2. Chapter 31 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

3. Chapter 32 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

4. Chapter 33 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

5. Chapter 34 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 curve

6. Chapter 35 Japanese Quality Strategy 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

7. Chapter 36 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 –Selling the importance and value –Training on quality concepts –Stabilizing processes –Improving processes

8. Chapter 37 Quality and Time Step-by-step doesn’t fit well with American temperament Quality takes time and consistency of long- term strategy For Japanese, quality improvement is forever, and this is the only attitude to take

9. Chapter 38 Questions?

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