ORGANIZATION STRUCTURE AND DESIGN
According to Luis A. Allen, it is defined as “the
process of identifying and grouping the work to be
performed, defining and delegating the authority
and establishing relationships for the purpose of
enabling people to work most effectively together in
accomplishing objectives”
It facilitates effective management
ORGANIZATION STRUCTURE FOR QUALITY
MANAGEMENT
• There are various factors which affect the organization structure for
quality management
• Company policies and objectives
• How important is quality to a company?
• How much emphasis is to be laid on quality?
• Type of business
• Traditional business, with fixed methods of manufacture and specific customers
• Diversified business covering many product types, and requiring flexibility and constant
innovations to meet changing market conditions
• Continued….
ORGANIZATION STRUCTURE FOR QUALITY
MANAGEMENT
• Type of products
• Quality requirements vary with different type of products like sophisticated electronic
equipments, timber industries etc
• Company size and organization
• For small size companies, quality functions can be assigned to one specific individual or
as an additional responsibility to some one dealing with production or sales
• For large companies, quality services should be decentralized and provided to individual
departments; and centralized in case of quality related information to higher
management
• Continued….
ORGANIZATION STRUCTURE FOR QUALITY
MANAGEMENT
• Market and customers
• The measure factor affecting the quality of a product is
the user satisfaction
• Quality organization should be designed considering the
user needs with the product
DESIGN OF ORGANIZATION
• It consists of three functions
• Identification and grouping of jobs
• Allocation of authority and responsibility
• Establishment of co-operative relationships
ORGANIZATION
QUALITY FUNCTION
A technique to make the product as per the need and desire of the
customers.
The main functions of quality group to implement quality activities:
To advice the top management to prepare a customer friendly quality policy
Evaluation of product design to improve the quality and reduction in quality cost
Deployment of the quality standards, quality control techniques, quality inspections
Quality audits periodically to conform the present status of the quality standard
Periodic calibration of process control equipments
Finally the quality of packaging process must be checked to ensure that the product
must be able to withstand the transportation hazards
Collecting the feedback of customers and accordingly reshape the quality
parameters of the product when product reached to the market
QUALITY FUNCTIONS
• These mainly consist of quality engineering and quality control
• As quality engineering , it performs the following
• Helps in framing the quality policy, standards, and objectives
• Defines the quality requirements and review the design
• Planning for maintaining the quality
• Analyzing the quality costs
• Continued….
QUALITY FUNCTIONS
• As quality control, it performs the following
• Checks the manufacturing process for quality related problems and solve them
• Performing the final inspection to ensure the quality of the end product
• Checking the quality of the packaging to ensure that the product is able to withstand
with the transportation hazards
• Feedback of the quality related data to quality engineering section
DECENTRALIZATION OF QUALITY FUNCTIONS
• Quality functions are delegated to pre-production, in-production and
post-production stage of the product development
• It is not necessary to perform all the quality functions related tasks to
be performed only by a quality department
• Some of them can be assigned to other departments
• The quality department has to monitor the quality functions related
tasks performed by other departments for their effectiveness
• Continued…..
DECENTRALIZATION OF QUALITY FUNCTIONS
• There are advantages and disadvantages of decentralization quality
functions
• Smooth flow of production due to less interdepartmental friction
• Longer reaction time related to quality problems
QUALITY FUNCTION
COST OF QUALITY
Cost of Achieving Good Quality
Prevention costs
costs incurred during product design
Appraisal costs
costs of measuring, testing, and analyzing
Cost of Poor Quality
Internal failure costs
include scrap, rework, process failure, downtime, and price reductions
External failure costs
include complaints, returns, warranty claims, liability, and lost sales
PREVENTION COSTS
• Quality planning costs
costs of developing and implementing quality management program
• Product-design costs
costs of designing products with quality characteristics
• Process costs
costs expended to make sure productive process conforms to quality
specifications
• Training costs
costs of developing and putting on quality training programs for employees
and management
• Information costs
costs of acquiring and maintaining data related to quality, and development
of reports on quality performance
APPRAISAL COSTS
• Inspection and testing
costs of testing and inspecting materials, parts, and product at
various stages and at the end of a process
• Test equipment costs
costs of maintaining equipment used in testing quality
characteristics of products
• Operator costs
costs of time spent by operators to gar data for testing product
quality, to make equipment adjustments to maintain quality, and to
stop work to assess quality
INTERNAL FAILURE COSTS
• Scrap costs • Process downtime costs
– costs of poor-quality products – costs of shutting down
that must be discarded, including productive process to fix
labor, material, and indirect costs
problem
• Rework costs
• Price-downgrading costs
– costs of fixing defective
products to conform to quality – costs of discounting poor-
specifications quality products
• Process failure costs —that is, selling products as
– costs of determining why seconds
production process is producing
poor-quality products
EXTERNAL FAILURE COSTS
• Customer complaint costs • Product liability costs
– costs of investigating and – litigation costs resulting from
satisfactorily responding to a
customer complaint resulting from a product liability and customer
poor-quality product injury
• Product return costs • Lost sales costs
– costs of handling and replacing
poor-quality products returned by – costs incurred because
customer customers are dissatisfied with
• Warranty claims costs poor quality products and do
– costs of complying with product not make additional purchases
warranties
MEASURING AND REPORTING QUALITY COSTS
• Index numbers
– ratios that measure quality costs against a base value
– labor index
• ratio of quality cost to labor hours
– cost index
• ratio of quality cost to manufacturing cost
– sales index
• ratio of quality cost to sales
– production index
• ratio of quality cost to units of final product
QUALITY–COST RELATIONSHIP
• Cost of quality
– Difference between price of nonconformance and
conformance
– Cost of doing things wrong
• 20 to 35% of revenues
– Cost of doing things right
• 3 to 4% of revenues
– Profitability
• In the long run, quality is free
QUALITY MANAGEMENT AND PRODUCTIVITY
PRODUCT COST
ATTITUDE OF TOP MANAGEMENT TOWARDS
HUMAN FACTOR
Improvement is based on six basic performance management
elements:
Commitment to human resources excellence
Dedicated work drivers
Benchmarks/proven approaches rather than re-inventing wheel
Move the needle on engagement
Healthy lust for kaizen
Increasing driving force
RESPONSIBILITY TOWARDS QUALITY
• Customer quality
• External quality
• Failure analysis lab
• Field quality
• Manufacturing quality
• NPI quality
• Quality systems
• Reliability lab
• Software quality
• Quality standards and bodies
CAUSES OF APPARATUS ERROR
1) Blunders (Mistakes)
2) Human error
3) Instrumental limitations
4) Sampling
5) Not all measurements have well-defined values
6) Observing the system may cause errors
7) Errors due external influences
