Quality management systems Requirements 3 Terms and definitions

Quality management systems – Requirements 3 Terms and definitions Definition of Quality – Value-Based View Value-based quality is defined in terms of costs and prices as well as a number of other attributes. Thus, the consumer’s purchase decision is based on quality (however it is defined) at the acceptable price.

Building customer supplier relation 2. We shall do our best to help you solve your problem … 1. We have a problem … 3. It looks like it’s possible to do business with this person. Requirements Supplier Customer

The two parties have different value scales Customer value scale Specifications Supplier value scale In order to fulfill customer requirements, we have to provide a solution. Cost of our solution is C 1 Supplier Customer

Value and cost are different to supplier and customer We estimate the value of our solution to be V 1. If customer pays V 1 then our benefit will be V 1 – C 1. V 1 C 2 C 1 Supplier Customer

Value and cost are different to supplier and customer The price of our solution is V 1. The value of their solution to our problem is V 2 which is well above the price We will have to pay C 2 for solution. V 2 V 1 C 2 C 1 Supplier Customer

Win – win situation We made a god deal since (V 2 – C 2) >0 We made a god profit since (V 1 – C 1) >>0 You provided a good solution. V 2 V 1 C 2 C 1 Supplier Customer

Value definition of Quality Our satisfaction will be higher in case where (V 2 – C 2)>>0 To improve quality we should create steeper arrow from left to right. V 2 Q= C 1 V 2 V 1 C 2 C 1 Supplier Customer

Value definition of Quality For improvement we reduce cost on the left and to increase the value to the right. Now we are even more competitive. If necessary we can even reduce price. This supplier is providing us high quality solutions. V 2 Q= C 1 We are looking forward to do business with you. V 2 V 1 C 2 C 1 Supplier Customer

Quality (Q), Ideality (I) and Return on Investmet (ROI) There are similarities between these expressions! Q= I= Vcustomer Csupplier V= ∑F useful Ccustomer ∑F useful ∑F harmful + ∑Costs ROI of improvement = Q = quality V = value C = cost ∑Cost before – Cost after Investment I = ideality F = function ROI = return on invesmentt