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Good afternoon Sir

Please could ypou help me with the below

Explain what are the common problems encountered due to recent changes in outsourcing being done by industry ?

Who is an average worker Explain?

Explain how to get quality and how do we get quality and how do we keep it consistently and constantly

Explain what are the common problems encountered due to recent changes in outsourcing being done by industry ?


1. Take advantage of the cost-advantages!
Outsourcing to countries such as India can give you access to cost-effective services. The same services with the same level of quality are offered in India for a much lower cost! This cost-advantage has increased the number of services that are being offered to India.
2. See an increase in your business
Another benefit of outsourcing is seeing a big increase in your profits, productivity, level of quality, business value, business performance and much more. Outsourcing can help you see an increase in almost every aspect of your business.
3. Save Big!
One of the benefits of outsourcing is that you can save on every aspect of your business and increase your profits. When you outsource, you can save on time, effort, infrastructure and manpower. Since you don't have to invest in infrastructure, you can also save on making unnecessary fixed investments. Outsourcing removes the burden of changing or maintaining infrastructure. You can also save on capital expenditure. Outsourcing can also help you save on training costs, because you do not have to invest in manpower. These savings will help bring about an increase in your revenue. Your organization can also save on investing in expensive software and technologies.

4. Get access to specialized services
By outsourcing you can get expert and skilled services. This benefit of outsourcing has been the key reason why several outsourcers opt for outsourcing. The function that you outsource may not be your core competency but you can find an outsourcing partner who is specialized in that particular business process. Your outsourcing partner will be able to provide more proficient services. This is yet another benefit of outsourcing, because if you perform all your business processes in-house, you will not be able to provide specialized and skilled services. Outsourcing can give you this advantage.
5. Concentrate more on your core business
One of the benefits of outsourcing is that your organization will be free to concentrate on your core business. By outsourcing all your non-core functions, your employees can be put to better use and you will be able to see a huge growth in your core business.
6. Make faster deliveries to customers
Another benefit of outsourcing is that you can make quicker deliveries to customers. Your outsourcing partner will be able to provide faster deliverables and you in turn will be able to make quick deliveries to your customer. Faster deliveries can also help you save on time.
7. Improved customer satisfaction
With timely deliveries and high-quality services you can impress your customers. Outsourcing can help you benefit from increased customer satisfaction and your customers will remain loyal to your organization.
8. Benefit from time zone advantages
Outsourcing to countries such as India has a time zone advantage. Your night will be India's day. With this advantage, your outsourcing partner can complete critical work and send it to you the next day. Thus, your work is continued by your outsourcing partner even after your employees go home. This enables the work to be completed much faster and gives your business a competitive advantage. This is one of the benefits of offshore outsourcing.
9. Increased efficiency
Another benefit of outsourcing is increased efficiency. Your non-core business functions will be performed efficiently by your outsourcing partner, while your core functions can be efficiently carried out in-house. Thereby you can achieve overall efficiency and see an increase in your profits.
10. Give your business a competitive edge!
Outsourcing can help your organization gain a competitive edge in the market. You can also get access to specialized services for different business processes and thereby provide your customers with best-of breed services. Such strategic outsourcing can give your business a competitive edge among your peers. The benefits of outsourcing can give your organization a cutting-edge in the worldwide market. Outsource and take advantage of the benefits of outsourcing.
1. Reduce overheads, free up resources
2. Minimize capital expenditure
3. Eliminate investment in fixed infrastructure
4. Offload non-core functions
5. Redirect energy and personnel into the core business
6. Free your executive team from day-to-day process problems
7. Focus scarce resources on mission-critical projects
8. Get access to specialized skills
9. Reduce need for internal commitment of specialists
10. Save on manpower and training costs
11. Control operating costs
12. Improve efficiencies through economies of scale
13. Improve speed and service
14. Level out cyclical or seasonal fluctuations
15. Eliminate peak staffing problems
16. Provide the best quality services, products and people
17. Be reliable and innovative
18. Provide value-added services
19. Increase customer satisfaction
20. Establish long-term, strategic relationships with world-class service providers to gain a competitive edge
21. Enhance tactical and strategic advantages
22. Focus on strategic thinking, process reengineering and managing trading partner relationships
23. Benefit from the provider's expertise in solving problems for a variety of clients with similar requirements.
24. Obtain needed project management and implementation consulting expertise
25. Acquire access to best practices and proven methodologies
26. Spread your risks
27. Avoid the cost of chasing technology
28. Leverage the provider's extensive investments in technology, methodologies and people
29. Reduce the risk of technological obsolescence
30. Increase efficiency by consolidating and centralizing functions
31. Keep pace and minimize the impact of rapid changes in technology without changing your infrastructure
32. Reduce the overall management burden while retaining control of strategic decision making.

TO   deliver high performance and achieve benefits through:
•   Bottom-line performance improvements.
•   Increased efficiencies and best practices.
•   Improved operational excellence.
•   Better access and utilization of technology.
•   Ongoing access to deep knowledge and experience.
the 3 R's of outsourcing: Reasons, Risks and Rewards, specifically as they relate to information technology (IT). And, as a bonus, we'll provide some tips to help you manage successful relationships with your IT service providers (whether they are full-time staff, or outsourced).
The Reasons
, there are many reasons why companies outsource. Here are some of the top reasons:
1.   Reduce and control operating costs. When you outsource, you eliminate the costs associated with hiring an employee, such as management oversight, training, health insurance, employment taxes, retirement plans etc.
2.   Improve company focus. It is neither practical, nor possible to be a jack of all trades. Outsourcing lets you focus on your core competencies while another company focuses on theirs.
3.   Gain access to exceptional capabilities. Your return on investment is so much greater when you outsource information technology to a firm that specializes in the areas you need. Instead of just the knowledge of one person, you benefit from the collective experience of a team of IT professionals. Outsourced IT companies usually require their IT staff to have proper industry training and certifications as well.
4.   Free internal resources for other purposes. You may have someone in your office that is pretty good with computers or accounting, but most likely these were not the jobs he or she was hired to do. If they are spending time taking care of these things, who is doing what they were hired to do? Outsourcing allows you to retain employees for their highest and best use, rather than wasting their time on things that may take them longer than someone who is trained in these specific areas.
5.   Resources are not available internally. On the flip side, maybe you don't have anyone in your company who can manage your IT needs, and hiring a new employee is not in the budget. Outsourcing can be a feasible alternative, both for the interim and for the long-term.
6.   Maximize restructuring benefits. When you are restructuring your company to improve costs, quality, service, or speed, your non-core business functions may get pushed aside. They still need to be handled, however, and outsourcing is an optimal way to do this. Don't sabotage your restructuring efforts by failing to keep up with non-core needs.
7.   Function difficult to manage or out of control. This is definitely a scenario when outsourcing to experts can make a big difference. But don't make the mistake of thinking you can forget about the problem now that it's being "handled." You still need to be involved even after control is regained.
8.   Make capital funds available. By outsourcing non-core business functions, you can spend your capital funds on items that are directly related to your product or your customers.
9.   Reduce Risk. Keeping up with technology required to run your business is expensive and time consuming. Because professional outsourced IT providers work with multiple clients and need to keep up on industry best practices, they typically know what is right and what is not. This kind of knowledge and experience dramatically reduces your risk of implementing a costly wrong decision.
The Risks
Anytime you give someone else responsibility for an aspect of your business, whether a full-time new hire or an outside vendor, there is risk involved. Did I hire the right person/company to do the job? Will they do what they are supposed to do? How will they "fit" with existing employees or departments? These are the questions that nag owners of small businesses when handing over the reigns to a new employee or vendor.
outsourcing IT functions need to be aware of the following risks:
1.   Some IT functions are not easily outsourced. IT affects an entire organization; from the simple tasks employees do everyday to the complex automated aspects. Be sure the outside vendor are qualified to take care of your greatest needs.
2.   Control may be lost. Critics argue that an outside vendor will never be as effective as a full-time employee who is under the same management as other employees. Other concerns include confidentiality of data and disaster recovery. However, a supervisor that is knowledgeable in managing an IT staff member will usually be required.
3.   Employee morale may be affected. This is particularly true if you will be laying off employees to replace their job functions with an outsourced firm. Other employees may wonder if their job is at risk, too.
4.   You may get "locked in." If the vendor does not document their work on your network and system, or if you've had to purchase their proprietary software, you may feel like you can't go anywhere else or take back your network. Many outsourced companies require you to sign a year to year contract which limits flexibility.
Most of these risks can be avoided altogether if you know what to look for in a vendor and ask the right questions. Wondering how your current or prospective IT service provider stacks up?
The Rewards
there are many rewards you can expect when you outsource your company's IT functions as well:
1.   Access to the latest and greatest in technology. You may have noticed how rapidly software and hardware becomes obsolete in this industry. How is one staff person going to keep up-to-date with everything? Outsourcing gives you the benefit of having more than just one IT professional. And since it's the core competency of the company, they can give you sound advice to put your IT dollars to work for you.
2.   Cost savings. Outsourcing your IT services provides financial benefits such as leaner overhead, bulk purchasing and leasing options for hardware and software, and software licenses, as well as potential compliance with government regulations.
3.   High quality of staff. Since it's their core competency, outsourced IT vendors look to hire staff with specific qualifications and certifications. You may not know what to look for if you're hiring someone to be on staff full-time, so you may hire the wrong person for the job.
4.   Flexibility. Vendors have multiple resources available to them, while internal staff may have limited resources and capabilities.
5.   Job security and burnout reduction for regular employees. Using an outsourced IT company removes the burden from your staff who has taken on more than he or she was hired for because "someone needs to do it." You will establish a better relationship with your employees when you let them do what they do best and what they were hired to do.
Now that you have seen the risks and rewards associated with outsourcing the IT function of your business, there is a lot to think about. Whether you choose to outsource or hire internally, one thing is certain, you must know how to manage successful working relationships with your IT service providers. Let's face it, they're not always the easiest people in the world to understand and deal with, right? Here are some tips:
•   Clearly form and communicate the goals and objectives of your project or business relationship.
•   Have a strategic vision and plan for your project or relationship.
•   Select the right vendor or new hire through research and references.
•   Insist on a contract or plan that includes all the expectations of the relationship, especially the financial aspect.
•   Keep open communication with all affected individuals/groups.
•   Rally support and involvement from decision makers involved.


Who is an average worker Explain?

An adult full-time worker in the private sector whose wage earnings are equal to the average wage earnings of such workers. This definition includes manual and non-manual workers, supervisory workers as well as managerial workers. The private sector is defined as Sectors B-N inclusive (ISIC Revision 4) or previously as Sectors C-K inclusive (ISIC Revision 3), with reference to the International Standard Industrial Classification of A ll Economic Activities.

Labour costs
The average hourly labour cost in the EU-28 was estimated at EUR 24.60 in 2014 and at EUR 29.20 in the euro area (EA-18). However, this average masks significant differences between EU Member States, with hourly labour costs ranging between EUR 3.80 and EUR 40.30 (Figure 1).
Labour costs are made up of costs for wages and salaries plus non-wage costs such as employers’ social contributions. The share of non-wage costs for the whole economy was 24.4% in the EU-28, while it was 26.1 % in the euro area. The share of non-wage costs also varied substantially across EU Member States. The highest shares of non-wage costs for the whole economy were in France (33.1 %), Sweden (31.6 %), Italy (28.2 %), Lithuania (28.0 %), Belgium (27.8 %) and the Czech Republic (27.1 %). The lowest shares of non-wage costs for the whole economy were recorded for Malta (6.9 %), Denmark (13.1 %), Ireland (13.5 %), Luxembourg (13.6 %), Croatia (14.9 %) and Slovenia (15.7 %).
Gross wages / earnings
Median earnings
Gross earnings are the largest part of labour costs. Among EU Member States, the highest median gross hourly earnings in October 2010 were recorded in Denmark (EUR 25.00), followed by Ireland (EUR 18.30) and Luxembourg (EUR 17.80) — see Figure 2. The lowest were recorded in Bulgaria (EUR 1.50), Romania (EUR 2.00), Lithuania (EUR 2.70) and Latvia (EUR 2.90). The median gross hourly earnings of the EU Member State with the highest value was 16 times as high as the hourly earnings of the Member State with the lowest value when expressed in euros; when expressed in purchasing power standards (PPS) — which account for price level differences between countries — the ratio was 5 to 1.
Low-wage earners
Low-wage earners are defined as those employees earning two thirds or less of the national median gross hourly earnings in a particular country.
In 2010, 17.0 % of employees were low wage earners in the EU-27, whereas the proportion was 14.8 % in the euro area (EA-17). The countries with the highest proportions of low-wage earners were Latvia (27.8 %) and Lithuania (27.2 %), while Sweden (2.5 %), Finland (5.9%), France (6.1 %), Belgium (6.4 %) and Denmark (7.7 %) had the lowest proportions. Compared with 2006, the earliest reference year available for the same data collection, the share of low-wage earners remained relatively stable, having gone up 0.2 percentage points in the EU-27 and 0.4 percentage points in the euro area (Figure 3).
Between 2006 and 2010, the proportion of low-wage earners increased most notably in Malta (+3.9 percentage points) and Bulgaria (+3.1 percentage points) while the largest decreases were recorded in Portugal (-4.6 percentage points), Latvia (-3.1 percentage points), Greece (-2.9 percentage points), Hungary and Slovenia (both -2.1 percentage points).
Gender pay gap
Despite some convergence, there remains a substantial difference between the average earnings of men and women in the EU, a concept commonly known as the gender pay gap. In 2013, in the EU-28 as a whole, women were paid, on average, 16.4 % less than men. The smallest differences in average pay between the sexes were found in Slovenia, Malta, Poland, Italy, Croatia, Luxembourg, Romania and Belgium (less than 10.0 % difference). The biggest gender pay gaps were identified in Estonia (29.9 %), Austria (23.0 %), the Czech Republic (22.1 %) and Germany (21.6 %) — see Figure 4.
Various effects may contribute to these gender pay gaps, such as: differences in labour force participation rates, differences in the occupations and activities that tend to be male- or female-dominated, differences in the degrees to which men and women work on a part-time basis, as well as the attitudes of personnel departments within private and public bodies towards career development and unpaid and / or maternity leave. Some underlying factors that may, at least in part, explain gender pay gaps include sectoral and occupational segregation, education and training, awareness and transparency, as well as direct discrimination. Gender pay gaps also reflect other inequalities — in particular, women’s often disproportionate share of family responsibilities and associated difficulties of reconciling work with private life. Many women work part-time or under atypical contracts: although this permits them to remain in the labour market while managing family responsibilities, it can have a negative impact on their pay, career development, promotion prospects and pensions.
Net earnings and tax burden
Net earnings
Information on net earnings complements gross earnings data with respect to disposable earnings, in other words after the deduction of income taxes and employee’s social security contributions from the gross amounts and the addition of family allowances, in the case of households with children. Family allowances are cash transfers paid in respect of dependent children.
In 2014, the net earnings of a single person earning 100 % of the average earnings of a worker in the business economy, without children, ranged from EUR 3 899 in Bulgaria to EUR 38 254 in Luxembourg. The same two Member States recorded the lowest (EUR 4 328) and the highest (EUR 52 041) average net earnings respectively for a married couple with a single earner and two children (Table 1).
In the case when both parties of a married couple work (both earning an average worker’s earnings), Luxembourg recorded the highest annual net earnings, EUR 85 907 when the couple had two children and EUR 78 386 when the couple had no children; Bulgaria recorded the lowest net earnings EUR 7 797, irrespective of whether the couple had two children or not.
Tax wedge
Information relating to the tax wedge measures the burden of tax and social security contributions relative to labour cost. This information is provided in relation to low-wage earners. The tax wedge for the EU-28 was 39.0 % in 2013 (see Table 2). The highest tax burdens on low-wage earners in 2013 were recorded in Belgium, Hungary, France, Germany, Italy, Austria, Romania, Latvia and Sweden (all above 40.0 %). On the other hand, the lowest tax burdens for low-wage earners were recorded in Malta, Ireland and the United Kingdom (below 30.0 %) as well as in Cyprus (latest data from 2007).
Among the EU Member States, there was no distinct pattern with regard to the development of the tax wedge for low-wage earners over the period from 2005 to 2013 (see Table 2) — with the tax burden rising in 15 Member States, falling in 12; for Croatia this comparison is not available. The largest reductions were recorded in the Netherlands (-9.3 percentage points) and Sweden (-5.7 percentage points).
The other three indicators presented in Table 2 provide information on the proportion of gross earnings that is ‘taxed away’ (higher tax rates and social security contributions and / or reduction or loss of benefits) when people return to employment or move from lower to higher incomes. The overall proportion of income ‘taxed away’ when an unemployed person moved into employment increased (4.4 percentage points) in the EU-28 between 2005 and 2013. The biggest decreases were recorded in Lithuania (-16.3 percentage points) and Sweden (-15.8 percentage points) whereas Hungary and the Czech Republic recorded increases of 16.4 and 14.4 percentage points respectively.
The overall figures for the EU-28 show that there was an increase of 4.8 percentage points between 2005 and 2013 in the disincentive for low wage earners who were single with no children to seek higher incomes, as a higher proportion of their earnings would be ‘taxed away’, whereas for a single-earner married couple with two children there was an increase of 3.9 percentage points. By contrast, there were quite different developments among the Member States. The highest increase (44.1 percentage points) in the proportion of earnings that would be ‘taxed away’ for a single-earner married couple with two children was recorded in the Czech Republic whereas Portugal recorded a decrease of 45.4 percentage points.

Labour costs
Labour costs encompass employee compensation (including wages, salaries in cash and in kind, employers’ social security contributions),vocational training costs, and other expenditure (such as recruitment costs, expenditure on work clothes, and employment taxes regarded as labour costs minus any subsidies received).
Labour cost statistics constitute a hierarchical system of multi-annual, yearly and quarterly statistics, designed to provide a comprehensive and detailed picture of the level, structure and short-term development of labour costs in the different sectors of economic activity in the EU and certain other countries. All statistics are based on a harmonised definition of labour costs. The labour cost levels are based on the latest labour cost survey (currently 2012) and an extrapolation based on the quarterly labour cost index. The labour cost survey is a four-yearly survey that collects levels of labour costs at a very detailed level. For the purpose of extrapolating with the labour cost index, data are only used at an aggregated level. The quarterly labour cost index (a Euroindicator) measures the cost pressure arising from the labour production factor. The data covered in the labour cost index collection relate to total average hourly labour costs and to two labour cost categories: wages and salaries; employers’ social security contributions plus taxes paid minus subsidies received by the employer. Data are available for EU aggregates and EU Member States for an aggregate covering industry, construction and services (except public administration, defence, compulsory social security) as covered by NACE Rev. 2 Sections B to N and P to S (the information is also disaggregated by economic activity), in working day and seasonally adjusted form.
Explain how to get quality and how do we get quality and how do we keep it consistently and constantly

The word quality is often used indiscriminately for many different meanings. Quality can be defined as “fitness for use,” “customer satisfaction,” “doing things right the first time,” or “zero defects.” These definitions are acceptable because quality can refer to degrees of excellence. Webster’s dictionary defines quality as “an inherent characteristic, property or attribute.” QReview will define quality as a characteristic of a product or process that can be measured. Quality control is the science of keeping these characteristics or qualities within certain bounds.

In a manufacturing or service environment, there are two major categories of quality: quality of design and quality of conformance. A poorly designed product will not function properly regardless of how well it meets its specifications. Conversely, a product that does not conform to excellent design specifications will not properly perform its intended function.

1 Design Quality

Design quality refers to the level of characteristics that the designers specify for a product. High-grade materials, tight tolerances, special features and high performance are characteristics associated with the term, high quality product.

An example of design quality may be shown by the comparison between an expensive automobile and an economy model. A Ferrari and a Ford Escort are compared. Both cars will perform the same basic function of getting from point A to point B. Each will generally conform to its design specification. The owners in both cases may be satisfied with the way their cars are put together. However, that is where the similarity ends. The Escort owner does not expect his car to go 150 mph, have leather seats and have twelve coats of paint, or be highly responsive. The Ferrari owner expects these characteristics or qualities.

The cost of making a product will usually rise as more characteristics are specified to increase product performance, improve comfort, improve ease of use and make the product look better. High-grade materials usually command a premium price. However, in many cases, increased competition creates an atmosphere of finding ways to make better and less expensive designs. This is true for products such as computers, VCRs and televisions.

The reliability of a product must be considered in the design stage. Reliability is the probability that a product will perform its intended function, without failure, for a specified length of time. Reliability is dependent on the basic design, the quality of materials and the quality of components that go into the final product. To achieve the required reliability, designers may need to specify higher priced components. This may translate to higher prices but also higher value for the consumer.

Many products command a premium price because they provide value to the consumer. Others may be expensive because of their role as status symbols.  Expensive products do not always contribute to better product performance or customer satisfaction. This is particularly true in the software industry. Many low priced applications work just as well and sometimes better than expensive ones.

The designer may receive input from various sources when determining the level of design quality. In addition to the designer’s own ideas, input concerning product performance, materials to be used and various product characteristics may be received from management, marketing, sales, other engineering organizations or directly from customers. The final design specification may or may not be what the designer had in mind.

Although some quality engineers and other quality professionals get involved with product design, their time and effort is usually spent in designing and maintaining systems to measure and control process and product characteristics after the design is complete. A challenge to quality engineers is to implement the statistical techniques used in manufacturing during the design stage. The goals would be to enhance product design by eliminating problems early in the design process to ensure the ease of manufacturing.

2 Conformance Quality

After the level of design quality has been determined, the product characteristics are formed into drawings and specifications. The manufacturing engineers will use the drawings and specifications to develop manufacturing specifications and design the operations necessary to produce the product. This includes the floor layout, machinery, test sets, tools and other equipment. A plan for the number of employees required may also be included. The quality engineer works with the manufacturing engineer to make the quality system and maintenance of conformance quality an integral part of the manufacturing process. Any product checks, process checks or quality improvement activities should be an inherent part of the process. Conformance quality may be defined as the degree of adherence of the product characteristics to the design drawings and specifications. The objective of a quality program is to have a system that will measure and control the degree of product and process conformance in the most economical way.

The quality engineer will determine what product or process characteristics are to be checked. The quality engineer will also determine the type of data to be collected, the corrective actions required, and the statistical tools or other techniques to be used.


A quality system is a mechanism that coordinates and maintains the activities needed to ensure that the characteristics of products, processes or services are within certain bounds. A quality system involves every part of an organization that directly or indirectly affects these activities. Typically, the quality system is documented in a quality manual and in the associated documents that specify procedures and standards.

3.1 Basic Elements in a Quality System

There are three basic elements in a quality system: Quality Management, Quality Control, and Quality Assurance.

•         Quality Management: Quality management is the means of implementing and carrying out quality policy. They perform goal planning and manage quality control and quality assurance activities. Quality management is responsible for seeing that all quality goals and objectives are implemented and that corrective actions have been achieved. They periodically review the quality system to ensure effectiveness and to identify and review any deficiencies.

•         Quality Control: The term quality control describes a variety of activities. It encompasses all techniques and activities of an organization that continuously monitor and improve the conformance of products, processes or services to specifications. Quality control may also include the review of processes and specifications and make recommendations for their improvement. Quality control aims to eliminate causes of unsatisfactory performance by identifying and helping to eliminate or at least narrow the sources of variation. Quality control has the same meaning as variation control of product characteristics.
The objective of a quality control program is to define a system in which products meet design requirements and checks and feedback for corrective actions and process improvements. Quality control activities should also include the selecting and rating of suppliers to ensure that purchased products meet quality requirements.

•         Quality Assurance: The term quality assurance describes all the planned and systematic actions necessary to assure that a product or service will satisfy the specified requirements. Usually this takes the form of an independent final inspection. The distinction between quality control and quality assurance is stated in an ANSI/ASQ standard: “Quality control has to do with making quality what it should be, and quality assurance has to do with making sure quality is what it should be.” The quality assurance function should represent the customer and be independent of the quality control function, which is an integral part of the manufacturing operation.

3.2    The Quality Audit

A quality audit is an independent assessment comparing the various management and quality activities to a standard. The word independent implies that the person performing the audit is not associated with the activity being audited. There are two general types of audits: management and quality system audits and product specific audits.

The types of quality audits:

•         Management and Quality System Audit - Manufacturing
•         Management and Quality System Audit - Software
•         Management and Quality System Audit - Service
•         Product Specific Audit - Manufacturing
•         Product Specific Audit - Software
•         Activity Specific Audit - Service

Companies use first-party audits to evaluate their own performance. Second-party audits are conducted by a customer on a supplier. Audits conducted by completely separate companies, with no personal stake in the audited company, are labeled third- party audits. Auditors in a third-party audit are usually registrars that audit to international standards such as the ISO 9000 series.

A customer will usually combine a quality system audit with a product-specific audit. Third-party audits are usually reviews of the management and quality system and not product specific.

Quality audits assess that:

•         Quality plans and procedures are in place
•         Documents are controlled to avoid misuse
•         Standards and regulations are being followed
•         The data system provides accurate and adequate information
•         Problems are addressed and corrective action is taken
•         Products conform to requirements
Audits should be conducted on a scheduled basis. There should be no surprises to the organization being audited. This policy enables all those involved to organize their workloads and assign personnel to assist in the audit. The audit should not disrupt any processes or work being done.


4.1 The International Organization for Standardization (ISO)

The International Organization for Standardization (ISO) was founded in 1946 to develop a common set of manufacturing, trade, and communications standards. It is based in Geneva, Switzerland. ISO promotes standards to facilitate international trade. The American Standards Institute (ANSI) is the United States representative to ISO. ISO has a full time staff plus technical committees, subcommittees, working groups and ad hoc groups. ISO receives input from governments, industry and other interested parties. ISO develops and promotes but does not implement or enforce international standards.

Quality systems or quality programs in one form or another have existed since the beginning of factories. Companies developed and implemented a quality system that worked for them. Although there was an abundance of literature on quality system elements, quality tools and statistical techniques, a standard did not exist until 1987. In that year, an ISO technical committee developed and published the ISO 9000 series of standards that define the minimum requirements for an adequate quality system. The ISO 9000 series standards were revised in 1994 and 2000.

The ISO 9000:2000 series and the joint ANSI/ISO/ASQ Q9000-2000 series of standards are used as a tool to establish whether companies are using a quality system that will ensure their ability to meet product quality and service performance requirements. The ISO 9000 series and the ANSI/ISO/ASQ Q9000-2000 series of standards are technically identical.

The ISO 9000 series standards are intended to assure that a company has at least a minimum adequate management and quality system in place. These generic standards provide quality management guidance as well as quality assurance guidance and requirements that apply to all types and sizes of companies. An ISO registration does not necessarily mean that a company produces products that always meet their design intent. The ISO audit is an assessment of the management and quality system and does not address product issues. There are no standards for product quality in the ISO 9000 series standards.

Over eighty countries have adopted the ISO 9000 series as a national standard. All standards developed by ISO are voluntary. There are no legal requirements to adopt them. However countries and companies often adopt and attach legal requirements to ISO standards. Each member country has an accreditation board that adopts the ISO 9000 series standards and certifies independent registrars. The Registrar Accreditation Board (ANSI/RAB) is the USA-recognized accreditation board.

Registrars are third party companies that evaluate quality systems for conformity to ISO 9000 standards. The registrars conduct audits and issue certificates to organizations that conform to the standards. The audit will involve most departments and functions in an organization. The focus of the audits is on documentation, implementation and effectiveness. Organizations are certified by the registrars and not by ISO or an accreditation board. ISO-conforming companies are allowed to display the registrar’s mark on advertising and stationary as evidence of registration. Unfortunately, not all registrars are created equal so there may be significant differences in the way audits are conducted and findings assessed.

The ANSI/RAB sets standards and specifies training for registrars but does not maintain a list of registered companies. There are private companies that maintain lists with voluntary information provided by registrars.

4.2 The ISO 9000:2000 (ANSI/ISO/ASQ Q9000-2000) Series Standards

The ISO 9000 Standards Year 2000 Revision consists of:

ISO 9000: Quality management systems - Fundamentals and vocabulary
ISO 9001: Quality management systems - Requirements
ISO 9004: Quality management systems - Guidelines for performance improvements

ISO 9001 registration provides confidence to customers and potential customers that an adequate quality system is in place and that quality and service requirements will likely be met. An ISO auditor will gather preliminary information on the company to be audited and then determine if the company is actually doing what it has documented.

The ISO 9000 Standards have been aligned with ISO 14001:1996 the environmental management standard.

4.3 ISO 9001:2000

A brief outline of the management system requirements per ISO 9001:2000 are listed below. For a complete list of requirements, please refer to the standard.

Quality Management System

The organization shall establish, document, implement and maintain a quality management system and continually improve its effectiveness. The quality management system documentation shall include documented statements of a quality policy and quality objectives, a quality manual and records.

Documents required by the quality management system shall be controlled. Records are a special type of document and shall be established and maintained to provide evidence of conformity to requirements and of the effective operation of the quality management system. Records shall remain legible, readily identifiable and retrievable.

Management responsibility ()

Top management shall provide evidence of its commitment to the development and implementation of the quality management system and continually improving its effectiveness by communicating to the organization the importance of meeting customer as well as statutory and regulatory requirements. Management shall ensure that customer requirements are determined and are met with the aim of enhancing customer satisfaction. Management shall ensure that the quality policy is appropriate to the purpose of the organization, is reviewed for continuing suitability and is communicated and understood within the organization. Quality objectives, including those needed to meet product requirements are to be established for relevant functions and levels within the organization.

Top management shall appoint a member of management who, irrespective of other responsibilities, shall have responsibility and authority for the quality system

Resource management (

The organization shall determine and provide the resources needed to implement and maintain the quality management system and continually improve its effectiveness, and to enhance customer satisfaction by meeting customer requirements. The necessary competence for personnel performing work affecting product quality shall be determined and training provided or other actions taken to satisfy these needs.
Appropriate records of education, training, skills and experience shall be maintained.

The infrastructure needed to achieve conformity to product requirements shall be determined and established. Infrastructure includes, buildings, workspace, associated utilities, process equipment (both hardware and software), and supporting services.

Product realization

The organization shall plan and develop the processes needed for product realization. In planning product realization, quality objectives and requirements for the product shall be determined. Where product requirements are changed, the organization shall ensure that relevant documents are amended and that relevant personnel are made aware of the changed requirements. The design and development of product shall be controlled. The organization shall determine the design and development stages, the review, verification and validation that are appropriate to each stage, and the responsibilities and authorities involved. Systematic reviews of design and development shall be performed per planned arrangements.

The organization shall ensure that purchased product conforms to specified purchasing requirements. Suppliers shall be evaluated and selected based on their ability to supply product in accordance with the organization's requirements. Purchasing information shall describe the product to be purchased.

Where appropriate, product shall be identified by suitable means throughout product realization. Product status shall be identified with respect to monitoring and measurement requirements. Where traceability is a requirement, the organization shall control and record the unique identification of the product. Care of customer property shall be exercised while it is under the organization's control.

Where necessary to ensure valid results, measuring equipment shall be calibrated or verified at specified intervals, or prior to use, against measurement standards traceable to international or national measurement standards. Where no such standards exist, the basis used for calibration or verification shall be recorded;

Measurement, analysis and improvement (

The organization shall plan and implement the monitoring, measurement, analysis and improvement processes needed to demonstrate conformity of the product, to ensure conformity of the quality management system, and to continually improve the effectiveness of the quality management system. The organization shall conduct internal audits at planned intervals to determine whether the quality management system conforms to the planned arrangements.

The management responsible for the area being audited shall ensure that actions are taken without undue delay to eliminate detected nonconformities and their causes. Follow-up activities shall include the verification of the actions taken and the reporting of verification results. Suitable methods for monitoring and, where applicable, measurement of the quality management system processes shall be applied. These methods shall demonstrate the ability of the processes to achieve planned results. When planned results are not achieved, corrective action shall be taken to ensure conformity of the product. Product characteristics shall be monitored and measured to verify that product requirements have been met. Product which does not conform to product requirements is to be identified and controlled to prevent its unintended use or delivery. The controls and related responsibilities and authorities for dealing with nonconforming product shall be defined in a documented procedure.

Appropriate data shall be determined and collected to demonstrate the suitability and effectiveness of the quality management system and to evaluate where continual improvement of the quality management system can be made. The organization shall continually improve the effectiveness of the quality management system through the use of the quality policy, quality objectives, audit results, analysis of data, corrective and preventive actions and management review.

Action shall be taken to eliminate the cause of nonconformities in order to prevent recurrence. Corrective actions shall be appropriate for the nonconformities encountered.


5.1 Statistical Quality Control and Statistical Process Control

Statistical quality control (SQC) and statistical process control (SPC) are scientific methods for analyzing data and keeping the process within certain boundaries. Many statistical tools, such as control charts, Pareto analysis, design of experiments, regression analysis and acceptance sampling may be used. SQC methods can be applied to anything that is possible to express in the form of numbers. SQC is concerned with product characteristics and SPC is concerned with process characteristics.

The word statistical means having to do with numbers, or more specifically, with drawing conclusions from numbers. The word quality means much more than the goodness or defectiveness of the product. It refers to the qualities or characteristics of the product or process being studied. The word control means to keep something within boundaries or to regulate it so that its outcome may be predicted with some degree of accuracy. In a manufacturing operation, conformance quality characteristics are to be kept within certain bounds. Taken together, the words Statistical Quality Control or Statistical Process Control mean:     

Statistical - With the help of numbers or data,
Quality or Process - The characteristics of a product or process are studied,

Control - To make them behave the way they are intended to behave.

The most important element in statistical quality control is the feedback loop between the quality control function and the make operation. In statistical process control, the feedback loop is between the process control function and the device that regulates the process or the person responsible for adjustments. Continuous feedback and the appropriate corrective action drive statistical quality control and statistical process control to achieve the desired results. Both SQC and SPC seem to work best when the checks and feedback loops are automated and human intervention is minimized.

5.2 The Law of Large Numbers

The law of large numbers is a mathematical concept that says: Individual occurrences are unpredictable and group occurrences are predictable. The number of marriages, births and deaths in the United States next year can be predicted with some degree of accuracy, but exactly who will get married, who will be born or who will die cannot be predicted. This concept can be applied to a manufacturing process. For example, a statistical study can determine that products from a certain process are on average two percent defective. However, in any sample, the specific parts that will be defective cannot be predicted.

5.3  Central Limit Theorem

The central limit theorem states that a group of averages of sample size 4, 5 or 6 units always tends to follow the pattern of a normal distribution. If the population distribution leans to one side or the other, the distribution of sample averages from that population will tend to be symmetrical and have normal variation. The central limit theorem is what legitimizes the use of variables control charts regardless of the actual population distribution.

5.4  Data

Webster's dictionary defines the word data as a plural noun portraying factual information such as measurements or statistics used as a basis for reasoning, discussion, or calculation. Data are categorized in two ways: attribute data and variables data. Data classified as good/bad, pass/fail, go/no-go, etc., are called attribute or discrete data. When actual measurements are taken and recorded, the data are called variables or continuous data. In many cases (but not all cases), variables data will be distributed in a symmetrical bell-shaped curve called the normal curve. The known areas under the curve allow for inferences to be made about the process with relatively small amounts of information. By using the known areas under the curve, the fraction of measurements that will lie between, above, or below certain values can be predicted with a high degree of accuracy.

5.5  Distributions

Because of variation between measurements of individual parts, data when plotted will form a distribution. A distribution model describes how the data are dispersed. A plot of the distribution will show a center value and the range of measurements. The variation between data values will usually be quite small and follow a natural pattern. Large variation indicates that the pattern is unnatural. This may be attributed to external or assignable causes. When a pattern is unnatural, the cause should be investigated and eliminated. Statistical techniques such as control charts are used to identify the unnatural patterns. A plot of the actual data showing the data values versus the number of occurrences is called a histogram. A mathematical estimate of the shape of the histogram is called a frequency distribution. Distributions are formed because everything in the world that can be measured exhibits variation. If the measuring instrument is very precise, it will be discovered that like the snowflake, no two measurements are exactly the same.
5.6  Precision and Accuracy

In addition to the objects that are measured, the measuring instrument itself has variability. Two different instruments may measure the same parts and yield different results. In many cases, measuring parts a second time with the same instruments will give a different result. A low value of the instrument’s standard deviation indicates greater precision. When an instrument is accurate but not precise, the measurements are distributed about the true value within the acceptable range. When an instrument is precise but not accurate, the measurements are clustered close together but at a distance from the true value. When an instrument is both accurate and precise, the data are clustered close together around the true value.

5.7    Statistical Techniques

Many statistical techniques are used in quality control and inspection. Listed below are the most widely used statistical methods.

•         Histograms
•         Acceptance Sampling
•         Statistical Inference
•         Process Capability Analysis
•         Hypothesis Testing
•         Reliability
•         Decision Errors
•         Regression & Correlation
•         Statistical Process Control
•         Design of Experiments
•         Control Charts
•         Pareto Analysis

Basic probability is the foundation of statistical methods. Its importance cannot be understated. To really understand statistical methods, an understanding of probability concepts is essential.

It must be stressed that the application of statistical techniques alone will not fix any problems or improve product or process quality. Statistical techniques are tools to identify problems and provide data for decisions. For problems to be fixed or improvements to be made, some action must be taken. The action may be automated or conducted by humans, but nevertheless, action must be taken. Automated actions work best in manufacturing situations.
the essential elements of the various statistical techniques. QReview presents the material from an engineering point of view and assumes that the student has some previous background in statistical concepts and methodology. Mathematical derivations and in-depth explanations are not included. These are tasks for textbooks on mathematical statistics. The subject of metrology and calibration is covered in chapter twelve.


Human factors focuses on human beings and how they interact with equipment, products, environments, other people and day to day activities. The goal of human factors in a company is to match the workplace and management approach to the capabilities, needs and limitations of people. The part of human factors addressing human and machine interactions is called ergonomics.
The first thrust of human factors was to study the workplace and design the environment and machinery to better accommodate the person doing the job. This goal has been expanded to include the way management manages and the involvement of employees in the decision making process.

In the 1930s, a study was conducted at Western Electric’s Hawthorne Works in Chicago, Illinois. Employees complained of bad lighting in an assembly area. New lighting was installed that brightened the area. The employees seemed to be much happier and as expected, productivity increased. It was decided to increase the light intensity and measure productivity. As the intensity increased, productivity increased. The first assumption was that brighter lights contribute to employee morale and higher productivity. One day the lights were dimmed; however, productivity did not drop. Productivity kept increasing as the light intensity decreased. The study team concluded that it was not the lighting that contributed to increased productivity, but the mere fact that somebody was paying attention to them. This study is called the Hawthorne study and the conclusion is referred to as the Hawthorne effect.

In an authoritarian company, the boss gives orders and the employees carry them out. In these situations, employees often complain about job satisfaction. In recent years, some companies are shedding the boss-worker image by allowing managers to assume the responsibility of coach. Workers are referred to as production associates. The coach’s job is to coordinate the work and motivate employees. The employees, whether they are engineers or production associates, become part of the team, not just someone who carries out orders. This approach yields significant rewards for the company and the employee. Company objectives and tasks are carried out in an efficient manner and the employee, by making a contribution, feels good about a job well done.

Human conflict can be minimized but never eliminated. There may be times when engineering decisions are overruled or employee suggestions not adopted. In these cases, the findings should be documented for possible review at a later date, then the engineer or employee can move on to the next assignment. In any conflict, whether it is between management and employees, between management and unions, or between employees, good judgement must be used.

Juran and Deming agree that the majority of problems arise from flaws in the system and not because of employee motivation or employee errors. Deming has stated that 80% of problems are management or system related. When the system is the problem, the output will not meet specifications regardless of employee effort. The outcome is substandard products and employee dissatisfaction. The situation is changing as management approaches are changing. In many companies, management and system problems are being addressed and the outcome is very positive. Management is investing in new equipment, advanced employee training and respect for employee judgement. This results in employee satisfaction, high quality products and increased productivity.

In recent years, computers have changed the way people work. The computer has become an indispensable tool. Former mundane tasks are easier to accomplish and in some cases even fun. In addition to increasing productivity at the workplace, computers and the computer industry have made a significant impact in all areas of human activity.


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