Product quality dimensions are those characteristics or properties product of a firm. These properties may be durability, portability, reparability and the general outlook of the product. On the other hand, service quality dimensions are those characteristics that define staff of a firm. For instance, staff might be described as being pleasant, welcoming, quick and smart in both wear and customer approaches.
A firm incurs Cost of poor quality (COPQ) when it offers low quality products and services to its customers. COPQ impacts negatively to the cost of doing business by a firm. There are four categories of COPQ. First, a firm incurs internal failure costs which happen in a firm before customers receive product or service. Secondly, external costs occur when the product is in the hands of a customer. The third category involves appraisal costs that occur when the management has realized that there are flaws somewhere; thus they move fast to finding ways of correcting the flaw. The fourth category involves preventive costs that a firm incurs as it positions itself to prevent any future costs as a result of COPQ, both within and outside the firm.
COPQ calculation considers the four categories. For instance, a fictional illustration, a company XY which specializes in making electronic identity cards for university students has realized that students are replacing their cards often. In fact, the university management has expressed dissatisfaction on the poor quality of the plastic identity card material. They say that the cards are fading so fast and the microchip dislodges after sometime.
They are now requesting the XY Company to replace all the cards for the student at no extra charge. XY Company establishes that the Epson material they used to make the cards is of very low quality; this forms internal costs totaling to USD 2000. The company has also established that the students do not keep their cards well thus get damaged fast. It has so far incurred external costs of USD 450 in replacing the cards. Appraisal costs incurred total to USD 600 while it has also incurred preventive costs of USD 2500 for future cushioning. The total COPQ incurred by the company is USD 5550.
Pull and push systems describe the pathways followed by goods and services between two people. In classical businesses, customers usually receive or ‘pull’ products or services from the suppliers or manufacturers. On the other hand, suppliers take or ‘push’ products or services to consumers. In this case, the suppliers have to balance amount of products they take to consumers with the amount consumers can take at a time.
Kanban is a system of maintaining smooth flow of products and services from the producers to the consumers. It signals the suppliers when the product level in the market is going low. To determine the number of units of product to be supplied at a given time (units required) the supplier considers past movement of the product to evaluate the demand levels and how fast a certain quantity disappears from the market. This way, the supplier does not produce too much product or service that is way beyond the quantity the customers can buy at a given time. Thus, the Kanban also ensures that the customers get the right amount of products and services from suppliers timely. This formula shows how to calculate Kanbans (number of items required).
Number of items required = mean demand per time x supply time x 1-buffer time(<10%)/Container size (< 10% total demand).