X470.9 Project Scope and Quality Management

Student Name: Eduardo Ferreira

Chapter 1 Discussion Questions: 3, and 11

3. Is there a difference between service quality and product quality?

Service quality is more difficult to define than product quality. Although they share many attributes, services have more diverse quality attributes than products. According to the textbook author Thomas Foster (p.5), this often results from wide variation created by high customer involvement. For example, the consumer of a fountain pen probably will not care that the factory worker producing the pen was in a foul mood (as long as the quality of the pen is good). However, excellent food served in a restaurant generally will not suffice if the server is in a foul mood. In addition, a consumer probably will not consider a pen poor quality if he or she is in a bad mood when using the pen. However, food and service in a restaurant could be excellent and still be perceived poorly if the patron is feeling bad.

If so, what are the implications of these differences for a manager of a service business, such as a restaurant or a retail store?

Service settings are more complex; thus quality is more difficult to define. A customer of a restaurant, for example, evaluates the quality of the restaurant not only on the merits of the food but also on the demeanor of the employees, the speed of the service, the location of the restaurant, the pleasantness of the surroundings, and so forth. A manager of a restaurant or retail store must place as much attention on the quality of the product (food being served in the case of the restaurant) than the actual delivery of the service.

11. What is meant by the phrase cost of quality?

Cost of quality is a means to quantify the total cost of quality-related efforts and deficiencies. Armand V. Feigenbaum first described it in a 1956 Harvard Business Review article. Feigenbaum classified the costs of quality into two areas, cost of conformance and costs of non-conformance. The central theme of quality improvement is that larger investments in prevention drive even larger savings in quality-related failures and appraisal efforts. Feigenbaum's categorization allows the firm to verify this for itself. When confronted with mounting numbers of defects, organizations typically react by throwing more and more people into inspection roles. But inspection is never completely effective, so appraisal costs stay high as long as the failure costs stay high. The only way out of the predicament is to establish the "right" amount of prevention. Variants of the concept of quality costs include cost of poor quality and categorization based on account type, described by Joseph M. Juran. He defined these account types as tangible and intangible costs. Once categorized, quality costs can serve as a means to measure, analyze, budget, and predict.

How can this phrase help a firm address its quality concerns?

The language of money is essential. Without the quality cost figures, communicating poor quality information to upper management is slow and ineffective. One way to translate quality concerns within a firm and to upper management is to identify and measure the costs of quality.

Appendix 1: Armand V. Feigenbaum Quality Cost Areas

Cost area Description Examples

Costs of control

(Costs of

conformance)

Prevention costsArise from efforts to keep

defects from occurring at all

Quality planning

Statistical process control

Investment in quality-related information systems

Quality training and workforce development

Product-design verification

Systems development and management

Appraisal costsArise from detecting defects

via inspection, test, audit

Test and inspection of purchased materials

Acceptance testing

Inspection

Testing

Checking labor

Setup for test or inspection

Test and inspection equipment

Quality audits

Field testing

Costs of failure

of control

(Costs of non-

conformance)

Internal failure

costs

Arise from defects caught

internally and dealt with by

discarding or repairing the

defective items

Scrap

Rework

Material procurement costs

External failure

costs

Arise from defects that

actually reach customers

Complaints in warranty

Complaints out of warranty

Product service

Product liability

Product recall

Loss of reputation

Appendix 2: Joseph Juran Variants of the concept of quality costs include cost of poor quality and categorization based on account type

Cost area Examples

Tangible costs—factory accounts

Materials scrapped or junked

Labor and burden on product scrapped or junked

Labor, materials, and burden necessary to effect repairs on

salvageable product

Extra operations added because of presence of defectives

Burden arising from excess production capacity necessitated by

defectives

Excess inspection costs

Investigation of causes of defects

Tangible costs—sales accounts

Discount on seconds

Customer complaints

Charges to quality guarantee account

Intangible costs

Delays and stoppages caused by defectives

Customer good will

Loss in morale due to friction between departments