1

Quality Management
and
Japanese Operations
Managements
 2

– Quality Management
– Philosophical Elements of Quality
Management
– Quality specification and Quality Costs
– Statistical Quality Control
– Process Control
– Features of Japanese Operations
Managements
– Stabilizing Schedule
– Elimination of Waste
– Acceptance Sampling ISO 9000
 3
Introduction and Background
Quality is a key business driver. While quality and
quality management have been around for a long
time, it is only since the rise of Japanese
Companies such as Toyota, Honda, Sony and
others in consumer markets that people have
begun to realize the importance of quality in the
production and delivery of goods and services. In
Newzealand, after the economic deregulation of
1984, leading companies started putting emphasis
on improving the quality of their goods and
services as the basis of ensuring their survival.
Similarly In Australia, during the 1980s and
subsequently, managers in most industries have
been attempting to improve the quality of all their
process and their goods and services. This has also
been the experience in many other countries.
 4
Quality management
As we know the field of operations management is
replete with acronyms. The field of quality management
has also contributed its share of acronyms. In its early
days people used the term “Quality Control”(QC).
This term reflected the fact that the approach to quality
at that time was all to do with control and typically
companies employed a group of people called quality
inspectors who came along as the product was about
to go to the customer, and they decided whether or not
the product met the customer’s specification. The term
“QC” also reflected the origins of quality management
in a manufacturing environment. It included a lot of
inspection and rework as needed, and also some good
works on building quality into the organization’s
operational processes, in order to reduce errors.
 5

Contd…..
When people realized the importance of services in the
economies of the developed countries, quality
assurance (QA) was developed to describe all the
processes and procedures that organizations used
to ensure that their products and services did meet
customers’ specifications or provided consumers
with goods and services of appropriate quality. Since
the 1970s the term total quality management(TQM)
has been adopted. Fundamentally, TQM implies that
of quality is not solely a control or technical issue but
quality must be addressed from the perspective of
strategic management and the top levels in the
organization. In leading companies, it has been a
company-wide approach and initiative.
 6

Defining Quality

The totality of features and

characteristics of a product or service
that bears on its ability to satisfy
stated or implied needs
American Society for Quality
 7

Different Views
 User-based – better performance, more
features
 Manufacturing-based – conformance to
standards, making it right the first time
 Product-based – specific and
measurable attributes of the product
 8

implications of Quality
1. Company reputation
 Perception of new products
 Employment practices
 Supplier relations
2. Product liability
 Reduce risk
3. Global implications
 Improved ability to compete
 9
Total Quality Management (TQM)
A holistic approach to long-term
success that views continuous
improvement in all aspects of an
organization as a process and not
as a short-term goal. It aims to
radically transform the
organization through progressive
changes in the attitudes, practices,
structures, and systems.
 10

Total Quality Management

Total quality management exceed the product quality
approach, involves everyone in the organization, and
encompasses its every function: administration,
communications, distribution, manufacturing, marketing,
planning, training, etc. Coined by the US Naval Air Systems
Command in early 1980s, this term has now taken on
several meanings and includes
 commitment and direct involvement of highest-level
executives in setting quality goals and policies, allocation of
resources, and monitoring of results
 realization that transforming an organization means
fundamental changes in basic beliefs and practices and that
this transformation is everyone's job
 building quality into products and practices right from the
beginning
 11
Total Quality Management
 understanding of the changing needs of the internal
and external customers, and stakeholders, and
satisfying them in a cost effective manner
 instituting leadership in place of mere supervision
so that every individual performs in the best
possible manner to improve quality and
productivity, thereby continually reducing total cost
 eliminating barriers between people and
departments so that they work as teams to achieve
common objectives
 instituting flexible programs for training and
education, and providing meaningful measures of
performance that guide the self-improvement
efforts of everyone involved.
 12
Philosophical Elements of TQM
The philosophical elements of the TQM stress the operation of
the firm using quality as the integrating element.
 Customer driven quality
 Leadership
 Continuous improvement
 Employee participation and development
 Quality control circles

Customer driven quality:

In TQM satisfying the customer’s need s and expectations is the
main factor. Therefore, it is imperative for a company to
identify such needs early in the product/services
development cycle. The ability to define accurately the needs
related to design, performance, price, safety, delivery and
other business activities and processes will place a firm
ahead of its competitors in the market.
 13
Leadership
Adopting and instituting leadership aims at helping people to
better job. The responsibility of the managers and supervisors
must be changed from producing mere numbers to quality. This
will automatically improve the productivity. The managements
must be ensured that immediate action is taken on reports of
inherited defects, maintenance requirements, poor tools,
particular operational definitions and other conditions are
harmful to quality.
Continuous improvement
Quality can be continually improved, it is not a static thing it is very
dynamic thing. Constantly improve every process for planning,
production and service. Search for the problems always in
order to improve every activity in the company, better quality,
increase productivity and decrease costs. It is a management’s
job to work continually on the system (design, incoming
materials, maintenance, improvement of machines, training,
supervision retraining etc.)
 14
Employee participation and development
Quality betterment is not possible with out the employee
participation. Employees are the internal customer, and every
employee should be taken as the ‘Quality Worker’. To locate
and identify the process faults in order to control the scrape
and waste.
The employee should be regularly updated and trained for
the emerging quality processes and standard.
Quality control circles
A quality circle is a small group(6-12) of staff working together
to contribute to the improvement of the enterprise, to respect
humanity and to build a cheerful workgroup through the
development of the staff’s infinite potential.
A quality control circle (QCC) team of people usually coming
from the same work area who voluntarily meet on a regular
basis to identify, investigate, analyze and solve their work-
related problems.
 15
Quality Specification
 Performance
 Features
 Reliability
 Conformance
 Durability
 Serviceability
 Aesthetics
 Perceived quality
 Value
 16

Cost of Quality
Cost of quality refer to the cost expended by
organization in managing current level of quality
(or lack of quality) and in seeking to improve that
level of quality. Cost of quality are those cost
incurred by an organization in preventing non-
conforming product and services, in evaluating
processes, product and services; and cost
associated with failure to confirm with
requirement. As per ISO 8402, Quality related
costs are those costs incurred in ensuring and
assuring satisfactory quality, as well as the
losses incurred when satisfactory quality is not
achieved.
 17
Contd….
Up to late 60s quality costs are analyzed under
the head of overheads. However in the
present circumstances, quality related costs
are much larger, approximately 20-30% of
total sales revenue. Hence, it is considered
separately. Quality losses are the inherent
aspects of the most products and services,
most industry offer. Any reduction in quality
cost is a direct profit. There is a huge potential
to increase profit, so for the productivity by
monitoring, evaluating and controlling quality
related costs.
 18

Types of Quality Cost

Quality cost can be categorized
into four types i.e. all the causes
responsible for providing poor
quality are grouped in to four
categories
Cost of Preventive
Cost of Appraisal
Cost of Internal Failure
Cost of External Failure
 19

Cost of Preventive
Cost of any activity which is needed to be carried out
of preventing faults in the product/services is called
prevention cost. It is the money part that is spent to
ensure whether the things are performed correctly at
the first time. Do the things right first time is an
essential slogan to keep the failure at minimum
level. Prevention cost includes:
 Pre production quality control
 Vendor quality control
 Inspection and test planning
 Design and development of inspection and test
equipment
 Quality control
 Quality system audit
 20
Cost of Appraisal
Appraisal activities determine conformance of a product or
service. Those include such activity as tests, inspections,
verifications and checks to identify failure or errors. Appraisal
activities do not include rework and re-inspection activities
following failure.
Appraisal costs may include the following costs:
 Cost of incoming inspection and tests to evaluate the quality
of purchased part/subassemblies/raw materials
 Cost of in process inspection and tests to carry out evaluation
of conformance to requirement(during manufacturing)
 Cost of final inspection and test to evaluate conformance to
requirement for product acceptance
 Cost of audit performed on process of finished goods
 Cost of inspection of test material and services
 Cost of evaluation of stocks includes cost of storing the
tested items in the field
 21
Cost of Internal Failure
Failure activities are those activities related to
correcting, reworking or disposing of errors.
Errors prior to sale /delivery to a customer
are internal failure. They are as follows
 Scrape, rework
 Trouble shooting
 Analysis of deflects and failures
 Re inspection and re test
 Loss of production due to defective supplied
material
 Modification permits in process sheets and also
in design
 22
Cost of Internal Failure
Failure activities are those activities related to
correcting, reworking or disposing of errors.
Errors after sale /delivery to a customer are
external failure. They are as follows
 Management complaints
 Product or customer service
 Product returns
 Product liability product recalls and product
replacement
 Marketing errors
 23
International Quality Standards
Quality is so important globally that the world is uniting
around a single quality standard, ISO 9000. ISO 9000
is the only quality standard with international
recognition. In 1987, 91 member nation (including the
U.S.) published a series of quality assurance
standards, known collectively as ISO 9000. The U.S.,
through the American National Standards Institute,
has adopted the ISO series as the ANSI/ASQ Q9000
series. The focus of the standards is to establish
quality management procedures, through leadership,
detailed documentation, work instruction, and
recordkeeping. These procedures, we should note,
say nothing about the actual quality of the product-
they deal entirely with standards to be followed.
 24

To become ISO 9000 certified,

organizations go through a 9- to 18
month process that involves
documenting quality procedures, an on-
site assessment, and an ongoing series
of audits of their products or services. To
do business globally- and especially in
Europe- being listed in the ISO directory
is critical. As of 2007, there were well
over 6,00,000 certifications awarded to
firm in 158 countries. About 50,000 U.S.
firms are ISO 9000 certified.
 25

ISO revised its standards in 2000 into

more of quality management
system, which is detailed in its ISO
9001:2000 component. Leadership
by top management and customer
requirements and satisfaction play a
much larger role, while documented
procedures receive less emphasis
under ISO 9001:2000.
 26
ISO 14000
The continuing internationalization of quality is evident
with the development of ISO 14000. ISO 14000 is an
environmental management standard that contains
five core elements:(1) environmental management,
(2) auditing, (3) performance evaluation, (4) labeling,
and (5) life cycle assessment. The new standard
could have several advantages:
 Positive public image and reduced exposure to
liability.
 Good systematic approach to pollution prevention
through the minimization of ecological impact of
products and activities.
 Compliance with regulatory requirements and
opportunities for competitive advantage.
 Reduction in needed for multiple audits.
 27
Statistical Quality Control
Statistical quality control (SQC) is the term
used to describe the set of statistical tools
used by quality professionals.

History
 SQC was pioneered by Walter A. Shewhart
at Bell Laboratories in the early 1920s.
 Shewhart developed the control chart in 1924 and
the concept of a state of statistical control.
 Shewhart consulted with Colonel Leslie E. Simon in
the application of control charts to weapons
manufacture at the Army's Picatinney weapon store
in 1934.
History
28

 W. Edwards Deming invited Shewhart to speak

at the Graduate School of the U.S. Department
of Agriculture, and served as the editor of
Shewhart's book Statistical Method from the Viewpoint of
Quality Control (1939) which was the result of that
lecture.

 Deming was an important architect of the

quality control short courses that
trained American industry in
the new techniques.
 29
Deming’s Fourteen Points
1. Create consistency of purpose
2. Lead to promote change
3. Build quality into the product;
stop depending on inspection
4. Build long-term relationships
based on performance, not price
5. Continuously improve product,
quality, and service
6. Start training
7. Emphasize leadership
 30
Deming’s Fourteen Points
8. Drive out fear
9. Break down barriers between
departments
10. Stop haranguing workers
11. Support, help, improve
12. Remove barriers to pride in work
13. Institute a vigorous program of
education and self-improvement
14. Put everybody in the company to
work on the transformation
 31
Objectives of Statistical Quality Control(SQC)
The main objectives of SQC are as follows:
To maintain the quality of manufactured products
by using the necessary steps.
To better use of available raw materials.
To locate and identify the process faults in order to
control the scrap and waste.
To make adjustments in the process in the case of
heavy rejections.
For the better co-ordination of specification and
standards.
To achieve a better quality and consistency of
quality
For the use of standards of statistical tools.
 32

CHARACTERISTICS OF S.Q.C.-:
 Designed to control quality standard of goods produced
for marketing.

 Exercise by the producers during production to assess

the quality of goods.

 Carried out with the help of certain statistical tools like

Mean Chart, Range Chart, P-Chart, C-Chart etc.

 Designed to determine the variations in quality of the

goods & limits of tolerance.
 33
CAUSES OF VARIATIONS IN QUALITY-:
1. ASSIGNABLE CAUSES-: It refers to those
changes in the quality of the products which
can be assigned or attributed to any particular
causes like defective materials, defective
labor, etc.
2. CHANCE CAUSES-: These causes take
place as per chance or in a random fashion as
a result of the cumulative effect of a
multiplicity of several minor causes which
cannot be identified. These causes are
inherent in every type of production.
 34
METHODS OF S.Q.C.-:
PROCESS CONTROL-: Under this the
quality of the products is controlled while
the products are in the process of
production.
The process control is secured with the
technique of control charts. Control charts
are also used in the field of advertising,
packing etc. They ensures that whether the
products confirm to the specified quality
standard or not.
 35
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 36
PURPOSE & USES OF CONTROL CHARTS
1. Helps in determining the quality standard of
the products.
2. Helps in detecting the chance & assignable
variations in the quality standards by setting
two control limits.
3. Reveals variations in the quality standards
of the products from the desired level.
4. Indicates whether the production process is
in control or not.
5. Ensures less inspection cost & time in the
process control.
 37
Types-:
Types of
Control
Charts

Control
Control
Charts
Charts for
for Attributes
Variables

np-
 Chart R-Chart σ-Chart p-Chart C-Chart
Chart
 38
CONTROL CHATS FOR VARIABLES
  CHART/ MEAN CHART-: This
chart is constructed for controlling
the variations in the average quality
standard of the products in a
production process.

 R-CHART-: This chart is constructed

for controlling the variations in the
dispersion or variability of the
quality standards of the products in
a production process.
 39

EXAMPLE-:

Sample No. Weights

1 20 15 10 11 14
2 21 18 10 8 22
3 21 19 17 10 13
4 22 12 19 14 20
5 20 19 26 12 23

Conversion factors for n=5, A2 =0.577, D3 =0,

D4=2.115
 40

Solution-:
Sample Weights (X) Total  Range
no. Weights =(ΣX/5) R=(L-
(ΣX) S)

1 20 15 10 11 14 70 14 10
2 21 18 10 8 22 70 14 14
3 21 19 17 10 13 80 16 11
4 22 12 19 14 20 80 16 8
5 20 19 26 12 23 100 20 14

K=5 Σ  =80 ΣR=57

 41
Grand = Σ/K = 80/5=16

Grand Chart
Grand = 16 (Central line)

Control limits-:

UCL = Grand + A2 
= 16 + 0.577 x 11.4
= 22.577

LCL = Grand - A2 
= 16 – 0.577 x 11.4
= 9.423
 42

 = ΣR/K = 57/5 = 11.4

Range Chart
 = 11.4 (Central line)

Control limits-:
UCL = D4. 
= 2.115 x 11.4
= 24.09

LCL = D3. 
= 0 x 11.4
=0
 σ Chart-: This chart is constructed to get a 43

better picture of the variations in the quality

standard in a process than that is obtained from
the range chart provided the standard
deviation(σ) of the various samples are readily
available.
Example-: Quality control is maintained in a factory with the
help of standard deviation chart. Ten items are chosen in every
sample. 18 samples in all were chosen whose ΣS was 8.28.
Determine the three sigma limits of σ- chart. You may use the
following-:
n = 10, B3 = 0.28, B4 = 1.72, K = 18.

Solution-:  = ΣS/K = 8.28/18 = 0.46

UCL = B4.  LCL = B3. 
= 1.72 x 0.46 = 0.28 x 0.46
= 0.7912 = 0.1288
 44
Control Charts for Attributes-:
 p-chart-: This chart is constructed for
controlling the quality standard in the average
fraction defective of the products in a process
when the observed sample items are classified
into defectives & non-defectives.
 np-chart-: This chart is constructed for
controlling the quality standard of attributes in a
process where the sample size is equal & it is
required to plot the no. of defectives (np) in
samples instead of fraction defectives (p).
 45

Example-:
Sample No. Size of sample No. of Fraction
(n) defectives (d) defectives
(d/n)
1 100 5 0.05
2 100 3 0.03
3 100 3 0.03
4 100 6 0.06
5 100 5 0.05
6 100 6 0.06
7 100 8 0.08
8 100 10 0.1
9 100 10 0.1
10 100 4 0.04
K = 10 Σd = 60
 46

 = Total no. of defectives/Total no. of units

= 60/1000 = 0.06
»q̅ = 1-  = 1- 0.06 = 0.94

 = 0.06 (central line)

UCL =  + 3√ . q̅/n
= 0.06 + 3√0.06x0.94/100
= 0.1311
LCL =  - 3 √ . q̅/n
= 0.06 - 3 √ 0.06x0.94/100
= -0.0111 = 0
47
 48
Example-:
An inspection of 10 samples of size 400 each from 10 lots
reveal the following number of defectives:
17, 15, 14, 26, 9, 4, 19, 12, 9, 15
Calculate control limits for the no. of defective units.

Solution-: n = 400, k (No. of samples) = 10, Σd (total no. of

defectives) = 140

n = Σd/k = 140/10 = 14

Now,  = n/n = 14/400 = 0.035,

»q̅ = 1-  = 1- 0.035 = 0.965

n = 14 (central line)

UCL= n + 3√ n q̅ LCL= n - 3√ n q
̅ = 14 + 3√400x0.035x0.965 = 14 -
3√400x0.035x0.965
= 25.025 = 2.975
49
 50

 C-Chart-: This chart is used for

the control of no. of defects per
unit say a piece of
cloth/glass/paper/bottle which
may contain more than one
defect. The inspection unit in
this chart will be a single unit of
product. The probability of
occurrence of each defect tends
to remain very small.
 51
USES-:
The following are the field of application
of C-Chart-:
 Number of defects of all kinds of

aircraft final assembly.

 Number of defects counted in a roll of

coated paper, sheet of photographic

film, bale of cloth etc.
 52

ACCEPTANCE SAMPLING
Meaning-:
Another major area of S.Q.C. is “Product
Control” or “Acceptance Sampling”. It
is concerned with the inspection of
manufactured products. The items are
inspected to know whether to accept a
lot of items conforming to standards of
quality or reject a lot as non-
conforming.
 53
DEFINATION-:
“ Acceptance Sampling is concerned with the decision
to accept a mass of manufactured items as
conforming to standards of quality or to reject the
mass as non-conforming to quality. The decision is
reached through sampling.”

By-:
SIMPSON AND KAFKA
 54
Risks in Acceptance sampling
1. Producer’s risk-: Sometimes in spite of
good quality, the sample taken may show
defective units as such the lot will be
rejected, such type of risk is known as
producer’s risk.

2. Consumer’s Risk-: Sometimes the quality

of the lot is not good but the sample results
show good quality units as such the
consumer has to accept a defective lot, such
a risk is known as consumer’s risk.
 55
Types of Sampling Inspection
Plan
Single Sampling Plan-: Under single
sampling plan, a sample of ‘n’ items is
first chosen at random from a lot of N
items. If the sample contains, say, ‘c’
or few defectives, the lot is accepted,
while if it contains more than ‘c’
defectives, the lot is rejected (‘c’ is
known as ‘acceptance number’).
 56

Single Sampling Plan

Count the no. of defectives,
‘d’ in the sample of size ‘n’

Is ‘d’ ≤ ‘c’

If yes, than accept the lot If no, then reject the lot
 57
Double Sampling Plan-:
Under this sampling plan, a sample of ‘n 1’ items is
first chosen at random from the lot of size ‘N’. If
the sample contains, say, ‘c1’ or few defectives,
the lot is accepted; if it contains more than ‘c 2’
defectives, the lot is rejected. If however, the
number of defectives in the sample exceeds ‘c 1’,
but is not more than ‘c2’, a second sample of ‘n2’
items is take from the same lot. If now, the total
no. of defectives in the two samples together
does not exceed ‘c2’, the lot is accepted;
otherwise it is rejected. (‘c1’ is known as
acceptance no. for the first sample & ‘c 2’ is the
acceptance no. of both the samples taken
together)
 58
Double Sampling Plan-:
Count the no. of defectives,
d1in the first sample of size
n1

Is d1 ≤ c1 ?

If yes, accept the

lot
If No, then check
If c1 ≤ d1 ≥ c2 ?

Draw another sample

of size n2

Count the no. of defectives d2

in this sample

Is d1 + d2 ≤ c2

If yes, then accept

If No, reject the lot
the lot.
 59

Multiple Sampling Plan-:

Under this sampling plan, a decision to
accept or reject a lot is taken after
inspecting more than two samples of
small size each. In this plan, units are
examined one at a time & after
examining each unit decision is taken.
“However, such plan are very
complicated & hence rarely used in
practice.”
 60

ADVANTAGES OF S.Q.C.-:
 Helpful in controlling quality of a product
 Eliminate Assignable causes of variation

 Better quality at lower inspection cost

 Useful to both consumers & producers

 It makes workers quality conscious

 Helps in earn goodwill

 61

LIMITATIONS-:
 Does not serve as a ‘PANACEA’ for all
quality evils.
 It cannot be used to all production process.

 It involves mathematical & statistical

problems in the process of analysis &

interpretation of variations in quality.
 Provides only an information services.
 62
Features of Japanese operations Management
Having the lost the war in 1945, Japan had to restart
the development process from the scrape. It is really
amazing that a country where infrastructures were
demolished, economic environment suppressed
today stands as one of the super economic powers
of the world.
The Japan of today is because of the efforts of
Japanese people who were smart enough to adopt
the foreign technology and management philosophy.
However, what make them stand out is their ability
to develop, suitable technological and management
system that can be effectively and efficiently applied
for the development of the country.
 63

Contd….
Japanese Management practices specially focuses on two
area.
 People-oriented
 Work-oriented

Features of Japanese Operations Management

People oriented
Work oriented

It explains that Japanese operations management are

more concerned on interaction between management
and employee, rather than on manufacturing methods.
 64
Contd….
Although the original concepts of operations management
was developed in united states, Japanese had their own
industrial concept. In the table below, one analyzes the
difference between American & Japanese operation
management.
Characteristics American Japanese
1. Duration of employment Short-term Life long
2. Evaluation of promotion Rapid Slow
3. Career path Rapid Slow
4. Mechanism of control Explicit Implicit
5. Decision & implementation Individualistic, quick Collective, slow decision,
decision, slow quick implementation
implementation
6. Accountability & responsibility Individualistic Collective
7. Employee concern Individualistic Holistic
8. Government approach Regulatory Supportive
 65
Elimination of Waste & Adding Value
JIT is a production system whereby inputs are delivered to the
production process just as they are needed. The benefit is
that this eliminates costly inventory activities. More important
is that whenever there is quality problem, the whole
production line is stopped until that problem is rectified. This
enforces the whole plant to focus on solving the problem.
Moreover, little rework is required as the buffer stock in a JIT
production system is minimal.
JIT requires a great deal of organizational discipline. As in the
case of MRP, JIT requires not only changes in the way a
company handles its inventory but also changes in its culture.
JIT applies to all functions of a company, not just operations.
Definition of JIT
JIT is a manufacturing system whose goal is to optimize processes
and procedures by continuously pursuing waste reduction.
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Shigeo Shingo, identified Seven Waste
as being the targets of continuous
improvement in production processes by
attacking to these wastages improvement
is achieved. Seven Wastes are as
follows:
 Waste of overproduction
 Waste of waiting
 Waste of transportation
 Waste of processing itself
 Waste of stocks
 Waste of motion

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Techniques for elimination of waste
In order to eliminate the above waste
following seven elements are introduced.
They are as follows
Focus on the factory network
Quality in the source
Group technology
JIT production
Uniform plant loading
Kanban production control (instruction card or
sign)
Minimization of set up time
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Stabilizing Schedule
Just-in-time philosophy developed at Toyota in Japan
emphasizing manufacturing and delivery of small lot
size when needed by a customer is possible upon the
availability of state schedule over a time horizon. Any
firm practicing JIT requires it. Stabilizing schedule
over a time horizon can be accomplished by level
scheduling, freeze windows, and underutilization of
capacity.
Level scheduling refers to requirement of materials to
be pulled into final assembly in a uniform pattern by
allowing the various production elements respond to
pull signals. This is possible only when production
system is well equipped with flexible setups and
response of fixed amount of materials in the pipeline
during assembly.
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freeze windows refers to not allowing the changes in
schedule once schedule is fixed for a particular
period of time for production. This will facilitate in
stabilizing the scheduling by accounting
components and parts in a pull system thereby
eliminating shop-floor data collection activity.
Underutilization of capacity refers to a firm not
utilizing its full production capacity taking into
consideration of delivery of product or services to
customers when they need. If a firm starts
addressing excess demand of customers the
scheduling part becomes unstable which will
ultimately make both tangible as well as intangible
losses to a company