Quality

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Table of Contents

Introduction2
Quality3
Competitiveness3
Why Quality Influence Competitiveness4
Cost of Poor Quality5
How Poor Quality Affects Competitiveness5
Causes of Poor Quality6
Man6
Material6
Machine6
Management6
Method6
Environment6
Case on Quality Failure7
Quality Guru: Joseph Juran8
Quality Failure8
Toyota’s Recalls8
Toyota’s Response9
Implementation of Juran’s Teaching in Toyota9
Quality Improvement9
Quality Control10
Methods to Overcome Poor Quality: Purpose and Usefulness11
PDCA cycle11
Benchmarking11
Six Sigma12
References13
Appendix15

Introduction

Customer satisfaction is an important criteria to every successful business. In order to achieve satisfaction, product or service offered must meet or exceed customer’s expectation. Quality of a product or service is the key element for customer satisfaction. However, quality needs a continuous improvement due to the competitiveness among other businesses. Quality guru, Dr. Joseph Juran had introduced 10 Steps to Quality Improvement (refer to Appendix, Diagram 1) to overcome this situation.

Quality

Based on Dr. Joseph Juran in Total Quality Management (2009) he defined quality as “fitness for use in terms of design, conformance, availability, safety, and field use.” In other words, quality consists of product features which met or exceeds the needs of each customer such that it provides product satisfaction. In addition, quality also shows the freedom from deficiencies such as rework, late delivery and design changes. Besides that, Juran also introduced quality improvement and quality control to achieve customer satisfaction through quality. Competitiveness

Whenever there is a business, there will always be competition unless it is in monopolistic market. Having competitors in any business can convey advantages such as a motivator or a guide for improvement. However, competitors also have the ability to break a business through “stealing” customers. It is not a tough decision for each customer to alter or change their regular used products into different products when their current product dissatisfies their needs. Retaining customer is a critical matter based on Phillip Kotler and Kevin Keller in Marketing Management 14th Edition. Kotler and Keller mentioned that gaining customer can cost five times more difficult than retaining current customers. Plus, research by Kotler and Keller shows that 5% retention to current customer can increase profits by 25% to 85%.

Why Quality Influence Competitiveness

Quality and competitiveness relates to each other no matter what type of business conducted because satisfaction and profit exist in each business. Most of the business organisation’s objective is to gain profit. In order to increase profitability, one of the ways is to reduce number of competitors. Level of competitiveness of a business can be decreased by gaining customers satisfaction, referring to the theory of Phillip Keller which states that customer satisfaction is the key to customer retention. Quality of each product or service determines whether it falls under, meets or exceeds their expectations.

Cost of Poor Quality

Cost of poor quality reflects low quality conformance which means high defects rate that includes prevention, appraisal and failure cost. Prevention cost is applied as a precaution before any defects occurs. In other words, it is to set a plan which prevents faulty output such as setting up Quality Control procedure. Appraisal cost is applied after prevention cost which is to uncover defects and ensure quality of the products. An example of appraisal cost is inspection of the equipment involved in production process. Failure cost is divided into internal and external failure. Internal failure is the faulty that discovered during the production process which requires rework. However, external failure is most feared by every production...
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