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Subject Code & Name: GE6757 -TOTAL QUALITY MANAGEMENT

UNIT I - INTRODUCTION

Introduction - Need for quality - Evolution of quality - Definitions of quality - Dimensions of

product and service quality - Basic concepts of TQM - TQM Framework - Contributions of

Deming, Juran and Crosby - Barriers to TQM - Quality statements - Customer focus - Customer

orientation, Customer satisfaction, Customer complaints, Customer retention - Costs of quality.

INTRODUCTION TO QUALITY

In last two decades, one of the important issues that business has focused on is “quality”.

The other issues are cost and delivery.

Recent evidence shows that more & more corporations are recognizing the importance

and necessity of quality improvement to survive domestic and world-wide competition.

To be competitive in today’s market, it is essential for the companies to provide more

consistent quality and value to their customers.

Quality is not just confined to products and services. It is a homogeneous element of any

aspect of doing things with high degree of perfection.

Quality refers to certain standards and the ways and means by which those standards are

achieved, maintained and improved

NEED FOR QUALITY

Automation and other productivity enhancements might not help to market its product or

service, if the quality is poor. The Japanese learned this fact from practical experience.

Quality has been widely considered as a key element for success in business in the present

competitive market. Business success depends on the quality decision making.

Quality and Productivity are not mutually exclusive. Improvement in quality leads to

increase in productivity & other benefits too.

Quality refers to meeting the needs and expectations of customers more than a product

simply working properly.

A new attitude has emerged – Quality first among the equals of cost and service. So the

customer wants value.

EVOLUTION OF QUALITY

1


Time Events

Prior to the

20th century

Quality is an art

Demands overcome potential production

An era of workmanship

F.Taylor

1900s

The scientific approach to management resulting in rationalization of work

and its break down leads to greater need for standardization, inspection and

supervision.

W.A.Shewhart

Bell Telephone

lab-1924s

Beginning of Statistical Quality Control and study of quality control. In

parallel, studies by R A Fisher on experimental design; the beginning of

control charts at western Electric in USA

Late

1930s

Quality standards and approaches are introduced in France and Japan.

Beginning of SQC, reliability and maintenance engineering

1942

Seminal work by Deming at the ministry of war in USA on quality control

and sampling

Working group setup by Juran and Dodge on SQC in US army

Concepts of acceptance sampling devised

1944 Daodge and Deming carried out seminal research on acceptance sampling

1945 Founding of the Japan standard association

1946 Founding of the ASQC (American Society for Quality Control)

1950 Visit of Deming in Japan at the invitation of K Ishikawa

1951 Quality assurance increasingly accepted

1954 TQC in Japan ; Book published 1956

1957 Founding of European organization for the control of quality

1960 Quality control circles are started in Japan

1961

The Martin Co in USA introduces the zero defects approach while developing

and producing Pershing Missiles. Quality motivation is starting in the US and

integrated programmes begun

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Time Events1964 Ishikawa publishes book on Quality management

1970Iskiawa publishes the book on the basics of quality circles and the concept of

Total Quality is affirmed and devised in Japanese industries.

1970 to 1980

Just – in –Time and quality become crucial for competitiveness. A large

number of US and European corporations are beginning to appreciate the

advance of Japan’s industries. Taguchi popularizes the use of

environmental design to design robust systems and products

1980+

Mid of 1980 the concepts of TQM were being publicized.

In late 1980s the automotive industry began to emphasize statistical process

control (SPC). Department of Defence also implemented SPC.

The Malcolm Baldrige National Quality awardvwas established and means to

measure TQM.

Genechi Taguchi introduced his concepts of parameter and tolerance design

and Design of Experiments (DOE) as valuable quality improvement tool.

1990+

The management of quality has become a necessity that is recognized at all

levels of management

Increasing importance is given to off line quality management for the

design of robust manufacturing processes and products. The growth of process

optimization.

ISO 9000 became worldwide model for a quality management system.

ISO 14000 was approves as the worldwide model for environmental

management systems.

New Millennium Brought about increased emphasis on worldwide quality and the Internet

DEFINITION OF QUALITY

Given in ISO 9000: 2000 – It is defined that the degree to which a set of inherent characteristics

fulfils requirements. Where,

Degree – Quality can be used with adjectives such as Poor, Good & Excellent.

Inherent – Existing in something, (i.e.) permanent characteristics.3


Characteristics – It can be qualitative or quantitative.

Requirement – Need or expectation that is stated by organization or customer.

Quality definition by Gurus of TQM as follows,

Predictable degree of uniformity and dependability at low cost and suited to the market -

Deming

Fitness for use - Juran

Conformance to requirements, not goodness - Crosby

Minimum loss imparted by a product to society from the time the product is shipped -

Taguchi

Correcting and preventing loss, not living with loss - Hosffin

Quality can be quantified as follows,

Where Q = Quality; P = Performance & E = Expectations

If Q is greater than 1.0, then the customer has a good feeling about the product or service. Most

likely, P & E based on perception with the organization determining performance and the customer

determining expectations.

DIMENSION OF QUALITY

Quality product can be determined by using dimension of quality. Quality has nine different

dimensions that are independent. A product can be excellent in one dimension and average

or poor in other dimension. Very few products excel in all dimensions.

Marketing has responsibility to identify the relative importance of dimension and then are

translated into requirements for developing new product or improving existing one.

DIMENSION MEANING & EXAMPLE

Performance Primary product characteristics, such as brightness of the picture

Features Secondary characteristics, added features, such as remote control

Conformance Meeting specifications or industry standards , workmanship

Reliability Consistency of performance over time, average time for the unit to fail

Durability Useful life, includes repair

Service Resolution of problems and complaints, ease of repair

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Q = P / E


Response Human-to-human interface, such as the courtesy of the dealer

Aesthetics Sensory characteristics, such as exterior finish

Reputation Past performance and other intangibles, such as being ranked first

Dimensions of Manufacturing and Service Quality

Defining quality in manufacturing organizations is often different from that of services.

Manufacturing organizations produce a tangible product that can be seen, touched, and

directly measured. Examples include cars, CD players, clothes, computers, and food items.

Therefore, quality definitions in manufacturing usually focus on tangible product features.

The most common quality definition in manufacturing is conformance, which is the degree

to which a product characteristic meets preset standards.

In contrast to manufacturing, service organizations produce a product that is intangible.

Usually, the complete product cannot be seen or touched. Rather, it is experienced.

Examples include delivery of health care, experience of staying at a vacation resort, and

learning at a university.

The intangible nature of the product makes defining quality difficult. Also, since a service is

experienced, perceptions can be highly subjective.

In addition to tangible factors, quality of services is often defined by perceptual factors.

These include responsiveness to customer needs, courtesy and friendliness of staff,

promptness in resolving complaints, and atmosphere.

Other definitions of quality in services include time—the amount of time a customer has to

wait for the service; and consistency—the degree to which the service is the same each time

For these reasons, defining quality in services can be especially challenging.

MANUFACTURING ORGANISATION SERVICE ORGANIZATION

Conformance to specifications Tangible factors

Performance Consistency

Reliability Responsiveness to customer needs

Features Courtesy/friendliness

Durability Timeliness/promptness

Serviceability Atmosphere

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Effects of poor Quality

1. Low customer satisfaction

2. Low productivity, sales & profit

3. Low morale of workforce

4. More re-work, material & labour costs

5. High inspection costs

6. Delay in shipping

7. High repair costs

8. Higher inventory costs

9. Greater waste of material

Benefits of Quality

1. Higher customer satisfaction

2. Reliable products/services

3. Better efficiency of operations

4. More productivity & profit

5. Better morale of work force

6. Less wastage costs

7. Less Inspection costs

8. Improved process

9. More market share

10. Spread of happiness & prosperity

11. Better quality of life for all.

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INTRODUCTION TO TQM

TQM is an enhancement to the traditional way of doing business. It is a proven technique to

guarantee survival in world class competition.

Only by changing the actions of management will the culture and actions of an entire

organization be transformed.

Golden Rule: “Do unto others as you would have them do unto you”

Purpose of TQM

To provide a quality product or service to customers that will increase productivity and

lower cost.

With a higher quality product & lower price, competitive position in the marketplace will

enhanced.

Allow the organization to achieve the objectives of profit & growth with greater ease. So the

work force will have job security & satisfaction in work.

DEFINITION OF TQM

TQM is the art of managing the whole to achieve excellence. It is both a philosophy and a

set of guiding principles that represent the foundation of continuously improving the

organization.

Total: Made up of the whole

Quality: Degree of excellence a product or service provides

Management: Act, art or manner of handling, controlling, directing etc.

It is the application of quantitative methods and human resources to improve all the

processes within the organization and exceed customer needs now and in the near future.

TQM integrates fundamental management techniques, existing improvement efforts, and

technical tools under a disciplined approach.

Characteristics of TQM

1. Customer Oriented

2. Long term commitment for continuous improvement of all process

3. Team work

4. Continuous involvement of top management

5. Continuous improving at all levels and all areas of responsibility

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Comparison of TQM with OLD Culture

Quality Element Previous State (Old Culture) TQM

Definition Product oriented Customer oriented

Priorities Second to service and cost First among equals of service & cost

Decisions Short term Long term

Emphasis Detection Prevention

Errors Operations System

Responsibility Quality Control Everyone

Problem solving Managers Teams

Procurement Price Life cycle costs, partnership

Managers Role Plan, assign, control and enforce Delegate, coach, facilitate, & mentor

BASIC CONCEPTS OF TQM

A committed and involved management to provide long term top-to-bottom organizational

support : LEADERSHIP

An unwavering focus on the customer, both internally and externally : CUSTOMER

SATISFACTION

Effective involvement and utilization of the entire work force : EMPLOYEE

INVOLVEMENT

Continuous improvement of the business and production process : CONTINUOUS

PROCESS IMPROVEMENT

Treating suppliers as partners : SUPPLIER PARTNERSHIP

Establish performance measures for the processes : PERFORMANCE MEASURES

Principles of TQM

1. Customers requirements-(both internal & external) must be met first time & every time

2. Everybody must be involved

3. Regular two way communication must be promoted I

4. Identify the training needs and supply it to the employees

5. Top management commitment is must

6. Every job must add value

7. Eliminate waste & reduce total cost

8. Promote creativity

9. Focus on team work.

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TQM FRAMEWORK

9


CONTRIBUTIONS BY QUALITY GURUS

The philosophies of notable individuals, who have shaped the evolution of TQM as follows,

Walter A. Shewhart He was a statistician at Bell Labs during the 1920s and 1930s. Shewhart studied randomness and

recognized that variability existed in all manufacturing processes. He developed quality control

charts that are used to identify whether the variability in the process is random or due to an

assignable cause, such as poor workers or miscalibrated machinery. He stressed that eliminating

variability improves quality. His work created the foundation for today’s statistical process control,

and he is often referred to as the grandfather of quality control.

W. Edwards Deming He often referred to as the father of quality control. He was a statistics professor at New York

University in the 1940s. After World War II he assisted many Japanese companies in improving

quality. The Japanese regarded him so highly that in 1951 they established the Deming Prize, an

annual award given to firms that demonstrate outstanding quality. It was almost 30 years later that

American businesses began adopting Deming’s philosophy. A number of elements of Deming’s

philosophy depart from traditional notions of quality. The first is the role management should play

in a company’s quality. Dr. Deming's famous 14 Points serve as management guidelines. The points

cultivate a fertile soil in which a more efficient workplace, higher profits, and increased

productivity may grow.

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1. Create constancy of purpose for improvement of product and service. (Plan to stay in

business.)

2. Adopt the new philosophy. (Stop tolerating poor quality.)

3. Cease dependence on inspection to achieve quality. (Improve the process.)

4. End the practice of awarding business on the basis of price tag alone. (Seek longer-term

supplier relationships; reduce the number of suppliers.)

5. Improve constantly and forever every process in the system of planning, production, and

service.

6. Institute modern training (for everybody!).

7. Institute modern methods of supervision. (The responsibility of foremen must be changed

from sheer numbers to QUALITY.)

8. Drive out fear. (Encourage employees to speak up.)

9. Break down barriers between departments.

10. Eliminate slogans, exhortations, and targets for the work force.

11. Eliminate work standards that prescribe numerical quotas.

12. Remove barriers to pride in workmanship. (Poor supervisors, poor materials, inadequate

equipment, lack of training, etc.)

13. Institute a vigorous program of education and self-improvement for everyone.

14. Place everybody in the company to work to accomplish the transformation and create a

structure in top management that will push every day on the above points.

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The Deming Theory

The Deming Theory of Management is a management philosophy based on four principles:

(1) an appreciation for systems

(2) a knowledge of variation

(3) a theory of knowledge

(4) psychology.

Although the principles for continuous improvement are clearly profitable for companies to

implement, why has it been difficult to transform the culture of western management to

focus on quality? Deming compiled a list of seven deadly diseases that have inhibited

change in style of management.

Lack of constancy of purpose to plan product and service that will have a market and keep

the company in business and provide jobs.

Emphasis on short-term profits: short-term thinking (just the opposite from constancy of

purpose to stay in business), fed by fear of unfriendly takeover, and by push from bankers

and owners for dividends.

Personal review system, or evaluation of performance, merit rating, annual review, or

annual appraisal, by whatever name, for people in management, the effects of which are

devastating. Management by objective, on a go, no-go basis, without a method for

accomplishment of the objective, is the same thing by another name. Management by fear

would still be better.

Mobility of management: job hopping.

Use of visible figures only for management, with little or no consideration of figures that

are unknown or unknowable.

Excessive medical costs.

Excessive costs of liability, fueled by lawyers that work on contingency fees.

Joseph M. Juran Ph.D: Juran Trilogy Juran was invited to Japan in 1954 by the union of Japanese Scientists and engineers. Juran defines quality as fitness for use in terms of design, conformance, availability, safety and field use. He focuses on top-down management and technical methods rather than worker pride and satisfaction.

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Philip Crosby: Author of popular book Quality is Free. His absolutes of quality are

Quality is defined as conformance to requirements, not “goodness”

The system for achieving quality is prevention, not appraisal.

The performance standard is zero defects, not “that’s close enough”

The measurement of quality is the price of non-conformance, not indexes.

Armand V. Feigenbaum Ph.D: Author of Total Quality Control

Kaoru Ishikawa Ph.D: Author of Quality is Free and Quality without Tears; Fishbone / Ishikawa

diagram for analyzing cause and effect

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Genichi Taguchi Ph.D: Taguchi philosophy

BARRIERS / OBSTACLES TO TQM IMPLEMENTATION

1. Lack of management commitment. – Management must consistently apply the

principles of TQM.

2. Inability to change organizational culture- People change if their needs are met.

Remove fear & instill trust.

3. Improper planning – Implementation plan ; modify plan as the plan evolves

4. Lack of continuous training and education – Training & education are ongoing

process

5. Incompatible organizational structure and isolated individuals and department –

Use of multi functional teams can break down the barriers of TQM implementation

6. Ineffective measurement techniques and lack of access to data and results - Key

characteristics of organizations have to be measured for effective decision making.

7. Paying inadequate attention to internal and external customers – Organizations

must understand the changing needs & expectations of customers

8. Inadequate use of empowerment and team work – Teams needs training &

individuals should be empowered to make decisions.

9. Failure to continually improve – It is tempting to sit back and rest . Lack of continuous

improvement would tamper the progress. Even if you are in right track, you will get run

over if you just sit there.

TQM IMPLEMENTATION

Begins with Management Commitment

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Leadership is essential during every phase of the implementation process and

particularly at the start

Senior Management should develop an implementation plan

Timing of the implementation process is very important

Formation of Quality Council

Active involvement of Middle Managers and First Line Supervisors is essential

Early discussions with the Union is a must

Communicate TQM to the entire organization

Training on quality awareness and problem solving

Customer, Employee and Supplier surveys must be conducted to benchmark

The council establishes the project teams and work groups and monitors their progress

Steps in implementing TQM

1 Obtain CEO Commitment

2 Educate Upper-Level Management

3 Create Steering Committee

4 Outline the Vision Statement, Mission Statement, & Guiding Principles

5 Prepare a Flow Diagram of Company Processes

6 Focus on the Owner/Customer (External) & Surveys

7 Consider the Employee as an Internal Owner/customer

8 Provide a Quality Training Program

9 Establish Quality Improvement Teams

10 Implement Process Improvements

11 Use the Tools of TQM

12 Know the Benefits of TQM

Continuous Improvement

Five Pillars of TQM are,

Product

Process

System

People

Leadership

BE N E F I TS O F T Q M 15


Customer satisfaction oriented benefits:

1. Improvement in product quality

2. Improvement in product design

3. Improvement in production flow

4. Improvement in employee morale and quality consciousness

5. Improvement in product service

6. Improvement in market place acceptance

Economic improvement oriented benefits:

1. Reduction in operating costs

2. Reduction in operating losses

3. Reduction in field service costs

4. Reduction in liability exposure

Tangible Benefits Intangible BenefitsImproved product quality Improved

productivity Reduced quality costs

Increased market and customers

Increased profitability

Reduced employee grievances

Improved employee participation

Improved team work

Improved working relationships

Improved customer satisfaction

Improved communication

Enhancement of job interest

Enhanced problem solving capacity

Better company image

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QUALITY STATEMENTS

V I S I O N S T A TEME N T

It is a short declaration of what an organization aspires to be tomorrow. It is an ideal state

which may never be achieved.

Successful visions are timeless, inspirational, and become deeply shared within the

organization.

Successful visions provide a succinct guideline for decision making

Example: “To continuously enrich knowledge base of practioners in mobility industry and

institutions in the service of humanity” – SAE

Disney Theme Park - Happiest place on earth

Polaroid - Instant photography

M I S S I O N S T A TEME N T

Describes the function of the organization. It provides the clear statement of purpose for the

employees, customers and suppliers.

It answers the following questions

Who we are?

Who are the customers?

What we do?

How we do it?

Example: “ Facilitating world class technical education through high quality institutions,

academic excellence and innovative research and development programmes, technology

forecasting and global manpower planning, promoting industry institute interaction,

inculcating entrepreneurship” – AICTE

A simpler mission statement is

“To meet customers transportation and distribution needs by being the best at moving their

goods on time, safely and damage free”

- National Railways

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Q UA L I T Y PO L I C Y S T A TEME N T

It is a guide for everyone in the organization as to how they provide products and services to

the customer. Written by the CEO feedback from workforce and approved by quality council.

Common characteristics are

Quality is first among equals

Meet the needs of the internal & external customers

Equal or exceed competition

Continuously improve the quality

Utilize the entire workforce

Example: “Xerox is a quality company. Quality is the basic business principle for Xerox.

Quality means providing our external and internal customers with innovative products and

service that fully satisfy their requirements. Quality is the job of every employee” – Xerox

Corporation

STRATEGIC QUALITY PLANNING

Goals – Long term planning (Eg : Win the war)

Objectives – Short term planning (Eg : Capture the bridge)

Goals should

Improve customer satisfaction, employee satisfaction and process

Be based on statistical evidence

Be measurable

Have a plan or method for its achievement

Have a time frame for achieving the goal

Finally, it should be challenging yet achievable

SEVEN STEPS TO STRATEGIC QUALITY PLANNING :

1. Customer needs - Discover the future needs of the customer.

2. Customer positioning - Planners determine where the organization wants to be in relation

to the customers.

3. Predict the future – Demographics, economic forecasts, and technical assessments or

projection are tools for predicting the future.

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4. Gap Analysis – Identify the gaps between current state and the future state of the

organization. An analysis of core values and concepts are excellent techniques for

pinpointing the gaps.

5. Closing the Gap – A plan has to be developed to close the gap by establishing goals and

responsibilities.

6. Alignment – Once a plan is developed it must be aligned with the vision, mission, and core

valuesand concepts of the organization.

7. Implementation – Resources must be allocated to collecting data, designing changes, and

overcoming resistance to change.

Customers are?External Customer -- those who receive the final products. Occurs normally at the

organizational level

Internal Customers -- occur at the process and cross-departmental levels within the company

Identifying Customers:

What parts or products are produced?

Who uses our parts or products?

Who do we call, correspond/interact with?

Who supplied the inputs to the process?

T H E C U ST O ME R S

The most important people in the business

Not dependent on the organization, but the organization depends on them. Not an

interruption to work but are the purpose of it.

Doing a favor when they seek business and not vice-versa.

A part of business, not outsiders and they are life blood of the business

People who come with their needs and jobs

Deserve the most courteous and attentive treatment.

T Y P ES O F C U ST O ME R S

Internal Customer: The customer inside the company are called internal customers

External Customers: An external customer is the one who used the product or service or

who purchase the products or service or who influences the sale of the product or service.

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How needs are translated into customer requirements?

The Kano model conceptualized customer requirements. The model represents three major

areas of customer satisfaction. First the diagonal line represents explicit requirements. They

include written and verbal requirements which are performance related. The second area

represents innovations (curved line in the upper left corner) – creative ideas excite and

delight the customer.

The third area (lower right corner) represents unstated or unspoken requirements. The

following diagram illustrates the Kano model which conceptualizes the customer

requirements.

Just meeting the customer‘s needs is not enough; the organization must exceed the

customer’s needs.

C u s tomer s at i s fact i on

The Customer is the King - Emphasized by Today's Buyers Market. TQM's Purpose is

meeting or exceeding customer expectations, so that the customers are delighted. The

customer satisfactions must be the primary goal of any organization.

CUSTOMER SATISFACTION MODEL

Teboul’s Model of customer satisfaction as shown in figure

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From the above diagram it is understood that the company should strive for increasing the

intersection portion i.e. Customer Satisfaction.

C U ST O MER S U PP LY C H A I N

C U ST O MER C O M P L A I N TS ( F EE D B A C K )

Customer feedback must be continuously solicited and monitored to reduce the dissatisfied

customers as much as possible.

C U ST O MER F EE D B AC K O R C U ST O MER C O M P L A I N T I S R E Q UIR E D

To discover customer dissatisfaction

To identify customer’s needs

To discover relative priorities of quality

To compare performance with the competition

To determine opportunities, for improvement

TOOLS USED FOR COLLECTING CUSTOMER COMPLAINTS

Listening to the voice of the customer can be accomplished by numerous information

collecting tools.

1. Comment card - Low cost method, usually attached to warranty card

2. Questionnaire - Popular tool, costly and time consuming - by mail or telephone preferably

multiple choice questions or a point rating system (1 to 5) or (1 to 10)

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Highly Neutral HighlySatisfied Dissatisfied

1. Trash removal 5 4 3 2 12. Personal hygiene 5 4 3 2 13. Romance 5 4 3 2 14. Thoughtfulness 5 4 3 2 15. Listening skills 5 4 3 2 16. Faithfulness 5 4 3 2 17. Respect for

Mother – in - law 5 4 3 2 18. Overall,how

satisfiedare you with yourmarriage? 5 4 3 2 1

To make surveys more useful, it is best to remember eight points

Clients and Customers are not the same

Surveys raise customers expectations

How you ask a question will determine how the question is answered

The more specific the question, the better the answer

You have only one chance and only 15 minutes

The more time you spend in survey development, the less time you will spend in data

analysis and interpretation

Who you ask is as important as what you ask

Before the data are collected, you should know how you want to analyse and use the data

3. Customer Focus groups - Meeting by a representative of the company with the group of

customers. Imprint analysis is an emerging technique to obtain intrinsic feelings using

customer meetings, word associations, discussion, relaxation techniques etc.

4. Phone - Toll free Telephone numbers

5. Customer visits - Visit customer's place of business.

6. Report cards - Usually, send to customer on a quarterly basis.

7. The internet and computer - It includes newsgroups, electronic bulletin board mailing lists,

Employee feedback.

8. Mass Customization - Capturing the voice of customers using data of what customer want

instead of what customer is thinking about buying and manufacturing exact what they want.

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STEPS TO SOLVE CUSTOMER COMPLAINTS

Investigate customers experiences by actively getting feed back, both positive and negative,

and then acting on it promptly

Complaints can be collected from all sources (letters, phone -calls, meetings and verb inputs)

Develop procedures for complaint resolution, that include empowering front-line personnel.

Analyze complaints, but understand that complaints do not always fit into new categories

Work to identify process and material variations and then eliminate the root cause.

When a survey response is received, a senior manager should contact the customer and strive

to resolve the concern.

Establish customer satisfaction measures and constantly monitor them.

Communicate complaint information, as well as the result of all investigation solution, to all

people in the organization. .

Provide a monthly complaint report to the quality council for their evaluation and needed, the

assignment of process improvement teams.

Identify customer's expectations beforehand rather than afterward through complaint

analysis.

SERVICE QUALITYCustomer service is the set of activities an organization uses to win and retain customer’s satisfaction. It can be provided before, during, or after the sale of the product or exist on its own.

Elements of customer service areOrganization

1. Identify each market segment.2. Write down the requirements.3. Communicate the requirements.4. Organize processes.5. Organize physical spaces.

Customer Care6. Meet the customer’s expectations.7. Get the customer’s point of view.8. Deliver what is promised.9. Make the customer feel valued.10. Respond to all complaints.11. Over – respond to the customer.12. Provide a clean and comfortable customer reception area.

Communication13. Optimize the trade – off between time and personal attention.14. Minimize the number of contact points.15. Provide pleasant, knowledgeable and enthusiastic employees.16. Write document in customer friendly language.

Front-Line people17. Hire people who like people.

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18. Challenge them to develop better methods.19. Give them the authority to solve problems.20. Serve them as internal customers.21. Be sure they are adequately trained.22. Recognize and reward performance.

Leadership23. Lead by example.24. Listen to the front-line people.25. Strive for continuous process improvement.

CHARACTERISTICS AND EXPECTATIONS----------------------------------------------------------------------------------------------------------------Characteristic Expectation----------------------------------------------------------------------------------------------------------------Delivery Delivered on schedule in undamaged conditionInstallation Proper instructions on setup, or technicians supplied for

complicated products

Use Clearly-written training manuals or instructions provided on proper use

Field repair Properly-trained technicians to promptly make quality repairs

Customer Service Friendly service representatives to answer questions

Warranty Clearly stated with prompt service on claims----------------------------------------------------------------------------------------------------------------

CUSTOMER RETENTION

More powerful and effective than customer satisfaction

It is the process of retaining the existing customer

Customer care can be defined as every activity which occurs within the organization that

ensures that the customer is not only satisfied but also retained.

For Customer Retention, we need to have both “Customer satisfaction & Customer loyalty”.

The following steps are important for customer retention.

1. Top management commitment to the customer satisfaction.

2. Identify and understand the customers what they like and dislike about the organization.

3. Develop standards of quality service and performance.

4. Recruit, train and reward good staff.

5. Always stay in touch with customer.

6. Work towards continuous improvement of customer service and customer retention.

7. Reward service accomplishments by the front-line staff.

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8. Customer Retention moves customer satisfaction to the next level by determining what

is truly important to the customers.

9. Customer satisfaction is the connection between customer satisfaction and bottom line.

SIGNIFICANCE OF CUSTOMER RETENTION

60% of organizations future revenue will come from existing customers

2% increase in customer retention has 10% decreases in operating cost.

96% of unhappy customers do not complain but 3 times likely to convey to other customers

about their bad experience.

91% of unhappy customers never purchase goods and services from you.

It costs 5 times more to attract the customer than retaining the existing customer.

Customer retention creates customer loyalty and moves customer satisfaction to a next level

called customer delight.

QUALITY COSTS

1. PREVENTION COST

Marketing / Customer / User.

Product / Service / Design Development.

Purchasing

Operations (Manufacturing or Service)

Quality Administration.

2. APPRAISAL COST

Purchasing Appraisal Costs.

Operations Appraisal Costs

External Appraisal Costs

Review of Test and Inspection Data

Miscellaneous Quality Evaluations

3. INTERNAL FAILURE COST

Product or Service Design Failure Costs (Internal)

Purchasing Failure Costs

Operations (Product or Service) Failure Costs

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4. EXTERNAL FAILURE COST

Complaint Investigations of Customer or User Service

Returned Goods

Retrofit and Recall Costs

Warranty Claims

Liability Costs

Penalties

Customer or User Goodwill

Lost Sales

ANALYSIS TECHNIQUES OF QUALITY COST

The purpose of quality cost analysis is to determine the cost of maintaining a certain level of

quality.

Such activity is necessary to provide feedback to management on the performance of quality

assurance and to assist management in identifying opportunities.

INDEX NUMBERS

Index Numbers are often used in a variety of applications to measure prices, costs (or) other

numerical quantities and to aid managers in understanding how conditions in one period compare

with those in other periods.

A simple type of index is called a RELATIVE INDEX.

QUARTER COST IN RS.1 20002 22003 21004 1900

Cost Index in quarter t = (Cost in quarter t / Base period cost) x 100

QUARTER COST RELATIVE INDEX1 (2000/2000) x 100 = 1002 (2200/2000) x 100 = 1103 (2100/2000) x 100 = 1054 (1900/2000) x 100 = 95

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TREND ANALYSIS

Good visual aids are important communication tools.

Graphs are particularly useful in presenting comparative results to management.

Trend Analysis is one where Time-to-Time comparisons can be made which illustrates the

changes in cost over time.

PARETO ANALYSIS

Joseph Juran observed that most of the quality problems are generally created by only a few causes.

For example, 80% of all internal failures are due to one (or) two manufacturing problems.

Identifying these “vital few” and ignoring the “trivial many” will make the corrective action give a

high return for a low money input.

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anandhavalli.files.wordpress.com · Web viewHe was a statistician at Bell Labs during the 1920s and 1930s. Shewhart studied randomness and recognized that variability existed in