Quality Definition Quality can be confusing concepts Quality can be confusing concepts People view quality subjectively People view quality subjectively

Quality DefinitionQuality Definition Quality can be confusing conceptsQuality can be confusing concepts People view quality subjectivelyPeople view quality subjectively The meaning of quality continues to evolve as the The meaning of quality continues to evolve as the

quality profession grows and maturesquality profession grows and matures Quality perception by managers of different firms Quality perception by managers of different firms

PerfectionPerfection ConsistencyConsistency

Eliminating wasteEliminating waste Speed of deliverySpeed of delivery

Compliance with policies and proceduresCompliance with policies and procedures Providing a good, usable productProviding a good, usable product

Doing it right first timeDoing it right first time Delighting or pleasing customersDelighting or pleasing customers

Total customer service and satisfactionTotal customer service and satisfaction

Quality PerspectivesQuality Perspectives Judgmental perspectiveJudgmental perspective

Often used by consumersOften used by consumers Synonymous with superiority or excellenceSynonymous with superiority or excellence Transcendent (to rise above or extend notably beyond Transcendent (to rise above or extend notably beyond

ordinary level) ordinary level) Abstract and subjective and hence little practical value to Abstract and subjective and hence little practical value to

managersmanagers E.g., Ritz-Carlton Hotel, Lexus automobileE.g., Ritz-Carlton Hotel, Lexus automobile

Product-based perspectiveProduct-based perspective Is a function of a specific, measurable variable & that Is a function of a specific, measurable variable & that

differences in quality reflect differences in quantity of differences in quality reflect differences in quantity of

some product attributesome product attribute E.g., no of stitches per inch on a shirt or no of cylinders in an E.g., no of stitches per inch on a shirt or no of cylinders in an

engineengine

Higher increasing amount of product characteristics are Higher increasing amount of product characteristics are

equivalent to higher qualityequivalent to higher quality Quality is often mistakenly assumed to be related to priceQuality is often mistakenly assumed to be related to price

Quality PerspectivesQuality Perspectives User-based perspectiveUser-based perspective

Quality is determined by customer wants/needs (Fitness Quality is determined by customer wants/needs (Fitness

for intended use)for intended use) Individuals have different wants/needs, & hence, different Individuals have different wants/needs, & hence, different

quality standardsquality standards E.g., Both Cadillac CTS and smart car are fit for use, for E.g., Both Cadillac CTS and smart car are fit for use, for

different needs and different groups of customersdifferent needs and different groups of customers Value-based perspectiveValue-based perspective

The relationship of usefulness or satisfaction to price The relationship of usefulness or satisfaction to price

(value)(value) A quality product is one that is as useful as competing A quality product is one that is as useful as competing

products but sold at a lower price, orproducts but sold at a lower price, or One that offers greater usefulness at as comparable priceOne that offers greater usefulness at as comparable price

P & G (1990) instituted a concept called value pricing – P & G (1990) instituted a concept called value pricing –

offering a product at a “everyday” low prices in an attempt to offering a product at a “everyday” low prices in an attempt to

counter the common consumer practice of buying whatever counter the common consumer practice of buying whatever

brand happens to be on special. brand happens to be on special.

Quality PerspectivesQuality Perspectives Manufacturing-based perspectiveManufacturing-based perspective

desirable outcome of engineering and manufacturing desirable outcome of engineering and manufacturing

practice, or conformance to specificationpractice, or conformance to specification Specifications are targets and tolerances determined by Specifications are targets and tolerances determined by

designers of products (0.236 ± 0.003 cm) or service (10:30 designers of products (0.236 ± 0.003 cm) or service (10:30

± 15 min)± 15 min) Conformance to specifications establishes consistency to Conformance to specifications establishes consistency to

goods and servicesgoods and services E,g., Coca-Cola (with rigorous quality and packaging standards products E,g., Coca-Cola (with rigorous quality and packaging standards products

will taste the same anywhere in the world)will taste the same anywhere in the world)

Integrating perspectives on qualityIntegrating perspectives on quality Quality perception depends on one’s position in the value Quality perception depends on one’s position in the value

chainchain E.g., designer, manufacturer, service provider, distributor, E.g., designer, manufacturer, service provider, distributor,

customercustomer

Quality perspectives in the Value ChainQuality perspectives in the Value Chain

Legend:Legend:Information flow Information flow

Product flow Product flow

CustomerCustomerTranscendent quality & Product-based quality

MarketingMarketingUser-based qualityUser-based quality

DesignDesignValue-based qualityValue-based quality

ManufacturingManufacturingManufacturing-based Manufacturing-based

qualityquality

NeedsNeeds

DistributionDistribution

Product & ServicesProduct & Services

Customer-driven qualityCustomer-driven quality

ANSI & ASQC (1978)ANSI & ASQC (1978)

The totality of features & characteristics of a product or The totality of features & characteristics of a product or service that bears on its ability to satisfy given needs service that bears on its ability to satisfy given needs

(also known as (also known as Fitness for useFitness for use))

Draws heavily on product- & user-based approachesDraws heavily on product- & user-based approaches Driven by the need to contribute value to customersDriven by the need to contribute value to customers

Influence satisfaction and preferenceInfluence satisfaction and preference

Progressive Organizations (1990s)Progressive Organizations (1990s)

Quality is Meeting or Exceeding Customer ExpectationsQuality is Meeting or Exceeding Customer Expectations

Improving Products & ServicesImproving Products & Services

• DissatisfiersDissatisfiers: those needs that are expected in a product or : those needs that are expected in a product or service, such as a compact disc player, air conditioner, & service, such as a compact disc player, air conditioner, & required safety features in an automobile. Such items required safety features in an automobile. Such items generally are not stated by customers but are assumed as generally are not stated by customers but are assumed as given. If they are not given, the customer is dissatisfied. given. If they are not given, the customer is dissatisfied.

• SatisfiersSatisfiers: needs that customer say they want, such as a TV in : needs that customer say they want, such as a TV in a car. Fulfilling these needs creates satisfaction. a car. Fulfilling these needs creates satisfaction.

• Delighters/ExcitersDelighters/Exciters: new or innovative features that : new or innovative features that customers do not expect. When first introduced, antilock customers do not expect. When first introduced, antilock brakes (ABS) and air bags were examples of exciters. brakes (ABS) and air bags were examples of exciters.

Note: Note: • SatisfiersSatisfiers are easy to determine (through routine marketing are easy to determine (through routine marketing

research).research).• Special effort is required to elicit customer perceptions about Special effort is required to elicit customer perceptions about

DissatisfiersDissatisfiers & & Delighters/ ExcitersDelighters/ Exciters. . • Overtime Overtime Delighters/ExcitersDelighters/Exciters become become SatisfiersSatisfiers as customers as customers

become used to them & eventually become used to them & eventually SatisfiersSatisfiers become become DissatisfiersDissatisfiers (if they are not provided). (if they are not provided).

N.B.: (concepts suggested by Japanese Professor Noriaki Kano)N.B.: (concepts suggested by Japanese Professor Noriaki Kano)

Important Quality Dimensions in ManufacturingImportant Quality Dimensions in Manufacturing

• Performance: A product’s primary operating characteristics.

• Features: The “bells and whistles” of a product.• Reliability: The probability of a product’s surviving over a

specified period of time under stated condition of use.• Conformance: The degree to which physical and

performance characteristics of a product match pre-established standards.

• Durability: The amount of use one gets from a product before it physically deteriorates or until replacement is preferable.

• Serviceability: The ability to repair a product quickly and easily.

• Aesthetics: How a product looks, feels, sounds, tastes, or smells.

• Perceived quality: Subjective assessment resulting from image, advertising, or brand names.

Quality in ServicesQuality in Services

Statistics from a variety of studies

● The average company never hears from more than 90 percent of its unhappy customers. For every complaint it receives, the company has at least 25 customers with problems, about one-fourth of which are serious.

● Of the customers who make a complaint, more than half will do business again with that organization if their complaint is resolved. If the customer feels that the complaint was resolved quickly, this figure jumps to about 95 percent.

● The average customer who has had a problem will tell 9 or 10 others about it. Customers who have complaints resolved satisfactorily will only tell about 5 others.

● It costs six times more to get new customer than to keep a current customer.

Important Quality Dimensions in serviceImportant Quality Dimensions in service

• Time: How much time must a customer wait?• Timeliness: Will a service be performed when

promised?• Completeness: Are all items in the order included?• Courtesy: Do front- line employees greet each

customer cheerfully?• Consistency: Are service delivered in the same

fashion for every customer, and every time for the same customer?

• Accessibility and Convenience: Is the service easy to obtain?

• Accuracy: Is the service performed right the first time?

• Responsiveness: Can service personnel react quickly and resolve unexpected problems?

PRINCIPLES OF TOTAL QUALITY MANAGEMENTPRINCIPLES OF TOTAL QUALITY MANAGEMENT

• Quality was often ensured too late in the production cycle – at final assembly, rather than in the design & development stages.

• Customer needs & satisfaction were not well understood.

• Quality was not an important issue until it became a problem.

• Management seemed willing to sacrifice quality when costs or scheduling conflicted.

• Operators were not sufficiently trained in their jobs & in quality issues.

• Quality problems were experienced with vendors.• Quality costs appeared high. * Polaroid Internal Survey

PRINCIPLES OFPRINCIPLES OF TOTAL QUALITY MANAGEMENT (Cont.)TOTAL QUALITY MANAGEMENT (Cont.)

• These are not quality problems; they areThese are not quality problems; they are– Design problemsDesign problems– Marketing problemsMarketing problems– Manufacturing problemsManufacturing problems– Human resource problemsHuman resource problems– Supplier relations problemsSupplier relations problems– Financial problemsFinancial problems

• They encompass the management of operations They encompass the management of operations throughout the firmthroughout the firm

• Thus a comprehensive & integrated management Thus a comprehensive & integrated management strategy is required centered on Qualitystrategy is required centered on Quality

Today the term TQM conveys a total, company wide effort Today the term TQM conveys a total, company wide effort that includes all employees, suppliers, and customers, that includes all employees, suppliers, and customers, and that seeks continuously to improve the quality of and that seeks continuously to improve the quality of

products & processes to meet the needs and products & processes to meet the needs and expectations of customersexpectations of customers

PRINCIPLES OF TOTAL QUALITY MANAGEMENT (Cont.)PRINCIPLES OF TOTAL QUALITY MANAGEMENT (Cont.)

• TQM has become the basic business strategy for TQM has become the basic business strategy for

firms that aspire to meet the needs of their firms that aspire to meet the needs of their

customerscustomers

• There probably are as many different approaches There probably are as many different approaches

to quality as there are businessesto quality as there are businesses

• Although no program is ideal, successful programs Although no program is ideal, successful programs

share many characteristicsshare many characteristics

• The basic attributes of TQM areThe basic attributes of TQM are

Customer FocusCustomer Focus

Strategic Planning & LeadershipStrategic Planning & Leadership

Continuous ImprovementContinuous Improvement

Empowerment & TeamworkEmpowerment & Teamwork


• CUSTOMER FOCUSCUSTOMER FOCUS– The customer is the judge of quality. Quality system must The customer is the judge of quality. Quality system must

address attributes that provide value to customers and lead address attributes that provide value to customers and lead to customer satisfaction and loyaltyto customer satisfaction and loyalty

– Factors that influence customers overall purchase, Factors that influence customers overall purchase, ownership, and service experiences include the relationship ownership, and service experiences include the relationship between company and customer and the trust and between company and customer and the trust and confidence in productsconfidence in products

– The concept of quality not only includes product attributes The concept of quality not only includes product attributes but also features that enhance the product and but also features that enhance the product and differentiate it from competing offerings (known as service differentiate it from competing offerings (known as service bundle/ service package)bundle/ service package)

– A company must remain close to customers by taking A company must remain close to customers by taking regular customer opinion, focus group discussion by survey, regular customer opinion, focus group discussion by survey, toll-free telephone, etc. toll-free telephone, etc. • Customer’s jobCustomer’s job

• How the customers uses their productHow the customers uses their product

• Customer requirements & valueCustomer requirements & value


• CUSTOMER FOCUS (Cont.)CUSTOMER FOCUS (Cont.)– Several companies require their sales & marketing Several companies require their sales & marketing

executives to meet with random groups of key customers on executives to meet with random groups of key customers on a regular basisa regular basis

– Other companies bring customers & suppliers into internal Other companies bring customers & suppliers into internal product design & development meetingsproduct design & development meetings

– Coca Cola is one example of good CRMCoca Cola is one example of good CRM• If a customer does call with a complaint, Coca-Cola sends the If a customer does call with a complaint, Coca-Cola sends the

customer a letter apologizing for the problem, as well as customer a letter apologizing for the problem, as well as coupons that allow the customer to replace the unacceptable coupons that allow the customer to replace the unacceptable productsproducts

• In certain circumstances, the Coca-Cola bottler may also follow In certain circumstances, the Coca-Cola bottler may also follow up with the customerup with the customer

• A Service Quality Survey (SQS) is mailed to the customer two A Service Quality Survey (SQS) is mailed to the customer two weeks after the initial contact askingweeks after the initial contact asking– To rate the quality of the response (Courtesy, professionalism, etc.)To rate the quality of the response (Courtesy, professionalism, etc.)

– The quality of the phone agent & letter-writer The quality of the phone agent & letter-writer

– Whether the customer will continue to purchase their productsWhether the customer will continue to purchase their products

• The survey shows that 90% of the customers are satisfied with The survey shows that 90% of the customers are satisfied with complaint handling but they aspire to achieve 100% satisfaction complaint handling but they aspire to achieve 100% satisfaction


• STRATEGIC PLANNING & LEADERSHIPSTRATEGIC PLANNING & LEADERSHIP– Achieving quality & market leadership requires a long range Achieving quality & market leadership requires a long range

strategystrategy– Improvements do not happen overnightImprovements do not happen overnight– Planning & organizing improvement activities take time & Planning & organizing improvement activities take time &

requires major commitments on the parts of all members of requires major commitments on the parts of all members of the organizationthe organization

– Strategies, plans, & budget allocations need to reflect long-Strategies, plans, & budget allocations need to reflect long-term commitments to customers, employees, stockholders & term commitments to customers, employees, stockholders & supplierssuppliers

– Other things to be addressed are: training, employee Other things to be addressed are: training, employee development, supplier development, technology evolution, development, supplier development, technology evolution, etc., that bear upon qualityetc., that bear upon quality

– Leadership for quality is the top management responsibilityLeadership for quality is the top management responsibility– Senior management must create cSenior management must create clear quality values & high lear quality values & high

expectations & build them into the way the company operates by expectations & build them into the way the company operates by substantial personal commitment & involvementsubstantial personal commitment & involvement

– If commitment to quality is not a priority (Lip service), any initiative If commitment to quality is not a priority (Lip service), any initiative is doomed to failure & is the Kiss to Deathis doomed to failure & is the Kiss to Death


• CONTINUOUS IMPROVEMENTCONTINUOUS IMPROVEMENT– Is part of the management of all systems & processesIs part of the management of all systems & processes– Achieving highest levels of quality & competitiveness Achieving highest levels of quality & competitiveness

requires a well defined & well-executed approach to requires a well defined & well-executed approach to continuous improvementcontinuous improvement

– Improvements may be of several typesImprovements may be of several types• Enhancing value to the customers through new & improved products & Enhancing value to the customers through new & improved products &

servicesservices

• Reducing errors, defects, & wastesReducing errors, defects, & wastes

• Improving responsiveness & cycle time performanceImproving responsiveness & cycle time performance

• Improving productivity & effectiveness in the use of all resourcesImproving productivity & effectiveness in the use of all resources

– Thus improvement is driven by not only the objectives to Thus improvement is driven by not only the objectives to better quality, but also by the need to be responsive and better quality, but also by the need to be responsive and efficientefficient

– Must contain regular cycles of planning, execution & Must contain regular cycles of planning, execution & evaluationevaluation

– Requires a basis, preferably a quantitative basis, for Requires a basis, preferably a quantitative basis, for assessing progress & for deriving information for future assessing progress & for deriving information for future cycles of improvement (Quality must be measured)cycles of improvement (Quality must be measured)


• CONTINUOUS IMPROVEMENT (Cont.)CONTINUOUS IMPROVEMENT (Cont.)– Improving products & ServicesImproving products & Services

• Careful research is required to determine the needs of Careful research is required to determine the needs of customers, & those needs must be reflected in the design of customers, & those needs must be reflected in the design of goods & servicesgoods & services

• Three classes of customer needs: Dissatisfiers, Satisfiers, Three classes of customer needs: Dissatisfiers, Satisfiers, Delighters/ExcitersDelighters/Exciters– Overtime Delighters/Exciters become satisfiers, & eventually Overtime Delighters/Exciters become satisfiers, & eventually

satisfiers become dissatisfierssatisfiers become dissatisfiers

– Therefore, companies must innovate continually & study customer Therefore, companies must innovate continually & study customer perceptions to ensure that their needs are being metperceptions to ensure that their needs are being met

– Designing & Improving Work ProcessesDesigning & Improving Work Processes• Quality excellence derives from we3ll-designed & well-executed Quality excellence derives from we3ll-designed & well-executed

work processes & administrative systemswork processes & administrative systems

• Improvements in quality of product design may lead to major Improvements in quality of product design may lead to major reductions in scrap & defects later in the production process &, reductions in scrap & defects later in the production process &, hence, to lower costshence, to lower costs

• Fast response to customers is a major quality attribute. Success Fast response to customers is a major quality attribute. Success in competitive markets increasingly demands shorter product & in competitive markets increasingly demands shorter product & service introduction cycles & faster response to customersservice introduction cycles & faster response to customers


• CONTINUOUS IMPROVEMENT (Cont.)CONTINUOUS IMPROVEMENT (Cont.)– Designing & Improving Work ProcessesDesigning & Improving Work Processes

• Reductions in cycle & response time can occur when work Reductions in cycle & response time can occur when work processes are designed to meet both quality & response goalsprocesses are designed to meet both quality & response goals

• Response time reduction should be a major focus in all quality Response time reduction should be a major focus in all quality improvement processes of work unitsimprovement processes of work units

• Since response time improvements often drive simultaneous Since response time improvements often drive simultaneous improvements in quality & productivity, it is highly beneficial to improvements in quality & productivity, it is highly beneficial to consider response time, quality, & productivity objectives consider response time, quality, & productivity objectives togethertogether

– Measurement as a Basis for ImprovementMeasurement as a Basis for Improvement• Meeting quality & performance goals of the company requires Meeting quality & performance goals of the company requires

that process management be based upon reliable information, that process management be based upon reliable information, data, & analysisdata, & analysis

• The quality of products, internal processes, & customer The quality of products, internal processes, & customer satisfaction must be measuredsatisfaction must be measured

• Analyzing the costs of poor quality is one approach that Analyzing the costs of poor quality is one approach that many firms use to identify improvement opportunities. many firms use to identify improvement opportunities. Such costs include, inspection costs, costs of scrap & Such costs include, inspection costs, costs of scrap & rework, customer returns & warranty claims, etc.rework, customer returns & warranty claims, etc.


• EMPOWERMENT & TEAMWORKEMPOWERMENT & TEAMWORK– All functions at all levels of an organization must focus on All functions at all levels of an organization must focus on

quality to achieve corporate goalsquality to achieve corporate goals– Teamwork can be viewed in three waysTeamwork can be viewed in three ways1)1) Vertical: teamwork between top management & lower-level Vertical: teamwork between top management & lower-level

employees. Employees are empowered to make decisions that employees. Employees are empowered to make decisions that satisfy customers without a lot of bureaucratic hassles, & barriers satisfy customers without a lot of bureaucratic hassles, & barriers between levels are removedbetween levels are removed

2)2) Horizontal: Teamwork within work groups & across functional lines Horizontal: Teamwork within work groups & across functional lines (cross-functional teams). E.g., a product development team may (cross-functional teams). E.g., a product development team may consist of designers, manufacturing personnel, suppliers, sales-consist of designers, manufacturing personnel, suppliers, sales-people, & customers.people, & customers.

3)3) Inter-organizationalInter-organizational– Partnership must be created both internally & externallyPartnership must be created both internally & externally

– Companies should seek to build partnerships that mutual & larger Companies should seek to build partnerships that mutual & larger community interestscommunity interests

– Partnership might include linkages with educational institutes, Partnership might include linkages with educational institutes, cooperation with suppliers & customers, agreement with unions, etc.cooperation with suppliers & customers, agreement with unions, etc.

– E.g., partnership with suppliers & customers. A company might E.g., partnership with suppliers & customers. A company might develop specifications jointly with suppliers to take advantage of the develop specifications jointly with suppliers to take advantage of the suppliers’ manufacturing capabilitiessuppliers’ manufacturing capabilities

Documents

Quality Definition Quality can be confusing concepts Quality can be confusing concepts People view quality subjectively People view quality subjectively