BUS300 Study Guide

Unit 9: Quality Management

9a. Explain quality management and apply quality management principles to continuous improvement in operations management

  • What are the principles of quality management?
  • What is a quality audit?

Quality management's focus is on present and future customer needs. When an organization places its priorities on customer satisfaction, they are more likely to achieve overall success. Quality management also requires all employees' full involvement and their commitment to creating an environment that focuses on quality both internally and externally.

Operations are systematic and efficient, and all facets of the organization are viewed as being interrelated. Decisions are based on facts and sound information, and companies with a quality focus tend to work closely with their suppliers to create a mutually beneficial relationship.

A quality audit examines the quality system and may be conducted by an internal or external audit team. Audits are conducted at predetermined times to ensure that the organization meets the criteria for a quality system and its activities.

The focus of an audit is on measuring the system's overall effectiveness and the results that have been achieved. The audit can identify areas in need of improvement, as well as those areas that have excelled. The audit results should be shared with everyone in the organization so that all parties can see the results of their practices.

To review, read Philosophies and Quality Inspections and Standards.


9b. Define total quality management

  • How does quality control contribute to total quality management?
  • On what specific aspects does total quality management focus?

The function of quality control is to ensure that an organization's standards are being met. This can be applied to how customers are treated, how goods are designed and produced, and how products and services are tested and judged. Top management is responsible for ensuring overall quality and is tasked with setting strategy, motivating workers, and implementing programs that promote the quality philosophy.

Total quality management (TQM) is an approach that is centered on quality throughout the entire organization and is focused on three aspects. The first of these include control, job management, defined processes and performance criteria, and record-keeping. The next focus is on performing specific tasks and requires competence, knowledge, skills, and experience. Finally, an organizational culture that supports a quality environment is essential. All employees must have high levels of integrity, confidence, and team spirit. This helps to create strong relationships and keeps everyone motivated.

Overall, a TQM approach requires an ongoing effort by everyone in an organization. All members of the supply chain need to be involved and ensure that organizational goals meet and exceed the standards set for quality control.

To review, read Quality Control.


9c. Describe W. Edwards Deming's impact on quality management

  • How does Deming define quality?
  • What are the concepts associated with Deming's approach to quality?
  • What is the essence of Deming's Shewhart Cycle?
  • How are the benefits of following Deming's 14 points?

Deming's view of quality is that it is not a single definition. He believed that the customer defines quality and that it can change depending on the customer's specific needs. To meet or exceed these needs, managers must have a good understanding of market research, statistical theory and thinking, and the application of statistical methods.

Deming takes a systems approach to quality and leadership and focuses on several concepts. These include the System of Profound Knowledge, the Plan-Do-Check-Act Cycle, Prevention by Process Improvement, the Chain Reaction for Quality Improvement, Common Cause, and Special Cause Variation, the 14 Points, and the Deadly" and Dreadful Diseases.

The substance of the Shewhart cycle is that to achieve success, organizations must first plan a change in their operations and then test those changes, preferably on a small scale. The effects of the change or test should then be observed and studied. Finally, action should be taken based on what was learned.

Deming's 14 points can be applied to any area in an organization and provide a foundation for transforming into a culture of quality and customer satisfaction. He believes that this is the responsibility of management to implement and that short-term goals should be put aside for a longer-term perspective to remain in business in the future.

To review, read Three Experts on Quality Management.


9d. Evaluate the differences in operational costs between a focus on continuous quality improvement vs.maintaining the status quo

  • What is the relationship between a reduction in costs and overall quality?
  • How does quality increase profit?
  • How can an improvement in production quality lead to higher levels of reliability for the finished product?

Reduced costs are the result of increased efficiency and effectiveness in production. When aiming for an efficient and effective process in creating a quality product, a reduction in costs will be realized as a by-product. If costs are cut without consideration for their impacts, such as reducing headcounts or closing departments, goals and objectives will likely not be achieved.

When finished goods experience even a small percentage of defects, it limits the profit that can be realized. When quality improves so that defects are no longer evident, there is a large increase in overall profits. This is evident even considering the labor and human resources cost to produce a higher percentage of goods that can be sold.

A product manufactured to higher standards will be more reliable and have other positive attributes once the product is finished. This will lead to higher levels of customer satisfaction, customer loyalty, and repeat sales.

To review, watch Profit, Costs, Quality: What is the Relationship?.


9e. Explain how statistical process control assesses variations to measure quality

  • What are the characteristics of statistical process control?
  • What are the phases associated with SPC activities?

Statistical process control (SPC) is used to monitor and control a process through statistical methods to ensure that the process operates at its optimal levels. Elements of this process include the use of control charts and flowcharts and a concentration on continuous improvement and how experiments are designed.

SPC is conducted in two stages, with the first step being the establishment of the process. This can be applied to any process, from a simple item to something more complex. This is followed by the actual use of the process and explains how something will be done. During this phase, changes might be made to the materials used, the human resources being exerted, or the actual production methods.

Using SPC enables organizations to focus on early detection and prevention rather than fixing problems after they have occurred. Rates of production are also seen to increase, and there is less likelihood that a product will need to be reworked.

The first phase of activity for SPC is understanding the process and its limits. This is followed by eliminating sources of variation to ensure process stability. Finally, the production process must be monitored to ensure early detection of any changes that might occur. As noted earlier, monitoring the process can help eliminate the production of any faulty and defective products and can increase output and profitability.

To review, read Statistical Process Control and Process Diagrams.


Unit 9 Vocabulary

This vocabulary list includes terms that might help you with the review items above and some terms you should be familiar with to be successful in completing the final exam for the course.

Try to think of the reason why each term is included.

  • quality management
  • quality management audit
  • quality control
  • corporate culture
  • organizational goals
  • leadership
  • W. Edwards Deming
  • elements of Deming's systems approach
  • Shewhart Cycle
  • 14 points
  • cost/quality relationship
  • impact of product defects on profitability
  • customer satisfaction
  • production improvements
  • statistical process control
  • continuous improvement
  • early detection and prevention
  • variations