Coursera KAIST: SCM101

Supply Chain Management

A Learning Perspective
Lecture 4

Professor Bowon Kim

KAIST Business School

2014 Bowon Kim

Quality

What is Quality?
Recall the definition of value

Utility
Value =
Cost

Utility when the consumer feels satisfied and/or happy

Quality Utility
When the consumer believes the quality of the product or service is high, she feels
satisfied/happy

What are the elements of quality? Is it a one-dimensional concept? Or is it a

multi-dimensional concept?
Quality Multidimensional Nature

Eight dimensions of quality Garvin (1988)*

Conformance meeting specification
Performance functionality
Reliability reliable performance
Durability long product life
Features supplementary functions
Serviceability maintenance, repair
Aesthetics feel, look, touch, subjective
Perceived quality brand, image, status
* Gravin, D. A. (1988). Managing Quality. Free Press.
Quality Order Winning versus Qualifying

Conformance
Performance
Reliability
Order-
Durability
Features
Serviceability
Order-

Aesthetics
Perceived quality
Quality Costs Quality Failure
Internal Efforts for Quality Improvement
Goal: To eliminate both internal and external quality failures
Costs
Prevention cost
Appraisal cost
Process and quality improvement activity cost
Internal Quality Failure
Costs
Rework, repair, scrap costs
External Quality Failure
Costs
Short-term
Return, repair, rework costs
Customer compensation
Long-term
Customer perceptionReputationCustomer loyalty Future sales
Rework Disruption Process variability Quality deterioration
Quality Costs Quality Failure

Costs
due to
Quality
Failure

Time
Internal External
Point of Purchase
Total Quality Management

Technical Statistical
Dimension Quality circle Process Six sigma
Control (SPC) TQM
(Total
Quality
Management)

Managerial
Command Empowerment Philosophy
Organizational Control (Top Motivation Learning
Customer-
Dimension Incentive organization
down approach) orientation
Quality Improvement Dynamics
Quality is Free?

Customer
+ Perception
Innovation +
Cap ability Quality

+ +
Process Quality Improvement Sales
Imp rovement Activity
+

- + +
Costs Resources + Profits
-
Quality Dynamics Quality Learning
Quality An Analytical Perspective

Quality from an Analytical Perspective

Defect = deviation from the goal

Quality Problem:= Defect

Deviation:= |Goal Actual Outcome|

Process Variability

Common Assignable
Causes Causes
Quality Statistical Process Control

Quality from an Analytical Perspective

Defect = deviation from the goal

Mean
Target Value
Quality Statistical Process Control

Quality from an Analytical Perspective

Defect = deviation from the goal

Actual Values Target Value

Deviation between Target and Actual Value

due to Common Causes
Quality Statistical Process Control

Quality from an Analytical Perspective

Defect = deviation from the goal

Assignable cause
affecting the dispersion
Quality Statistical Process Control

Quality from an Analytical Perspective

Defect = deviation from the goal

Assignable cause
affecting the mean
Quality Statistical Process Control
Statistical Process Control plotting the actual outcomes

UCL

Target
Time

LCL

1st unit 5th unit

Quality Statistical Process Control
Statistical Process Control
Type I Error: Probability(To say out-of-control wrongly when in fact it is in-control)
Type II Error: Probability(To say in-control wrongly when in fact it is out-of-control)

Type I
Type II
Quality Process Capability

Customer Specification
Tolerance Range

As Process Distribution

Bs Process Distribution

LC Target UC
Lower limit Upper limit
of specification of specification