1. Managing Quality 1

2. Quality Back in 1964 a Justice of the US Supreme Court, Potter Stewart, wrote in an opinion something to the effect that obscene was hard to define but he knew something was obscene when he saw it. Is quality a similar idea? You know quality when you see? The author defines quality as meeting or exceeding customer requirements. In this sense quality is in the eyes of the customer. Continuous improvement is effort by producers to meet customer needs by 1) reducing variability in output, and 2) introducing new products. 2

3. Dimensions of Quality Dimensions of quality that can be defined include Quality of design, quality of conformance, the “abilities (availability, reliability, and maintainability),” and field service. Quality of design – by assessing customer desires quality can be designed into a product before it is even made. A set of specifications is developed and used in production. Quality of conformance means meeting specification in production. The more specs are met the higher the quality. Availability means product is in operational state. A measure of availability = uptime/(uptime + downtime), or the percentage of time the product is available. Presumably, the higher the availability the higher the quality. 3

4. Dimensions of Quality 4 Reliability is about the length of time a product can be used before it fails. Related to this is the MTBF, or mean time between failure. This is just the average time that a production works from one failure to the next. The longer the time the higher the quality. Maintainability is about restoring a product once it has failed. Related to this is the MTTR, or mean time to repair. Another way to see availability is MTBF/(MTBF + MTTR). Say MTBF = 8 hours and MTTR = 2 hours. Then availability = 8/10 =.8 or 80%.

5. Dimensions of Quality 5 Field Service refers to warranty and repair or replacement of product after it has been sold. You would hope this would be done fast and in a courteous manner.

6. SERVQUAL 6 SERVQUAL is a popular measure of service quality and is done by a customer questionnaire of five perceptual measures of service: tangibles, reliability, responsiveness, assurance, and empathy. Tangibles refers to the organizations appearance in terms of facilities, equipment, and personnel. Reliability is the ability of the company to perform the service dependably and accurately. Responsiveness is the willingness of the company to provide the service in prompt and helpful manner. Assurance deals with the knowledge and courtesy of the employees, as well as their ability to convey trust and confidence. Empathy is the caring and individualized attention provided.

7. SERVQUAL 7 Customers have an expectation about the items in SERVQUAL. There is then the actual performance. Gap is defined as actual provided performance minus expectation. The higher the gap the higher the quality.

8. Quality Gurus 8 You should know about the people Deming, Juran and Crosby. Deming was big on the role management should take in quality improvement. Top executives should manage for long term and quality should not be sacrificed for short run profit. Plus he stressed firms should prevent defects in products and he was big on statistical analysis. As an example of this, if a process has a constant average and a constant variance, then the system is stable. He then stressed improvement by reducing the variance. Page 145 lists Deming’s 14 points of management. Japanese industry really took to his ideas.

9. Gurus 9 Juran came up with the quality trilogy of planning, control, and improvement. He felt planning should identify major business goals, customers and products required. Control is about the use of statistical methods similar to Deming’s. His ideas on improvement are also similar to Deming’s Crosby advocated “zero defects” in production, or get it right the first time! Crosby argued it is cheaper to make the product right the first time than to correct errors or failures later. Crosby also had 14 points or steps and stressed management commitment, training, worker involvement, measurement of quality, and prevention of defects in all parts of the business.

10. Cost of Quality 10 The cost of quality can be put into two groups: control costs and failure costs. Control costs deal with prevention and appraisal. Preventing defects by quality planning, new product reviews, training and engineering analysis are costly, but hopefully reduce other costs. Appraisal costs deal with inspection and appraisal aimed at eliminating defects after they occur but before shipment to consumer. Failure costs are internal (machine downtime and other things) and external (warranty charges, returned goods, and stuff like that there ). The author suggests through an example that if prevention costs go up from 2 to 4 % of sales and that reduces failure costs from 18 to 9 % of sales, then profitability has gone up! Add to this revenue enhancement from better product and quality is a big deal!

11. Efforts Fail 11 Quality improvement efforts fail because -Companies have to change values and management philosophy, -Companies focus on short term profitability goals, -Managers blame employees for poor quality instead of the system the managers implement with inherent quality problems, -Managers would rather meet schedules and fix problems later, and -Reward systems are not in sync with quality.

12. summary 12 Here we have been introduced to concepts and ideas that deal with quality. Providing high quality can actually enhance the profitability of firms.