return on quality

Examples of return on quality in the following topics:

• Product Quality

  • The Mercedes-Benz SLR McLaren is a high quality car.
  • When discussing quality one must consider design, production, and service.
  • Return on quality (ROQ) - an approach that evaluates the financial return of investments in quality
  • Successful management of quality requires that managers have insights on various aspects of quality.
  • Without ease of use, companies may lose customers, face sales returns, or legal problems from product injuries.

• Total Quality Management Techniques

  • The following sections describe some other important and widely used techniques that drew inspiration from TQM in their focus on quality and control.
  • The Just-in-Time (JIT) method is a production strategy for improving business return on investment by reducing in-process inventory and associated carrying costs.
  • JIT focuses on continuous improvement to maximize an organization's return on investment, quality, and efficiency.
  • JIT programs often include a focus on Total Quality Control.
  • For example, when a process or parts quality problem surfaces on Toyota's production line, the entire production line is slowed or even stopped while the problem is dealt with.

• Total Quality Management (TQM)

  • Total quality management (TQM) promotes the importance of improving quality on a continuous basis.
  • An important basis for justifying TQM is its impact on total quality costs.
  • This is the most expensive category of quality cost as it results in returns, repairs, warranty claims, and potentially lost business.
  • Constantly identifying and improving on processes to increase quality and/or lower costs is a primary responsibility of operations teams.
  • Employ the total quality management (TQM) perspective to identify how to improve quality and efficiency on a continuous basis

• Quality costs

  • While this special topic on TQM is not a comprehensive discussion of all aspects of TQM, several key concepts will be discussed.
  • An important basis for justifying TQM practice is understanding its impact on total quality costs.
  • Examples are designing the products so that they will be durable, training employees so they do a good job, certifying suppliers to ensure that suppliers provide quality in products and services, conducting preventive maintenance on equipment, and documenting quality procedures and improvements.
  • Examples include product returns, repairs, warranty claims, lost reputation, and lost business.
  • Successful TQM practice dictates that pursuing zero defects will result in the minimization of total quality costs by spending more on prevention and appraisal activities in order to reduce the much higher costs of internal and external failure.

• The Quality Control Cycle

  • Quality control is used to evaluate and address the quality of the goods a business provides.
  • Quality control is a business procedure used to assess the quality of a company's products or services against benchmarks determined by the company, industry standards, or clients/customers.
  • Quality control and quality assurance have different purposes.
  • Most importantly, a quality control process should be an ongoing process.
  • Quality control is one of the most important procedures for any business because it lowers that risk of customer or client dissatisfaction and prevents losses for the business.

• Quality Control and Assurance

  • Quality assurance and quality control are intended to ensure that products are created with the fewest number of defects possible.
  • This can be contrasted with quality control, which is focused on process outputs.
  • Many organizations use Six Sigma levels of quality, so the likelihood of an unexpected failure is less than four in one million.
  • Efficient quality control depends on top-notch visual examination of products, employee training, and organizational culture.
  • Discuss quality control (QC) and quality assurance (QA) as integral components of an effective organizational management structure

• Quality

  • Consumers place a value on quality; therefore high quality products may be able to win share and/or command a price premium.
  • Product quality can vary depending on perception and is considered somewhat subjective since it may be understood differently by different people.
  • Consumers may focus on product features and how well the product compares to competing brands in the marketplace.
  • Product qualities can be divided into two main categories:
  • These standards were established to produce better products on a consistent basis, while focusing on production, conformance, and quality control mechanisms.

• Defining Venture Capital

  • As a shareholder, the venture capitalist's return is dependent on the growth and profitability of the business.
  • Investors combine their financial contributions into one fund, which is then used to invest in a number of companies.
  • Innovative technology, growth potential and a well-developed business model are among the qualities they look for.
  • Growth potential is the most important quality, given the high risk a VC firm assumes by investing.
  • Facebook is one example of a entrepreneurial idea that benefited from venture capital financing.

• Measuring and Managing Risk

  • Risk is pervasive in the economy and is an essential component in the derivation of an asset's investment return.
  • Therefore, investment returns compensate holders for the time to maturity via a risk premium .
  • For example, if asset A and asset B both pay a 5% coupon on an annual basis, but asset B matures in 5 years and asset A matures in 1 year, all else equal (asset quality and issuer solvency), we would expect asset A to trade at a higher price than asset B.
  • Remembering that yield and price are inversely related, the higher price on A implies that it has a lower yield than B.
  • To compensate investors for taking on this type of risk, the issuer will provide a risk premium to incentivize the investor to purchase the investment.

• Quality Inspections and Standards

  • The ISO 9002 and 9003 standards were integrated into one single certifiable standard: ISO 9001:2008.
  • It gives one single integrated standard for the food industry and is expected to become more popular in the coming years in the industry.
  • A quality audit is the process of systematic examination of a quality system carried out by an internal or external quality auditor or audit team.
  • Initiated in the UK, the process is focused primarily on procedural issues rather than on the results or the efficiency of a quality system implementation.
  • Evans and Parker (2008) describe auditing as one of the most powerful safety monitoring techniques and "an effective way to avoid complacency and highlight slowly deteriorating conditions," especially when the auditing focuses not just on compliance but effectiveness.