Product quality has entered the consciousness of managers. It has become crystal clear that high quality products have a distinct advantage in the market place, that market share can be gained or lost over the quality issue. Therefore quality is a competitive priority. We have had formal quality control programs in US companies since the 1940s important statistical quality control procedures were developed in this country beginning in the early 1930s, and quality control organizations and procedure within companies have been common. Yet something important changed in the global competitive scene in the last ten years or so, and that something was unsurpassed Japanese product quality.
Reports of superior Japanese quality appeared in the press almost daily during the 1980s. One study is based on the quality performance of nine American and seven Japanese manufacturers of home air conditioners.
The broad findings of the study were as follows:
- The failure rates of air conditioners made by the worst producers, which were all American, were between 500 and 1000 times greater than those made by the best producers, which were all Japanese
- The average American manufacturer had 70 times as many defects on the assembly line as the average Japanese manufacturer and made 17 times as many service calls during the first year following sale.
- The defect percentages of air conditioners produced by the worst Japanese manufacturers were less than half of those produced by the best American manufacturers.
- Companies with the best quality records also had the highest labour productivity.
- The extra cost of making higher quality Japanese goods was about half the cost of fixing defective products made by American manufacturers
The competitive quality and cost advantage of the Japanese home air conditioner products highlights the importance on quality assurance. Ensuring high quality is now recognized as being of the greatest significance in maintaining a strong competitive position.
The competitive pressure to produce high quality products has increased greatly in recent years.
Up to 1970, the attitude towards quality was reflected in the term yield. We focused on how many good parts were being produced – just toss out the bad ones. An acceptable level was thought to be 10%.
Scrap – During the 1970s we began to use the term scrap to focus on damaged material and that the level had declined below 10%.
By the 1980s, it appeared that even the previous levels were no longer competitive so slogans like quality is job 1 were coined to signal determination to reduce scrap below 1%.
Parts per Million–By 1985 the market’s perception of quality forced manufacturers towards zero defects and the Japanese introduced the intimidating term, parts per million to indicate their resolve for quality output.
The broader system for assuring that high quality is maintained the choice of processes the nature of control procedures for quality of products and services, the maintenance function, and the role of repair and preventive maintenance in ensuring high quality.
The quality and quantity are monitored in some way, and the results are compared with standards. Although we are generally interested in quality measures, changes in output quantity may also be symptomatic of reliability problems. The associated costs of quality and quantity control are derivatives of reliability. When the results, are interpreted we may conclude that the processes are out of adjustment or that something more fundamental is wrong, thus requiring machine repair or possibly retraining in annual operations. If equipment actually breaks down then the maintenance function is called. Information on output quality and quantity may also be used to form preventive maintenance programs designed to anticipate break downs. Thus, although other important interactions have their efforts, quality assurance centres on quality control and equipment maintenance.
However, it is local in nature and leaves a great deal unsaid. We must ask: Where did the standards come from? What is the nature of the productive system, and is it appropriate for the quality tasks?
The organization must set policies regarding the desired quality in relation to markets and needs, investment requirements return on investment potential competition and so forth. For profit making organizations, this involves the judgment of where in the market the organization has a relative advantage.
For non-profit organizations policy setting may involve meeting standards set by legislation and /or by the organization to maximize its position. For example, universities acquire superior academic staffs in order to raise funds, improve the physical plant, obtain outstanding students, and enhance research output. Hospitals may set high standards of acre partially to attract the best known physicians support fund raising programs, and attract interns with the best qualifications. The post office may set standards for delivery delay that accommodate current budgetary levels.
The policies set by management in box 1 provide the guidelines for the design of the organization’s products and services. This design process is an interactive one in which the productive system design is both considered in and influenced by the design of products and services. For manufacturing systems, the design of products in this interactive fashion is termed production designs. The interaction affects quality considerations because equipment capability must be good enough to produce at least the intended quality.