MGF 2511 Managing Quality,

Innovation and Knowledge

Dr. Richard Cooney

Why is Quality Important ?

The effect of market failures can be

catastrophic
 Melamine in milk in the chinese dairy
industry
The effect of organizational failures can
be catastrophic
 Pan Am and Lockerbie
Why is Quality Important ?

99.9 % Quality means:

 1 hour of unsafe drinking water per month
 2 unsafe aircraft landings per day

 2000 lost mail items per hour

 2000 incorrect drug prescriptions each

year
 2000 incorrect surgical procedures each
year
Why is Quality Important ?

Social issues effect market regulation

 Quality standards and global warming
Competitivness issues effect firms
 Customers expectations have increased
 Quality is an important competitive weapon
Why is Quality Important ?

Quality tools provide a guide to good

management practice
 Quality Planning underlies innovation
 Problem solving tools underpin employee
involvement
 Best Efforts Are Not Good
Enough

“Best efforts are essential. Unfortunately, best

efforts, people charging this way and that way
without the guidance of principles can do a lot
of damage. Think of the chaos that would
come if everyone did their best, not knowing
what to do?"
W Edwards Deming
Why Innovation is Important
Basis of economic growth
 Expand inputs – labour, land, capital
 Expand innovation

Innovation overcomes resource

limitations
Why Innovation is Important
Technological change alone is subject
to diminishing returns
 Competitiveness
“Competitiveness is the degree to which a
nation can, under free and fair market
conditions, produce goods and services that
meet the tests of international markets, while
simultaneously maintaining or expanding the
real income of its citizens”
Presidents Commission on Industrial
Competitiveness
 History of Quality

Craft work

Individual skilled work

Quality rested on the reputation of the

master craftsman

 
 History of Quality
Standardised work

Standardised tasks and standardised parts

Quality rests on the reputation of a brand

name
 Definitions of Quality

Excellence
“In observing the excellent companies what
we found most striking was the consistent
presence of obsession. This characteristically
occurred as an unjustifiable over commitment
to quality, reliability and service.”
Peters & Waterman
 Definitions of Quality

Conformance

"conformance to requirements"
Phillip Crosby
 Definitions of Quality

Fitness for use

“Good quality does not necessarily mean high

quality. It means a predictable degree of
uniformity and dependability at low cost with a
quality suited to the market."
W Edwards Deming.
 Definitions of Quality

Meeting or exceeding customer

expectations

"the totality of features and characteristics of

a product or service that bear on its ability to
satisfy stated or implied needs"
International Standardisation Organization
 Avenues to Business
Improvement
Reduce Wastes
Labour
Materials
Machines
 
Increase Market Share
reliability = single source supplier
low margins but high volume = profitability
efficiencies from demand smoothing

Charge Premium Prices

unique features (competitors cant match our offerings) (a short term monopoly)
reputation of quality
 Attributes of Best Practice
Manufacturers
Becoming the best competitor 

Growing more rapidly and being more

profitable than competitors 

Hiring and retaining the best people 

 Attributes of Best Practice
Manufacturers
Being able to respond quickly and
decisively to changing market
conditions 
Adopting a product and process
engineering approach which maximises
the performance of both 
Continually innovating and improving