Transcript Total Quality Management: Value of Quality Implementation

The Value of Implementing
Quality
Chapter 3
Achieving Quality Through Continual
Improvement
Claude W. Burrill / Johannes Ledolter
Published by John Wiley & Sons, Inc., 1999
Prepared by Dr. Tomi Wahlström,
University of Southern Colorado
Chapter 3
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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
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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
3
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 Chapter
curve
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Japanese Quality Strategy
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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
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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
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Selling the importance and value
Training on quality concepts
Stabilizing processes
Improving processes
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Quality and Time
• Step-by-step doesn’t fit well with American
temperament
• Quality takes time and consistency of longterm strategy
• For Japanese, quality improvement is
forever, and this is the only attitude to take
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Questions?
Chapter 3
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