Quality Planning Tutorial

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Quality Definition

The dictionary defines quality as "customer satisfaction and loyalty". An alternative definition for quality is also the phrase "fitness for use". To develop a deeper understanding of what quality is, one must start by understanding their customer. A customer is "anyone who is affected by the service, product or the process". There are two types of customers. External customers are the ultimate users, such as the general public which include the intermediate processors as well as retailers. They are of prime importance to any organization. Internal customers are the other divisions of a company that are exchange information or components for assembly and departments or persons that supply products to each other. When a purchasing department receives specifications from the engineering department for procurement, purchasing becomes the internal customer of engineering. The internal and external customers are jointly referred to as "stakeholders".

The output of any process is a product. Three types of products are namely goods (e.g. automobiles, circuit boards etc.), software (e.g. computer program, a report) and services (e.g. banking, insurance, and healthcare) are identifiable.

Quality which has been defined as customer satisfaction and loyalty is two dimensional: 1) features and 2) freedom from deficiencies. A close examination of the two dimensions provides the following insights:

  1. Features have a major effect on sales income. Features refer to the quality of design. Increasing the quality of design may lead to higher costs.

  2. Freedom from deficiencies has major effect on costs through reductions in scrap, rework, complaints .Freedom from deficiencies refer to quality of conformance. Higher conformance leads to fewer complaints and decreased customer dissatisfaction.

Quality is quantified by the customer and features and freedom from deficiencies are the determinants of customer satisfaction. Design projects are initiated to improve features whereas pursuing improvement projects reduce defects. Design for Six Sigma (DMADV) focuses on feature improvement whereas Six Sigma DMAIC and Lean Techniques are directed towards lowering deficiencies.

Relationships between Quality, Productivity, Costs, Cycle Time and Value

Quality and Productivity

Productivity is the ratio of salable output divided by the resources used. The resources are labor, raw material and capital. When quality is improved by the identification and elimination of the causes of errors and rework more useful output is obtained for the same labor input. Improvement in quality results in a direct increase in productivity.

Quality and Costs

As features in a product or quality of design increases, cost escalates. Increase in the quality of conformance leads to reduction in scrap, rework and other deficiencies leading to significant drops in costs. An ideal strategy is to use the savings realized from reduced deficiencies to pay for increase in product features without raising the selling price.

Quality and Cycle Time

Cycle time to provide a transaction is a vital parameter in service industries. A fall in cycle time is observed when quality improvement initiatives reduce rework, redundant operations and other defects.

Quality and Value

Value is quality divided by price. Quality and price are seen in conjunction by customers. Quality improvements that do not result in any increase in the price of the product provide better value. Quality, productivity, cost, cycle time and value are interrelated. Quality problems must be detected early to prevent a compromise in cost, value and schedule. Emphasis must be placed on prevention rather than correction of quality problems.

Quality perspectives- Internal and External

Table 1 shows the two views of quality: the old internal view is still followed by organizations and the new external view has been adopted by many other organizations which have found it mandatory for their survival.

Internal view Customer-focused (external) view

Compare product to specification

Compare product to competition and to the best.

Get product accepted at inspection

Provide satisfaction over product life.

Prevent plant and field defects

Meet customer needs on goods and services

Concentrate on manufacturing

Cover all functions

Use internal quality measures

Use customer quality measures

View quality as technical issue

View quality as business issue

Efforts coordinated by quality manager

Efforts directed by upper management.

Table 1: Two views of quality (Source: Juran Institute Inc. (1990))

Both the internal and the external views of quality are necessary. In the 1980’s the emphasis on applying quality principles beyond manufacturing to the public and service sectors and the participation of all employees of the organization gave rise to Total Quality Management (TQM). TQM is the system of managerial, statistical and technological concepts and techniques to achieve quality objectives throughout an organization.