Hostile Assumptions #2

I did not want the #1 thread to get too long and others may still have comments on it, so:

Quality Hostile Assumption #2:

<FONT COLOR="BLUE"><BLOCKQUOTE>Quality is not a major factor in customer decisions, they usually can't tell the difference.</BLOCKQUOTE></FONT></P>

To which Kevin answered:

<FONT COLOR="RED"><BLOCKQUOTE>What are the key factors then? Again, must be born with this knowledge.</BLOCKQUOTE></FONT></P>

If one is to define quality as 'conformance to requirements' the manager above may be correct. But, as we have seen in the Challenger example from #1, quality is much more than that. It is giving the customer what he needs and wants when he needs and wants it (I want to get into space and need to survive doing it), among others.

So, while this manager may be guilty of shortsightedness, what else is there?

Back to an auto example. If the customer gets a good value at the purchase stage, he may be happy for a while. But, what about the after sale service? If this were poor, would the customer give repeat business? Long term reliability? Usage versus dollars spent? The list goes on.

If I supply my customer a product that satisfies the conformance to requirements part, does that mean the customer is going to be happy when the product is received? Perhaps, perhaps not.

Not only must a supplier be able to supply a product or service that will make a profit, they must be able to do this on a regular basis and the method of doing this is to keep current customers happy. They will then send new business and offer repeat business. There are many establishments in my community that I do not frequent and go to great lengths to tell others of my experiences. So, what does this do? The establishments do not have a clue how I feel. They have neither taken the time or energy to find out why I do not frequent their establishments. Why? They do not realize that I can tell the difference!

So my response to #2 would be that the manager in question sees quality as simply meeting some so-called specification and cannot see the system as a whole.

Regards,
Don

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Just the ramblings of an Old Wizard Warrior.

Quality is not a major factor:

This makes me wonder what formula the manager chooses to use. I suppose the formula might look like this:

Price
------ = Profit
Cost

The Customer driven formula probably looks a bit different. Perhaps:

Quality
------- = Value
Price

I think that Customers want the best for the money they are willing to spend. Quality is determined by the Customer. Cost is controlled by the Producer. But Price is set by the rules of Supply & Demand, so this is set by mutual agreement.

In the first formula, the quickest way to increase profits would be to raise the price. What effect will this have on Supply & Demand (you might price yourself above what the Market will bear)? You could cut Costs, as this too will increase profit. Where should you start? If quality is not important, perhaps using substandard materials or manufacturing practices could achieve this. How long will the management practice succeed?

In the second formula, you could increase value by lowering the price. But this will reduce profit. An organization must still stay in business, so this solution can only be exercised with fixed limits and reduction of costs. You could increase quality and increase value. But many would argue that this would increase costs and raise the price. If you believe that quality is free, then this solution will appear correct. I tend to believe the second.

Now I am wondering what the correlation between Value and Profit are. In my estimation, I'm thinking that it is probably pretty strong. Quality is important to the Customer. It may be a varying degree for different products, needs, expectations. But you need to know this in order to know what to build and what to sell it for.

Back to the group.....

How about....

Value
------ = Quality
Price

Perfect Randy!!!

When I was flying in helicopters in the service we flight crew folks were constantly aware that the quality of what we flew was directly proportional to what the low bidder could afford to provide.

I've got 28 years of service and I can tell you about cost vs. quality

I have been away, just started reading these posts. What a great place to vent!


Whithin the context of this post, Randy's equation is appropriate. I like it.

If I was a purchasing person, and saw this equation, I could simply find a cheaper (Cost) source. That would increase quality. Especially if I am being measured on my ability to reduce supplied product costs.

If I was a middle manager, the same thought applies. I can reduce head count (Cost) and increase quality. Especially if I am being graded on improving my budget, and the only thing I have that is flexible is my personnel.

Of course, just finding a cheaper supplier for the sake of price almost never works. We quality folks know this.

Of course just reducing head count is frought with dangers. Again we quality folks know this.

My point here is that it is probable that the equation needs to be more (I don't know what) to be understood by the entire business system. Maybe the Cost part should be [almost] untouchable, so we only improve Value, which improves the Quality?

It may actually have to change for each level of the business, to be appropriate. A business with "silos" will never understand any of this, and I think the entire system needs to comprehend all other aspects of the system. Maybe investors should be looking at "Value" instead of Profit, but that would require they understand that creating value, and increasing it, is the long road to profits.

The equation may have to be a circle -increase quality, increase value, increase customer satisfaction, something like that.

Getting back to the Hostile Assumption #2, I believe that Quality is not a major factor in customer decisions. But they can and will tell the difference, sooner or later. I think supplier quality is assumed to be there. At least it's expected to be there. That's why we are here...

Originally posted by Randy:

...the quality of what we flew was directly proportional to what the low bidder could afford to provide...With manufacturing of military / DoD equipment in my background, I remember the contracts end. They were the limiting factor, and being as the contracts were originated in a DoD organization, the DoD has a lot of the responsibility in specing out what they want. We would typically say "We can do that..." or "We can't do that..." and what it would 'probably' cost. Sometimes the DoD would decide things like "They (military personnel) do not need padding on those seats. They've got tough asses and we need another XXXXX..."



[This message has been edited by Marc Smith (edited 24 February 2000).]

Marc,

I suppose I am glad they weren't thinking that way when it came to helmets and hard heads! Who knows where we'd be today?

Kevin

I guess my point is/was there are always trade offs. If Alan replies to this thread I suspect we'll get some RISK commentary.

Dear Marc - here is the comment. You might have gathered I used to work in a defence manufacturing area, so the comments made already are familiar. I suspect originally the Acceptable Quality Levels (AQL's) used in Mil - Std -131B Sampling by attributes and the corresponding Australian Standard, were based on risk to the end user. For example what level of sampling is required to assure that a soldier confronted with the enemy doesn't have the rifle go 'click', and not fire. Or similarly what risk of a grenade going 'instantaneous' is tolerable.
One hundred percent inspection is not practicable for ammunition as the critical defects are not detectable except by firing the ammo. Inspections are performed at component level and the probabilities multiplied.
I don't believe there is anyone left in the Australian Defence Forces with the knowledge required to estimate an AQL, and most serving officers probably don't even know the concept.
There are two risks considered in Mil-Std 131B, user risk (above)and manufacturer's risk (the risk of the supplier finding a defect).
Where a major problem comes in, is with 'organisational culture'. Would you like to use a grenade or a bullet of which the functionality (safety) depends on 100 percent inspection of components, when the operators in the manufacturing establishment are disgruntled and possibly careless?

Originally posted by Alan Cotterell:
Would you like to use a grenade or a bullet of which the functionality (safety) depends on 100 percent inspection of components, when the operators in the manufacturing establishment are disgruntled and possibly careless?My education in the evolution of quality systems from a government perspective goes back quite a few years. In the US, the first effort to control quality in military contracts goes back to our civil war (1861-65) where contractors sold the government all sorts of defective goods from bullets to gun powder to food to clothes. More often than any other reason was outright fraud.

Having worked for companies such as Westinghouse and Cincinnati Electronics on military contracts, I am well aware of risks involved. Many of the projects I worked on were extremely low volume and quite (if you ask the military) 'risk sensitive'. Prior to the Iraq war in 1990 I worked on a Westinghouse team where we both designed and build 5 items (1 product, 5 units produced) which were specialty communications items. Our product kept the AWACS flying and communicating.

On the other side of the spectrum, I have been involved in high volume, but no less critical, military projects such as the PR-77 man-pack radio. I am well aware of the implications and potential of failure of a radio on (possibly) many, many soldiers in the field (if not an important operation as a whole) if even 1 radio fails. I know why a military toilet seat costs (as the rumour went) US$500. I have written environmental design criteria test plans (read reliability).

I have been involved with a problematic company which was a sole supplier for a special bomb fuse. China Lake accepted my changes to company manufacturing and test procedures - deferring a Method D (takover of company by the military until problems are solved).

I have also worked in comparably critical commercial fields such as air bag design/production in the automotive industry and in the explosives industry. I have worked in the medical arena as well where diagnostic equipment and risk is a hand-in-hand every day consideration.

I also understand consumer vs producer risk.

I made my comment about you and risk as that's quite obviously your focus. I have no problem with that. However, it is my experience that risk is generally considered in design and production as a matter of course. That apparently is not your experience. I do not get excited about risk in manufacturing and design as that has been a part of my experience going back many years. There is not a decision I make that there isn't a risk factor involved. Because of that, risk assessment is not new to me and is, in fact, part of every day life. For this reason it is hard for me to get excited about risk management.

In so far as 'inspecting in' quality, I will agree it is not ideal, but although we have entered the 21st century inspection and test often (still) plays a critical role. Many times it makes more sense to test every item produced (eg.: 100% inspection and test of microprocessors) than to accept any significant consumer risk.[quote]One hundred percent inspection is not practicable for ammunition as the critical defects are not detectable except by firing the ammo. Inspections are performed at component level and the probabilities multiplied.[/b]Where it has to be destructive testing, I guess not. Same with air bags and many other products.

I am not detracting from risk analysis nor am I an inspection and test proponent - but, they both have their place.

You bring the 'risk' factor into most of your responses and you have posted a number of vague dialogues which mostly appear to be promoting your personal business but I have yet to hear details. Instead of doing the promo route, you might want to consider giving specifics. Instead of saying "...You should be considering risk factors...", you might want to be more specific and tell us specifically what risk factors, why they are relevant to the thread you are posting in and tell us how do you would do a risk analysis (what would you want to consider) in that specific situation. How would you determine an AQL? Why?

Less vagaries and more specifics, please. We can all wax philosophical.

In considering the following comment you made there is obviously a major difference between practice in Australia and the US design and production of munitions. The comment I made about AQL's was specific enough to highlight a major deficiency in the Australian Defence Forces. I believe the comments I could make about design of munitions in Australia would make me susceptible to the Crimes Act. -
"However, it is my experience that risk is generally considered in design and production as a matter of course. That apparently is not your experience. I do not get excited about risk in manufacturing and design as that has been a part of my experience going back many years. There is not a decision I make that there isn't a risk factor involved. Because of that, risk assessment is not new to me and is, in fact, part of every day life. For this reason it is hard for me to get excited about risk management."

On the matter of AQL's, I have never seen a definitive text or specification which outlines how to derive one. The AQL is supposed to be defined in contracts. The comment I made, suggested the AQL should be based on risk to the end user, however that is only my opinion. The Australian Standard AS4360 - Risk Management was only published four years ago, and was a global first, however I believe risk management was used prior to the second world war in the US. I believe the AQL's used in Australia are simply copied from US practice with no real justifiable logic on the part of the Australian Defence Forces.
There is obviously a gap in reasoning related to customer requirements and their transposition onto the order.
I'm sorry to harp on risk management, however I suggest it is the basis of the success of the US, when compared with the Australian situation. I suggest ISO9000 can be considered to be an example of 'administrative control' of the 'risk of supplying a nonconforming product to a customer'. It should be promoted to consumers on this basis.