Quality and Business Performance

One factor above all others-quality-drives market share. And when

superior quality and large market share are both present profitability is
virtually guaranteed.

There is no doubt that relative perceived quality and profitability are

strongly related. Whether the profit measure is return on sales or
return on investment, business with a superior product/service offering
clearly outperform those with inferior quality

Even producers of commodity or near-commodity products seek and

find ways to distinguish their products through cycle time, availability
or other quality attributes. In addition to profitability and market share,
quality drives growth .The linkages between these correlates of quality
are shown in figure1-1.
Quality can also reduce costs. This reduction, in turn, provides an
additional competitive edge. Figure 1-1 includes two types of quality.
Customer driven quality and conformance or internal specification
quality

Common themes of these three Gurus

Inspection is never the answer to quality improvement, nor is policing.
Involvement of leadership and top management is essential to the necessary
culture of commitment to quality.
A program for quality requires organization-wide efforts and long term
commitment, accompanied by the necessary investment in training.
Quality is first and schedules are second.

14 Steps of Crosby
1. Commitment of Management
First and foremost, management must be committed to improving the
quality in a company. This commitment must also be transparent to all
employees so that proper attitudes towards a Zero Defect product or service
line are modeled.

2. Formulate the Quality Improvement Team

Forming a quality improvement team is the second step to achieving total
quality management. Searchfor team members who will model quality
improvement commitment, and who are not already over-committed to
other projects. The quality improvement team should be able to effectively
commit themselves to improvement of quality.
3. Measure for Quality in Current Practices
Before you can establish a plan for improving quality, you first have to know
exactly where your products and services lie when it comes to conforming
to requirements. Thus, the third step on Crosby's list is to measure
quality. Determinewhere there is room for improvement and where potential
for imrpovement exists.

4. What Will the Cost of Quality Be?

How much is your cost of nonconformance to standards? What is the cost for
quality? By answering these questions, you can demonstrate to all company
employees that there is a need for a quality improvement system. Explain
how the cost of quality figures into the overall company plan.

5. Quality Awareness is Central to Success

You will need to raise employee awareness to the importance of quality
management. By doing this, and making quality a central concern to
employees, you will increase the likelihood that your quality improvement
efforts will be realized.

6. Remember the Quality Problems? Take Corrective Action

By now, you will have determined what your company's quality problems
are. It is now time to take corrective action to eliminate the defects that
have been identified. Be sure that you install a system, using causal analysis
techniques, to ensure that these problems don't reoccur in the future.

7. Plan for Zero Defects

You need to create a committee to ensure that there are zero defects in your
products and services. For Crosby, it's not enough, remember to have "as
few as possible" defects. Instead, you really need to have this number at
zero - establish a zero-defect tolerance in your company.

8. Practice Effective Training for Supervisors

Ensure that your supervisors can carry out the tasks required of them for
maintaining quality. By practicing supervisor training, with quality in mind
(and the four absolutes), then you will be more likely to acheive zero-defect
status.

9. Happy Zero Defects Day!

Hold a quality event, called a zero defects day, where all employees are
made aware of the change that has taken place. By holding a zero defects
day in your company when implementing a total quality management
project, you can be sure that you are increasing awareness for quality in
your workplace.

10. Involve Everyone in Goal Setting

After implementing a change, you will need to ensure that you involve
everyone - both employees and supervisors - in the goal setting process. By
bringing everyone in the company in on setting goals for improvement, you
can ensure greater commitment to achieving zero defects.

11. Eliminate Causes of Errors

Error-cause removal is necessary for the successful implementation of any
quality improvement effort. Encourage your employees to come to
management with any obstacles or issues that arrise in attempting to meet
improvement goals. By having employees communicate obstacles before
they become crises, you can avert many of the dampers for quality
improvement efforts.

12. Implement Recognition for Participants

The twelfth step of Crosby's 14 Steps is the implementation of employee
recognition. By regularly recognizing those who participate in quality

improvement efforts, employees will be much more likely to continue to

participate.
13. Create Quality Councils
By bringing together specialists and employees, you can create a focused
effort towards creating lasting quality improvement implementations. Make
sure your qualitycouncils meet on a regular basis.
14. Lather...Rinse...REPEAT!!!
Quality improvement doesn't end because you have run out of the 14 Steps
of Crosby! In order to really make improvements in the quality of your
products and services, you will need to do it over again...and again...and
again. Now go get started on your quality improvement projects!

The advantages of total quality management (TQM) include:

Cost reduction. When applied consistently over time, TQM can reduce
costs throughout an organization, especially in the areas of scrap, rework,
field service, and warranty cost reduction. Since these cost reductions flow
straight through to bottom-line profits without any additional costs being
incurred, there can be a startling increase in profitability.

Customer satisfaction. Since the company has better products and

services, and its interactions with customers are relatively error-free, there
should be fewer customer complaints. Fewer complaints may also mean that
the resources devoted to customer service can be reduced. A higher level of
customer satisfaction may also lead to increased market share, as existing
customers act on the company's behalf to bring in more customers.

Defect reduction. TQM has a strong emphasis on improving quality

within a process, rather than inspecting quality into a process. This not only
reduces the time needed to fix errors, but makes it less necessary to employ
a team of quality assurance personnel.

Morale. The ongoing and proven success of TQM, and in particular the
participation of employees in that success can lead to a noticeable

improvement in employee morale, which in turn reduces employee turnover,

and therefore reduces the cost of hiring and training new employees.
Quality 101: W. Edwards Deming "14 Points" Explained
The need for a working understanding of basic quality management
system statistical principles is at the heart of Deming's teaching. While
accepting the ASQ's Shewhart Medal in 1955, he commented that "Statistical
theory has changed practice in almost everything. Statistical techniques, in
their ability to aid the discovery of causes, are creating a science of
management and a science of administration." His quality process message,
directed primarily at management, is stated succinctly in his famous 14
Points for Management:
1) Create constancy of purpose for improvement of product and
service. Inspire the workers to stay competitive in the market and remind
about the importance of stability in jobs and new opportunities which may
come up in later stages, as inducing a sense of purpose in producing quality
products will work as the inspiration to work efficiently.
2) Adopt the new philosophy. The customer demands and taste change
very fast and the competition in the market grow at a rapid rate today, and
we have to accept new philosophies according to the market trends and
technology revolutions.
3) Cease dependence on mass inspection. Instead of inspecting the
product for quality after production, infuse quality at the beginning itself
withproduction quality control, as this will ensure no raw materials are
wasted for the sake of quality.
4) End the practice of awarding business on price tag alone. Instead,
minimize total cost - move towards a single supplier for any item, on trust.
5) Constantly and forever improve the system of production and
service. Enterprise systems and services must keep growing indefinitely in
order to catch up with the competitive market.
6) Institute modern methods of training on the job. A trained worker
has more productivity and quality than an untrained one, so giving training
sessions will drastically improve the quality of the person and directly it
helps in better product quality performance.

7) Institute modern methods of supervision. A company can display

stunning growth if potential leaders are identified and encouraged.
8) Drive out fear. Creating a fearful impression in the employees does not
give more quality and productivity to work. If a person is not working
willingly with satisfaction then he can never do a work perfectly even if he
has the intention to be perfect in conscious mind, so driving out fear is
essential.
9) Break down barriers between staff areas. The workers in design,
sales, and production must work together to face problems and resolve
them, which takes the company to better quality assurance
management and also other profit with better planning.
10) Eliminate numerical goals for the work force. Slogans or
exhortations call for more quantity in production than focusing on quality
control in manufacturing, which will severely damage the quality
management process. Employees should have a calm and quiet quality
atmosphere in the company.
11) Eliminate work standards and numerical quotas. This focuses on
quantity rather than quality of product.
12) Remove barriers that hinder the hourly worker. Supervisor
responsibility must be focused on quality, not numbers. Abolish annual or
merit rating and MBO completely.
13) Institute a vigorous program of education and training. A person
must grow after joining a company, and letting them learn new technology
and techniques will increase employee longevity.
14) Create a situation in top management that will push every day
on the above points. Just like products and services, every employee in a
company must work to accomplish the transformation.

Qualities and traits of great leaders that you can learn and practice:
o

Self-assessment: Effective leaders periodically take stock of their

personal strengths and shortcomings. They ask: What do I like to do? What
am I really good at? What are my areas of weakness, and what do I dislike
doing?
Knowing your areas of weakness does not make you weak; on the contrary,
it allows you to delegate to others who have those abilities, in order to
achieve the common goal. Rather than clinging to the false belief that they
can do it all, great leaders hire people who complement, rather than
supplement, their skills. Working on your areas of weaknesses will improve
your leadership ability and recognizing them makes you more human.

Sharp perception: Do you know how people really perceive you?

Effective leaders do. They have an easy level of honest communication with
their teams and their peers, and a thorough understanding of how they are
perceived. Testing others perception of you can be as simple as observing
their behavior. Are your co-workers and team members relaxed around you?
Does all conversation stop when you enter the room?
If you really want to know what people think, just ask them. You may
receive feedback that youre not listening or showing appreciation as well as
you could be. If youve established an environment of honest and open
communication, you should be able to ask about your good qualities and the
areas you need to improve on. Your staff will appreciate your effort.

Responsive to the groups needs: Being perceptive can also help a

leader be more effective in knowing the needs of the team. Some teams
value trust over creativity; others prefer a clear communicator to a great
organizer. Building a strong team is easier when you know the values and
goals of each individual, as well as what they need from you as their leader.

Knowing the organization: Effective leaders know the organizations

overall purpose and goals, and the agreed-upon strategies to achieve these
goals; they also know how their team fits into the big picture, and the part
they play in helping the organization grow and thrive. Full knowledge of your
organization inside and out is vital to becoming an effective leader.

Communication Good communication skills are required at every

level of business, but leaders must possess outstanding communication
skills. Luckily, this is a skill that can be learned.

Motivating teams Inspiring others is the mark of an effective

leader. Motivation is best done by example and guidance, not by issuing
commands.

Team building Putting together strong teams that work well is

another trait of great leaders. The opposite is also true: if a team is weak
and dysfunctional, it is generally a failure in leadership.

Risk taking You can learn how to assess risk and run scenarios that
will help you make better decisions. Great leaders take the right risks at the
right time.

Vision and goal setting A team depends on its leader to tell them
where they are going, why they are going, and how theyre going to get
there. People are more motivated when a leader articulates his or her vision
for a project or for the organization, along with the steps or goals
needed to achieve it.
THE VEHICLE FOR COMMUNICATING ABOUT QUALITY ARE SELECTED
COMPONENTS OF THE TQM SYSTEM
Training and development for both managers and employees.
Managers must understand the process they manage as well as the
basic concept of systems optimization. Employee training should focus
on the integration and appropriate use of statistical tools and problemsolving methods.
Participation at all levels in establishing benchmarks and measures
of process quality. Involvement is both vertical in the hierarchy as well
as horizontal by cross-functional teams.
Empowerment of employees by delegating authority to make
decisions regarding process improvement within individual areas of
responsibility, so that the individual owns the particular process step.
Quality assurance in all organization process, not only in
manufacturing or operations but in business and supporting process as
well. The objective throughout is continuous improvement.

Human resource management systems that facilitate

contributions at all levels (up and down and across) the organizational
chart.

C har ac t er ist ic s Of Ef fe c t ive C omm unic at ion

The real meaning of communication is getting the receiver and the sender
tuned together for a particular message. Communication takes place when
one person transfers some understandable data to another person. It also
includes the exchange of thoughts, opinions, sentiments, facts, and
information between two or more persons. Feedback is very important as it
assures that your message should be properly conveyed to the receiver.
The essential features of an effective communication system are keys for
productive communication. The chief principles or characteristics of an
effective communication system are as follows: -

Clearness and integrity of message to be conveyed.

Adequate briefing of the recipient.
Accurate plan of objectives.
Reliability and uniformity of the message.
To know the main purpose of the message.
Proper response or feedback.
Correct timing.
Use of proper medium to convey the message properly.
Use of informal communication.

The following are some important guidelines to make communication

effective: - Try to simplify your thoughts before communicating your message.
- You must analyze the intent of each and every message.
- Consider the overall physical setting whenever you communicate.
- You must discuss with others, where appropriate, in planning
communication.
- Be careful while communicating, of the overtone as well as basic content of
your message.
- Take the opportunity to suggest something of help or value of the receiver.
- Follow-up your communication.
- Prepare yourself for transmitting the message in a proper way.
- Be sure your actions support your communication.
- Seek not only to be understood but understand.

Characteristics of Good Communication

Completeness
(context)
Conciseness (style)
Consideration
(context/delivery)
Concreteness
(style/sources)
Clarity
(organization/
sources)

t
t
t
t
t
t
t
t
t
t
t
t
t
t
t
t
t

Courtesy (delivery)
Correctness (style)

t
t
t
t
t
t
t

answer all questions asked

give something extra, when desirable
check for the five W's and any other essentials
shorten or omit wordy expressions
include only relevant statements
avoid unnecessary repetition
focus on "you" instead of "I" or "we"
show reader benefit/interest in the reader
emphasize the positive, pleasant facts
apply integrity and ethics
use specific and accurate words, facts and figures
put action in your verbs
choose vivid, image-building words
choose short, familiar, conversational words
construct effective sentences and paragraphs
achieve appropriate readability (through headings
and transitions) and listenability
include examples, illustrations, and other visual
aids, when desirable
be sincerely tactful, thoughtful, and appreciative
omit expressions that irritate, hurt, or belittle
grant and apologize good-naturedly
use the right level of language
maintain acceptable writing mechanics
choose nondiscriminatory expressions
apply all the other pertinent "C" qualities

1.

Pre-thinking: Pre-thinking concerning the message is usually an

important excellent involving good communication. Pre-thinking enables
the actual sender to develop a creative message also to monitor this
correctly.

2.

Unique

purpose:

Communication

occurs

along

with

particular

objectives. For that reason, the actual communicator got to know the
aim of communication and also ought to set up the actual message
accordingly.
3.

Timeliness: Usefulness involving any message is dependent upon its

well-timed transmitting. If your message is just not transported within
correct moment, its electric is usually shed. To ensure the communicator
must look into any time involving communication.

4.

Conciseness: One more important good quality involving good

communication is usually the concept should be to the point. Brief
concept is usually the one that has merely applicable and required facts,
reduces the risk for repetition and sets up appropriately.

5.

Completeness: Good communication sends an extensive concept so

your receiver can realize the full meaning of the message. The sender
shouldnt sacrifice completeness to realize conciseness.

6.

Correctness:

Good

communication

has

merely

the

proper

announcements. Bogus, inflated and overstated the facts aggravate this

receiver and make this communication ineffective.
7. Persuasiveness: Persuasiveness is usually an additional important
good quality involving good communication. It assists to produce good
mind-set from the receiver towards the message.
8. Concreteness: Business communication turns into powerful as
soon as that excludes unnecessary facts. Concreteness is critical to
mention

this

communicators

look

at

towards

the

receiver

unambiguously.
9. Feedback: Good communication often will keep this supply involving
feedback. Feedback helps to ensure that this concept offers reached
towards meaning receiver.

10.

Mutual interest: As soon as communication looks at the eye

involving equally sender and receiver, it can be dealt with of the same
quality of good communication. Should the concept ignore the eye of
the receiver; communication may possibly dont obtain its target.
11.

Use of correct language: Good communication often uses

correct language. Proper language avoids uncertain as well as complex

text, misleading non-verbal cues, specialized jargons, poetic text etc.
12.

Considering the receiver: A good communicator ponders the

receivers understanding, power, awareness, origin etc. That greater

the power as well as acceptability associated with communication.
13.

Use of correct media: Selecting ideal media is extremely

needed for productive communication. This sender needs to choose

the written or perhaps common communication depending on the
characteristics as well as the importance of the concept, availability of
the moment, price, receivers power etc.
14.

Emphasizing on informal relationship: This communicator

demand to help give attention to determine laid-back interactions with

the radio along with communication romantic relationship mainly
because it guarantees good results associated with communication.
15.

Effective

listening:

This

communicator

can

be

great

audience. She has to concentrate constantly the result on the receiver.

Therefore, the sender needs to possess the opportunity to find out the
receivers result constantly having because of endurance.

Statistical Process Control (SPC)

Statistical methods are analytical tools used to evaluate men,
m a t e r i a l s , M a c h i n e s , o r p r o c e s s e s . Evaluations obtained by these
methods assist in maintaining desired result by using past history to predict
capabilities or trends. Such analytical methods are management
tools which furnish data to all levels supervision for appropriate action.
uses simple but powerful graphical tools to monitor the
p r o c e s s t o i m p r o v e q u a l i t y b y d e c r e a s i n g p r o d u c t v a r i a b i l i t y.
This narrowing of the limits of variability does not stop when
the product meets specifications, but continues thereafter for
continuous improvement to make more uniform product. The
objective in the use of SPC fundamentals is process
improvement, to find and solve problems and to reduce
variation.
Some advantages of statistical techniques in interpreting engineering data
and controlling manufactured products are:
More uniform at a higher level.
Less waste by reduction of rework and scrap
Improved inspection by better planning and better execution.
Higher production of good parts per man per machine hour.
Improved design tolerance.
Better plant relations through coordinated effort
Statistical Process Control Explained
Statistical Process Control (SPC)
monitoring production process to detect and prevent poor quality
Sample
subset of items produced to use for inspection

 Control Charts
process is within statistical control limits

Statistical Process Control, commonly referred to as SPC, is a method for

monitoring, controlling and, ideally, improving a process through statistical
analysis. The philosophy states that all processes exhibit intrinsic variation.
However, sometimes processes exhibit excessive variation that produces
undesirable or unpredictable results. SPC, in a manufacturing process
optimization context, is used to reduce variation to achieve the best target
value.

Plan involves using SPC tools to help you identify problems and possible
causes.
Do involves making changes to correct or improve the situation.
Study involves examining the effect of the changes (with the help of control
charts).
Act involves, if the result is successful, standardizing the changes and then
working on further improvements or, if the outcome is not successful,
implementing other corrective actions.
Applying SPC to Service (cont.)
Hospitals

 timeliness and quickness of care, staff responses to requests,

accuracy of lab tests, cleanliness, courtesy, accuracy of
paperwork, speed of admittance and checkouts
Grocery Stores
waiting time to check out, frequency of out-of-stock items,
quality of food items, cleanliness, customer complaints, checkout
register errors
Airlines
flight delays, lost luggage and luggage handling, waiting time at
ticket counters and check-in, agent and flight attendant courtesy,
accurate flight information, passenger cabin cleanliness and
maintenance
Benefits of Statistical Quality Control
Statistical quality control refers to the use of statistical methods in the monitoring and
maintaining of the quality of products and services. One method, referred to as acceptance
sampling, can be used when a decision must be made to accept or reject a group of parts or
items based on the quality found in a sample. A second method, referred to as statistical
process control, uses graphical...

1) It provides a means of detecting error at inspection.

2) It leads to more uniform quality of production.
3) It improves the relationship with the customer.
4) It reduces inspection costs.
5) It reduces the number of rejects and saves the cost of material.
6) It provides a basis for attainable specifications.
7) It points out the bottlenecks and trouble spots.
8) It provides a means of determining the capability of the manufacturing
process.
9) It promotes the understanding and appreciation of quality control.

Just In Time JIT

An inventory strategy companies employ to increase efficiency and decrease
waste by receiving goods only as they are needed in the production process,
thereby reducing inventory costs.
This method requires that producers are able to accurately forecast demand.
Just in time (JIT) inventory is a strategy to increase efficiency and decrease
waste by receiving goods only as they are needed in the production process,
thereby reducing inventory costs. In other words, JIT inventory refers to an
inventory management system with objectives of having inventory readily
available to meet demand, but not to a point of excess where you must
stockpile extra products.
A good example would be a car manufacturer that operates with very low
inventory levels, relying on their supply chain to deliver the parts they need
to build cars. The parts needed to manufacture the cars do not arrive before
nor after they are needed, rather they arrive just as they are needed.
Advantages of JIT
Lower Warehouse Costs
Storing excess inventory can cost a lot of money, and reducing the amount
of inventory you keep on hand can reduce your carrying costs as well.
Companies that implement the just-in-time inventory model may be able to
reduce the number of warehouses they maintain, or even allow them to
eliminate those warehouses altogether.
Better Supply Chain Management
The just-in-time inventory model can also help companies be more efficient
and competitive in the way they handle their supply chains and use their
parts to assemble products for their customers. A more efficient supply chain
can provide lower costs throughout the manufacturing process, and those
lower costs can then be passed on to the customer. Those lower costs can
make the company's products more affordable, and help the company gain a
larger market share and stay ahead of its competitors.

Better Customer Satisfaction

Implementing the just-in-time inventory management model can allow
companies to serve their customers faster and more efficiently. Companies
that use the just-in-time model have a greater level of control over the
entire manufacturing process, making it easier to respond quickly when the
needs of customers change. For instance, a computer manufacturer that
uses the just-in-time inventory control model can quickly ramp up
production of a hot model, while reducing the number of unsold units and
outdated products.
Less Waste
When companies use the traditional method of inventory management and
control, they can end up with pallets of unsold items that simply go to
waste. The company many need to slash prices on that unsold inventory just
to get rid of it, which can reduce the perceived value of the firm's other
products. The just-in-time inventory model reduces this waste and helps the
company respond more quickly to what its customers need.
Customer Needs
Balancing the goals of avoiding stock outs while minimizing inventory costs
is at the heart of just-in-time inventory. One of the main benefits of
automated and efficient inventory replenishment systems is that you can
quickly respond to reduced inventory levels. Companies are now equipped to
pull back on stock in a given product category and ramp up inventory in
another as customer needs and interests change.
Inventory Costs
Minimization of inventory management costs is a primary driver and benefit
of just-in-time practices. Inventory management has costs, and when you
reduce the amount of holding space and staff required with JIT, the company
can invest the savings in business growth and other opportunities, points out
the Accounting for Management website. You also have less likelihood of
throwing out product that gets old or expires, meaning reduced waste.
Coordination
A disadvantage of managing a just-in-time inventory system is that it
requires significant coordination between retailers and suppliers in the
distribution channel. Retailers often put major trust in suppliers by syncing

their computer systems with suppliers so they can more directly monitor
inventory levels at stores or in distribution centers to initiate rapid response
to low stock levels. This usually means build up of technology infrastructure,
which is costly. This coordinated effort is more involving on the whole than
less time intensive inventory management systems.
Risks
Just-in-time inventory is not without risks. By nature of what it is, companies
using JIT intend to walk a fine line between having too much and too little
inventory. If company buyers fail to adjust quickly to increased demand or if
suppliers have distribution problems, the business risks upsetting customers
with stock outs. If buyers over compensate and buy extra inventory to avoid
stock outs, the company could experience higher inventory costs and the
potential for waste.

Strategic Information System

Integration of processes and information can proceed as follows:
Identify the market segment in which you want to compete.
Use data collection and analysis to define the customer requirements
in the chosen segment.
Translate these requirements into major design parameters to develop,
produce, deliver and service the product that meet the customers
requirements. These are primary activities of the value chain.
Complement the primary processes with support activities such as
planning, finance and accounting, MIS, personnel, etc
Subdivide or explode the organization design parameters into the
processes (functions, activities, etc) that are necessary to achieve the
quality differentiation.
Design the information requirements necessary to manage each
process and to integrate all process horizontally.
Environmental Analysis
Strategy formulation requires an analysis of the different
environments:
general, industry and competitive.
One study found that small business owners spend over one-fourth of
the day in external information search activities.
Competitive information is particularly valuable but is difficult to
obtain.
In general, the minimum information needed about competitors can be
related to how they stand on the key success factors for a market
segment.
Primary Environment Factors
These may differ by industry and segment but usually include the following:

Market share

Product line breadth

Proprietary advantages

Growth rate
Distribution effectiveness
Price competitiveness

Age and location of facility

Experience curve effects

R & D advantage and position

Capacity and productivity

Value added
Cash throw-off

Secondary Environment Factors

Porter has identified the information needed for positioning in an
industry and in a chosen market segment, and his system is widely
used.
His categories are;
1. Intensity of rivalry
2. Bargaining power of buyers
3. Bargaining power of suppliers
4. Threat of substitution and
5. Threat of new entrants
Definition of Quality
The concept and vocabulary of quality is elusive. Different people interpret quality
differently. Few can define quality in measurable terms that can be operationalized.
When asked what differentiate their product or service, the banker will answer
service, health care worker will answer quality health care, the hotel restaurant
employee will answer customer satisfaction, and the manufacturer will simply answer
quality product. When pressed to provide a specific definition and measurement, few
can do so.
There is an old maxim in management that says, If you cant measure it, you cant
manage it, and so it is with quality. If strategic management systems and the
competitive advantage are to be based on quality, every member of the organization
should be clear about this concept, definition, and measurement as it applies to his or
her job.
Harvard professor David Garvin, in his book Managing Quality, summarized five
principal approaches to defining quality: transcendent, product based, user based,
manufacturing based, and value based. Lets discuss each one of them:

1. Transcendental View of Quality: Those who hold transcendental view would say,
I cant define it, but I know when I see it.
Advertisers are fond of promoting products in these terms. Where shoping is a
pleasure (supermarket), We love to fly and it shows (airline), and It means beautiful
eyes (cosmetics) are example.
2. Product-Based View: Product based definitions are different. Quality is viewed as
quantifiable and measurable characteristics or attributes. For example durability or
reliability can be measured (e.g. mean time between failure, fit and finish), and the
engineer can design to that benchmark. Quality is determined objectively. Although this
approach has many benefits, it has limitations as well. Where quality is based on
individual taste or preference, the benchmark for measurement may be misleading.
3. User-Based View: User based definitions are based on the idea that quality is an
individual matter, and products that best satisfy their preferences (i.e. perceived
quality) are those with the highest quality. This is a rational approach but leads to two
problems. First, consumer preferences vary widely, and it is difficult to aggregate these
preferences into products with wide appeal. This leads to the choice between a niche
strategy or a market aggregation approach which tries to identify those product
attributes that meet the needs of the largest number of consumers.
4. Manufacturing-Based View: Manufacturing-based definitions are concerned
primarily with engineering and manufacturing practices and use the universal definition
of conformance to requirements. Requirements, or specifications, are established
design, and any deviation implies a reduction in quality. The concept applies to services
as well as products. Excellence in quality is not necessarily in the eye of the beholder
but rather in the standards set by the organization.
This approach has serious weaknesses. The consumers perception of quality is equated
with conformance and hence is internally focused. Emphasis on reliability in design and
manufacturing tends to address cost reduction as the objective, and cost reduction is
perceived in a limited wayinvest in design and manufacturing improvement until these
incremental costs equal the costs of non-quality such as rework or scrap.

5. Value-Based View: Value-based quality is defined in terms of costs and prices as

well as a number of other attributes. Thus, the consumers purchase decision is based
on quality (however it is defined) at the acceptable price.
Product Differentiation Helps You
Build Competitive Advantage
Your Strategic Marketing Process Must Include A Differentiation Strategy
Differentiation, frequently called the competitive edge, answers
the question: why should I buy from you?
Michael Porter, in his landmark book Competitive Strategy:
Identified two generic competitive strategies
1. Overall cost leadership
2. Differentiation
The second strategy involves differentiating the product or service by
creating something that is perceived by the buyer as unique.
Differentiation can also be broad in scope (American airline in on time
service, caterpillar for spare part support) or focused (e.g. Godiva
chocolates, Mercedes automobiles)
Thus there are four generic strategies but each depends on something
different -something unique or distinguishing.
Even an effective cost leadership strategy must start with a good
product.
Selecting a strategy and recognizing quality as the competitive
dimension is important for strategic purposes. Product and service
quality has become widely recognized as a major force in the
competitive marketplace and in international trade.
Research indicates that eight out of ten customers consider quality to
be equal to or more important than price in their purchase decisions.
This is a doubling of buyer, emphasis in ten years and the trend is
expected to continue.

 The message here is that Whether the cost leadership or

differentiation strategy is chosen, quality must be a competitive
consideration in either case.
Differentiation can command a premium price or allow increased sales
at a given price. Moreover, differentiation is one of two types of
competitive advantage, the other being price. Price, however , should
not be the sole basis of differentiation unless the product is perceived
to be a commodity. Even if the product is a commodity or nearcommodity, it can still be differentiated by such services characteristics
as availability or cycle time.
The industry in which you operate can have an affect on product
differentiation. Be very clear on type of industry you are operating in; review
an example marketing plan in your industry:

a large volume industry (differentiate on a low-cost or highly diverse

basis);

a specialized or niche industry (differentiate on an opportunities basis look for specialty applications of your product/service);

a mature industry (differentiation is challenging and entry into this

market will be difficult unless you have a very unique approach, highly
successful sales staff, and a big marketing budget);

or a fragmented industry (for example, graphic designers often

operate as independents in many markets - it is difficult for them to
gain a large market share and developing a strong, unique competitive
advantage is challenging but not impossible).

Strategic Marketing Process and Differentiation:

Your ability to create a viable business growth strategy through
differentiation is limited by the product itself.

Differentiation must fit. When developing your product differentiation plan,

assess whether or not the following can be unique and whether or not that
uniqueness is a competitive advantage:
1. The size, the shape and the components of the product (for example, a
cup of coffee can be short, tall, etc.);
2. The features of the product (for example, a cup of coffee can be extra
hot, non fat, with a extra shot, etc.);
3. The product performance or product quality (for example, is it the best
tasting coffee made from the best quality coffee beans, served piping
hot - or to the customer's requirement);
4. The product performance consistency (for example, is that cup of
coffee the same quality every day, in every location);
5. The life cycle of the product (for example, will coffee be replaced by
tea or soft drinks or will coffee have a long life cycle);
6. The reliability of the product (this is different from consistency; no
more cup of coffee examples - this is about reliability of performance is the product going to be working for what the customer would expect
to be a reasonable period of time (if you buy a stove do you expect it
to perform without problems for 1, 5, 10, 15, 20 years) - even though
warranties may be defined for a period of time, customers do not
expect or want their product purchased to fail the day or week or
month after the warranty expires);
7. Is the product easily repairable? (for example, is it more economical to
replace the product if it fails than to repair it - that is not good, design
a product that can last for a long period and be easily repaired at least
for what your customer would consider to be a reasonable period of
time);
8. The style and design of the product (how does it look, is the design
useful (back to the cup of coffee example); does the lid fit properly on
the take-out cup).

Product differentiation is a critical strategic marketing process. A

differentiation strategy is key to building your competitive advantage. Use an
example marketing plan to build your marketing mix product program.
Businesses need to continually differentiate their products from their
competitors. If there is no differentiation, why would a customer buy your
product compared to a competitive product?
As a small business owner, you know that you need to build your products or
services with unique value or unique competitive advantage.
However, fairly quickly, your competitors will copy, or even improve upon,
your unique values or advantages, and therefore the advantage is soon lost.
Most highly valued attributes become commodity features over time.
To combat that loss of advantage or uniqueness, your business needs to be
continually developing new value and benefits in existing products or
services and/or developing new products and services to remain in a market
leader position.
Taguchi methods (see in book)
Taguchi methods are statistical methodsdeveloped by Genichi Taguchi to improve the quality
of manufactured goods, and more recently also applied to engineering, biotechnology,
marketing and advertising.

8-STEPS IN TAGUCHI METHODOLOGY:

Step-1: IDENTIFY THE MAIN FUNCTION, SIDE EFFECTS, AND FAILURE
MODE
Step-2: IDENTIFY THE NOISE FACTORS, TESTING CONDITIONS, AND
QUALITY CHARACTERISTICS
Step-3: IDENTIFY THE OBJECTIVE FUNCTION TO BE OPTIMIZED
Step-4: IDENTIFY THE CONTROL FACTORS AND THEIR LEVELS
Step-5: SELECT THE ORTHOGONAL ARRAY MATRIX EXPERIMENT
Step-6: CONDUCT THE MATRIX EXPERIMENT

Step-7: ANALYZE THE DATA, PREDICT THE OPTIMUM LEVELS AND

PERFORMANCE
Step-8: PERFORM THE VERIFICATION EXPERIMENT AND PLAN THE
FUTURE ACTION

Moving from Inspection to Process Control

Process control may still require measurement that is determined by
inspection but the activity of inspection is now transformed into a diagnostic
role. The objective is not merely to discover defects, but rather to identify
and remove the cause(s) of defects or variations. Process control now
becomes problem solving for continuous improvement. Moving from
inspection to process control takes place in steps or phases:

Process characterization
1. Definition of process requirement and identification of key variables
2.

Develop standards and measures of output Involve work force

3. Monitor compliance to standards and review for better control Identify any
additional variables that affect quality
4.
Identify and remove cause (s) of defects or variations (this requires a step-bystep documentation of the process and process control charting)
5.

Achievement of process control with improved stability and reduced variation

Cause and Effect Diagram

ntroduction
There are a number of productivity and management tools used in business
organizations. Cause and Effect Diagram, in other words, Ishikawa or
Fishbone diagram, is one such management tool. Due to the popularity of
this tool, majority of managers make use of this tool regardless of the scale
of the organization.
Problems are meant to exist in organizations. That's why there should be a
strong process and supporting tools for identifying the causes of the
problems before the problems damage the organization.

Steps for Using the Tool

Following are the steps that can be followed to successfully draw a cause
and effect diagram:

Step 1 - Properly identify the problem in hand

Start articulating the exact problem you are facing. Sometimes,
identification of the problem may not be straightforward. In such instances,
write down all the effects and observations in detail. A short brainstorming
session may be able to point out t the actual problem.
When it comes to properly identifying the problem, there are four properties
to consider; who are involved, what the problem is, when it occurs, and
where it occurs. Write down the problem in a box, which is located at the
left hand corner (refer the example cause and effect diagram). From the
box, draw a line horizontally to the right hand side. The arrangement will
now look like the head and the spine of a fish.

Step 2 - Add the major factors that contribute to the

problem
In this step, the main factors of the problem are identified. For each factor,
draw off a line from the fish's spine and properly label it. These factors can
be various things such as people, material, machinery or external
influences.
Think more and add as many as factors into the cause and effect diagram.
Brainstorming becomes quite useful in this phase, as people can look at the
problem in different angles and identify different contributing factors.
The factors you added now become the bones of the fish.

Step 3 - Identify the causes

Take one factor at a time when identifying possible causes. Brainstorm and
try to identify all causes that apply to each factor. Add these causes
horizontally off from the fish bones and label them.
If the cause is large in size or complex in nature, you can further
breakdown and add them as sub causes to the main cause. These sub
causes should come off from the relevant cause lines.

Spend more time in this step; the collection of causes should be

comprehensive.

Step 4 - Diagram analysis

When this step starts, you have a diagram that indicates the problem, the
contributing factors, and all possible causes for the problem.
Depending on the brainstorming ideas and nature of the problem, you can
now prioritize the causes and look for the most likely cause.
This analysis may lead to further activities such as investigations, interviews
and surveys. Refer the following sample cause and effect diagram:

Use of cause and effect diagrams

When it comes to the use of cause and effect diagrams, brainstorming is a
critical step. Without proper brainstorming, a fruitful cause and effect
diagram cannot be derived.
Therefore, following considerations should be addressed in the process of
deriving a cause and effect diagram:

There should be a problem statement that describes the problem accurately.

Everyone in the brainstorming session should agree on the problem statement.

Need to be succinct in the process.

For each node, think all the possible causes and add them into the tree.

Connect each casualty line back to its root cause.

Connect relatively empty branches to others.

If a branch is too bulky, consider splitting it in two.

Conclusion
Cause and Effect diagrams can be used to resolve organizational problems
efficiently.
There are no limitations or restrictions on applying the diagrams to different
problems or domains. The level and intensity of brainstorming defines the
success rate of cause and effect diagrams.
Therefore, all relevant parties should be present in the brainstorming
session in order to identify all possible causes.
Once most likely causes are identified, further investigation is required to
unearth further details.