Assignments-Mba Sem-Iii: Subject Code: QM0001

ASSIGNMENTS- MBA Sem-III
QM0001 Foundation of Quality Management
ASSIGNMENTS- MBA SEM-III Subject code: QM0001 Subject Name: FOUNDATION OF QUALITY MANAGEMENT Set 1& Set 2
Submitted By: Mr. Mithesh Kumar Reg. No. 520930668 948-000-9987 Kumar.mithesh@gmail.com
Mr. Mithesh Kumar
Reg. No. 520930668
Page 1
SET 1
Q1.
Describe the importance of customer satisfaction.
Customer satisfaction, a term frequently used in marketing, is a measure of how products and services supplied by a company meet or surpass customer expectation. Customer satisfaction is defined as "the number of customers, or percentage of total customers, whose reported experience with a firm, its products, or its services (ratings) exceeds specified satisfaction goals."In a survey of nearly 200 senior marketing managers, 71 percent responded that they found a customer satisfaction metric very useful in managing and monitoring their businesses.
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.
Even though satisfaction is important, modern firms need to look further. Customer Loyalty is one of the driving factors to achieve sustained profitability and increased market share. Loyal Customers are those, who stay with the company and make positive referrals. Satisfaction and Loyalty are two different concepts.
Mr. Mithesh Kumar Reg. No. 520930668 Page 2
Customers who are merely satisfied may often purchase from competitors because of convenience, promotions and other factors. Loyal Customers place priority on doing business with a particular company, will often go out of the way or pay premium to stay with the company. Loyal Customers spend more, are willing to pay higher prices, refer new clients and are less costly to do business with. Studies have shown that a typical company gets 65% of its business from existing customers and it costs 5 times more to find new customers than keep existing customers happy.
Customer satisfaction occurs when products and services meet or exceed customer expectation. To exceed expectations, the organization must deliver everimproving 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 ontime 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.
If a competitor offers the same quality package of goods and services at a lower price, customers would generally choose the one having the lower price. However, lower prices require lower costs if the company is to continue to be profitable. Quality Improvements in operations reduce costs. Thus, understanding exactly what customers want and their perceptions of value is absolutely crucial to competitive success. Business must focus on both continually improving both the customer benefits package and improving the quality of their internal operations.
In addition to value, 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. A customer is the most important visitor on our premises. He is not dependent on us; we are dependent on him. He is not an interruption in our work; he is the purpose of it. He is not an outsider in our business; he is part of it. We are not doing him a favor by serving him; he is doing us a favor by giving us an opportunity to do so.
Q2.
Differentiate between appraisal cost and prevention cost.
Appraisal Costs The costs associated with measuring, evaluating or auditing products or services to assure conformance to quality standards and performance requirements. These include the costs of:

Incoming and source inspection/test of purchased material In-process and final inspection/test Product, process or service audits Calibration of measuring and test equipment Associated supplies and materials
Example for Appraisal Costs Test and inspection of incoming materials. Test and inspection of in-process goods. Final product testing and inspection. Supplies used in testing and inspection Supervision of testing and inspection activities. Depreciation of test equipment. Maintenance of test equipment. Plant utilities in the inspection area Field testing and appraisal at customer site.
Prevention Costs The costs of all activities specifically designed to prevent poor quality in products or services. Examples are the costs of:

New product review Quality planning Supplier capability surveys Process capability evaluations Quality improvement team meetings Quality improvement projects Quality education and training
Example for Prevention Costs

Systems development Quality Engineering Quality Training Quality Circles Statistical process control Supervision of prevention activities Quality improvement projects Technical support provided to suppliers Audits of the effectiveness of the quality system.
3. Explain the concept of company-wide quality.
Companywide Quality During the 1980s, the concept of company wide quality with the focus on management and people came to the fore. It was realized that, if all departments approached quality with an open mind, success was possible if the management led the quality improvement process.
The company-wide quality approach places an emphasis on four aspects:1. Elements such as controls, work management, adequate processes, performance and integrity criteria and identification of records 2. Competence such as knowledge, skills, experience, qualifications 3. Soft elements, such as personnel integrity, confidence, organizational culture, motivation, team spirit and quality relationships. 4. Infrastructure (as it enhances or limits functionality) The quality of the outputs is at risk if any of these aspects is deficient in any way.
The approach to quality management given here is therefore not limited to the manufacturing theatre only but can be applied to any business or non-business activity: It comprises a quality improvement process, which is generic in the sense it can be applied to any of these activities and it establishes a behavior pattern, which supports the achievement of quality.
With the development of Quality Management Standards (ISO 9000 series) and their adoption by European Union as one of the pre requisites for the exporters to Union to be eligible, the quality management movement picked up pace worldwide and the concept of Total Quality Management gained immense popularity.
Customers recognize that quality is an important attribute in products and services. Suppliers recognize that quality can be an important differentiator between their own offerings and those of competitors (quality differentiation is also called the quality gap). In the past two decades this quality gap has been greatly reduced between competitive products and services. This is partly due to the contracting (also called outsourcing) of manufacture to countries like India and China, as well
internationalization of trade and competition. These countries amongst many others have raised their own standards of quality in order to meet International standards and customer demands. The ISO 9000 series of standards are probably the best known International standards for quality management.
At the same time, industry sectors had initiated campaigns for development of sector specific Quality management models to drive quality movement in the respective sectors. Among the most popular ones, which had revolutionized the quality status in the sector, are: QS 9000 / TS 16949 in the automotive sector and Capability Maturity Models developed by Software Engineering Institute of Carnegie Mellon University for Information Technology sector.
Governments and the industry bodies have developed the award criteria for encouraging the organizations to move continuously up the value chain in establishing the total quality concept in their organizations. Among the most popular ones is the Malcom Baldrige Quality Award, Deming Prize, EFQM (European Foundation for Quality Management) and others.
The increasing globalization, complexity in supply chain and the ever increasing customer expectations had led many major organizations to adopt the principles of Total Quality Management and implemented in different formats like: Six sigma, Lean productions, Toyota Production system and others.
Mr. Mithesh Kumar
Reg. No. 520930668
Page 7
SET 2
Q1. Explain the business perspective and process flow perspective of Quality.
Quality: A Business perspective In quality management, the ratio of improvement effort to benefits varies greatly. Sometimes, a single change in a process will bring a lot of benefit. Other times, three or four changes in a process have to come together to produce one change in results. We can understand this best if we visualize our business as a series of pipes containing products, information, and money. If one main pipe is broken in just one place, then fixing it will make a big difference. If the same pipe is clogged in five different spots, then we have to clear all five clogs before things get moving and we see increases in flow or productivity. Also, once weve fixed all the pipes and cleared out the main ones, we will see less improvement in overall flow as we get down into the details and clear out small pipes that are only partly clogged. If results are incrementally lower over time, should a company stick with quality management? There are three reasons: When we dont spiral up towards more quality, we quickly spiral down towards less. It is hard, if not impossible, to stay on a plateau. Maintaining quality in a world of human error, mechanical failure, and general change requires constant checking. That constant checking if we do it naturally leads to some degree of improvement. Without that constant checking, quality is sure to degrade. If our competitors keep the focus on quality in an effective way, we will fall behind fast particularly in market share. A steady commitment to quality solves other problems, such as customer retention and employee retention, reducing cost of sales and cost of operations.
Mr. Mithesh Kumar
Reg. No. 520930668
Page 8
Quality: A Process Flow Perspective The idea of seeing a business as a bunch of flows through pipes is not a new one. Chemical engineering developed a method called flow diagramming for chemical plants, and that led to data flow diagramming for business by the 1950s. We also talk about work flow, information flow, and cash flow. When things are flowing, its good for business. In a chemical factory, stuff flows through vats and pipes. What carries the flow of work in a company? Processes! In a factory, a process is how a product is built. And we can define each process as having seven elements, as shown in Figure.
Fig: Process Flow We can think of each task as having three core elements, and four ancillary elements. The major elements are: Inputs, which are the ingredients, raw materials, or components that go into a process and become part of the output. Process, the activity of transforming inputs to make outputs the work. Outputs, the end results of a task, such as a component or a finished product.
The additional, minor elements are: Tools or equipment, which are used for the task, but not used up. Resources, including disposable items (such as cleaning supplies), and our effort, which are used up in the process but do not get included in the product. Techniques, the instructions for the work process. The work environment, the space and conditions within which the work is being done. Of course, each product may be built using many tasksperhaps thousands or even millions.Tasks are linked because the output of one task is the input of
Mr. Mithesh Kumar
Reg. No. 520930668
Page 9
another, until we can link the suppliers through all the tasks to the cut OutputCustomer model. Of course, a single product or company has many such chains that link all suppliers through many processes to all customers. We can map the five stages of our quality management framework to the SIPOC model as follows: Quality definition comes before the definition of processes. Quality planning includes defining what processes are required to deliver the product to meet Or exceed specifications, putting them in order by linking outputs of one process to inputs of the next, and then defining all seven aspects of each process with requirements and tolerances on all key variables, so that we can consistently produce all outputs of all processes to specification. Quality control in the broad sense including all forms of checking ensures that outputs and processes meet requirements, that defective output is reworked or scrapped, and that all seven aspects of processes are adjusted and restored to work within tolerances. Quality assurance includes activities to evaluate and improve processes, reengineer work to eliminate unnecessary processes or steps, ensure effective communication and mutual understanding throughout the SIPOC chain, and auditing and review to ensure all processes are maintained to standard and improved. Delivering quality means carrying the SIPOC chain all the way through to the customers receipt of the product or service, to the customers perception that he or she has indeed received value and quality in the product, service, and contact with the company.
Q2.
What are the barriers to Quality?
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.
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
The above four groups with inclusive elements are shown in the following figure
Fig: Group of Barriers The Barriers/obstacles of the groups are discussed with feasible actions to overcome such hindrance factors. While many such obstacles are interrelated, it and may be difficult to categories them exactly to any one specifically.
Physical/ Management Perspectives Some of the attributes that may pose threat as barriers, which requires positive actions from the management, are listed below. Lack of management commitment/lack of leadership Inability to change the mind set (paradigms) of top management Inability to maintain momentum for the transformation Lack of uniform management style
Lack of long term Corporate directions Inability to change the culture of an organization Lack of effective communication Lack of discipline require to transform Incompatible Organizational Structure Isolated Individuals and Departments Whos responsible? Inadequate Empowerment and Teamwork Setting Priorities Paying Inadequate Attention to Internal and External Customers Ineffective Measurements, Lack of Access to Data & Results Organizational Politics: Lack of time
Q3.
Write short notes on the following: a. Classical theory model of organization
Classical Theory: The classical theory model of organization reflects the scientific management approach developed by Frederick Taylor, the Classical theory of Henri Fayol and Max Webers Bureaucracy theory. These collectively dominate the mainstream management thinking. Each of these approaches regards the design of organizations as a technical exercise and depends upon fragmenting or dissecting an organization into its component parts for analysis and efficient operation.
The machine approaches to organization arose, as suggested, in the late nineteenth and early twentieth centuries and may be considered logical extensions of the advances then being made in machine technology. Machines are in general, designed to perform specified tasks at known input/ output rates and within specified tolerances; these management approaches assume that organizations can be similarly designed. Frederick Taylors Scientific management is based on four key principles: scientific task design, scientific selection, management-worker cooperation and equal division of work.
Taylors objectives were first, to improve efficiency by increasing output and reducing underworking. Second, to achieve standardization of job performance, by dividing tasks up into small and closely specified sub tasks. Finally, to instill discipline, by establishing hierarchical authority and introducing system whereby all managements policy decisions could be implemented. Taylor saw the organization as a machine capable of being specified, designed and controlled by management to achieve a given purpose. The workmen were viewed as standardizes machine parts, interchangeable with every other of like design and to be used at the discretion of management. His approach was later followed by Gilbreth and Gantt, who both attempted to humanize scientific management, recognizing the need for rest and human needs and dignity.
b. Human relations theory Human relations Theory: While benefits could, and may still, be obtained from the rational 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 organic or organism analogy stem from the origins of modern systems thinking in the biological sciences and attempts to deal with the attainment of survival of the system or organization rather than the achievement of particular goals. While survival may be seen as a legitimate goal, it may not sufficiently represent the purpose of the organization. This organic view first found expression in organizations through what has become known as the Human Relations Model. This considers that attention must be paid to the human aspects of organization and gives primacy to the roles, needs and expectations of the human participants. Particular emphasis is given to issues of motivation, management style and participation as critical factors. The Hawthorne studies of Roethlisberger and Dickson with Elton mayo 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 work in this field by Maslow and Herzberg 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.
In modern large scale industry, the three persistent problems of management are: 1) The application of science and technical skill to some material good or product, 2) The systematic ordering of operations. 3) The organization of team work that is of sustained co-operation.
Following Chester Barnard, Mayo saw that the first two of these would operate to make an industry effective, the third to make it efficient. He considered that application of science and technical skill and the systematic ordering of operations were attended to, the first by continuous experiment, the second being already well developed in practice. He saw the third element as neglected but necessary if the organization as a whole was to be successful. Mayo became involved in the Hawthorne studies, after they had examined the effects of changes in the physical environment. Experiments had shown that social and psychological factors were present, and the studies became focused on these human issues. Records were kept of every aspect of changes made and their impact, to establish a systemic view. Further experiments were conducted and followed by formal interviews, which revealed that many of the particular organizations difficulties related to emotional rather than rational conditions. Further experiments showed that informal group pressures had more influence on output and performance than the economic pressures of the formal organization.
Mr. Mithesh Kumar
Reg. No. 520930668
Page 14

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ASSIGNMENTS- MBA Sem-III

QM0001 Foundation of Quality Management

Mr. Mithesh Kumar

Reg. No. 520930668