Quality Control Charts

A measure of quality for processes or for products

What are Quality Control Charts?

Quality control charts depict measures of quality for processes or for products. They show the deviation, if any, from the set, ideal standards or specifications for a product or a process.


Quality Control Charts



  • Quality control charts depict measures of quality for processes or for products. They show the deviation, if any, from the set, ideal standards, or specifications.
  • The charts are useful for ensuring smooth operational processes and uniform quality product levels.
  • While quality control is most often thought of in the context of product manufacturing, it can be applied to many other processes as well.


The Importance of Quality Control

Quality control is an extremely important activity for any business that is engaged in manufacturing products. If a company’s products are produced with uneven quality, it can negatively impact the company’s sales.

For example, consider a company that makes and sells bottled beverages. Now think about what might happen if a production machine that affixes the caps to the bottles gets a little bit out of whack, so that it begins affixing approximately one-third of the bottle caps in such a way that it becomes nearly impossible, or at least extremely difficult, for consumers to remove the cap from the bottle. It doesn’t take too many instances of an occurrence such as that before the company begins to lose a lot of customers.

Therefore, companies set rigorous specification standards for both manufacturing processes and for the finished products that they produce. They then set in place quality control procedures. One of the procedures is commonly to take random samples and create quality control charts that reveal how much deviation exists from the specification standards for a product.

If significant deviations from specifications are revealed, the company can take whatever action is needed to correct any problems – such as recalibrating a machine that affixes caps to bottles – and restore the desired level of uniform quality.


Understanding Quality Control Charts

Quality control charts can be created and used to examine either a single variable or multiple variables related to the desired quality of a product or process. For example, a toy manufacturing company may wish to use quality control charts to monitor (1) the smoothness of the edges of the toy and (2) the fit of the toy’s packaging.

A quality control examination will use random samples of the population to be examined, comparing actual specifications found in the collected samples to the stated, ideal specifications. Typically, a quality control chart will show a center line that represents the ideal specification for whatever quality variable is being studied. The chart will also usually include upper and lower quality control lines that represent acceptable, relatively insignificant levels of deviation from the desired specification. Plotted on the chart will be the results of random samples drawn for the quality control study.

As long as the samples show deviations that are only within the range bordered by the upper and lower quality control lines, then that indicates good quality control, that products are being produced with the desired level of uniform quality. It is referred to as being “in control.”

However, if the results show many samples with plot points above or below the upper or lower quality control lines, respectively, it indicates significant variation in product or process quality that needs to be addressed. Wide variations from specifications indicate being “out of control.”




Uses of Quality Control Charts

While the use of quality control charts is most frequently associated with manufacturing processes and manufactured products, they can be applied to many other things as well. Following are some other potential applications for the use of quality control charts.


1. Employee Retention Rates

Finding, hiring, and training new employees is an expensive and time-consuming process for a company. Therefore, it is to a company’s advantage to retain good employees as long as possible. A quality control chart can be constructed that compares a company’s actual employee turnover rate to its desired rate. If the chart reveals an excessively high turnover rate, then the company can do further investigation to find the cause(s) of the high turnover rate, and then make changes designed to reduce the rate.


2. Returns on Investments

Quality control can also be applied to examine returns on your investments, checking the extent to which individual investments in your portfolio either outperform or underperform compared to your expected investment returns.

Wide variations in investment results, either up or down, may indicate that your current investment portfolio carries a higher degree of risk than the risk level that you are comfortable with. Outperforming and underperforming investments can also be examined for common characteristics that may help you identify future investments that offer a higher probability of obtaining maximum profits.


3. E-commerce websites

Quality control charts can be used to monitor the processes and functionality of an e-commerce website. For example, anyone engaged in such a business would do well to monitor the number of instances where there is some type of glitch in the website’s operation that causes a customer to abandon the process of making a purchase. By monitoring the quality of the website’s operational performance, any problems or issues that arise can be quickly addressed before they lead to a substantial decline in revenues.


Additional Resources

CFI is the official provider of the global Financial Modeling & Valuation Analyst (FMVA)® certification program, designed to help anyone become a world-class financial analyst. The following CFI resources will be helpful in furthering your financial education and advancing your career:

  • Internal Controls
  • Environmental Due Diligence
  • Logistics
  • Quality of Inventory

Financial Analyst Certification

Become a certified Financial Modeling and Valuation Analyst (FMVA)® by completing CFI’s online financial modeling classes and training program!

0 search results for ‘