Lecture 7: Quality Control in
Logistics Management
Learning
Objectives
To understand what is
meant by the term
quality
To examine quality in
context & the need to
focus on quality
To understand total
quality management
In-class activity
Why is quality so important?
What are the implications of poor quality?
The cost poor quality examples Video:
https://youtu.be/jYj_R4oCTPI
Toyota Recalls
• Quality (safety) issues with
brakes, airbags etc. leading
to mass recalls
• Customer confidence
• Cost
• Toyota’s TPS and TQM
Dreamliner and
A380s Grounded
• Boeing 787 Dreamliner –
batteries
• A380 – cracks in wings;
engines
• Disruption to flight
services
• Often discovered soon
after launch
Why focus on Quality?
‼ No focus on quality means lose market share and
reputation.
‼ Good reputation is easier to lose than regain.
‼ People trust and become accustomed to favourites.
‼ They remember the bad. "I'll never go there again“!
‼ Threat of substitute suppliers
In-class activity
• Think of a product that you think is of high quality.....what is
it......what makes it high quality?
• What about poor quality?
How could we define Quality?
• Perfection
• Eliminating waste
• Compliance with policies
• Doing it right the first time
• Pleasing customers
Any other definitions?
Perceived Quality
Quality is “consistent conformance to customers’
expectations.”
Defining Quality
• Shewhart (1931) defined quality as the “goodness” of a
product.
• Legal definitions focus around being “fit for purpose”
• Defining quality around:
• Product based criteria
• User based criteria
• Value based criteria
• Manufacturing based criteria
The Eight Dimensions of Product Quality
David A Garvin, “Competing on the Eight Dimensions of
Quality”, Harvard Business Review, November-December
1987, pp. 101-109.
• Performance – main characteristics of the product/service
• Special features – secondary characteristics
• Aesthetics – appearance, feel, smell, taste
•Conformance – how well the product/service conforms to
established standards or customer expectations
The Eight Dimensions of Product Quality
(cont.)
• Reliability – consistency of performance
• Durability – useful life of the product or service
• Perceived quality – indirect evaluation of quality (e.g.
reputation, images, advertising)
• Serviceability – speed, courtesy, competence, and
ease of repair
How to Diagnose Quality Problems
• Gap 1: the customer’s specification – operation’s
specification – i.e., service interval of a car
• Gap 2: the concept – specification – i.e., climate
control system fitted to a car
• Gap 3: the quality specification – actual quality
• Gap 4: the actual quality – communicated image
How to Achieve ‘Conformance to
Specification’
• Step 1: Defining the quality characteristics
• Step 2: Decide how to measure each characteristic
• Step 3: Set quality standards
• Step 4: Control quality against those standards
(where, how and how often)
• Step 5: Find and correct causes of poor quality
• Step 6: Continue to make improvements
Ishikawa Fishbone – Cause and Effect
• Searching for root cause
• What, when, where, how,
why?
• Or, Manpower,
Machinery, Materials,
Method, Money.
• Structure to group
discussion and analysis
Continuous Improvements
• Audi accepted and implemented 15,000 suggestions
for improvements from employees in 2017.
• This led to savings of 108.6 million Euros in 2017.
Improvement Cycles
Four Approaches for Improvements
Six Sigma
• Six sigma means the specification range of any part of
a product or service should be within 6 standard
deviation, which is 99.99966%. (3.4 defects per million)
• Motorola’s ‘Total Customer Satisfaction’ in 1980s which
focused on removing product defects
• A disciplined methodology of defining, measuring,
analysing, improving and controlling the quality in every
one of the company’s products, processes, and
transactions with the ultimate goal of virtually
eliminating all defects.
Six Sigma – Performance Measurement 1
• A defect – failure to meet customer-required performance
• A defect unit or item – any unit of output that contains a
defect
• A defect opportunity – a number of different ways a unit of
output can fail to meet customer requirements
• Proportion defective – the percentage of fraction of units that
have one or more defect
• Process yield – the percentage of total units produced by a
process that are defect free
Six Sigma – Performance Measurement 2
• Defect per unit (DPU) – the average number of defects on a
unit of output
• Defects per opportunity (DPO) – the percentage of defects
divided by the total number of defect opportunities
• Defects per million opportunities (DPMO) – the number of
defects per 1 million opportunities
• The Sigma measurement – the number of standard deviation
derived from DPMO
Six Sigma – Example
• Insurance claims – a random sample of 300 claims
• 51 claims had one or more defects. (74 defects in total)
• 4 types of errors (coding, policy conditions, liability and
notification)
• Proportion defective: 17% (= 51/300)
• Yield: 83% (= 1-0.17)
• DPU: 24.7% (= 74/300)
• DPO: 6.2% (= 74 / (300 * 4))
• DPMO: 62,000 (= 0.0062 * 1,000,000)
What is TQM?
a holistic approach to the management of quality
emphasizes the role of all parts of an organization and
all people within an organization to influence and
improve quality
a philosophy of how to approach the organization of
quality improvement
Definition of TQM
An effective system for integrating the quality
development, quality maintenance, and quality
improvement efforts of the various groups in an
organisation to enable production and service at the
most economical levels which allow for full customer
satisfaction (Slack et al., 2016)
9
Figure 1. Total Quality Management
Key Aspects of TQM
1. Meeting the needs and expectations of
customers
Customer centricity or voice of the customer
Start with an insight into customer needs, wants,
perceptions, and preferences
Translate them into quality objectives and drive
customer improvement
Key Aspects of TQM (cont.)
2. Covering all parts of the organization
Each department, each activity, each person, and each
level need to work together
Internal customer/supplier concept: everyone is a
customer and supplier within an organization
Use of Service level agreements (SLAs) within an
organization e.g. for response times and range of
services
Key Aspects of TQM (cont.)
3. Including every person in the organization
Everyone should contribute.
Scope for creativity and innovation
Key Aspects of TQM (cont.)
4. All costs of quality are considered
Prevention costs
Appraisal costs
Internal failure costs
External failure costs
Can you think of any examples for each cost category?
Key Aspects of TQM (cont.)
4. All costs of quality are considered (cont.)
Traditional quality model TQM-adjusted quality model
Increasing the effort spent on preventing errors occurring in the first
place brings a more than equivalent reduction in other cost categories
Key Aspects of TQM (cont.)
5. Developing the systems and procedures which
support quality improvement
ISO 9001
The standards provide guidance and tools for companies
and organizations who want to ensure that their products
and services consistently meet customer’s requirements,
and that quality is consistently improved
Key Aspects of TQM (cont.)
6. Development a continuous process of
improvement
Lean approach
Aims to meet demand with perfect quality and no waste
In-class activity
What TQM activities is Toyota using and
what each activity involves?
https://www.youtube.com/watch?v=pdaWR_EoI1k
Summary
• Quality is not just about the
finished product it
encompasses all areas of the
business.
•Poor quality can and will
result in poor performance.
•Total quality management is
the most comprehensive
method for shaping and
improving quality.
Further - Advanced
Reading
• Weissman, R (2017) Kobe Steel's quality scandal is an
age-old supply chain tale (online) available from
<http://www.supplychaindive.com/news/Kobe-Steel-
scandal-data-supplier-fraud/507729/>
• Danigelis, A. (2017) Right on Time: Why Businesses Need
Quality Management System Software (online) available
from <https://www.environmentalleader.com/2017/10/right-
time-businesses-need-quality-management-system-
software/
Thank you!
