Managing for Productivity &

Quality

Measuring the Concept of Quality, Cost

of Quality, Elements of Quality
Management and Factors affecting the
Quality.

Department of Business Administration

Faculty of Management Studies and Commerce
University of Sri Jayewardenepura
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 How to measure the Quality of Design

Quality of Design represents the degree to which a

particular product has the ability to satisfy the
stated, implied and latent needs of its targeted
customers.
In other words, quality of design is the total
reflection in the extent of customer satisfaction and
delight.

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MEASURES OF CUSTOMER
SATISFACTION

 Customer Complaints
(Delivery/Quantity/Rudeness etc.)
 Customer Returns
 Customer Churn (Conversions)
 Customer Referrals / Ratings
 Customer Court Cases against the Company
 Sales (Repeated Purchase)

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METHODS TO DETERMINE
CUSTOMER SATISFACTION

 Customer Satisfaction Surveys

 Lost Customer Analysis
 Customer Complain and Returns Analysis
 Mystery/Ghost Shopping
 Sales Trend Analysis/Market Share
Analysis

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

 HOW TO COMPUTE A CUSTOMER SATISFACTION INDEX

 WEIGHTED FACTOR RATING METHOD

 CUSTOMER RES. WGT SCORE WGTED SCORE

 (ADVERSE) % (1-10)

 1. COMPLAINTS .10 6 .60

 2. RETURNS .10 8 .80

 3. (-) REFFERALS .25 7 1.75

 4. CHURN .25 9 2.25

 5. COURT CASES .30 6 1.80

 OVERALL SCORE 7.20

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Quality Function Deployment (QFD)

QFD is a productivity improvement technique used to transform

user/customer needs and requirements initially into Quality of
Design, and then into Quality of Conformance.

Recommended Process of QFD

1. Identify the Target Customers.

2. Carry out a user/customer need analysis.
3. Design the product according to the customer needs and
expectations.
4. Identify the required criteria to measure the product quality.
5. Identify the quality attributes and variables
6. Establish expected quality standards or specifications.

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How to measure the Quality of Conformance

Degree to which the product conforms to its design

specifications & functions.

Quality of Conformance represents the degree to which a

particular product conforms to a set of pre-determined
design and functional specifications.
In other words, quality of design is totally reflected in the
extent which the product is defects or reject free.

Depending on the nature and type of the defect/s the

product will be accepted or rejected.

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MEASURES OF PRODUCT CONFORMANCE

Defects
Scraps
Downgrades
Rework
Rejects
Cost of Quality

Few indicators to measure the Quality of Conformance

Reject Ratio
Rework Ratio
Scrap Ratio
Major Non-conformities
Minor Non-conformities
% Failure Cost to Total Quality Cost

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Criteria's to Measure Quality of Conformance.
• Quality Attributes
• Quality Variables

Measuring the Quality Attributes

Here the quality of conformance is judged by inspecting and

controlling, whether the quality attributes of the product is
having the expected quality standard or not.

Then, finally decide whether the product is Quality Accepted or

Quality Rejected.

Quality attributes in a product are mainly ensured by using the

Accepted Sampling.

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Measuring the Quality Variables

Here the quality is judged by inspecting and controlling, whether the

quality variable is varying within the permissible range defined by the
expected quality standard or not.

Then, finally decide whether the product is Quality Accepted or Quality

Rejected.

Quality variables in a product are mainly ensured by using the

Statistical Quality Control.

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COST OF QUALITY
1. Internal Failure Cost -Costs attributable to errors and
defects in production in-house.
Examples
 Loss Of Sales Due To Rejects
 Loss Of Sales Due To Downgrades And Scraps
 Cost Of Rework

2. External Failure Cost-Costs attributable to the failure of

products in the field.
Examples

 Cost Of Claims And Gurantees

 Cost Of Discounts And Recalls
 Legal And Compensation Cost
 Cost For Loss Of Goodwill 13
Appraisal Cost-Costs of evaluation, measuring, or inspecting for
quality in-house and in the field.

Examples
 Cost Of Inspection
 Cost Of Quality Rating
 Cost Of Equipment Used For Quality Appraisal

Prevention Cost-Costs of planning , Designing and maintaining quality

control and assurance programmes.

Examples
 Cost Of Quality Planning
 Cost Of Training & Development
 Cost Of Vendor Evaluation (Supplier Analysis)
 Cost Of Conducting Quality Audits
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Demings Fourteen Principles For Total Quality Improvement

1. Create and publish to all employees a statement of the aims and purposes
of the company or other organization. The management must
demonstrate constantly their commitment to this statement.

2. Learn the new philosophy, top management and everybody.

3. Understand the purpose of inspection, for improvement of processes and

reduction of cost.

4. End the practice of awarding business on the basis of price tag alone.

5. Improve constantly and forever the system of production and service.

6. Institute training.

7. Teach and institute leadership.

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8. Drive out fear. Create trust. Create a climate for innovation.

9. Optimize toward the aims and purposes of the company the

efforts of teams, groups, staff areas.

10. Eliminate exhortations for the work force.

11. Eliminate numerical quotas for production Instead, learn and

institute methods for improvement.

12. Remove barriers that rob people of pride of

workmanship.

13. Encourage education and self-improvement for

everyone.

14. Take action to accomplish the transformation

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