Week 11 - Quality Flashcards
How does the International Organisation for Standardisation (ISO) define quality?
The totality of features and characteristics of a product/service that bear on its ability to satisfy stated or implicit needs.
Focusing on the quality of a product or service generally does what four positive things?
- builds expertise in producing it
- lowers the costs of providing it
- creates higher satisfaction for customers
- generates higher future revenues for the company selling it
There are two basic aspects of quality. What are they?
- Design quality
* Conformance quality
What is design quality?
Refers to how closely the characteristics of a product/service meet the needs and wants of customers.
e.g. customers want photocopying machines that combine copying, faxing, scanning and electronic printing - photocopying machines that fail to meet these needs fail in the quality of their designs.
What is conformance quality?
The performance of a product or service relative to its design and product specifications.
e.g. if a part breaks on a new car, it fails to satisfy conformance quality.
What are the 4 costs of quality (COQ)?
- Prevention costs - costs incurred to prevent the production of products that do not conform to specifications
- Appraisal costs - incurred to detect which of the individual units of products do not conform to specifications
- Internal failure costs - incurred on defective products before they are shipped to customers
- External failure costs - incurred on defective products after they are shipped to customers
What are 5 examples of prevention costs?
- Training employees
- Product testing costs (in design phase)
- Preventive maintenance of machinery and equipment
- Procedure and instruction development
- Supplier qualification assessment
What are 4 examples of appraisal costs?
- Inspection/testing of supplies
- Process appraisal
- Material appraisal (taking samples from products)
- Outsourced laboratory testing
What are 5 examples of internal failure costs?
- Scrap
- Rework
- Re-inspection and testing
- Paperwork
- Redesign
What are 8 examples of external failure costs?
- Processing customer returns
- Invoice adjustments
- Product recall
- Liability costs
- Warranty claim administration
- Loss of customers and market share
- Customer dissatisfaction
- Loss of reputation
What kind of costing do we use to identify the cost of quality related activities?
Activity-based costing
What are the 3 non-financial quality measures on the balanced scorecard - what are they?
- Customers
- Internal business processes
- Learning and growth
Why is it important to use both a financial and non-financial analysis?
If a customer is dissatisfied and tells others about its problems and decides not to buy the product in the future, the resulting revenue losses will not show up for some time. That’s why doing customer surveys and using other non-financial measures is important.
What are some non-financial measures of customer satisfaction?
- Market research information on customer preferences for, and customer satisfaction with, specific product features to measure design quality
- market share
- percentage of customers who give high ratings for customer satisfaction
- number of defective units shipped to customers as a percentage of total units
- number of customer complaints (companies estimate that for every customer who complains, there are 10-20 others who had bad experiences with the product/service but didn’t complain)
- percentage of products that fail soon after delivery
- delivery delays - difference between scheduled delivery date and the date requested by the customer
- on-time delivery rate - percentage of shipments made on or before the scheduled delivery date
What is a statistical quality control (SQC)? Also known as statistical process control (SPC)
A formal means of distinguishing between random and non-random variations in an operating process.
