, quality loss occurs when a product's specifications deviates from target or
nominal value. No matter how small the deviation, there is some loss in quality.
 If the deviation grows, then the loss increases. The Taguchi's U-shaped loss function
curve is shown in below figure.
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The above second figure shows the loss function in a traditional approach. In contrast,
the smooth curve in first figure illustrates the Taguchi's approach. Cross-hatching in both two
figures indicates the losses.
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Total Productive Maintenance (TPM)
MAINTENANCE DEFINED
 Maintenance is defined as the management, control, execution and quality assurance of
activities which ensure the achievement of optimum availability and performance of a
plant in order to meet business objectives.
 Maintenance is the activity to ensure the physical assets to continue to do what their users
wanted to do.
 The modern view of maintenance is all about preserving the function of physical assets.
 The evolution of maintenance can be traced through three generations as shown in below
table. The TPM has become a corner stone of the third generation.
TYPES OF MAINTENANCE
Maintenance may be classified into following categories:
1) Corrective or breakdown maintenance,
2) Scheduled or routine maintenance,
3) Preventive maintenance, and
4) Predictive maintenance.
Corrective or Breakdown Maintenance
 For example, replacing the gears in a machine only after the gears get failed and become
inoperative.
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 It says wait until a failure occurs and then remedy the situation as quickly as possible.
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 Corrective maintenance implies that repairs are made after the failure of machine or
equipment.
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Scheduled or Routine Maintenance
 Scheduled maintenance is a stitch-in-time procedure aimed at avoiding breakdowns.
 This includes all work undertaken to keep the production equipment in efficient
condition. It may cover periodic inspection, cleaning, lubrication, overhaul, repair,
replacement, etc.
 The two types of scheduled maintenance are:
(a) Running maintenance, and
(b) Shutdown maintenance.
Preventive Maintenance
 Preventive maintenance is carried out before the failure arises or prior to the equipment
actually breaks down.
 It is a safety measure designed to minimize the possibility of unanticipated breakdowns
and interruptions in production.
 It involves repetitive and periodic upkeep, overhauling, servicing of the equipment to
prevent breakdown.
Predictive Maintenance
 In predictive technique, on the prediction of any fault, maintenance is being done. It is
comparatively a newer maintenance technique.
 In this technique, equipments condition is measured periodically or on a continuous
basis. This enables maintenance staff to take a timely action such as equipment
adjustments, repair and overhaul.
 Predictive maintenance extends the service life of equipment without any fear of failure.
 For example, unusual sounds coming out of rotating equipment predict a coming trouble
or an electric cable excessively hot at one point predicts a trouble.
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The central problem that industries have struggled with is how to make the choice
between the above-said four maintenance techniques. This has led to the increasing interest
within industry in two strategies, which offer a path to long term continuous improvement rather
than the promise of a quick fix. These are Total Productive Maintenance (TPM) and Reliability
Centered Maintenance (RCM). However, the TPM requires the mastery of these four
maintenance techniques. Now, we shall discuss the TPM, in detail, in the following sections.
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WHAT IS TOTAL PRODUCTIVE MAINTENANCE (TPM)?
 Total Productive Maintenance (TPM) is the systematic execution of maintenance by all
employees through small group activities.
 TPM is a manufacturing led initiative that emphasises the importance of people, a 'can
do' and 'continuous improvement' philosophy. It also emphasises the importance of
production and maintenance staff working together.
 The dual goals of TPM are zero breakdowns and zero defects.
 TPM improves equipment efficiency rates and reduces cost. It also minimises inventory
costs associated with spare parts.
 The implementation of TPM can generate considerable cost savings through increased
productivity of the machinery.
 Thus the TPM is concerned with the fundamental rethink of business processes to
achieve improvements in cost, quality, speed, etc.
OBJECTIVES OF TPM
The five goals of TPM are:
1) To improve equipment effectiveness: TPM examines the effectiveness of facilities by
identifying and examining all losses, like down time losses, speed losses and defect
losses.
2) To achieve autonomous maintenance: TPM allows the people who operate equipment
to take responsibility of the maintenance tasks.
3) To plan maintenance: TPM has a systematic approach to all maintenance activities. This
involves the identification of the nature and level of preventive maintenance required for
each piece of equipment, the creation of standards for condition-based maintenance, and
the setting of respective responsibilities for operating and maintenance staff.
4) To train all staff in relevant maintenance skills: TPM places a heavy emphasis on
appropriate and continuous training to all operating and maintenance staffs.
5) To achieve early equipment management:
TPM aims to move towards zero maintenance through “Maintenance Prevention
(MP)”.

TPM attempts to track all potential maintenance problems back to their root cause so
that they can be eliminated at the earliest point in the overall design, manufacture and
deployment process.
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WHAT ARE THE 6 BIG LOSSES?
TPM works to eliminate the following six big losses:
CONCEPT OF TPM
 The concept of 'true' TPM is that everyone from the operator to top management is
responsible for maintenance activities.
 TPM embraces various disciplines to create a manufacturing environment wherein
everyone feels that it is his / her responsibility to keep the equipment running and
productive.
 Under TPM, operators no longer limit themselves to simply using the machine and
calling the technician when a breakdown occurs. Operators can inspect, clean, lubricate,
adjust, and even perform simple calibrations on their respective equipment.
 In TPM, a management should also show interest in data concerning equipment uptime,
utilization, and efficiency.
 In short, everyone understands that zero breakdowns, zero defects, and maximum
productivity are goals to be shared by everyone under TPM.
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 TPM activities are carried out in small teams with specific tasks. Every level in the
overall organisation must be represented by a team or more.
 Lower maintenance and production costs
 Approaching zero equipment - caused defects
 Improved team work between operators and maintenance people
 Enhanced job satisfaction
 Improved return on investment
 Improved safety
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 TPM cannot be implemented overnight. Normally it takes an organisation at least two
years to set an effective TPM system in place.
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TWELVE STEPS FOR TPM DEVELOPMENT
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The below table illustrates the various steps involved in developing TPM.
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OVERALL EQUIPTMENT EFFECTIVENESS (Measures of TPM)
The TQM efforts are measured by the factor called overall equipment effectiveness
(O.E.E). The below table shows how to calculate the O.E.E.
Benefits (Achievements) of TPM:
Increased equipment productivity

Improved equipment reliability

Reduced equipment downtime
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The properly implemented TPM has made excellent progress in a number of areas. These
include:
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Increased plant capacity

Extended machine line

Lower maintenance and production cost

Approaching zero equipment – caused defects

Improved team work between operators and maintenance people

Enhanced job satisfaction

Improved return on investment

Improved safety
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TEROTECHNOLOGY
 TPM's comprehensive role in integration of interrelated activities has been described as
terotechnology.
 Terotechnology is concerned with the application of managerial, financial, engineering
and other skills to extend the operational life and increase the efficiency of equipment
and machinery.
 Terotechnology covers aspects of process installation, commissioning, maintenance
engineering, replacement and removal of plant, machinery and equipment, feedback to
operators, and strengthens relations with other activities.
COST OF QUALITY (Quality Cost)
Concept: Quality-related costs are costs incurred by an organisation to ensure that the
products / services it provides conform to customer requirements. In other words, quality
costs are the sum of money spent on ensuring that customer requires are met and also the
costs wasted through failing to achieve the desired level of quality. Thus quality cost is the
cost of not meeting the customer's requirement. i.e., the cost of doing things wrong.

The cost of quality is the difference between the actual cost of making and selling
products or services and the cost of no failure.

Definition: Quality costs are defined as those costs associated with the non-achievement
of product / service quality as defined by the requirements established by the organisation
and its contracts with customers and society.

In simple words, quality cost is the cost of poor products or services.
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CONCEPT AND DEFINITION OF QUALITY COSTS
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Unit IV
ELEMENTS OF QUALITY COSTS
The cost of quality (COQ) can be classified into the following four categories.
1. Cost of prevention,
2. Cost of appraisal,
3. Cost of internal failures, and
4. Cost of external failures.
Cost of Prevention

Prevention costs are the costs that are incurred on preventing a quality problem from
arising.

Prevention costs relate to efforts to prevent failures.

Cost of prevention includes:
1. Cost of quality planning: It includes the costs associated with creating an overall quality
plan, the cost of market research and product development, inspection plan, reliability
plan, etc.
2. Cost of documenting: It includes cost of preparation of required documents such as
manuals, procedures, policies, etc.
3. Process control cost: It is the cost associated with implementing the quality plans and
procedures to achieve the stated purpose.
4. Cost of training: It includes the costs of conducting training programmes.
5. Costs associated with preventing recurring defects: It is the engineering,
technical and supervisory costs for preventing the reoccurring defects.
6. Costs of investigation, analysis and correction of causes of defects by quality
control and engineering departments.
7. Cost of quality awareness programme.
Appraisal costs are the costs that are incurred in assessing that the products / services
conform to the requirements.

Appraisal costs relate to testing, execution, and examination to assess whether
specified quality is being maintained.

Cost of appraisal includes:
1.Cost of receiving test and inspection.
2. Cost of laboratory acceptance testing.
3. Cost of installation testing.
4. Cost of installation and commissioning.
5. Cost of maintenance and calibration of testing and inspecting equipments.
6. Cost of test equipment depreciation.
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Cost of Approval
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7. Cost of analysis of reporting of tests and inspection results.
8. Cost of line quality engineering.
9. Cost of vendor rejects.
Cost of Internal Failures
Internal failure costs arise due to internal failures.
These costs are linked to correcting mistakes before delivery of the product, such as: scrap,
rejects, adjustments, downtime of equipment, labour sitting idle while waiting for repairs, and
sales discounts for inferior products.
Cost of internal failure includes:
1. Cost associated with scrap and rejects.
2. Cost of repair and rework.
3. Cost of design changes.
4. Cost of trouble-shooting or defect failure analysis.
5. Cost of reinspection and retesting.
6. Cost of sales discounts for inferior products.
7. Cost of downgrading.
8. Cost of downtime.
External failure costs arise from the rejection of the products / services by the customers
due to poor quality.

These costs are associated with the adjustments of malfunctions after delivery of the
product, such as: repair costs, travel and lodging expenses, replacement costs, stock spare
parts, lost goodwill of customer, guarantee and warranty costs, and dispatchment costs.

Cost of external failures include:
1. Cost of processing complaints from customers.
2. Cost of commissioning failures.
3. Cost of servicing or replacing the defective items.
4. Cost of guarantee and warranty claims.
5. Cost of lost goodwill of customer.
6. Cost of product reliability compensation (voluntary or legal).
7. Cost of loss of sales.
8. Cost of concessions offered to customers (due to substandard products being
accepted by customers).
OPTIMUM COST OF PERFORMANCE
The relationship between various cost categories is depicted in below figure. It is
understood that the sum of the prevention and appraisal costs rises from zero to infinity as
perfection is approached. In contrast, the failure cost drops from infinity to zero as perfection is
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Cost of External Failures
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approached. Thus the optimum total cost point lie between two infinities, as shown in below
figure.
From the above figure, it is clear that to achieve a reduction in failure costs, it is
necessary to increase prevention and appraisal costs.
ANALYSIS TECHNIQUES FOR QUALITY COSTS
 The most commonly used techniques for analyzing the quality costs are trend and pareto
analysis.
 The objective of these techniques is to determine opportunities for quality improvement.
TREND ANALYSIS
What is Trend analysis?

A trend analysis or a trend graph is a planning tool that provides information for longerange planning. It also provides information for the investigation and assessment of
quality improvement programmes.

In this contest, trend analysis compares the present quality cost levels to past levels.
Trend analysis can be established by cost category, by sub-category, by product, by
measurement base, by department, by machine, and by combinations thereof.

Depending on the purpose of the analysis, time scales for these trend graphs may be by
month, quarter, or year.
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Characteristics of Trend Analysis
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Input data for trend analysis are the monthly reports and the detailed transaction reports
of the each element.
Typical Trend Graphs and Their Interpretations
1. A typical trend graph/or the/our cost categories by quarter is depicted in below figure (a)
Interpretation: Figure ‘a’ is a cumulative type trend graph.
Here, Curve 1 represents the prevention cost;
Curve 2 includes the prevention and the appraisal costs;
Curve 3 includes the internal failure, appraisal, and prevention costs; and
Curve 4 includes all four cost categories.
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It can be seen from the figure (a) that prevention and internal failure costs are increasing;
appraisal costs remain unchanged; but external failure costs are decreasing.
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2. A typical trend analysis for three different measurement bases is illustrated above figure(b).
Interpretation: The above figure (b) gives three kinds of results in a graph. By using a single
graph, for a particular quarter, one can forecast the trend based on three various parameters.
3. A typical trend analysis for two different products X and Y is shown in above figure (c).
Interpretation: Since the quality costs for product X is lesser than that of product Y, therefore
the product X is better than product Y.
It can also be noted that an increase in prevention and appraisal costs will improve the
external and internal failure costs of product Y.
4. A trend graph for the internal failure category is shown in above figure (d).
Interpretation: This graph shows the variations of production costs of various internal failure
elements with respect to each quarter.
PARETO ANALYSIS
What is Pareto analysis?
 A Pareto analysis is a method of classifying items, events or activities according to their
relative importance.
 A Pareto diagram is a diagnostic tool commonly used for separating the vital few causes
that account for a dominant share of quality loss.
 The Pareto diagram is based on the Pareto principle, which states that a few of the
defects accounts for most of the effects.
When do we use Pareto analysis?
 Pareto analysis can be used in a wide range of situations where one need to prioritise
problems based on its relative importance.
 It can be used as a most effective cost-analysis tool.
 Pareto diagrams can be established for quality costs by operator, by machine, by product
line, by non-conformity, by category, by element, and so forth.
Determine the method of classifying the data by problem, reasons etc…
Decide the factor to rank the characteristics frequency etc…
Collect data for an appropriate the internal or use historical data.
Summaries the data and rank order categories from largest to smallest.
Construct the diagram and find the ‘Vital few’
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(1)
(2)
(3)
(4)
(5)
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How can we construct it?
Five steps for constructing a Pareto diagram:
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Typical Pareto Diagrams and Their Interpretations:
1. A typical Pareto diagram for the analysis of the external failure costs for cell phone
manufacturer is depicted in below figure.
Interpretation: Datas are arranged in descending order starting from the largest category to
smallest. It can be seen that vital few items represent a dominant amount of the total. So one can
concentrate more on vital few items which results in more reduction of quality costs.
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2.Typical Pareto diagram for internal failures is depicted in below figure
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3.Typical Pareto diagram for quality costs by department is shown in below figure.
4. Typical Pareto diagram for quality costs by machine is shown in below figure.
PERFORMANCE MEASURES
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Performance measures indicates the measurement of success in an organisation. Ray F.
Boedecker has identified and listed seven objectives of performance measures.
The seven objectives are:
1. To establish baseline measures and reveal trends.
2. To determine which processes need to be improved.
3. To indicate process gains and losses.
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OBJECTIVES OF PERFORMANCE MEASURES
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5.
6.
7.
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To compare goals with actual performance.
To provide information for individual and team evaluation.
To provide information to make informed decisions.
To determine the overall performance of the organization.
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PERFORMANCE INDICATORS (What are the items to be measured?)
The performance measures of an organisation includes the performance measures of its
each functional elements such as customers, production, suppliers, research and development,
human resources, marketing / sales and administration. The below table displays some important
indicators to measure the various functional elements of the organisation.
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REQUIREMENTS (OR CRITERIA) OF THE PERFORMANCE MEASURES
The organisations can adopt any of the performance measures listed in the above table,
depending on its requirements. However, for successful implementation, the selected measures
should try to satisfy the following requirements.
1. Performance measures should be simple and understandable to the users.
2. Instead of using many performance measures, it is preferable to use few numbers of
key measures.
3. While selecting measures, one should select the measures which are more relevant to
customers.
4. Performance measures should focus on continuous improvement, prevention and
corrective action.
5. Cost related performance measures should be preferred to better understand the
financial position of the firm.
6. The performance measures selected / used should be transparent and visible to all the
employees.
7. The performance measures should be time-based, preferably measures should be based
on hourly, daily, or weekly rather than monthly or quarterly.
8. The results of the performance measures should balanced the interests of all
stakeholders.
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STRATEGY FOR IMPLEMENTING PERFORMANCE MEASURES
Usually the selection, processing, implementation, and monitoring of performance
measures are carried out by the quality council. They integrate the measures with the total
system of measures. To facilitate this, they utilize the core values, goals, mission, vision, and
policy statements of the organisation. This activity will be translated into the creation of the
strategic measurement system.
The strategic measurement system includes the few or more of the performance measures
listed in the below table. These selected measures become the base on which the organisation
revolves. These measures are tracked regularly to show trends, identify problem areas, and
allocate resources. The quality council should monitor the current activities and plan the future
activities at regular intervals.
Below table shows a typical example of a strategic measurement system of an organisation.
Typical strategic measurement system
Criteria
Quality
Measurement system / measures / indicators
- % increase in quality grade
- % reduction in failure rate
- % reduction in cost of poor quality
- reduction in number of customer's complaints
- % reduction of rejects and scrap
- % reduction of safety and environmental incidents
Throughput - reduction in throughput time
- increase in manufacturing cycle effectiveness
time
- reduction in number of breakdowns
- increase in availability
- increase in invoicing speed
- reduction in time between order and delivery
Productivity - increase in productivity
- increase in effectiveness
- increase in efficiency
- increase in revenue growth
- increase in sales and market growth
- % reduction in personnel turnover
Added vaLue - increase in revenue per employee
- increase in gross and net added value
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Net added value = Gross added value - Depreciation (consumption of durable capital goods)
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Gross added value = Sales - used raw material, goods and services needed to produce the
products.
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PERFORMANCE MEASURES PRESENTATION
The commonly used techniques for presenting performance measures are:
1. Time series trend graphs,
2. Control charts,
3. Capability index,
4. Taguchi's loss function,
5. Cost of poor quality! and
6. Quality awards.
1. Time series trend graphs: In time series graph, the time (in days, weeks, quarter, etc.) is
represented on the X-axis and the performance measure is represented on the Y-axis. A typical
trend analysis for three different measurement bases is illustrated in below first figure.
2. Control charts: The control charts are powerful tools for the diagnosis of quality
problems. A typical control chart for defects per lot is illustrated in below first diagram.
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4. Taguchi's quality loss function: This technique is based on the fact that quality loss occurs
when a product's specifications deviate from target or nominal value. The Taguchi's U-shaped
loss function curve is shown in below figure.
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3. Process capability index: It is the ratio of the tolerance to the capability. There are two
measures:
(i) Cp: It measures the ability of the process to meet specifications.
(ii) Cpk: It indicates the centering of the process on the target.
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6. Quality awards: The criteria for any quality awards should include leadership, strategic
planning, customer and market focus, information and analysis, human resource focus, process
management, and business results. Therefore quality awards [such as Malcom Baldrige National
Quality Award (MBNQA) for u.s. organisations - similar to Oscar Awards for u.s. films] can
effectively measure the performance of the TQM effort on an annual basis.
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5. Cost of poor quality: This quality cost concept is explained in first unit. The relationship
between cost categories is depicted in below figure
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