SEMESTER: 2

SUBJECT CODE & NAME

DBBA1204: QUALITY MANAGEMENT

Q.1: Discuss Deming Cycle and Crosby’s Four Absolutes of Quality.

Ans: The Deming Cycle: W. Edwards Deming in the 1950’s proposed that business processes should be
analyzed and measured to identify sources of variations that cause products to deviate from customer
requirements. He recommended that business processes be placed in a continuous feedback loop so that
managers can identify and change the parts of the process that need improvements. As a teacher, Deming
created a (rather oversimplified) diagram to illustrate this continuous process, commonly known as the PDCA
cycle for Plan, Do, Check, Act*:
 PLAN: Design or revise business process components to improve results
 DO: Implement the plan and measure its performance
 CHECK: Assess the measurements and report the results to decision makers
 ACT: Decide on changes needed to improve the process
Deming’s PDCA cycle can be illustrated as follows:

Deming’s focus was on industrial production processes, and the

level of improvements he sought were on the level of production. In
the modern post-industrial company, these kinds of improvements
are still needed but the real performance drivers often occur on the
level of business strategy. Strategic deployment is another process,
but it has relatively longer-term variations because large companies
cannot change as rapidly as small business units. Still, strategic
initiatives can and should be placed in a feedback loop, complete
with measurements and planning linked in a PDCA cycle. To
illustrate the relationship of business unit processes to strategic
processes, we may construct two nested PDCA cycles:

This ‘wheel
within a wheel’
describes the relationship between strategic management and
business unit management in a large company. There are
several separate business units, of course, each with its own
set of metrics, goals, targets and initiatives. But this figure
illustrates the idea that the business activities constitute the
DO part of the overall strategic effort.

4 Absolutes for Quality Management by Crosby:

I. First absolute: The Definition of Quality is Conformance to

Requirement, not Goodness

Quality is not about goodness, but it is about meeting

requirements. The management needs to respond on it. They
need to decide what is the needs. If they don’t do, the operators should do. In addition, management has to
provide adequate tools to achieve the requirements. So, the management has the following three tasks to
perform:
1. Establish the requirements to be met and communicate them to the employees

2. Provide the appropriate tools and techniques and the necessary training in them.

3. Provide continuous support and encouragement.

II. Second Absolute: The System of Quality is Prevention: Prevention is better than correction, detection or
appraisal. In the whole process you need to analysis what can goes wrong and then take preventive action. By
that, it can minimum the error, damage and also problem.

III. Third Absolute: The Performance Standard is Zero Defects

Here Crosby is stating that nothing less than perfect quality has to be the aim. Setting targets below 100% is the
start of downward.

IV. Fourth Absolute: The Measurement of Quality is the Price of Non-Conformance

Quality has to be measured as a cost in order to attract the attention of management. Like Juran, Crosby also
believes in costing the quality as a powerful motivator for management. It was classified into two types:

1. The Price Of Non-Conformance (PONC): all the cost of not getting products or things right.

2. The Price of Conformance (POC): what it costs to do things right.

Q.2: How is the McKinsey 7S model used for carrying out strategic planning and implementation?
Ans: McKinsey 7S model – Diagram: The McKinsey 7S model is a widely discussed framework for viewing
the interrelationship of strategy formulation and implementation. The 7S-model was born at a meeting of four
authors - Richard Pascale, Anthony Athos, Tom Peters, and Robert Waterman in 1981. It was taken up as a
basic tool by the global management consultancy company McKinsey. Since then it is known as the McKinsey
7S model. The model helps focus managers’ attention on the importance of linking the chosen strategy to a
variety of activities that can affect the implementation of that strategy.

Explanation:
Strategy: The plan devised to maintain and build competitive
advantage over the competition.
Structure: The way the organisation is structured and who reports to
whom.
Systems: The daily activities and procedures that staff members
engage in to get the job done.
Shared Values: The core values of the company that are evidenced in
the corporate culture and the general work ethic.
Style: The style of leadership adopted.
Staff: The employees and their general capabilities.
Skills: The actual skills and competencies of the employees working for the company.
The McKinsey 7S framework should be thought of as a set of seven compasses. When the needles are aligned,
the company is organised. When they are not, the company is not really organised even if its structure looks
right. All the 7Ss are to be analysed individually to identify whether they are performing up to the mark or not.
This is because if even one of the Ss is not working properly, all the other Ss will be affected. Before
implementing any strategy, the organisation should be analysed in terms of these 7Ss.
Q.3: What is cost of quality? Why is it important to measure? List common costs of poor quality.
Ans: Cost of quality: Traditionally, cost of quality is defined as the expenditure incurred by the producer to
achieve a particular level of quality. It has been modified, and today it is defined as the expenditure incurred by
the producer, user, and community to achieve a particular level of quality. It is an important concept because
managers, before making any decision related to quality, must have clear understanding of the implications of
the decisions on cost.
Quality cost details are also important for the following reasons:
 It is an important input while making capital budgeting and other investment decisions.
 It helps in identifying outmoded systems.
 It facilitates evaluation of profit-making opportunities.
 It assists in establishing budgetary and profit planning objectives.
 It ascertains overhead wastes related to activities not needed by the customer.
 It supports objectivity of performance appraisal mechanisms.
Common costs of poor quality are as follows:
Waste: Wastage adds to cost. This increase in cost reduces profit because price has to be kept constant.
Scrap: Scrap includes the price of the rejected material, as well as the value of labour.
Rework: Cost of rework may appear to be small, yet it impacts overall cost. If not taken care of, it may shoot
up alarmingly.
Repair: Repair includes the value of labour and the price of the spare parts that may be required for repair.
Concessions: Customers demand concessions (at times, large ones) if the quality of a product is not up to the
mark.
Re-inspection: Re-inspection includes operative, administrative, and direct costs incurred for inspection of
faulty products and reworked and repaired products.
Warranty: Warranty costs directly cut into the profit of the company.
Replacement: When a product cannot be repaired or reworked, it has to be replaced with a new identical
product.
Additional Overhead: This cost is the result of extra overhead costs due to repair, rework, and replacement.
Shipping and packaging of returned products: This cost includes the cost incurred for packaging and
shipping repaired and replacement products.
Claim adjustments: This cost affects the account receivable to compensate for concessions.
Goodwill: This cost is difficult to measure. However, one is aware how costly it is to lose the goodwill of
customers. It adversely affects future sales that could have been expected from customers and their families
and friends.

SET 2
Q.4: What is meant by Quality Audit? What is its purpose?
Ans: Quality Audit: Audits refer to systematic investigation of procedures or operations. Audits are generally
performed to ensure compliance to confirmed standards, proper implementation of processes as specified in the
organizational requirements. It is a process that involves examination, inspection, documentation or recording
and final review of the findings.

Purpose: Audits occupy an important place in the organisation. They serve many purposes.
 Conformance to standard: Audits are a necessary and essential component of the certification
process. For example, ISO certifications are issued only after an audit has been performed of the
organisation. The audit process ensures that the organisation has in place all the necessary processes and
structure to support the QMS as prescribed by the standard.
 Improvement of programs: Many organisations perform audits even if they are not applying for any
certification. This is because audits highlight weak areas and strong areas of the program under audit. In
addition, audits also provide solution recommendations and corrective action to remedy the weaknesses.
Thus, audits are an important tool for assessing the capability of the organisation and initiating
improvement programs within the organisation.
 Statutory requirements: Audits are also performed because they are required by the laws of the
country. Such audits are termed statutory audits. For example, most of the countries require
corporations to perform financial audits to ensure accurate bookkeeping and ethical accounting
practices. Thus, audits help prevent fraud and white collar crimes.

Q.5: Write short notes on:

a) Recognition and rewards
b) Suggestion systems
Ans: Recognition and rewards: Recognition and Rewards are two effective tools in the hands of managers to
motivate employees and encouraging them to maintain and improve their performance in an organisation.
Recognition refers to the acknowledgement by the management for the achievements and positive contributions
made by the employee or the team that led to the success of the organisation. This is done by using verbal or
written praises, certificates or by giving some symbolic items such as gifts or mementos.
Rewards on the other hand are something tangible. It may include cash prize, promotion, package tours, etc. to
promote a desirable behaviour. Usually recognition and reward go hand in hand. But recognition and rewards
should be valid, genuine and meaningful for both the giver and the receiver. They should not be used by the
givers to manipulate their employees. Rewards and recognitions should be designed in such a manner that they
create positive motivation and results.
There are many forms of individual and group rewards. Individual rewards may include certificates, paid family
tours, gifts like cars, flats, cash rewards etc. Team rewards are also similar to individual rewards. Apart from
these, an organisation can use other methods such as putting employee’s picture along with their achievements
on bulletin boards, articles in newspapers, placing notes of appreciations, letters to appreciate and motivate the
achievers etc.

Suggestion systems: Suggestion system is one of the finest and best ways of enhancing employee involvement.
It is a management tool for submission, evaluation and implementation of an employee’s ideas to cut down cost
and improve quality. Companies even reward those employees whose ideas prove to be beneficial for the
organisation. On getting such rewards and appreciations, other employees also get motivated to involve
themselves in the functioning of the organisation and seek improvements in all aspects of job. Suggestion
systems originated in the West but it was Japan who refined it and made it feasible to be used universally. Japan
used it for small, gradual but continuous improvements. The overall participation rate in Japan increased to 65
percent and every year their employees submit dozens of suggestions. On the other hand, suggestion systems in
the US are relatively very poor due to a number of reasons. Let us now take a glance at few strategies that can
foster the success of suggestion systems:
 Ensure participation of top management. Involvement should always begin at the top and then filter down to
all the levels.
 Push decision making regarding suggestion evaluation to lower levels.
 Get the support of unions by pledging them no lay-offs due to productivity gains from adopted suggestions.
 Train everyone in all facets of suggestion system by promoting creative problem-solving through the use of
seven basic statistical tools.
 Resolve all suggestions within one month.
 Encourage all to describe their ideas personally to a supervisor, engineer or manager.
 Promote the suggestion program through supervisors.
 Identify restrictions prohibiting suggestions regarding a worker’s immediate work area.
 Keep the program simple.

Q.6: Discuss about IMC Ramakrishna Bajaj National Quality Award.

Ans: IMC Ramakrishna Bajaj National Quality Award: The IMC Ramakrishna Bajaj National Quality
Awards was instituted in 1996. It was named after Mr. Ramakrishna Bajaj who was a freedom fighter, social
worker, philanthropist and a highly successful business industrialist. He established various social welfare
foundations and other institutes aimed at promoting social welfare. The IMC Ramkrishna Bajaj National
Quality Awards is aimed at recognising excellence in organisations. It is awarded annually.
Award categories: There are three categories of award.
Excellence in Business: These are awarded to manufacturing, service and small businesses. It includes foreign
sub-units operating in India. It also includes Indian sub-units operating overseas.
Excellence in Education: These are awarded to all educational institutes (public, private and government
organisations) that provide educational services in India. It includes foreign sub-units that operate in India. It
also includes Indian sub-units that operate overseas.
Excellence in HealthCare: These are awarded to institutes providing medical, surgical or other healthcare
services. It includes foreign sub-units operating in India. It also includes Indian sub-units operating overseas.
Award Criteria: The award criteria provide a framework for businesses to achieve quality excellence. It
consists of seven key areas.
Leadership: The leadership category examines the role of the senior management and leaders of the
organisation. This category also examines how well the organisation fulfills their legal, ethical and social
responsibilities.
Strategic Planning: This category examines the strategic planning capability of the organisation. It includes
evaluation of the strategic goals and action plan of the organisation. It also includes assessment of how well the
existing plans and strategies are being implemented, monitored, and measured and how adaptive and flexible
the planning process is to changes in the environment.
Customer Focus: The Customer Focus category examines how well the organisation meets the customer
requirements. It evaluates existing customer relationship management policies of the organisation including
how well the organisation listens to ’the voice of the customers’. It also evaluates how effectively the
organisation is using the voice of customers to identify areas of improvement, opportunities and innovation.
Measurement, Analysis and Knowledge management: The measurement, analysis and knowledge
management category examines how the organisation gathers, monitors, measures and analyses data and use it
for improvement purpose. It examines how well an organisation captures and utilises the knowledge assets
within the organisation. It also examines how well an organisation manages its information technology.
Workforce Focus: The Workforce Focus category examines how well an organisation manages its workforce.
It includes examining how an organisation assesses employee capabilities and skills, how it provides
opportunities for employee skill and knowledge development and how it encourages and motivates employees.
Process Management This category examines the existing processes within the organisation. It evaluates how
well these processes are designed and how effective they are in achieving their objectives. It evaluates the
organisational processes in terms of customer value and long term sustainability of the organisation.
Results: The Results category examines the organisation’s performance in all the afore-mentioned areas. It also
includes organisational financial and market performance as compared to its competitors.
Quality Council of India: The Quality Council of India (QCI) was set up in 1997. QCI is a non-profit
autonomous body. It is a joint effort between the Government of India and Indian trade associations, namely:
 Associated Chambers of Commerce and Industry of India (ASSOCHAM)
 Confederation of Indian Industry (CII)
 Federation of Indian Chambers of Commerce and Industry (FICCI)
Their main objective is to establish and operate national accreditation structure and promote quality through
National Quality Campaign.
EFQM Award: Another important award is the EFQM excellence award. EFQM stands for “European
Foundation for Quality Management”. EFQM is a global non-for- profit membership foundation based in
Brussels, Belgium. With more than 500 members, the foundation provides a unique platform for organisations
to learn from each other and improve performance. EFQM is the custodian of the EFQM Excellence Model, a
business model which is helping over 30000 organisations around the globe to strive for Sustainable Excellence
The aim of this EFQM award is to recognise Europe’s best performing organisations, whether private, public or
non-profit. To win the EFQM Excellence Award, an applicant must be able to demonstrate that their
performance not only exceeds that of their peers, but also that they will maintain this advantage into the future.