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, most agree that it is an integration of all functions of a business to achieve high quality of products through continuous improvement efforts of all employees. Quality revolves around the concept of meeting or exceeding customer expectation applied to the product and service. Achieving high quality is an ever changing, or continuous, process therefore quality management emphasizes the ideas of working constantly toward improved quality. It involves every aspect of the company: processes, environment and people. The whole workforce from the CEO to the line worker must be involved in a shared commitment to improving quality. Therefore, in brief, quality and quality management in particular can be defined as directing (managing) the whole (total) production process to produce an excellent (quality) product or service. It differs from other management techniques in the attitude of management toward the product and toward the worker. Older management methods focused on the volume of production and the cost of the product. Quality was controlled by using a detection method (post production inspection), problems were solved by management and management's role was defined as planning, assigning work, controlling the production. Quality management, in contrast, is focused on the customer and meeting the customer's needs. Quality is controlled by prevention, i.e., quality is built in at every stage. Teams solve problems and everyone is responsible for the quality of the product. Management's role is to delegate, coach, facilitate and mentor. The major quality management principles are: quality, teamwork, and proactive management philosophies for process improvement. CONCEPT AND DIMENTIONS OF QUALITY People define quality in many ways. Some think of quality as superiority or excellence, others view it as a lack of manufacturing or service defects, still others think of quality as related to product features or price. Followings are some of many ways to look at quality. 1 2 3 4 5 6 7 8 9 perfection consistency eliminating waste speed of delivery compliance with policies and procedures providing a good, usable product doing it right the first time delighting or pleasing customers total customers service and satisfaction
Today most managers agree that the main reason to pursue quality is to satisfy customers. The American National Standards Institute (ANSI) and the American Society for Quality (ASQ) define quality as "³the totality of features and characteristics of a product or service that bears on its ability to satisfy given needs.´ The view of quality as the satisfaction of customer needs is
these systems focused primarily on technical issues such as equipment reliability. Most of these dimensions revolve around the design of the product. Quality in Manufacturing Well-developed quality systems have existed in manufacturing for some time. or smells. human resource management.often called fitness for use. legal. sounds. and manufacturing operations. To beat the competition. Quality in Services Service can be defined as ³any primary or complementary activity that does not directly produce a physical product±that is. Suppliers have become partners in product design and manufacturing efforts. Human resource practices concentrate on empowering workers to collect and analyze data. health. or brand names. y Feature: the ³bells and whistles´ of a product. inspections. and take responsibility for continuous improvements. tastes. engineering. y Reliability: the probability of a product¶s surviving over a specified period of time under stated Conditions of use y Conformance: the degree to which physical and performance characteristics of a product match pre-established standards. Product design activities. y Aesthetics: how a product looks. organizations often must exceed customer expectations. y Perceived quality: subjective assessment resulting from image. The transition to a customer-driven organization has caused fundamental changes in manufacturing practices. now closely integrate marketing. Service organizations include hotels. feels. changes that are particularly evident in areas such as product design. merely satisfying customer needs will not achieve success. for example. In highly competitive markets. y Durability: the amount of use one gets from a product before it physically deteriorates or until replacement is preferable. thereby moving the responsibility for quality from the quality control department onto the factory floor. one of the most popular definitions of quality is meeting or exceeding customer expectations. engineering. make critical operations decisions. Thus. which forced their network of suppliers to improve quality. and . y Serviceability: the ability to repair a product quickly and easily. However. and supplier relations. the non goods part of the transaction between buyer (customer) and seller (provider). advertising. Manufactured products have several quality dimensions including the following: y Performance: a product¶s primary operating characteristics. and process control.´ A service might be as simple as handling a complaint or as complex as approving a home mortgage. defect measurement. Many of these efforts were stimulated by the automobile industry.
whereas manufacturing is performed away from the customer. Today services account for nearly 80 percent of the U. 3 The output of many service systems is intangible. educational institutions. Of the customers who make a complaint. Manufacturing quality can be assessed against firm design specifications. nebulous expectations and past experiences. financial services. customers of a quick-service restaurant pace their own orders. Constantly changing personnel makes establishing a culture for continuous improvement more difficult. The service sector began to recognize the importance of quality several years after manufacturing had done so. The average customer who has had a problem will tell nine or ten others about it. which typically pay less than manufacturing jobs. as statistics from a variety of studies reveals: The average company never hears from more than 90 percent of its unhappy customers. whereas manufacturing produces tangible.S. and each customer is different. visible products. the goal is uniformity. The importance of quality in services cannot be underestimated. Another factor is the high turnover rate in service industry jobs. If the customer feels that the complaint was resolved quickly. the company has at least 25 customers with problems. lawyers. but service quality can only be assessed against customers¶ subjective. Manufactured goods can be recalled or replaced by the manufacturer. . this figure jumps to about 95 percent. carry their food to the table. For every complaint it receives. The most critical differences are: 1 Customer needs and performance standards are often difficult to identify and measure.. and these differences have important implications for managing quality. and are expected to clear the table when they have finished eating. primarily because the customers define what they are. but poor service can only be followed up by apologies and reparations. The production of services differs from manufacturing in many ways. more than half will do business again with that organization is their complaint is resolved. So why do many companies treat customers as commodities? In Japan the notion of customer is equated with ³honored guest. Singapore and Sweden workforce. insurance salespeople. retailers.´ Service clearly should be at the forefront of a firm¶s priorities. Customers who have had complaints resolved satisfactorily will only tell about five others.other professional services. Doctors. about one-fourth of which are serious. 4 Customers often are involved in the service process and present while it is being performed. In manufacturing. This can be attributed to the fact that service industries had not confronted the same aggressive foreign competition that faced manufacturing. It costs six times more to get a new customer than to keep a current customer. transportation. and public utilities. 2 The production of services typically requires a higher degree of customization than does manufacturing. For example. and food-service employees must tailor their services to individual customers.
Customer perceptions are critical although it may be difficult to define what the customer wants.5 million shipments across the globe. on a given business day. and every time for the same customer? Tangibility: after the service is over. Hence. The quality of human interaction is vital in every . Many service organization have well-developed quality assurance systems. is there any thing to take home to remind the service experience? Empathy or Courtesy: Do frontline employees greet each customer cheerfully? Responsiveness: Can service personnel react quickly and resolve unexpected problems? Service organizations must look beyond product orientation and pay significant attention to customer transactions and employee behavior. doctors. are based on manufacturing analogies and tend to be more product-oriented than service-oriented. however. Most of them. service organizations have special requirements that manufacturing systems cannot fulfill.5 million customer through it¶s branches and cash machines. However. The most important dimensions of service quality include the following. yet perceptions of speed may differ significantly among different service organization and customers. Several points that service organizations should consider are as follows: The quality characteristics that a firm should control may not be the obvious ones. you may remember the most important ones by RATER: Reliability: How much reliable is the service provider? Accessibility and convenience: Is the service easy to obtain? Timeliness: Will a service be performed when promised? Completeness: Are all items in the order included? Consistency: Are services delivered in the same fashion for every customer. Many of the key dimensions of product quality apply to services. Such large volumes increase the opportunity for error. ³on time arrival´ for an airline is a measure of service performance. Behavior is a quality characteristic. 2 Many service organizations must handle very large numbers of customer transactions. or Fed Ex might handle more than 1. A typical hotel¶s quality assurance systems focus on technical specifications such as properly made-up rooms. These differences have made it difficult for many service organizations to apply total quality principles. Equity Bank of Kenya might process more than 2 million transactions for 4. For example. For example. The quality of human interaction is a vital factor for services that involve human contact. frequent flyer awards and ³business class´ sections represent features. speed of service is an important quality characteristic. 1 Services are generally labor intensive. and other medical staff. whereas manufacturing is more capital intensive. For instance. Marketing and consumer research can play a significant role. the behavior and morale of service employees is critical in delivering a quality service experience. For example. nurses. the quality of hospital care depends heavily on interactions among the patients.Challenges involved in Service offering include the following.
far beyond product orientation. and tools.S.transaction that involves human contact. banks have found that the friendliness of tellers is a principal factor in retaining depositors. The foundation of total quality is philosophical: TQ includes systems. TQ is anchored in values that stress the dignity of the individual and the power of community action. If quality is meeting and exceeding customer expectations. manufacturing can be seen as a set of interrelated services. then manufacturing takes on a new meaning. TQ is a total system approach (not a separate area or program) and an integral part of high-level strategy. methods. involves all employees. Service standards. but within the organization. (5) management by fact. not only between the company and the ultimate consumer. However. the philosophy stays the same. (4) empowerment and teamwork. (2) a process orientation. However. corporations in cooperation with deans of business and engineering departments of major universities. Establishing and measuring service levels may be difficult. Image is a major factor in shaping customer expectations of a service and in setting standards by which customers evaluate that service. and rework. TQ stresses learning and adaptation to continual change as keys to organizational success. (3) continuous improvement and learning. sales are a customer of packaging and distribution. The systems permit change. and extends backward and forward to include the supply chain and the customer chain. Quality control activity may be required at times or in places where supervision and control personnel are not present. most share some basic elements: (1) customer focus. Often work must be performed at the convenience of the customer. Customer attitudes and employee competence are not as easily measured. it works horizontally across functions and departments. scrap. PRINCIPLES OF TOTAL QUALITY A definition of total quality was endorsed in 1992 by the chairs and CEOs of nine major U. For example. and recognized consultants: Total Quality (TQ) is a people-focused management system that aims at continual increase in customer satisfaction at continually lower real cost. it is easy to quantify output. assembly is a customer of manufacturing. are often set judgmentally and are hard to measure. and (6) leadership and strategic planning. Total quality provides the umbrella under which everyone in the organization can strive to create customer satisfaction. There probably are as many different approaches to TQ as there are businesses. This calls for more training of employees and self-management. top to bottom. These issues suggest that the approach to managing quality in services differs from that used in manufacturing. In manufacturing. Manufacturing is a customer of product design. . particularly those relating to human behavior.
A business can achieve success only by understanding and fulfilling the needs of customers. 3. work gets done (or fails to get done) . and community activities and the sharing of nonproprietary quality-related information demonstrate far-reaching benefits. 2. trade. External Customer Internal Customer Investor Customer Social or Society Customer Process Orientation The traditional way of viewing an organization is by surveying the vertical dimension ± by keeping an eye on an organization chart. In addition. is an exemplary corporate citizen.Customer Focus The customer is the judge of quality. A world-class company. Employees must view themselves as customers of some employees and suppliers to others. A firm also must recognize that internal customers±the recipients of any work output. and positive referrals. and workforce training activities. Customers may be of following types: 1. product design. concern for the environment. Society represents an important customer of business. and sharing quality-related information in the company'¶ business and geographic communities are required. This requires an awareness of developments in technology and rapid and flexible response to customer and market needs. however. process improvement. the company shows constant sensitivity to emerging customer and market requirements. Business ethics. From a total quality perspective. measuring their satisfaction relative to competitors. Understanding customer needs. Failure to meet the needs of internal customers will likely affect external customers. Employees who view themselves as both customers of and suppliers to other employees understand how their work links to the final product. 4. the responsibility of any supplier is to understand and meet customer requirements in the most efficient and effective manner possible. all strategic decisions a company makes are ³customer-driven.´ In other words. Customer focus extends beyond the consumer and internal relationships. and keeping pace with changing markets requires effective strategies for listening to and learning from customers. and building relationships. industry. public health and safety measures. company support±within reasonable limits of its resources±of national. repeat business. Customer needs±particularly differences among key customer groups ± must be linked closely to an organization¶s strategic planning. However. both current and future. After all. such as the next department in a manufacturing process or the order-picker who receives instructions from an order entry clerk ± are as important in assuring quality as are external customers who purchase the product. Satisfaction and dissatisfaction information are important because understanding them leads to the right improvements that can create satisfied customers who reward the company with loyalty. by definition. Creating satisfied customers includes prompt and effective response and solutions to their needs and desires as well as building and maintaining good relationships.
assembly. Many of the greatest opportunities for improving organizational performance lie in the organizational interfaces ± those spaces between the boxes on an organization chart. nearly every major activity within an organization involves a process that crosses traditional organizational boundaries. a process is how work creates value for customers. We typically think of processes in the context of production: the collection of activities and operations involved in transforming inputs-physical facilities. For example. Achieving the highest levels of performance requires a well-defined and well-executed approach to continuous improvement and learning. capital. Common types of production processes include machining. computerized quality reports. Data and information support analysis at all organizational levels. and shipping by distribution and logistics personnel.horizontally or cross-functionally. and digital readouts of part dimensions to provide immediate information on what is happening and how . picking. Continuous Improvement Continuous improvement is part of the management of all systems and processes. Improvement and learning need to be embedded in the way an organization operates. defects. and installation by field service engineers. This means they should be a regular part of daily work. seek to eliminate problems at their source. mixing. According to AT&T. or approving loans. and cycle time performance. and waste. However. determine root causes. filling orders. The types of information and how it is disseminated and aligned with organizational levels are equally vital to success. not hierarchically. responsiveness. Management by Fact Organizations needs performance measures for three reasons: To lead the entire organization in a particular direction. rather than focusing on only a small part. At the work level. that is. and take corrective action as needed. equipment. Improving productivity and operational performance through better work processes and reductions in errors. and Improving flexibility. A process is a sequence of activities that is intended to achieve some result. data provide real-time information to identify assignable reasons for variation. and energy-into outputs-products and services. a credit check by finance. This might require lean communication a channel consisting of bulletins. an order fulfillment process might involve a salesperson placing the order. to drive strategies and organizational change. and be driven by opportunities to do better as well as by problems that need to be corrected. invoicing by finance. people. Improvements may be of several types: Enhancing value to the customer through new and improved products and services. a marketing representative entering it on the company¶ computer system. To manage the resources needed to travel in this direction by evaluating the effectiveness of action plans. packaging. materials. and 21 To operate the processes that make the organization work and continuously improve. ³Continuous improvement´ refers to both incremental and ³breakthrough´ improvement. A process perspective links all necessary activities together and increases one¶s understanding of the entire system.
At the organization level. operational performance data such as yields. and recognition of team member achievements. customer complaint data obtained from customer service representatives or monthly sales and cost figures faxed in from field offices. and supplier data. Information at this level generally is aggregated. quality and operational performance data from all areas of the firm. defect rates. human resources. TQM and Strategic Focus 1. Such information is highly aggregated and obtained from many different sources throughout the organization. and Cost and financial performance. Leadership and Strategic Planning Senior Executive Leaders. and quality and operational performance. Long-term quality initiatives are viewed as being costly and not contributing to the ultimate performance measure ± profit.things are progressing. . participation in improvement or strategic projects. and market share drive strategic planning. At the process level. All this has contributed to an annual average increase in sales growth of 35 percent from 1995 to 2000. regular interactions with customers and team members. A comprehensive set of measures and indicators tied to customer and company performance requirements provides a clear basis for aligning all activities of the company with its goals. A company should select performance measures and indicator that best represent the factor that lead to improved customer. market. and financial performance. operational. Quality planning activities are delegated to the ³quality control´ department. (SELs) and the Leadership Committee (LC) set the strategic direction of the company. and process cycle times receive as much attention in the strategic plan as financial and marketing objectives. Employee performance. for example daily or weekly scrap reports. along with relevant financial. cycle times. and productivity measures help manager determine whether they are doing the right job. form the basis for strategic planning and decision making. and communicate and reinforce values and expectations through performance reviews. Strategic Planning and Management In traditional management. and high levels of customer and employee satisfaction. Market assessments. Product and service performance. Supplier performance. These typically include Customer satisfaction. return on investments. and whether they are improving. Competitive comparisons. Quality goals are the cornerstone of the business plan. whether they are using resources effectively. financial and marketing issues such as profitability. Measures such as customer satisfaction. Quality planning and strategic business planning are indistinguishable in TQ.
which transforms them into outputs. These efforts usually result in incremental improvement over time although there can be breakthrough improvements. and as a result.QUALITY MANAGEMENT AND OTHER ORGANIZATION ACTIVITIES ORGANIZATION AS A SYSTEM DIAGRAM DEPICTING AN ORGANISATION AS A SYSTEM Systems theory fundamentals An organization is a complex relationship involving people. better outcomes. Organizational capability This refers to the organization¶s ability to perform using the available resources (the inputs on the diagram above). physical assets. Systems theory and continuous improvement Systems theory holds that an organization can get better outputs. emphasis should be on continually improving the inputs and transformation process. all aligned to achieving predetermined goals and objectives. by controlling the quality of both inputs and the transformation process (the first two columns in the diagram). funds and processes. which are under the control of the organization. Therefore. The effectiveness of this transformation is measured by the outcomes. An organization takes the inputs and adds value to them by means of processes and procedures. Three dimensions that must be aligned and support each other to build organizational capability that will deliver results are: .
Most organizations are made up of individual functional units that are represented as departments that ultimately provide customer satisfaction in their own unique way. Management of quality should be performed using systems approach where independent functional areas are unified with the aim of satisfying both the internal and external customers. a methodology and a set of tools. processes. In a typical functional area. Organizational capital: organization¶s processes Defining a quality system A quality system is a structured and documented approach that covers the structure. Human capital: people skills and knowledge 2. It usually consists of a philosophy. Manufacturing/production a) Development of quality processes b) Instituting quality assurance systems in the processes c) Participating in product designs activities d) Instituting process control systems e) Developing quality inspection and measurement systems Sales and Marketing a) Establishing customer requirements b) Identify product features as determined by the customer c) Establishing the price the customer is willing to pay for a given level quality d) To continuously obtain feedback on product quality for continuous improvement e) Ensuring customer satisfaction by providing quality and after sale services Research and Development a) Develop technical specifications for the products b) Provide measures and specifications on product services required to produce a quality product. a framework. quality contributions can be achieved in the following ways.1. procedures. Human Resource a) Recruitment of qualified staff b) Developing training to continuously empower employees . Social capital: relationships between people 3. products and services. c) To translate information collected from the customer into product requirement d) Develop ways of continuously improving product or service offering e) Develop standards for evaluating product and service quality Purchasing Department a) Selecting suppliers who are able to deliver quality materials and parts b) Establish products requirements in line with specifications developed by the research department c) Establish long term supplier relationships based on trust d) Informing supplier of any problems/defects encountered in the use of the product e) Measuring quality of products as they are received from suppliers. responsibilities and resources needed to implement a system wide approach to ensuring quality in work processes.
c) Initiate a reward and recognition system based on quality performance d) Carry out job design and work measurements to ensure high quality output. The ultimate goal is to produce products and services that are of high quality that meet and exceed customer expectations. each functional area therefore has a unique role to play the quality chain. Finance and Accounting a) Allocation of resource to quality management b) Measurement of cost of quality i.e. cost of compliance and cost of non-conformance c) Evaluation of quality investment In summary. .
be this success by pro¿t or failure through liquidation. and argued that organisations chose to pay for poor quality. organisations have always measured performance in some way through the ¿nancial performance. Introduction : Performance measurement is a fundamental building block of TQM and a total quality organization. based on cost accounting information. COST OF QUALITY Cost of quality is also an important communication tool. measurement plays a key role in quality and productivity improvement activities. However. provide little to support organisations on their quality journey. In a successful total quality organisation. because they do not map process performance and improvements seen by the customer. This section covers why measuring performance is important. which has been used for many years to drive improvement activities and raise awareness of the effect of quality problems in an organisation. Crosby demonstrated what a powerful tool it could be to raise awareness of the importance of quality. which includes more than just measuring. This is followed by a description of cost of quality measurement. collecting and analysing data. but also de¿ning and understanding metrics. In the cycle of never-ending improvement. and as part of the µPlan ±Do ± Check ± Act¶ cycle. . The main reasons it is needed are: level To ensure customer requirements have been met To be able to set sensible objectives and comply with them To provide standards for establishing comparisons To provide visibility and a ³scoreboard´ for people to monitor their own performance To highlight quality problems and determine areas for priority attention To provide feedback for driving the improvement effort It is also important to understand the impact of TQM on improvements in business performance.MEASUREMENT OF QUALITY. then prioritising and taking improvement actions. such as the shareholders. traditional performance measures. performance will be measured by the improvements seen by the customer as well as by the results delivered to other stakeholders. on sustaining current performance and reducing any possible decline in performance. It is important to know where the strengths and weaknesses of the organisation lie. Historically. A simple performance measurement framework is outlined. He referred to the measure as the ³Price of Nonconformance´. performance measurement plays an important role in: Identifying and tracking progress against organisational goals Identifying opportunities for improvement Comparing performance against both internal and external standards Reviewing the performance of an organisation is also an important step when formulating the direction of the strategic activities.
They are planned and incurred before actual operation. and could include: Product or service requirements ± setting speci¿cations for incoming materials. They could include: Repairs and servicing ± of returned products or those in the ¿eld Warranty claims ± failed product that are replaced or services re-performed under a guarantee Complaints ± all work and costs associated with handling and servicing customers¶ complaints Returns ± handling and investigation of rejected or recalled products. products and services to ensure they conform to speci¿cations. Internal failure costs occur when the results of work fail to reach designed quality standards and are detected before they are transferred to the customer. but are not detected until after transfer to the customer. They could include: Veri¿cation ± checking of incoming material. Prevention costs are associated with the design. production. They could include: Waste ± doing unnecessary work or holding stocks as a result of errors. processes. implementation and maintenance of the TQM system. operational. poor organisation or communication Scrap ± defective product or material that cannot be repaired. ¿nished products/services Quality planning ± creation of plans for quality. process set-up. inspection Quality assurance ± creation and maintenance of the quality system Training ± development. including transport costs . used or sold Rework or recti¿cation ± the correction of defective material or errors Failure analysis ± activity required to establish the causes of internal product or service failure External failure costs occur when the products or services fail to reach design quality standards. preparation and maintenance of programmes Appraisal costs are associated with the suppliers¶ and customers¶ evaluation of purchased materials.Quality-related activities that will incur costs may be split into prevention costs. reliability. for products and services Failure costs can be split into those resulting from internal and external failure. processes. products against agreed speci¿cations Quality audits ± check that the quality system is functioning correctly Vendor rating ± assessment and approval of suppliers. appraisal costs and failure costs.
thus making a direct contribution to pro¿ts. Effective quality improvements should result in a future stream of bene¿ts. by a given speci¿ed process in the most effective manner. . such as: Reduced failure costs Lower appraisal costs Increased market share Increased customer base More productive workforce Many organisations will have true quality related costs as high as 15% of their sales revenue. which categorises the cost of quality (COQ) into the cost of conformance (COC) and the cost of non-conformance (CONC).QUALITY RELATED COST Expenditure on prevention and improvement activities is an investment from which a return is expected. and effective quality improvement programmes can reduce this substantially. where: COQ = COC + CONC COC is the process cost of providing products/services to the required standards. An alternative to the P-A-F model is the Process Cost Model.
and ensure they are SMART. involving people . To implement the performance measurement framework. focus on a few key goals that are critical to the success of the organisation or business. and should be broken down into targets for discrete short-term intervals. These steps are continuously implemented and reviewed: Initially. Targets and improvement activities must be cascaded down through the organisation. Relevant and Timely Write clear de¿nitions Agree method for establishing current performance (if not already determined) List resources required to support the design Agree data formats and classi¿cations for aggregation and consolidation Identify possible sources of benchmark data Set reporting calendar Establish roles and responsibilities Detail training requirements Validate with process stakeholders The gap between current and desired performance now has to be measured. Achievable.e: Speci¿c.the strategic objectives of the organisation are converted into desired standards of performance. comparisons made and new standards/targets set. Some of the metrics already exist and their current performance data must be collected. gaps are identi¿ed. new baselines can be set. as well as data for new metrics. Once all the data has been collected to identify the current performance. Once the plan has been implemented and data collected. Performance measures must be: Meaningful.CONC is the failure cost associated with a process not being operated to the requirements.g. the next three quarters.and long-term must be decided. the target level of performance for the medium. i. e. Measurable. unambiguous and widely understood Owned and managed by the teams within the organisation Based on a high level of data integrity Such that data collection is embedded within the normal procedures Able to drive improvement Linked to critical goals and key drivers of the organisation There are four key steps in a performance measurement framework . a plan with timescales and designated responsibilities is needed. metrics are developed to compare the desired performance with the actual achieved standards. and improvement actions initiated. A good performance measurement framework will focus on the customer and measure the right things. or the cost due to the variability of the process. These performance levels must be achievable.
assigned responsibilities and owners. achievable set of actions is determined. The critical elements of a good performance measurement activity are very similar to those required for a total quality improvement activity: Leadership and commitment Good planning and a sound implementation strategy Appropriate employee involvement Simple measurement and evaluation Control and improvement .and teamwork in the development of new metrics. A minimum. with plans. data collection and improvement activities. Improvement can be initiated by examining the gaps between current and target performance of the driver metrics at each level.
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