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Chuck Doyle

Six Sigma

Quality and Value--Are They the Same?

In lean, quality and value work hand-in-hand toward customer satisfaction.

Published: Tuesday, August 17, 2004 - 21:00

Many organizations need answers to some key questions about lean and quality management: Is there a difference between quality and value? Should we have two teams, one for continuous improvement and one for lean? What roles would each have? What are the differences?

The source for this confusion is a misunderstanding about the terms “quality” and “value.” Part 1 of this series will deal with this misunderstanding. In Part 2, we will explore the roles, responsibilities and the differences between the two teams at work.

Over several decades, companies have focused their quality initiatives on listening to the customer and reducing defects. Many of these initiatives have paid off and organizations worldwide have improved the quality of their products. Companies that didn’t pay attention to customer needs and quality improvement have fallen by the wayside: They simply couldn’t make it in today’s highly competitive and demanding environment. In both cases, a lot of money and resources were invested in the efforts.

Now that so many companies are dynamically improving competitiveness and bottom-line performance with lean methods for building customer value, the question becomes, "How does the quality of the product fit into a lean enterprise?"

We know that they should fit. Toyota, the model of excellence in developing and applying lean methods, is best known for its commitment to and achievement of superior quality. Quality is what grew their dominant market share and today keeps them on top of the competition. Toyota is, therefore, a practical example of quality and lean management working together for the benefit of the organization.

Research performed by Lucent Technology has shown that customers who perceive high quality in a product will be prepared to pay a premium price. This looks like another important affirmation of a solid link between quality and value.

But first, let’s make sure we are using the terms properly by looking at the established definitions.

The American Society for Quality defines quality as "a subjective term for which each person has his or her own definition. In technical usage, quality can have two meanings, (1) the characteristics of a product or service that bear on its ability to satisfy stated or implied needs, and (2) a product or service free from deficiencies." Of course, there are more definitions out there, but for the purposes of this article we are using the ASQ definition.

Value also has many definitions, but Webster’s dictionary refers to it as "(1) an amount, as of goods, services or money, considered to be a fair and suitable equivalent for something else; a fair price or return, (2) monetary or material worth and (3) worth in usefulness or importance to the possessor."

In lean work, value is that for which the customer would willingly and knowingly pay. That’s quite similar to the third definition found in Webster’s. The customer decides on the timelines as well as the quality level of the product or service they are buying. Further, although customers would all relish buying items of the best quality, resource limitations tend to get them to focus on cost. This is where the customer starts to look hard at the best value for his or her time and money.

Why is the best quality product so often associated with high price? Sometimes people even mistake high price with good quality.

There’s no question that most of us seem to believe that for a product or service to have good or exceptional quality, it will cost the producer more. Many of us still think that one-off specially crafted items are better than items that may be similar but mass-produced. In all of these cases we are really making value judgments. If we perceive that we get value for the money we spend, we’re happy; if we don’t, we aren’t.

When an organization goes lean, the focus is on increasing the customers’ perception of value for the product or service produced. As we saw in the definition above, value is subjective. It’s what the customer believes he or she is getting. We can be certain that everyone would like better quality for the same or lower price. In almost all cases, the lower the price, the higher the quality and the better the perceived value.

Lean companies build value by reducing turnaround times, lowering costs, and improving quality. These organizations aim to produce high volumes with equal or better quality than clients get from one-off crafted goods, but at lower costs. We aspire to give customers Lexus quality for the Saturn price. That’s what beats the competition and grows our market share.

This is the elegant dance of quality and lean value. They are both important, but are defined differently. Further, they are both required for success in today’s economy. Customers are looking for value when they buy and quality is certainly one of the key features that build the value story. However, we can’t overlook costs, timeliness and the ability to fully meet the customers’ needs as the other essentials in creating value.

In Part 2 of this series, we’ll explore the best approach of getting quality and value to work in organizations that are committed to customer-focused growth.


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About The Author

Chuck Doyle’s default image

Chuck Doyle

Chuck Doyle is senior advisor with Lean Advisors Inc., leading on-site educators of lean principles and techniques. Doyle has had experience implementing lean in both the private and public sectors. A business improvement professional for 26 years, he has an exceptional track record helping teams remove waste from processes. Doyle trained in statistical process control at the University of Tennessee and in the design of experiments at MIT. He is an American Society for Quality-certified Quality Manager. For more information about Doyle or Lean Advisors Inc., visit www.leanadvisors.com.