PALAWAN STATE UNIVERSITY

College of Business and Accountancy

Department of FM, HRDM and
Becon Puerto Princesa City

MODULE 1:
INTRODUCTION TO QUALITY
COURSE CODE: BEC4104
2nd Semester | SY: 2024-
2025

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 TABLE OF CONTENTS
Title Page of Module 1
Approval Sheet 2
Table of Contents 3

Overview 4
Course Outcome 4
Learning Outcomes 4
Summary of Topics 4

Content
Topic 1: Defining Quality 6
Topic 2: History of Quality Management 9
Topic 3: Quality in Manufacturing 11
Topic 4: Quality in Service Organizations 13
Topic 5: Quality in Business Support Functions 13
Topic 6: Quality and Competitive Advantage 14
Topic 7: Quality and Personal Values 15

Module Activity No. 1 16

Module Activity No. 2 16
Module Activity No. 3 17
References 20

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 MODULE 1
| INTRODUCTION TO
Overvie
QUALITY
w
Quality has become a vital component of every modern organization and will remain an important
part of a continual quest for improving performance across the globe. Module 1 provides an introduction
to quality management principles. It introduces the notion of quality, how it is defined, its history and
importance, the role of quality in manufacturing and service, and its impact on competitive advantage and
financial return. Therefore, it is important to get the right meaning, interpretation and understanding of the
term quality and related terms because this will provide a strong foundation for Total Quality
Management.

Course Outcome:
1. Identify methods which can sustain continuous improvement in an organization.
2. Propose solutions to improve current systems, procedures, and practices in the University through
research.
3. Formulate strategies for customer satisfaction.

Intended Learning Outcomes:

 Explain how TQM evolved to get the right understanding of the term quality and other related terms.
 Identify the basic concepts and approaches of quality.
 Explain the impact of quality on competitive advantage and business results.
 Familiarize the basic concepts & different approaches and manufacturing systems to quality.

Topics:
1: Defining Quality
2: History of Quality
Management 3: Quality in
Manufacturing
4: Quality in Service Organizations
5: Quality in Business Support
Functions 6: Quality and
Competitive Advantage
7: Quality and Personal Values

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 LET’S TRY!

WORD SEARCH
Answer first this preliminary activity to find out if you have an idea about the topic. Give
me a word that can be associated with Total Quality Management.

I see the word……

M P R O C E S S T C
A A W U S E T E A U
R H N D A Y O E S S
K Q U A L I T Y K T
E C C I G L A A D O
T F O R T E L L W M
I G R E A M M P Y E
N S E R V I C E S R
G W P I A P A I N F
T B M P R O D U C T

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 LET’S LEARN!

Topic #1: Defining Quality

Quality is by no means a new concept in modern business. In October 1887 William Cooper Procter,
grandson of the founder of Procter and Gamble, told his employees.’ The first job we have is to turn out quality
merchandise that consumers will buy and keep on buying. If we produce it efficiently and economically, we will earn a profit, in
which you will share.”
High quality goods and services can provide an organization with a competitive edge. A reputation for
high quality generates satisfied and loyal customers who reward the organization with continued patronage and
favorable word-of-mouth advertising often resulting in new customers.
Quality can be confusing concept, partly because people view quality subjectively and in relation to differing
criteria based on their individual roles in the production-marketing chain.
The quality Improvement Glossary defines quality as a subjective term for which each person has his or her own
definition.
For example, one study that asked managers of 86 firms in the eastern United States to define quality produced several dozen
different responses, including the following:
1. Perfection
2. Consistency
3. Eliminating waste
4. Speed of Delivery
5. Compliance with policies and procedures
6. Delighting or pleasing customers
7. Total customer service and satisfaction
Thus, it is important to understand the various perspectives from which quality is viewed in order to fully
appreciate the role it plays in the many parts of a business organization.
Quality can be defined from six different perspectives:
1. Transcendent
2. Product
3. Value
4. User
5. Manufacturing
6. Customer

Transcendent (Judgmental) Perspective

One of the common notions of quality often used by consumers, is that it is synonymous with
superiority or excellence. According to Walter Shewhart, one of the pioneers of quality control, first defined as
quality as the goodness of a product. This view is referred to as the transcendent (transcend, “to rise above or
extend notably beyond ordinary limits’ or judgmental, definition of quality. In this sense, quality is ‘both absolute

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and universally recognizable, a mark of uncompromising standards and high achievement.”

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 One of the examples of products associated with an image of excellence are Rolex watches, Ritz Carlton hotels, and Lexus
automobiles. From this perspective, quality cannot be defined precisely, you just know it when you see it.

Product Perspective
Another definition of quality is that it is related to the quantity of some product attribute, such as thread
count of a shirt or bed sheet, or the number of different features in an automobile or a cell phone.
This assessment implies that the larger numbers of product attributes are equivalent to higher quality,
so designers often try to incorporate more features into products, whether the customers want
them or not. The assessment of products attributes may vary considerably among individual thus,
good marketing research is needed to understand what features customers want in a product.

User Perspective
Individuals have different wants and needs and, hence, different expectations of a product. This leads to
a user-based definition of quality-fitness for intended use, or how well the product performs its intended function.

Example of user’s perspective are Cadillac (luxury car) and Honda Civic both fit for use; they simply serve different
needs and different groups of customers. If you want a highway-touring vehicle with luxury amenities, then a Cadillac may be
better satisfying your needs. If you want a vehicle for commuting in a congested urban environment, a Civic might be preferable.

Value Perspective
A fourth approach to defining quality is based on value; that is, the relationship of product benefits to
price. Consumers no longer buy solely on the basis of price. They compare the quality of the total package of
goods and services that a business offers (sometimes called the customer benefit package) with price and with
competitive offerings. This customer benefit package includes the physical product and its quality dimensions;
presale support, such as ease of ordering; rapid, on time, and accurate delivery. If competitors offer the same
quality package of goods and services at a lower price, customers would generally choose the one having
the lower price. From this perspective, a quality product is one that provides similar benefits as competing
products’ lower price, or one that offers greater benefits at a comparable price.

Manufacturing Perspective
Consumers and organizations want consistency in goods and services. Having standards for goods and
services and meeting these standards leads to the fifth definition of quality: conformance to specifications.
Specifications are targets and tolerances determined by designers of goods and services. Targets are the
ideal values for which production is to strive, tolerances are necessary because it is impossible to meet
targets all of the time.
One of the examples under this perspective is the Coca Cola company, quality is about manufacturing a product
that people can depend on every time they reach for it. They ensure that through rigorous quality and packaging standards,
Coca Cola strives to ensure that customers will enjoy the taste of its products anywhere in the world.

Customer Perspective
According to the American National Standards Institute (ANSI) and the American Society for Quality (ASQ)
standardized official definitions of quality terminology. They defined the Quality as the totality of features and
characteristics of a product or service that bears on its ability to satisfy given needs. This definition draws heavily on the
product and user definitions and is driven by the need to create satisfied customers. By the end of 1980’s
many organizations had begun using a simpler, yet powerful, customer-based definition of quality that
remains popular today: meeting or exceeding customer expectations.

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 Integrating Quality Perspectives in the Value Chain
Figure 1.1 Quality Perspective in the Value Chain

Transcende
nt User
User
perspective
perspectiv
and

Marketin
Custome g
r Value
perspectiv

Custome Desig
Product
r
s and n
Service perspectiv
s

Manufacturin
g
Distributio
n Manufacturin
g

Source: Evans, E.R, Lindsay, W.M, (2019) Total Quality Management. Cengage Learning Tenth Edition.
Information Flow
Product Flow

This figure shows the essential elements of a value chain in manufacturing for
developing, producing, and distributing goods to customers. The customer is the driving
for the production of goods and services, and customers generally view quality from
either the Transcendent or the Product Perspective. The user perspective of quality is
meaningful to people who work in marketing. The manufacturer must translate customer
requirements into detailed product and process specifications. Making this translation is
the role of research and development, product design, and engineering. The
manufacturing function is responsible for guaranteeing that design specifications are met
during production and that the final product performs as intended. Thus, for production
workers, quality is defined by the manufacturing perspective. Throughout the value chain,
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each function is an internal customer of others, and the firm itself may be an external
customer or supplier to other firms. Thus, the customer perspective provides the basis for
coordinating the entire value chain.

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Topic #2: History of Quality Management

As the philosopher George Santayana once said, “Those who cannot remember the past are condemned to
repeat it.” Thus, the understanding of the history of quality can be quite insightful. Quality has been an
important aspect of production operations throughout history.

Modern quality assurance methods actually began millennia ago in China during the Zhou Dynasty. Specific
governmental departments were created and given responsibility for:

 Production, inventory, and product distribution of raw material (what we now call supply chain
management)
 Production and Manufacturing
 Formulating and executing quality standards
 Supervision and inspection

These departments were well organized and helped establish China’s central control over production
processes. The system even included an independent quality organization responsible for end-to-end
oversight that reported directly to the highest level of government.

The Age of Craftmanship

During the Middle Ages in Europe the skilled craftsperson served both manufacturer and inspector.
“Manufacturers” who dealt directly with the customer took considerable pride in workmanship. During this time
the quality Assurance was informal; every effort was made to ensure that quality was built into products by the
people who produced them.

In the middle of the eighteen century Honore Blanc French gunsmith develop a system for
manufacturing muskets to a standard pattern using interchangeable parts. Thomas Jefferson brought the
idea to America, and in 1978, the new U.S. government awarded Eli Whitney a two -year contract to supply
10,000 muskets to its armed forces. The interchangeable parts necessitated careful control of quality.

The Early Twentieth Century

In the early 1990’s the work of Frederick W. Taylor, often called the ‘Father of scientific management,’
led to a new philosophy of production. Taylor’s innovation was to separate the planning function from the
execution function. By this time managers and engineers were given the task of planning; supervisors and
workers took the task of execution. This approach worked well at the turn of the century.

One of the leaders of the second Industrial Revolution Henry Ford, Sr developed many of the fundamentals of
what we now call ‘total quality practices in the early 1990’s. this piece of history was not discovered until
Ford executives visited Japan in 1992 to study Japanese management practices.

The early pioneers of quality-Walter Shewhart, Harold Dodge, George Edwards, and others such as Joseph
Juran and W. Edwards Deming- were members of this group. These pioneers coined the term quality
assurance which refers to any planned and systematic activity directed toward providing consumers with
products (goods and services) of appropriate quality, along with the confidence that products meet consumers’
requirements and developed many useful techniques for measuring, controlling, and improving quality. Quality
control is the evaluation of a process to determine if corrective action is needed to ensure that a requisite level of
quality is achieved, often through some type of inspection or measurement activity.

Post-world War II

During this time, two U.S. consultants, Dr. Joseph Juran and Dr. W. Edwards Deming, introduced statistical

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quality control techniques to the Japanese to aid them in their rebuilding efforts. A significant part of their
educational activity was focused on upper management, rather than quality specialists alone. With the support
of the top management, the Japanese integrated quality throughout their organizations and developed a
culture of continuous improvement (sometimes referred to by the Japanese term kaizen.

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The U.S. “Quality Revolution”

The decade of the 1980’s was a period of remarkable change and growing awareness of quality by
consumers, industry, and government. During the 1950’s and 1960’s, when ‘made in Japan’ was associated with
inferior products, US consumers purchased domestic goods and accepted their quality without question.
During the 1970’s, however, increased global competition and the availability of higher quality foreign
products led U.S. consumers, armed with increased access to information, to consider their purchasing
decisions more carefully and to demand high quality and reliability in goods and services at a fair price.

One of the most influential individuals in the quality revolution was W. Edwards Deming. He plays a
big role in the development of Japanese quality, and his name was soon a household word among corporate
executives. Deming’s leadership and expertise helped may U.S organizations to revolutionize their approach to
quality. Since then Quality became recognized as a key to worldwide competitiveness and was heavily
promoted throughout industry.

From Product Quality to Total Quality Management

Managers began to realize that the approaches they use to listen to customers and develop long-term
relationships, develop strategy, measure performance and analyze data, reward and train employees,
design and deliver products and services, and act as leaders in their organization are the true enablers of
quality, customer satisfaction, and business results. In other words, they recognize that the ‘quality
management’ is as important as the’ management of quality’. In this fashion, quality assurance gave way to
quality management.
As organizations came to realize the broad scope of quality, the concept of total quality management (TQM),
or simply total quality (TQ) emerged. A definition of total quality was endorsed in 1992 by the chairs and CEOS of
nine major U.S. corporations in cooperation with deans of business and engineering departments of major
universities and recognized consultants.

Total Quality is a people-focused management system that aims at continual increase in customer satisfaction at
continually lower real cost. TQ is as total system approach (not a separate area or program) and an integral part of high-level
strategy, it works horizontally across functions and departments, involve all employees, top to bottom, and extends backward
and forward to include the supply chain management and the customer chain.
The foundation of total quality is philosophical; the scientific method. TQ includes systems, methods, and tools.

Emergence of Six Sigma

In the quest to remain competitive, and after learning from the failures of TQM, a new approach to
quality improvement emerged in the late 1990’s, called Six sigma Sic sigma is a customer-focused,
results-oriented approach to business improvement that integrates many traditional quality improvements
tools and techniques that have been tested and validated over the years, with a bottom-line and strategic
orientation that appeals to senior managers, thus gaining their support. Many organizations have adopted Six
sigma as a way or revitalizing their quality efforts.

Current and Future Challenges

The real challenge today is to ensure that managers continue to focus on quality management and
performance excellence throughout their organizations.
In 2011, the American Society for Quality identified eight key forces that will influence the future of quality.
1. Global Responsibility
2. Consumer Awareness
3. Globalization
4. Increasing Rate of change
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5. Workforce of the future
6. Aging population
7. Twenty-first Century Quality
8. Innovation

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Topic #3: Quality in Manufacturing
Manufacturing Systems

Figure 1.2 Functional Relationships in a Typical Manufacturing System

Suppliers

Customers Marketing Product

and Purchasing
Sales design and
and receiving
engineerin
g

Installation
and Production planning
Industrial Tool
and
service engineering and engineerin scheduling
process design g

Manufacturing and assembly

Packagin
g shipping
Finished goods inspection and testing
and
warehousin
g

Source: Evans, E.R, Lindsay, W.M, (2019) Total Quality Management. Cengage Learning Tenth Edition.

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 This figure Illustrates a typical manufacturing system and the key relationship among its functions. The quality concerns of each
component of the system.

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  Marketing and Sales
Marketing enables firms to define their products that are fit for use and salespeople help obtain feedback
on product performance from customers and convey information to product designers and engineers for further
improvements They should also help to ensure that customers receive adequate assistance and are completely
satisfied.

 Product Design and Engineering

Poorly designed manufacturing processes result in poor quality or higher costs. Good design of products
can help to prevent manufacturing defects and service errors and to reduce the need for the non-value adding
inspection.

 Purchasing and Receiving

The quality of purchased parts and services and the timeliness of their delivery are critical. The
purchasing department can help a firm achieve quality by selecting quality-conscious suppliers, establishing
long-term supplier relationships based on trusts and maintaining good communication with suppliers as quality
requirements and design change occur.

 Production Planning and Scheduling

A production plan specifies long-term and short-term production requirements for filling customer orders
and meeting anticipated demand.

 Manufacturing and Assembly

The role of manufacturing and assembly in producing quality is to ensure that the product is made
correctly. Once in production, no defects should be acceptable. If and when they do occur, every effort must
be made to identify their causes and eliminate them,

 Tool Engineering
The tool engineering function is responsible for designing and maintaining the tools used in
manufacturing and inspection.

 Industrial Engineering and Process Design

The job of industrial engineers and process designers is to work with product design engineers to develop
realistic specifications.

 Finished goods Inspection and Testing

If quality is built into product properly, inspection should be unnecessary except for auditing purposes
and functional testing.

 Packaging, Shipping and Warehousing

Packaging, shipping, and warehousing often termed logistics activities-are the functions that protect
quality after goods are produced.

 Installation and Service

Products must be used correctly in order to benefit the customer. Users must understand a product and have
adequate instructions for proper installation and operation.

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Topic #4: Quality in Service Organizations
Service organizations include all nonmanufacturing organizations such as hotels, restaurants, financial and
legal services and transportation, except such industries as agriculture, mining, and construction the sector grew
rapidly in the second half of the twentieth century.

Pure service businesses deliver intangible products. Examples would include a law firm, whose product is
legal advice and health care organization, whose product is comfort and better health. For instance,
manufacturers such as xerox provide extensive maintenance and consulting services, which may be more
important to the customer than its tangible products.

Contrasts with Manufacturing

The production and services differ from manufacturing in many ways, and these differences carry
important implications for quality management. These are the most critical differences between services and
manufacturing:
1. Customer needs and performance standards are often difficult to identify and measure,
primarily because the customers define what they are and each customer is different.
2. The production of services typically requires a higher degree of customization than does manufacturing.
3. The output of many service systems is tangible, whereas manufacturing produces tangible,
visible products, Manufacturing quality can be assessed against firm design specifications
4. Services are produced and consumed simultaneously, whereas manufactured goods are
produced prior to consumption.
5. Customers often are involved in the service process and are present while it is being performed.
6. Services are generally labor intensive, whereas manufacturing is more capital intensive
7. Many service organizations must handle large numbers of customer transactions.

Components of Service Quality

Service quality may be viewed from a manufacturing analogy, for instance, technical standards such as the
components of a properly made-up guest room for a hotel, service, transaction speed, or accuracy of
information. However, managing intangible quality characteristics is more difficult, because they usually
depend on employee performance and behavior.

Topic #5: Quality in Business Support Functions

Finance and Accounting
The finance function is responsible for obtaining funds, controlling their use, analyzing investment
opportunities, and ensuring that the firm operates cost-effectively and ideally-profitably. Financial
decisions affect manufacturing equipment purchases, cost control policies, price volume decisions, and nearly
all facets of the organization.
Legal Services
A firm’s legal department attempts to guarantee that the firm complies with laws and regulations regarding
such things as product, labelling, packaging, safety, and transportation; designs and words warranties
properly; satisfies its contractual requirements; and has proper procedures and documentation in place in the
event of liability claims against it.
Quality Assurance
Quality assurance specialist performs special statistical studies and analyses and may be assigned to
work with any of the manufacturing or business support functions.
A customer driven quality focus must involve every function in the organization, including manufacturing,
service, and
business support functions. Quality is indeed everyone’s responsibility.

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Topic #6: Quality and Competitive Advantage
Competitive advantage denotes a firm’s ability to achieve market superiority. A strong competitive advantage
provides
customer value, leads to financial success and business sustainability, and is difficult for

competitors to copy. The following are the impact of product quality on corporate

performance which PIMS researchers found:

 Product quality is an important determinant of business profitability

 Businesses that offer premium quality products and services usually have large market shares and were early entrants
in to their markets.
 Quality is positively and significantly related to a higher return on investment for almost all kinds of products and market
situations.
 Instituting a strategy of quality improvement usually leads to increased market share, but at the cost reduced short-
run profitability
 High-quality producers can usually charge premium prices.

These finding are summarized in Figure 1.3. Profitability is driven by both the quality of design and
conformance.

Figure 1.3 Quality and Profitability

Improved quality of Improved quality

design of
conformance

Higher perceived value Higher prices Lower

manufacturing
and services

Increased market Increased revenues

share

Higher
profitability

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Source: Evans, E.R, Lindsay, W.M, (2019) Total Quality Management. Cengage Learning Tenth Edition.

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 Topic #7: Quality and Personal Values
Today, organizations are asking employees to take more responsibility for acting as the point of contact
between the organization and the customer, to be team players, and to provide better customer service.

Quality begins with individual attitudes and behavior. Employees who embrace quality as a personal value often go beyond
what they’re asked or normally expected to do in order to reach a difficult goal or provide extraordinary service to a
customer.

Personal quality is an essential ingredient to make quality happen in the workplace, yet most organizations
have neglected it for a long time.

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 LET’S DO THIS!

MODULE ACTIVITY NO. 1

Instructions:
Read the questions and carefully give your ideas and thoughts. You will be graded based on the rubric
provided below.

Discuss how either good or poor quality affects you personally as a consumer. For instance, describe
experiences in which your expectations were met, exceeded, or not met when you purchased goods and
services. Did your experience change your regard for the organization and/or product? How?

MODULE ACTIVITY NO. 2

Instructions:
Read the question and carefully give your ideas and thoughts. You will be graded based on the rubric
provided below.

How does your college or university utilize its human resources and information technology to improve service?

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 RUBRIC FOR ESSAY
Criteria Exemplary Proficient Developing Beginning
4 3 2 1
Completeness of Superior in Essentially Incomplete in Incomplete in
thoughts completeness, complete, review some respects, most respects
student has of the problem student has not
made an done a thorough
extremely explanation
thorough review
of the problem
and
correctly answer
Clarity and Thought is a Thought Thought can be Thought is poorly
organization of model of clarity, generally well generally written; ideas are
thoughts conciseness, written, Ideas understood, disjoined and
and logical are often although ideas are difficult to
thought ideas presented in a sometimes understand
flow smoothly clear and presented in a
between organized confusing and
paragraphs manner repetitive
and manner
across sections

MODULE ACTIVITY NO. 3

FAMILIARIZATION. Examine the pictures given below and identify which quality concerns
component of manufacturing systems they do belong.

Source: unsplash.com/s/. photos/manufacturing

Source: https://www.shutterstock.com/search/goods+receiving+acar

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1. __________________________________________

2. __________________________________________

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3. __________________________________________

4. __________________________________________

5._________________________________________

6. ________________________________________

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 7. _______________________________________

8. _______________________________________
Source: https://www.shutterstock.com/image-photo/installing-solar-

WRAP UP!

Let us sum up what you have learned by completing the sentence below. This will not be

graded. What have you learned from our topics?

1. I have learned that quality is and I can

apply this in life by

2. Product quality is an important determinant of business profitability because

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 RUBRIC FOR ESSAY
Criteria Exemplary Proficient Developing Beginning
4 3 2 1
Completeness of Superior in Essentially Incomplete in Incomplete in
thoughts completeness, complete, review some respects, most respects
student has of the problem student has not
made an done a thorough
extremely explanation
thorough review
of the problem
and
correctly answer
Clarity and Thought is a Thought Thought can be Thought is poorly
organization of model of clarity, generally well generally written; ideas are
thoughts conciseness, written, Ideas understood, disjoined and
and logical are often although ideas are difficult to
thought ideas presented in a sometimes understand
flow smoothly clear and presented in a
between organized confusing and
paragraphs manner repetitive
and manner
across sections

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REFERENCES

Textbooks:
Evans, J.R., Lindsay, W.M. (2019) Total Quality Management. Cengage Learning Tenth Edition.
Bonifacio Global City, Taguig City: Cengage Learning Asia Pte (Philippines Branch)

Camilar-Serrano, A.O. (2016) Total Quality Management. Intramuros Manila: Unlimited Books
Library Services & Publishing Inc.

Websites:
https://www.shutterstock.com/image-photo

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