Fall 2011 (August 2011)

Master of Business Administration- MBA Semester 3 Total Quality Management Specialization QM0010 - Foundations of Quality Management (4 credits)
(Book ID: B1240)

ASSIGNMENT- Set 1 Marks 60

Note: Each Question carries 10 marks. Answer all the questions.

1. Write a brief note on the concept of Total Quality Management. Differentiate between Quality Control and Quality Assurance. TQM is a management philosophy that seeks to integrate all organizational functions (marketing, finance, design, engineering, and production, customer service, etc.) to focus on meeting customer needs and organizational objectives. TQM views an organization as a collection of processes. It maintains that organizations must strive to continuously improve these processes by incorporating the knowledge and experiences of workers. The simple objective of TQM is "Do the right things, right the first time, every time". TQM is infinitely variable and adaptable. Although originally applied to manufacturing operations, and for a number of years only used in that area, TQM is now becoming recognized as a generic management tool, just as applicable in service and public sector organizations. There are a number of evolutionary strands, with different sectors creating their own versions from the common ancestor. TQM is the foundation for activities, which include: Commitment by senior management and all employees Meeting customer requirements Just In Time Improvement teams Reducing product and service costs Employee involvement and empowerment Recognition and celebration Challenging quantified goals and benchmarking Focus on processes / improvement plans Specific incorporation in strategic planning

Fall 2011 (August 2011)

Quality Control V/s Quality Assurance: Frequently, people get confused between quality control and quality assurance. Though they are comparable, there are some critical differences. Quality control is with regards to the product, whereas Quality Assurance is with regards to the process. Quality control (QC) is a procedure or set of procedures intended to ensure that a manufactured product or performed service adheres to a defined set of quality criteria or meets the requirements of the client or customer whereas Quality assurance is a set of activities or processes that are designed to ensure that products, goods and/or services satisfy the requirements of customers in a systematic and reliable fashion. QC highlights on testing products to find out faults and inform the management who decides to allow or stop the release whereas Quality Assurance helps to improve and stabilize production, and other components of the processes, to avoid or minimize issues that led to defects. QC is about Products or Deliverables. It describes checking a final product or deliverable to ensure that it is defect or error free and meets specifications whereas QA consists of procedures, processes and systems used to guarantee and improve the quality. 2. Explain quality economic approach and quality environmental approach. Business conditions are changing and evolving so as the economic environment. In this competitive environment, organization requires new approaches to survive. Quality is becoming prime priority for most of the organizations and implementing a quality system requires management commitment to develop a quality assurance program. This embraces a variety of activities designed to ensure reliability in the first place, specific quality control measures to monitor quality on a routine basis. The goal of quality system should be to avoid errors rather than to detect them. The reduction of correction costs is recognized as a benefit which can be offset against the cost of the system. The quality economical approach is to provide quality product or service at competitive prices while reducing wastage, decreasing cost, providing high customer satisfaction, gaining competitive advantage, provide a vibrant economy that affects in terms of taxation, government spending, general demand, interest rates, exchange rates, and overall development and growth. Following are some of the quality economical aspects Reduce Cost, Reduce wastage, Gain Competitive advantage, Face Competition, Right Pricing, Increase Market share and Provide overall economic growth Industrial and economic development have led to faster depletion of natural resources, forestry, water, coal, and petroleum etc have given impetus to growth and now with the fast depletion of resources the crisis is approaching. Pollution, carbon and gaseous emission, are adding to crisis. Large scale usage of natural resources is not only causing depletion but also leading to wide spread air, water and noise pollution that is again leading to hazardous health problem and severe consequences. Emission of hazardous gases are depleting the ozone layer in the atmosphere and disturbing ecological imbalance. The consequences have alarmed the society, organization and various other institutions. Now organizations are aware of their environmental and social responsibility and are taking various measures to safeguard environment.

Fall 2011 (August 2011)

Social responsibility of business organization is to keep check on issues pertaining to environment. To discharge the responsibility organizations need to accomplish Environmental Quality policy. Total quality management provides a model for business excellence by advocating on environment management as a key business process to create eco-friendly environment and built premises of secure environment and better working condition. Quality management concentrates on the activity that lead to environment pollution directly or indirectly and causes harm to environment and health, hygiene of people in an around the business. It checks the problem and consequences of the environmental issues and concentrates on the following areas: Generation and discharge of pollutants to the environment, namely air, waste or excessive noise, Industrial energy management, Management of industrial health, hygiene and safety and Management of ecology and forestry. 3. Explain the importance of customer satisfaction with an example. How do you measure customer satisfaction? New companies (many start ups) create new markets with innovative products. This process basically tells customers what they want. As customers become more and more sophisticated and competition increases, these firms often face a competitive crisis and must begin to listen to customers more closely. Many companies have not developed their capability in this area. A research study has shown that quality of customer service will be critical factor to maintain competitive edge in 21st century. The organizations must also use customer focus as a key driver for its strategic planning activities. Customer satisfaction is an important factor for the bottom line. A study has shown that a company with 98% customer retention rate was twice as profitable as those at 94%. Studies have also shown that dissatisfied customers tell at least twice as many friends about bas experiences than they tell about good ones. Customer satisfaction occurs when products and services meet or exceed customer expectation. To exceed expectations, the organization must deliver ever- improving value to its customers. Customers no longer buy solely on the basis of price. They compare the total package of products and services that a company offers with the price and the competitive offerings. This total package influences the perception of quality and includes the physical product and its quality dimensions; pre-sale support such as ease of ordering, rapid on-time and accurate delivery; and post sale support such as field service, warranties, and technical support. If competitors offer better choices for similar price, the customers will rationally select the package with the highest perceived quality. satisfaction and loyalty are influenced greatly by service quality, integrity and the relationships that organizations build with customers. One study has found that customers are 5 times more likely to switch because of perceived service problems than for price concerns or product quality issues. Measuring Customer Satisfaction Customer feedback is vital to a business. Feedbacks enable the company to learn how satisfied their customers are with its products and services. Measure of customer satisfaction benefits the business through:

Fall 2011 (August 2011)

Discover customer perceptions of how well the business is doing in meeting the customer needs and identify causes of dissatisfaction and failed expectations as well as drivers of delight. Compare the companys performance relative to competitors to support planning and better strategic initiatives. Discover areas for improvement in the design and delivery of products and services, as well as for training and coaching of employees. Track trends to determine whether changes actually result in improvements. An effective customer satisfaction measurement system results in reliable information about customer ratings of specific product and service features and about the relationship between their ratings and the customers likely future market behavior. It is important to keep in mind that customer satisfaction is a psychological attitude. It is not easy to measure and it is influenced by customer expectations and their perceptions on quality and value. Thus it is difficult to reduce these complex relationships in to a single measure. Customer satisfaction measures may include product attributes such as product quality, product performance, usability, maintainability and service attributes such as attitude, service time, on-time delivery, exception handling, accountability, technical support and image attributes like reliability and price; and overall satisfaction measures. The most important customer data includes comparisons with key competitors. Companies commission third parties to conduct blind surveys to determine who key competitors are and how their products and services compare. Competitive comparisons often clarify how improvements in quality characteristics are being overlooked. 4. Explain Kaizen Approach to Problem Solving, with an example. Often it was an awareness of how hard it is for people to concentrate on improvement when they keep thinking about getting their work done. To some extent it was a matter of their innate respect for the people who do the work. For all these reasons, years ago the Japanese inventors of the Lean improvement systems came up with a different improvement model they called Kaizen. Kaizens (or blitzes, as they are sometimes called) are improvement events where people work only on improvement for a few days, up to a full week. In a traditional Kaizen project, the people from a particular work area come together with a few experts for four or five days straight and complete most or all of a DMAIC cycle on a narrowly targeted high-priority issue. ("We need to process loan applications faster.") The model has been so successful that this basic approach has been adapted to other uses such as service design sessions. Example of a Bank's Use of Kaizen A major national bank started using the five-day Kaizen approach whenever it wanted to attack process speed and efficiency problems. The bank's Kaizen events all share four characteristics: The purpose is to take a cross-functional view of the process or work area. Participants are people who are directly involved in, and usually responsible for, various parts of the process. The team is cross-functional. Participants are pulled off their jobs for several days at a time. The project is well-defined going in because there is not time to redefine the purpose or scope.

Fall 2011 (August 2011)

A Typical Kaizen Schedule Here is a sample agenda which the bank uses for the five days: Day 1 is an afternoon spent training participants on topics that cover basic concepts related to the goals of the project. This could include teaching relevant Lean or Six Sigma concepts and reviewing relevant data. Day 2 is spent looking at the process with new eyes. Participants do a "unit walk," a tour of operations affected by the problem or situation being studied where they simulate being a work item flowing through the process. The group visits each portion of the process, where, because there is cross-functional representation, they have the opportunity to hear insights from someone who works in that area. The group creates a value stream map (a picture of the "as-is" situation) that captures the basic process steps, such as cycle times, number of steps, rework loops, queuing delays, work in progress (WIP) and transportation time. Day 3 is designed around clarifying problems and brainstorming solutions. The team re-organizes the value stream (on paper) or creates a "should" map that depicts how the process would need to function to solve the identified problems. The outcome includes developing action plans for implementing solutions or trial simulations for the next day. Day 4 is used to test the solutions, conducting a simulation within the operations if possible. The group quantifies the improvement if the proposed changes are implemented, using estimates of reductions in travel time, queuing time, work in process, number of steps, number of forms, and so on. Day 5 is when participants prepare and present their findings to the sponsor in a formal report-out session. 5. Explain the concept of Cost of Quality with examples. Differentiate between external failure cost and internal failure cost. The concept of cost of Quality (COQ) has emerged in 1950s. The concept of Quality Costs is a means to quantify the total cost of Quality related efforts and deficiencies. This was first described by Armand V. Feigenbaum. Generally, the people have the perception that higher quality involves higher costs, either for buying better raw materials or machines or by hiring expensive skills. Further more, while cost accounting had evolved to categorize the financial transactions in to revenues, expenses, overheads, it had not attempted to categorize the costs related to quality. Management is well served if the Quality related costs are segregated and reported so that the data can be evaluated to understand the impact of investments on quality related activities and focus better on the quality improvement activities to reduce the overall costs and enhance the profitability. Cost of Quality is the amount of money a business loss because of its product or service was not done right in the first place. It can include the costs of repairing a defective component in an

Fall 2011 (August 2011)

assembly to those associated with warranty costs of malfunctioning machines, badly performed service or business loss. Some practitioners refer to these costs associated with the failures are also called as Cost of Poor Quality (COPQ) to distinguish them from the costs associated with other Quality activities. External Failure Costs External failure costs are associated with deficiencies that are found after the customer receives the product. This also includes the lost opportunities for sales revenue. This cost will automatically disappear in the absence of the deficiencies.Examples of this category: Warranty charges Costs involved in repairs or making repairs to products that are still within the warranty period. Internal Failure costs: These are the costs of deficiencies discovered before delivery. These are associated with the failures to meet the requirements of customers (both explicit and implicit). These costs include avoidable process losses and process inefficiencies. Internal failure costs are broadly classified as a) Costs of failures to meet customer requirements & b) Costs of Inefficient processes. Examples of costs of failures to meet customer requirements: Rework correcting defects in physical products or errors in services. 6. Write a note on Quality function Deployment. Quality Function Deployment (QFD) is a standard approach of defining customer needs or requirements and translating them into specific plans to develop products to meet those needs. It is a discipline approach to product design, engineering and production and provides an in depth evaluation of a product. An organisation which has implemented QFD can improve knowledge, productivity and quality, reduces costs, product development time and time spent on costly engineering changes. Quality function deployment is a planning tool used to fulfil customer needs and expectations. It is a discipline approach to product design, engineering and production and provides an in depth evaluation of a product. An organisation which has implemented QFD can improves knowledge, productivity and quality, reduces costs, product development time and time spent on costly engineering changes. QFD focuses on customer requirements i.e. Voice of the Customer. QFD is a scientific technique for translating voice of the customer into technical characteristics in development of product or services. It is a complete product planning process. QFD focuses on customer requirements i.e. Voice of the Customer. It focuses on satisfying customer needs and places stress on techniques that help understand those needs and develop a product of superior value. QFD is a scientific technique for translating voice of the customer into technical characteristics in development of product or services. It is a complete product planning process. Therefore, QFD is a customer driven planning process which guides through the design, manufacture and marketing of a product or service.

Fall 2011 (August 2011)

Master of Business Administration- MBA Semester 3 Total Quality Management Specialization QM0010 - Foundations of Quality Management (4 credits)
(Book ID: B1240)

ASSIGNMENT- Set 2 Marks 60

Note: Each Question carries 10 marks

1. What is meant by Quality Audit? Explain the importance of Quality Audit.List the general guidelines for carrying out a quality assurance audit. The quality audit is a management tool used to evaluate, confirm or verify activities related to quality. A properly conducted quality audit is a positive and constructive process. It helps to prevent problems A quality audit is necessary in order to Provide objective evaluation of compliance with the established procedures; Determine the adequacy of the exiting quality systems and procedures in Verify implementation of corrective action measures Assess the progress on different tasks related to quality programme in the enterprise.

ISO 8402 (1986) defines quality audit. It is referred to as a systematic and independent examination to determine whether quality activities and related results company with planned arrangements and whether these are implemented effectively and are suitable to achieve objectives. Following are the three dimensions of quality audit: a) Are the quality systems and procedures by themselves free from congenital that go counter to the concepts of quality? b) Are the existing quality systems and procedures capable of achieving and maintaining the standards of quality chosen by the enterprise for a product or class of products? This need arises quite often and they are normally imposed by special market requirements: important major customer or regulatory agencies. c) Are the systems and procedures being adhered to and complied with, in day-to-day work? All these aspects of quality audit need to be taken up together. This process naturally covers the product and the process also, apart from the systems already referred to. Thus for example, quality audit while evaluating an inspection/test activity is not concerned with the type of decision-acceptance

Fall 2011 (August 2011)

or rejection arrived at but on the soundness of the procedure adopted for inspection/test: ability of the very inspection/test method to help in reaching the correct decision. The general guidelines for carrying out a quality assurance audit exercise are as follows: a) Formulate a check-list of the deficiencies likely to be found in each area. b) Conducted the assuranceevaluation on the spot where the activity is and through available data, documents, analysis, discussions with all concerned etc. to arrive at the right conclusions. c) Peruse the quality crisis, if any, encountered by the company and the manner in which it sorted out the crisis. This gives important clues and ideas to improve quality measures. d) Nominating the auditors. e) Maintain proper human-relations to get the best possible information and create a congenial environment to receive the findings of the evaluation-exercise well. f) Discuss the findings and suggestions with key personnel prior to submission of the report.

2. How is the human relations theory different from classical theory? The principal early models in organization (or management) theory are the classical, also known as the traditional or Rational, and the Human relations. While benefits could, and may still, be obtained from the classical approaches, their lack of humanity is demonstrated by the difficulties which emerge during their application with the people involved. The Human Relations Model of organization emerged as a means of addressing these difficulties and was the first significant challenge to the machine view. The Human Relations Model of organization stems from the origins of modern systems and attempts to deal with the attainment of survival of the system or organization rather than the achievement of particular goals. The classical may be interpreted as an early systems approach to management. Although they were originally focused on the application of scientific management principles, their findings led away from this perspective, and they subsequently recognized the need to capture and understand the relatedness of all the parts involved. Later Human Relations Model did not accept the systemic perspective. These later developments still adopt a reductionist and closed system view of the organization, concentrating on improving the performance of parts, not wholes, and emphasizing internal rather than external influences on the organization.

Fall 2011 (August 2011)

3. Mr.X is a manager in a large restaurant in one of the major cities in India. He knows that the customers expect high overall quality from that restaurant. He wants to know whether his restaurants services are meeting customers expectations. How can he check this? What are the ways he can measure quality in his restaurant? Parasuraman, in 1985 propounded a model of service quality popularly known as the gap model This model shows five gaps between various elements in the design and delivery of a service. These gaps are the discrepancies or hurdles in the ultimate customer satisfaction. The customer develops his/ her set of expectations from a service through word-of-mouth communication (from friends, relatives, etc who have experienced such a service) his/her own personal needs from the service, and his/her own past experience with the service. Gap 1 exists between the expectations of the customer (customer of service) and the perception of the service provider about these customer expectations. For example, the manager of a restaurant might have instructed the waiters to stand somewhere near the customers table after having served the meals so that if the need be, the customer can easily call the waiter. On the other hand, the customer may feel irritated by the waiter staring at him/ her having the meal. In this situation, the customer expects the waiter to be readily available whenever (s) he needs and at the same time, remain at a sufficient distance to ensure adequate privacy at the customer table. Thus, the manager of the restaurant has to use proper tools and techniques to understand the customer expectations as objectively andprecisely as possible. Gap 2 exists between the perception of the service provider and the translation of these perceptions into the creation of the specifications of the service. In our example, of Gap 1. Having understood the expectation of the customer, the manager has to evolve the specifications about the exact distance from the customer table at which the waiters should stand after having served the meals. Also it should be specified how waiters should not stare at the customer and still be prompt enough to respond to a call/ gesture of the customer. If any such required specification is not specified objectively, it would exemplify Gap 2. Gap 3: is between the service specifications and service delivery (including pre-and post-contacts with the customers). In our example, let us assume that it has been specified that the waiter should be 5 meters away from the customers table and look in any vague direction (but not towards any table) with the customer in peripheral vision for detecting any signal/ call by the customer. When it come to the implementation of these specifications, it was found that some waiters (who had joined recently) were not following these specifications. During rush hours, waiters had to attend to more than one customer table and distance specification became difficult to adhere to practically. As the end result, some customers perceived the same problem as with the earlier service. Gap 4 is between the external communication (through advertising etc) to the customers about the attributes of the service and the actual service delivery. It is always beneficial to give a realistic

Fall 2011 (August 2011)

view of the service provided to the customers through advertising. Otherwise, consumers get overwhelmed by the exaggerated commercials shown to them on TV, radio, or print media and have bloated expectations from the service. Subsequently after having experienced the service they may perceive the service as below standard. Gap 5 exists between the expectations of the consumers from the service their perceptions about the service after having experienced it. Perceived quality of service depends on the size and directions of Gap 5, which in turn depends on the nature of the gaps associated with the marketing, design and deliveryof services. 4. Write a note on the ISO 9000 series of Quality Standards and Malcolm Baldrige Criteria for Business Performance Excellence. ISO 9000 this is a series of international quality standards which serves as a guidance to suppliers and purchasers about the minimum requirements of a quality system. The first edition of ISO 9000 standards was completed in 1986 by ISO Technical Committee 176 and it was published in 1987. Ralli Wolf was the first company in India to get ISO 9001 certified in the year 1988 by BSI, UK. The number of ISO 9000 certified organizations in India was 554 in 2001, 8110 in 2002, 10,198 in 2003 (out of which 8367 were ISO 9000: 2000 certified) and presently approximately 12,000.The total number of ISO 9000 certified organizations throughout the world till end of 2003 were 5,67,985 . The basic principle behind ISO 9000 is stated in Section 1-scope and Field of Application, which states: The requirements specified are aimed primarily at achieving customer satisfaction by preventing non-conformity at all stages from design through servicing Three types of certifications are there in ISO 9000 depending upon the activities of the organization seeking the certification. ISO 9001 this is the most comprehensive of the certificates for an organization engaging in development/design, production, installation, and servicing. ISO 9002 this certification is provided to organization engaging in development/design, production, installation and servicing. ISO 9003 this certification is provided to organizations involved only in final inspection and testing. Two documents are provided by ISO as guidance to organizations for understanding various aspects of a good quality system. They are: ISO 9000 this document explains principle concepts and applications and guide to selection and use. ISO 9004 this document explains principle concepts and applications, guide to quality management and quality system elements. Malcolm Baldrige National Quality Award (MBNQA) is an annual award presented by the President of US to US organizations in recognition of their performance excellence in Quality. It promotes a) awareness of quality as an increasingly important element in competitiveness b) a clear understanding of the requirements for the quality excellence and c) encourages sharing of information of their success stories for the benefit of other organizations.

Fall 2011 (August 2011)

Even just the process of competing for the award has helped many companies to define what the quality means to them. Many organizations who have competed but did not win, have realized that by practicing the seven categories of the award and its evaluation system as a technique to measure their Total Quality Management [TQM] efforts have paid the rich dividends and efforts did not go as waste. They also learnt about their organizational strength and weaknesses and acted upon to improve operations. Various TQM models are available to industry such as MBNQA, Deming Application award, European Quality award, etc. While their approaches are different, each of them is concerned with the proper adoption of TQM principles for organizational synergy. MBNQA, which is most popular and widely used world over, as it provides an integrated system of seven categorys of processes of TQM and has been a bench mark standard for total quality. This type of Benchmarking and performance against other leading performers who have won the award in their area of operations, has helped improve the performance practices and capabilities, Facilitated communication and sharing of best practices information among US organizations, and Served as a working tool for understanding and managing performance, planning, training and assessment. Criteria of various awards including this MBNQA, provide additional resource, beyond ISO9000, for implementation of Total Quality Management (TQM) in an organization. 5. Describe the various tasks which help to build a healthy association and partnership with the suppliers. The result oriented goals of performance excellence are designed to achieve improved value to customers apart from improving the organizational capability. These are derived from the following set of core values and concepts. 1) Focus on Customer driven quality 2) Leadership to address core values and empower employees for performance excellence 3) Continuous Learning process and improvement 4) Employee participation and development in each area of operations 5) Fast response to change and results 6) Design for quality and prevention of deficiencies 7) Long-range view of the future to sustain & compete 8) Corporate responsibility and citizenship 9) Result orientation 6. Assume that you are a Quality manager in a large BPO company and you are thinking of implementing TQM in your Company. What are the various barriers you may face for such initiative? List out such barriers to Quality. How do you plan to overcome such barriers? The barriers/obstacles to implement TQM seem endless. The barriers are found never-ending with plenty of issues. In fact it starts from top management itself and flows down to all working levels. This is so in all business sectors, whether they are manufacturing, services, government and even education.

Fall 2011 (August 2011)

The question is: Is there any way to adopt TQM and finally overcome these barriers? Therefore, it is important for organizations to understand these barriers first and avoid them both before and during the TQM implementation. Main Groups of barriers: The barriers to quality could be grouped under four: Physical: (Processes, Tools, & Structures, Organization design & Management perspectives) Infrastructure: (Strategy, Measurements, Rewards, Systems & Procedures) Behavioural: (What groups or individual do) Cultural: (Deeply held Assumptions, Values, Beliefs, & Norms. attitudes, values and beliefs A strong knowledge and awareness in the Leadership coupled with a drive for excellence and growth, proactively, will reap high success to the organization. The manager's job is to create an environment in which excellent workmanship flows. All the means and ways must be found to overcome any obstacles/barriers/hindrances that may come in the way of progress and growth of the organization Some of the drivers that are essentials to achieve success and identified areas for overcoming obstacles/barriers in quality across are discussed below: Senior management commitment and involvement. Leadership and active commitment to continuous improvement at all levels Focusing on the needs of customers and stakeholders. Establishing clear and effective measurement and feedback systems. Learning from continuous improvement results and capturing and sharing learning throughout the organization. Establishing a culture for continuous improvement and high involvement Focusing on people-front line and developing employee ownership for quality. Focusing on critical processes including major business processes Standardizing achievements & documented quality management system

A Step by Step Approach: To create a sound quality culture across the organization, managers should have their own approach plans. The activities involved shown below, may to some extent fade the barriers. These steps emerged from the company's experiences in human resource management and adopted as an active approach to quality improvement and remove the obstacles. 1. Show what's expected and required, 2. Involve people and Encourage employees 3. Take a long-term approach, 4. Focus on teamwork and Train thoroughly, 5. Use problem-solving processes, 6. Communicate and Try different approaches.