Thursday, February 25, 2010

How do you define quality?

When we think about “quality”, we generally imagine products that are usable, reliable, and free from defects. While this is a good generalization, we need to examine quality at multiple levels: the customer, the product, and the process.

First, let’s consider a steel manufacturer that produces two types of structural beams:

Beam-A supports 2000 lbs; takes 2 days to manufacture; uses standard materials
Beam-B supports 4000 lbs; takes 5 days to manufacture; uses premium materials

Which one is better quality? We might intuitively say the one that uses better materials, takes longer to make, and can support more weight, but is that truly correct? The answer is that it really depends on the customer. Beam-B may exceed weight specifications, or not conform to the customer’s production schedule or budget. This leads us to our first key understanding of quality – it is always defined by the customer! In practice, Beam-A may perfectly satisfy customer needs, create value, and thus, be the higher quality product.

As you can imagine, quality is a moving target since customer requirements change over time. That’s why gathering continual voice of customer (VOC) information is so important. Good companies know exactly what their customers want today, and the really great companies can even anticipate what customers will need in the future.

Here are some common customer requirements which businesses must translate into key quality standards:


Keep in mind; we’re not only talking about the final good/service. Quality standards must also extend to the promotion, production, delivery, and support of products. Consider a firm who provides analytic services for customers. In addition to the actual quality of the service, customers have very specific expectations regarding data protection, privacy, and security. A defect in any of these related areas constitutes a breakdown in overall quality.

This leads us to another key aspect of quality: operational excellence. The systems and processes of an organization must be able to consistently produce products that conform to quality standards. This is where the concept of Six Sigma is used to analyze and reduce all significant sources of variation. A company that is operating at the 6σ level is only producing 3.4 defects per every million opportunities. This is a challenge, but can be accomplished through the standardization of work, documentation of processes, workflow automation, adherence to SOPs, and the use of rigorous quality controls.

Ideally, every process in the business should be aimed at creating value for the customer. This is what it means to be “lean”. If a task doesn’t contribute to quality, or if the customer wouldn’t be willing to pay for it, it is considered waste and should be eliminated. The investment in quality assurance systems not only ensures we continually meet customer needs; it helps us avoid all the costs associated with poor quality. These expenses can be far more damaging, and potentially include:

Cost of rework materials
Cost of labor to fix problem
Credits, refunds, liability, etc
Loss of sales, customers, market share
Opportunity costs
Damage to brand reputation

So back to our original question… how is quality defined? To me, quality is all about creating processes and products that conform to requirements, create value, and satisfy customers. In the end, customers are the final judges on quality; their repeat business will be our best gauge.

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