Chapter 3 QUALITY MANAGEMENT Quality. The ability of a product or service to consistently meet or exceed customer expectations. Dimensions of quality.

Performance, special features, conformance, reliability, durability, perceived quality and service after sale. Performance. Main characteristics of the product or service. Special features. Extra characteristics. Conformance. How well a product or service corresponds to the customers expectations. Reliability. Consistency of performance. Durability. The useful life of the product or service. Perceived quality. Indirect evaluation of quality. Service after sale. Handling of complaints or checking on customer satisfaction. Determinants of Quality The degree to which a product or a service successfully satisfies its intended purpose has four primary determinants. 1. Design 2. How well it conforms to the design 3. Ease of use 4. Service after delivery Quality of design. Intention of designers to include or exclude features in a product or service. Focus group. In market research, a group of consumers who express their opinions of a product or service. Quality of conformance. The degree to which goods or services conform to the intent of the designers. Consequences of Poor Quality 1. Loss of business 2. Liability 3. Productivity 4. Costs Costs of Quality 1. Failure costs. Costs caused by defective parts or products, or faulty services. 2. Appraisal costs. Costs of activities designed to ensure quality or uncover defects. 3. Prevention costs. Cots of preventing defects from occurring. Quality Awards Deming Prize. Prize established by the Japanese and awarded annually to firms that distinguish themselves with quality management programs. Baldrige Award. Annual award given by the US government to recognize quality achievements of US companies. ISO 9000 series. Set of international standards on quality management and quality assurance. The purpose is to promote worldwide standards that will improve operating efficiency, improve productivity, and reduce costs. Total Quality Management. A philosophy that involves everyone in an organization in the quest for quality with customer satisfaction as the driving force. It can be describe as follows: 1. Find out what customers want.

2. Design a product or service that will meet what customers want. Make it easy to use and easy to produce. 3. Design a production process that facilities doing the job right the first time. 4. Keep track of results, and use those to guide improvement in the system. 5. Extend these concepts to suppliers and to distribution. A number of other elements of TQM are important: 1. Continual improvement. The quest of quality and better service to the customer should be a continual, never ending one. 2. Competitive benchmarking. This means identifying companies or other organizations that are the best at something and then modeling your own organization after them. 3. Employee empowerment. Giving workers the responsibility for improvements and the authority to make changes to accomplish them provides strong motivation for employees. 4. Team approach. The use of teams for problem solving and to achieve consensus takes advantage of group thinking, gets people involved, and promotes a spirit of cooperation and shared values among employees. 5. Knowledge of tools. Everyone in the organization is trained in the use of quality control and improvement tools. Quality at the source. The philosophy of making ach worker responsible for the quality of his or her work. Suppliers are partners in the process, and long-term relationships are encouraged. Quality function deployment. The process of involving customers in the design stage of new or redesigned products.