QUALITY IS IT A COST?

INTRODUCTION
Is there a need for discussing this subject?
I have asked this question to self a number of times. And after observing the
discussions on various forums and lately by Margret A Hamburg, M D,
Commissioner, Food and Drugs Agency, USA has observed that
All companies must understand that quality is the basis for
the publics trust and confidence in their products and
maintaining high quality standards is part of the cost of doing
business.
Reproduced from blog of US FDA

Despite the fact that this subject has been well covered by stalwarts of
Deming, Juran, Philip Crosby and many others the issue continues to
persist, as illustrated in the remarks above.
Additionally, the debate has engaged some specific industries such as
Medical

Devices,

Pharmaceuticals,

Automobiles,

Nuclear

Plants

(Fukushima), etc where risks inbuilt into the product and quality of the
product are closely interlinked.
From a historical perspective, certain new dimensions have been seen in the
market dynamics that necessitate revisiting the subject; illustratively, the
impact of poor quality in the context of recalls, regulatory warnings, etc and
their impact on goodwill or the existence of the company.
Pharmaceuticals

Commissioner Hamburgs remarks are a pointer.

Although the remarks have been made during her
visit to India in February 2014; and in the context of
increasing number of Indian companies getting
warning letters from US FDA on quality issues, it is
not a region specific issue.

Medical Devices

EU has harmonised the Risk Management Standard

for medical devices, and in the process included the

exclusion of economics in evaluating the risks of the

medical devices as a part of its Quality Management
System.
Automobiles

Toyota the epitome of Quality in Automobiles has

been experiencing increasing number of recalls after
2010.

Nuclear Power Plants

The tragedy at Fukushima nuclear power plant

continue to be a subject of serious discussion in the
recent times, as much as Three Mile, Long Island
and Chernobyl were in the 1970s.

Many of these recalls and accidents raise the issue of the value of goodwill
lost in the process and its impact on the life of the product. This is linked to
the Cost of Non-Performance of the product an aspect of Cost of Quality.
[Juran, Deming, Philip Crosby].
Risks arising from the product to the society and environment are seemingly
integrated with the QMS
To understand and appreciate this issue, allow me to break it into 3 parts
1. Understanding Quality.
2. Appreciating the Customers perspective on Quality including risk
3. Evaluating Quality from a management perspective.
This will appear in four blogs. This is the first part.
----This is the second part of the blog the first being available here.
PART 1: UNDERSTANDING QUALITY
In the blog quoted in the first part, Ms. Hamburg starts with appreciation of
the quality of the craftsmen and the maintenance staff of the Taj Mahal in
maintaining the pristine glory of the monument.
I could not help but reflect on the care, craftsmanship and
quality of the work that took over two decades to complete. It
was evident .. that those responsible for building the Taj

and those that are preserving the centuries old structure are
committed to extraordinary quality.
So what is product that the Commissioner FDA is talking about? It is a
visual spectacle of the Taj and its surroundings that enthral the visitor. It is
not the Taj, since the monument cannot be traded. It can only be viewed.
What is the quality of the product that the Commissioner FDA is talking
about? It is the experience provided by the visual spectacle.
I may add that all the wonders of the world provide similar product and
quality. Therefore it is essential to understand product and quality to
evaluate the cost of quality and its relevance to business even the Wonders
of the World have to be self sustaining.
A product represents both a physical or tangible item as also a service or
intangibles that may packaged along with the physical or tangible item or
related to the delivery of the physical or tangible item or independent of the
physical product.
A hotel may be a service industry, but the product has the physical or
tangible aspect the room, and other facilities available. The service is in
the manner in which the physical or tangible stuff is made available for
temporary use.
A product therefore has certain characteristics. The characteristics of the
product are its distinguishing features. They may be inherent or assigned or
may be Qualitative or Quantitative.

[ISO 9000:2005 Clause 3.5.1]

The characteristics can be classified by classes, such as [ISO 9000:2005]

Physical
o
Mechanical, Electrical, Chemical or Biological
Sensory
o
Related to the 5 Senses Smell, Touch, Taste, Sight, Hearing
o
And may I add the AURA of the product when all the senses
come together to form an experience of the product.

As in the case of the Taj Mahal.

Behavioural
o
Courtesy, Honesty, Veracity
Temporal
o
Punctuality, Reliability, Availability

Ergonomics
o
Physiological Characteristics, or Related to Safety
Functional
o
Aspects of the product such as intended use.
o
Such as maximum speed, load carrying capacity, etc.

The products are being offered in the market place [includes priced products
and free services] to consumers. Free services include fresh air that we
breathe or certain aspects of the internet, although the access to the
internet is usually priced it is free in hotspots at select locations.
The market differentiation is defined by the differing needs, desires,
expectations, statutory and regulatory requirements, associations and value
for money propositions that customers associate with the product. Market
participants play on the various interacting factors to create differentiations
within the market.
The ability of an organisation to differentiate the market and create space
for its offerings in these markets determines it size, profitability, perception
and