Dimensions of Quality
In examining the dimensions of quality for goods, it is important to recall that a good is tangible, and therefore, direct contact between the customer and the employees who make the good does not often occur. As a result, the factors that comprise the quality of goods are quite different from the factors that comprise quality service. People at all levels of the manufacturing organization are still critical when determining quality because they design and build the product. The impact of these employees on the customer, therefore, is transmitted through the customers’ use of the product. The following list describes the
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factors that determine quality for goods. As can be expected, these focus on specific attri- butes of the product and do not include human factors, with the exception of serviceability:
• Performance—primary operating characteristics of a product. • Features—secondary characteristics that supplement the product’s basic
functioning. • Reliability—length of time a product will function before it fails, or the probabil-
ity it will function for a stated period of time. • Conformance—degree to which a product’s design and operating characteristics
match pre-established standards. • Durability—ability of a product to function when subjected to hard and frequent
use. • Serviceability—speed, courtesy, and competence of repair. • Aesthetics—how a product looks, feels, sounds, tastes, or smells. • Perceived Quality—image, advertising, or brand name of a product.
For the quality of goods, performance and features are important dimensions of the prod- uct. These are often key elements in the purchase decision whether the product is a mobile device, a vehicle, or an appliance. Reliability is common to both services and goods, but as expected with a good, it is linked directly to how the product performs. Conformance is a positive dimension in some applications, but may be negative in other applications. When purchasing paint that is to match an existing color, a replacement door, or new brakes for a car, conformance to specifications is vital. Conversely, non-conformance may be desir- able for other items such as clothing or furniture. Durability is another trait of goods that can be measured and assessed, and is often more important for goods that provide func- tion rather than form, such as markers for white boards, hand mixers, and can openers. Most people want these products at low cost and want them to last a long time. The last three characteristics are more subjective in nature. With serviceability, the customer often interacts directly with the employee who is doing the work, so this factor has similar char- acteristics to service quality. Aesthetics refers to how a product looks, which is subject to individual tastes, and is often difficult to assess. Perceived quality is similar to aesthetics because customers may have different expectations.
Traditionally, companies thought of quality costs only as those that were necessary to produce higher quality. In fact, as many companies have discovered, higher quality can mean reduced costs because of savings from reduced scrap, rework, and customer war- ranty claims. Whether performing a medical test or assembling a mobile device, correctly completing a job the first time improves quality and lowers costs. Identifying and elimi- nating steps in a process that do not add value for a customer has the potential to reduce selling price. While it may not be true in every instance, there is truth in the statement that “quality is free.” Consider the following three categories of the costs of quality:
1. Failure costs—can be internal to the organization or external involving the customer.
2. Appraisal costs—investment in measuring quality and assessing customer satisfaction.
3. Prevention costs—put a stop to the quality problem.
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Failure Costs
Failure costs are incurred whenever any product or component of a product fails to meet requirements. Such costs can be divided into two categories: internal or external. Inter- nal failure costs are those associated with defects found before the product reaches the customer. Examples of this include the costs of correcting errors in a customer’s bank account, discarding food that was improperly cooked, scrapping defective parts, or reworking products that contain defects. In some cases internal failures can be danger- ous to employees, such as when a building collapses while under construction because of defective materials.
External failure costs are incurred after a product has reached the customer. This can include the cost of warranty repair work, handling complaints, or replacing products. The costs of lost goodwill and possible liability if someone is injured or killed because of an external failure can be considerable. The costs of external failure can be especially devas- tating if customers are lost.
Appraisal Costs
Appraisal costs are the costs incurred to measure quality, assess customer satisfaction, and inspect and test products. Activities that are designed to improve quality by better understanding the current performance level of a product are included in appraisal costs. Appraisal costs could include the cost of conducting a customer satisfaction survey, hiring an individual to visit, and inspect each property in a hotel chain, or testing new notebook computers to be sure they will operate as intended. In electronic components, most fail- ures take place during the first 90–180 days of operations or during the wear-out period at the end of the product’s life, and the defect rate between these two events is very low.
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Prevention Costs
Prevention costs result from activities designed to prevent defects from occurring. Pre- vention costs can include activities such as employee training, quality control procedures, special efforts when designing products, or administrative systems to prevent defects. One example is the cost of modifying a bank’s computer system to request confirma- tion whenever a teller’s entries are unusually large or unusually small. Electronic confir- mations are also seen on entry screens for online purchases and other applications. For example, an error message will appear if a digit in a telephone number is missing, and the customer will not be able to advance to the next screen. Conversely, if an extra keystroke is made in an attempt to enter a phone number, the system will not accept it. Critical infor- mation, such as e-mail addresses, require the customer to enter the data into these systems twice. The two entries are compared, and if they are the same, the user can advance to the next screen. Double-entry greatly reduces the chance of an incorrect entry. There are many examples of this in manufacturing as well, but customers do not see them. Manufacturers design assembly systems so that a part can only be assembled in one correct way. If it fits or snaps in place, it is correct. Parts are color-coded to ensure they are placed correctly on the right product. Thousands of preventative measures have been implemented to reduce the cost of maintaining quality in manufacturing.
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For many years, companies accepted a 1% to 3% rate of defects in goods and services, which is as many as three defects per hundred units. A few years ago, Motorola, a world- recognized quality leader, set for itself a goal of Six Sigma quality. Six Sigma relates to the firm’s ability to produce error free products. For the statistician that is six standard deviations rather than three standard deviations, which is often discussed when applying the normal distribution. While three standard deviations equals approximately 2.6 defects per 1,000 units, or 99.74% error free, six standard deviations equals 3.4 defects per 1 mil- lion units, or 99.99966% error free. The old standard of 1% to 3% defects, which is not very restrictive, would generate about 34,000 defects per 1 million. Six Sigma increases expecta- tions and attempts to slash defects drastically.
Six Sigma is a collection of ideas and programs that are intended to improve the quality of a service or a good by using tools that identify the root cause of the defects and then implement programs to eliminate the underlying problem that caused the defects. Tools such as a fishbone chart allow the firm to trace a problem that the customer sees to the root cause of the problem. For example, long delays in baggage delivery at the airport could be the result of insufficient staffing, insufficient baggage handling equipment, or poor loading procedures that make it difficult to find the right bags. Then, tools such as simulation or mathematical modeling (which are discussed in a later chapter) can be applied to determine how the problem may be solved and the baggage handling process improved. Six Sigma helps the firm make its processes consistent because when Six Sigma is achieved a defect (late baggage delivery) occurs only 3.4 times out of 1,000,000. Six Sigma may be good enough for baggage delivery, but sometimes, Six Sigma is not enough. Passengers on the airlines want results that are better than 3.4 crashes for every 1,000,000 airline flight, or about one crash in 300,000 flights. There would be several crashes each day if a three sigma standard was used, and dozens of crashes per day if a 3% defect rate was allowed.
Six Sigma develops a cadre of specialists within an organization called “Black Belts” and “Green Belts,” who are experts in specific methods. Six Sigma follows a set of steps that investigates the operations process and leads the team toward outcomes that can be mea- sured, analyzed, improved, and controlled. The effectiveness of the baggage handling
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process is measured by customer wait time, and the airline should have a performance target. The outcomes of these processes are important to the company and, ultimately, to the customer.
Six Sigma is based upon the implementation of ongoing, well-documented, and highly visible activities. It is common for highly placed executives in the firm to be Black Belts and to train new Green Belts and Black Belts. These firms want their employees to live and breathe quality, so that quality improvement efforts are sustainable.
4.3
The groundwork for today’s philosophies about quality was implemented over a long period by many different people. Some of the best-known individuals working in quality control have been writing, teaching, and lecturing for many years. In fact, two, W. Edwards Deming and Joseph M. Juran, are credited with major influence on the approach to quality in Japanese organizations.
Until his death in 1993 at the age of 93, W. Edwards Deming was probably the most influential indi- vidual within the specialty of quality. Deming began his career as a statistician and became involved in quality when he worked with Walter Shewhart, the founding father of statistical pro- cess control. Statistical process control (SPC) is the use of statistical methods to determine when a process that produces a good or service is get- ting close to producing an unacceptable level of defects. When the process crosses a particular threshold, it is moving out of control. After World War II, Deming went to Japan under the aus- pices of the U.S. government as part of an effort to rebuild Japan’s economy. His influence on the Japanese was so great that today, Japan’s highest prize for quality is the Deming Prize. Surprisingly, Deming was largely ignored in the United States until the 1980s. Beginning in the 1980s, Deming lectured extensively to large audiences through- out the country until his death in 1993.
