CHAPTER ONE

BACKGROUND OF THE STUDY

1.1    INTRODUCTION

Quality is an important concern for management for three basic reasons: competition, productivity and cost. Competition quality has become one of the most competitive points in business today. Ford, Chrysler and General Motors each argues, for example, that its cars are higher in quality than the cars of the others. IBM, Apple and DEC stress the quality of their products as well. Indeed, it seems that virtually every American business has adopted quality as a major point of competition. Thus, a business that fails to keep pace may find itself falling behind not only foreign competition but also other American firms.

          Productivity managers have come to recognize that quality and productivity are related. In days gone by many thought that productivity and quality were inversely related – that is, management could increase output (productivity) only by decreasing quality. Managers today have learned the hard way that such an assumption is virtually always wrong. If a firm installs a meaningful quality enhancement program, three things are likely to result, first, the number of defects is likely to decrease, causing fewer returns from customers. Second, because the number of defects goes down, resources (materials and people) dedicated to reworking flawed output will be decreased. Third, because making operative employees responsible for quality reduces the need for quality inspectors, the organization is able to produce more units with fewer resources – with a positive effect on productivity.

          Cost improved quality lowers cost. Poor quality results in higher returns from customers, high warranty costs, and lawsuits from customers injured by faulty products. Future sales are lost because of disgruntled customers. An organization with quality problems often has to increase inspection expenses just to catch defective products.