Chapter 3 1

The Value of Implementing Quality

Chapter 3

Achieving Quality Through Continual ImprovementClaude W. Burrill / Johannes Ledolter

Published by John Wiley & Sons, Inc., 1999

Prepared by Dr. Tomi Wahlström,

University of Southern Colorado

Chapter 3 2

Cost of Quality

• 3 cost categories:– Prevention components– Appraisal components– Failure components

• Reducing the cost of quality– It is always cheaper to do a job right the first

time than do it over

Chapter 3 3

Quality and Productivity

• Productivity of a process is the ratio of the value added by the process to the value of the labor and capital consumed

• Productivity is measured with no reference to customer satisfaction as a result of product quality - Prof. Martin Starr, Columbia University

Chapter 3 4

Quality and the Customer

• The total cost of product to a customer is purchase cost of the product and life cycle cost combined

• Customers base their purchase decisions on price and perceived quality– Perceived quality is the customer’s judgment or

perception of the quality of a product relative to that of competing products

• Price/Performance curve

Chapter 3 5

Japanese Quality Strategy• Quality improvement cuts cost• Lower costs allow lower prices• Lower price brings increased market share• Increased market share brings benefits of

scale• Scale benefits generate further cost reductions• Quality of design increases demand

Chapter 3 6

Quality as an Investment• To gain approval for a quality improvement

effort, quality must be viewed as an investment– Accounting vs. Marketing view

• Establishing quality requires expenditures– Selling the importance and value– Training on quality concepts– Stabilizing processes– Improving processes

Chapter 3 7

Quality and Time

• Step-by-step doesn’t fit well with American temperament

• Quality takes time and consistency of long-term strategy

• For Japanese, quality improvement is forever, and this is the only attitude to take

Chapter 3 8

Questions?

Chapter 3 9

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