Management of Quality
Chapter 9
Learning Objectives
• You should be able to:
1. Define the term quality as it relates to products and as
it relates to services
2. Explain why quality is important and the consequences
of poor quality
3. Identify the determinants of quality
4. Distinguish the costs associated with quality
Instructor Slides
2
Quality Management
Quality
 The ability of a product or service to
consistently meet or exceed customer
expectations
9-3
Which has higher quality?
• Rolls Royce
• vs.
• Toyota Tacoma
• Performance, Aesthetics, Special features,
Conformance, Reliability, Durability, Perceived
quality, Serviceability
4
Dimensions of Product Quality
• Performance
– main characteristics of the product
• Aesthetics
– appearance, feel, smell, taste
• Special features
– extra characteristics
• Conformance
– how well the product conforms to design specifications
• Reliability
– Dependable performance
• Durability
– Ability to perform over time
• Perceived quality
– indirect evaluation of quality (reputation)
• Serviceability
– handling of complaints or repairs
(Garvin, 1987)
9-5
Dimensions of Service Quality
• Convenience
– the availability and accessibility of the service
• Reliability
– ability to perform a service dependably, consistently, and
accurately
• Responsiveness
– willingness to help customers in unusual situations and to deal
with problems
• Time
– the speed with which the service is delivered
• Assurance
– knowledge exhibited by personnel and their ability to convey
trust and confidence
• Courtesy
– the way customers are treated by employees
• Tangibles
– the physical appearance of facilities, equipment, personnel, and
communication materials
• Consistency
– the ability to provide the same level of good quality repeatedly
(Zeithhaml et al., 1990 & Evans et al., 1996)
9-6
Benefits of Good Quality
 Enhanced reputation for quality
 Ability to command premium prices
 Increased market share
 Greater customer loyalty
 Lower liability costs
 Fewer production or service problems
 Lower production costs
 Higher profits
9-7
The Consequences of Poor Quality
•
•
•
•
Loss of business
Productivity
Costs
Liability
9-8
Costs of Quality
• Prevention Costs
–
Cost of preventing defects from occurring
Planning, administration, working with vendors, training,
quality assurance, process control, design and production.
•
• Appraisal Costs
–
Costs of activities designed to ensure quality or uncover
defects
Inspectors, testing, test equipment, labs, quality audits,
quality control, field testing
•
•
Failure Costs
• costs incurred by defective parts/products or faulty services.
 Internal Failure Costs

Costs incurred to fix problems that are detected before the
product/service is delivered to the customer.
 External Failure Costs

All costs incurred to fix problems that are detected after the
product/service is delivered to the customer
9-9
Costs of Quality
• Conformance Quality
• how closely the actual product conforms to the
chosen design specifications
Cost of Assurance
$
(Prevention + Appraisal)
Total Cost
Failure Cost of
(Internal + External)
Conformance Quality
Optimum
10
Costs of Quality
• Spending money on prevention saves even
more money on failure costs.
• It is possible to have high quality and
(relatively) low cost at the same time.
• “quality is free” (Crosby), and firms should
get it “right the first time.”
9-11
Quality Contributors*
Contributor
Key Contributions
Shewart
Control charts; variance reduction
Deming
14 points; special vs. common causes of
variation
Juran
Quality is fitness-for-use; quality trilogy
Feigenbaum
Quality is a total field; the customer defines
quality
Crosby
Quality is free; zero defects
Ishikawa
Cause-and-effect diagrams; quality circles
Taguchi
Taguchi loss function
Ohno and Shingo
Continuous improvement
9-12
Quality Awards and Certification*
• Quality Awards
– Deming Prize
– Malcolm Baldrige National Quality Award
http://www.nist.gov/baldrige/
– European Quality Award
• Quality Certifications
– ISO 9000/1
– International Organization for Standardization
– Set of international standards on quality
management and quality assurance, critical to
international business
9-13
Six Sigma
• Six Sigma
– A methodology for improving quality, reducing
costs, and increasing customer satisfaction
– Statistically
• Having no more than 3.4 defects per million
– Conceptually
• Sustained quality improvement requires commitment
from the entire organization ("Champions", "Master Black
Belts", "Black Belts", "Green Belts", “Yellow belts” ).
• Every manufacturing and business processes have
characteristics that can be measured, analyzed, improved
and controlled.
• Continuous efforts to achieve stable and predictable
process results (i.e., reduce process variation/defects)
9-14
Basic
Quality
Tools
9-15
Basic
Quality
Tools
9-16
Operations Strategy*
• Quality is a strategic imperative for
organizations
– Customers are very concerned with the quality of
goods and services they receive
• Quality is a never-ending journey
– It is important that most organizational members
understand and buy into this idea
• Quality needs to be incorporated
throughout the entire supply chain, not just
the organization itself
9-17