There may be potential flaws in the whole process of quality formation. The time and expenditure for their control are different according to when they are detected.
Many people found one famous principle while they were summing up their quality management. That is the Law of Ratio 1:10:100.
It means that it takes an hour and 1 won to manage a flaw of quality at the stage of development and design, 10 hours and 10 won at the stage of production, and 100 hours and 100 won at the stage of marketing. That is to say, plan: production: marketing = 1:10:100.
Kang In Song, an institute head at the Faculty of Management of Industrial Economy, has formulated 6 types related to the time of flaw detection and rectification and analyzed the influences of each type on customer satisfaction, time and cost.
Type 1-4: stages of development and design, design examination, production, and test, respectively. In each stage, quality flaws are found and controlled.
Type 5 and 6: stages when quality flaws have been transferred to customers. Type 5 gives priority to troubleshooting and maintenance and also employs refund or exchange of goods. Type 6 is when quality flaws transferred to customers cannot be controlled by enterprises.
Enterprises can choose one of these types to manage quality flaws.
The effects on customer satisfaction, time and cost are:
The enterprise which agrees to Type 1 might make the best choice by giving great satisfaction to the customers and ensuring minimum time and cost. It guarantees preventive management of quality. This enterprise can be said to have quality management level of 6σ.
Any enterprise in favor of Type 2 may give basic satisfaction to the customers and control flaws with comparatively short time and low cost. It has quality management level of 5σ. Its drawback is relative – it is not preventive but has pursuit property and delays the time of starting production.
An enterprise whose quality management goal is Type 3 may have the following advantages. It is preventive and gives partial satisfaction to the demand of the customers. It might ensure production and supply in good time and save a lot of money for equal and continuous improvement even if it needs 10 times as much expenditure. It might have quality management level of 4σ.
An enterprise in favor of Type 4 may not have good points by and large but flaws are not transferred to the customers. It might have quality management level of 3σ. It is not preventive but has pursuit property. It does not satisfy customers’ requirement but ask them for its quality level. It might delay supply and need 10 times its expenditure, in particular in the last stage.
The enterprise in Type 5 might not have good points but if any, it is responsible for flaws and takes measures even though they have already been transferred to the customers. It has quality management level of 2σ. It might always deal with the customers to fix exchange or refund the goods. It has a problem of whom to allocate extra pay – the enterprise or the customers. It might need time for fixing and servicemen and equipment for it.
Any enterprise in Type 6 may have decreased income and legal problems. It might injure its reputation, causing a lot of loss and hardly managing its own business, as flaws are transferred to customers, which makes them disappointed. It is on the verge of bankruptcy. Its quality management level is 1σ.
The 6 types mentioned above let us aware of different effects on customer’s satisfaction, time and cost.
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