Presentation summary Quality Management System (QMS) is often misperceived as a paperwork exercise done to ensure the organization has an ISO 9001 certificate hanging on the wall. Perhaps, a contractual obligation. This misperception often results in quality management professionals becoming an easy target for headcount reduction. This shortsighted cost cutting blurs the long-term vision of achieving a sustainable and more resilient organization. Quality professionals often don’t do a great job of making top management and other interested parties aware of everything quality management encompasses and why it’s important to understand a holistic approach to achieving quality. As a result, top management often sees quality as a transactional activity, not a strategic advantage. This interactive session will focus on presenting ideas for realizing financial and economic benefits from the quality management system implementation. Effective QMS is "quietly saving" in every area of the organization. These implicit savings aren’t publicized to the organization because they aren’t obvious. I will discuss these savings and receive inputs from the participants. I will also discuss how quality management system is tied to organization's bottom line, innovation and growth.

1. ASQ Los Angeles Section
Quality management -- Guidelines for realizing financial and
economic benefits
(Based on ASQ Quality Progress Publication “Paddle Like The Dickens”)
Govind Ramu
September 12th, 2018

2. Agenda
● Current state - Quality, Organization and challenges
● What needs to change?
● Future state - Quality, Organization and financial and economic benefits
● Q & A
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3. Defining Quality
Quality: A subjective term for which each person or sector has its own definition.
In technical usage, quality can have two meanings: 1) the characteristics of a
product or service that bear on its ability to satisfy stated or implied needs; 2) a
product or service free of deficiencies. According to Joseph Juran, quality means
“fitness for use”; according to Philip Crosby, it means “conformance to
requirements.”
Ref: The refreshed, third edition of QP’s Quality Glossary
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4. Participant Interaction
Questions:
● What is your definition of Quality?
○ Key words that come to your mind
■ Customer
■ Value
● What are our challenges as Quality Professional?
○ Meeting customer expectations
○ Delivering value to our organizations
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5. Quality Organization - Function Vs Roles
● Meet customer expectations
● Prevent defects
● Ensure product conformance
● Design in Quality
● Develop management
system
● Manage supplier quality
● Facilitate problem solving
● Auditing - ensure system
compliance
● Others.
● Inspector
● Technician
● Auditor
● Analyst
● Document controller
● Engineer
● Manager
● Director
● Vice President
● Chief Quality Officer
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6. Quality Challenges
● Quality roles have rapidly evolved over years into new job titles.
● Quality organization appraisal cost is now a significant portion of Cost of
Quality*.
● Organizations with lower gross margin cannot afford a large headcount
quality organization**.
● Quality organization suffers the early loss of resources during downturns.
● Quality efforts deprioritized for speed (time), cost and design iterations
*Most organizations do not measure beyond COPQ
**>1% of overall organization’s headcount for > 500 employee organizations)
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7. Participant Interaction
● Organizations prefer domain expertise and subject matter expertise as their
first preference for candidates for quality.
● Let us explore Pros and Cons
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8. How Stakeholders See The Quality Organization*?
● Required by customer contracts, expectations
● Verifies compliance
● Provides degree of independence
● Management System certification maintenance (audits, liaison with
certification body, etc)
● Responsible for responding to customers on quality related complaints
● Administers highly bureaucratic paperwork required in some industry sectors
● Publishes Dashboard/KPI monitoring.
● Others?
*Typical Quality Organization - Based on a Brainstorm at TC 176 International Meeting.
“Narrow perception”
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9. What we do not hear about Quality Organization?
● True Partner - Highly engaged in solving organizational issues, share
common priorities instead of competing priorities.
● Value adder - Proactively anticipate and manage risk, contribution to optimize
value and provide objectivity.
● Pragmatic - Being flexible, reasonable yet meeting the intent of the objectives.
● Enabler of simplicity - Making complex issues simple. Disentangling
stakeholders from bureaucratic nightmare.
● Bottom line sensitive - Compliance as a function of Cost.
“Holistic perception”
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10. Why?
Quality Management not effectively tied to
organization’s economics
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11. How Big Does a Quality Organization Need to Be?
Based on
○ Revenue
○ Overall organization headcount
○ Number of product lines
○ Volume of products or services
OR
○ Customer loyalty improvement
○ Opportunity for business process improvement
○ Defect reduction
Hire aggressively when
the market conditions are
good, downsize when
market is down.
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12. Cost of Quality - Opportunities
New product
Introduction -
Improvement team
Process
Improvement
Team
Supplier
Development
Team Customer Loyalty
Improvement
Team
Table 1 - Reference Paddle Like The Dickens, Quality ProgressGovind Ramu

13. QMS Benefits - Quantify Quiet Savings
Table 2 - Reference Paddle Like The Dickens, Quality Progress
Accountability
(Ownership and
empowerment)
Standardization
(scalability)
Capability
Management of
Change
Prevention
Manage Risk
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14. Quality Organization
Quality
Organization
OpEx
Ensure
Compliance
(20%)
Prevent issues
(70%)
Manage Crisis
(10%)
Minimal yet stable
headcount - Folks who
are required Up or Down
market situation
Train Domain experts in
Quality management
and dotted line to
Quality function.
Quality Coach - Who works
with cross functional Team
and have defect Reduction
targets (variable
headcount)
Prevention CostAppraisal Cost Failure Cost
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15. Value offering (3C)
● Contribute
○ Launch a highly scalable new product on time
○ Help meet product and service target profit margin
○ Address key customer needs and expectations
● Collaborate
○ Innovation
○ Speed - time to market
○ Integrate - Organizational learning
● Communicate
○ Top management
○ Key stakeholders
○ Industry, professional society
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16. Participant Interaction
● What is your economic case for Quality Management?
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17. References and bibliography
● The refreshed, third edition of QP’s Quality Glossary
● Paddle Like The Dickens, Quality Progress
● ASQ TR2: 2018 Cost of Quality: Guidelines for Development, Implementation and Monitoring to
improve quality and performance.
● ISO 10014:2006 Quality Management - Guidelines for realizing financial and economic benefits
● ISO 9001:2015 Quality Management System - Requirements
● ISO 9000:2015 Quality Management System - Fundamentals and Vocabulary
Acknowledgement:
Wes Richardson, Knowledge Manager, Quality Council of Indiana, IN
Jordan Freed, Business Unit Director, C4 Solutions, Curtiss-Wright, Ottawa, Canada
for review and suggestions.
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