Quality management systems – Requirements 3 Terms and definitions 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. Definition of Quality – Value-Based View
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Quality management systems – Requirements
3 Terms and definitions
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.
Definition of Quality – Value-Based View
Building customer supplier relation
Supplier Customer
3. It looks like it’s possible to do business with this person.
1. We have a problem …2. We shall do our best
to help you solve your problem …
Requirements
The two parties have different value scales
Supplier Customer
C1
Specifications
In order to fulfill customer requirements, we have to provide a solution. Cost of
our solution is C1.
Supp
lier v
alue
sca
le
Cust
omer
val
ue s
cale
Value and cost are different to supplier and customer
Supplier Customer
C1
V1 C2
We estimate the value of our solution to be V1. If customer pays V1 then
our benefit will be V1 – C1.
Value and cost are different to supplier and customer
Supplier Customer
C1
V1 C2
V2
The price of our solution is V1.
The value of their solution to our problem is V2 which is
well above the price We will have to pay C2 for solution.
Win – win situation
Supplier Customer
C1
V1 C2
V2
We made a god deal since
(V2 – C2) >0
You provided a good solution.
We made a god profit since
(V1 – C1) >>0
Value definition of Quality
Supplier Customer
C1
V1 C2
V2
Our satisfaction will be higher in case
where (V2 – C2)>>0
To improve quality we should create steeper
arrow from left to right.
Q =
V2C1
Value definition of Quality
Supplier Customer
C1
V1 C2
V2
This supplier is providing us high quality solutions.
Q =
V2C1
We are looking forward to do business with
you.
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.
Quality (Q), Ideality (I) and Return on Investmet (ROI)
Q = Vcustomer
Csupplier
There are similarities between these expressions!
I = ∑F useful
∑F harmful + ∑Costs
ROI of improvement = ∑Cost before – Cost after
Investment
V = ∑F useful
Ccustomer
Q = qualityV = valueC = cost
I = idealityF = functionROI = return on invesmentt
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