Module 5: Defining Quality PDF

# MODULE 5 | QUALITY ASSURANCE ## CHAPTER 3: DEFINING QUALITY ### 3.1 QUALITY PRINCIPLES It is essential to have a clear understanding of the definition of quality, since everyone has their own opinion of what good quality is. That is often the problem, as we all understand the concept differentl...

# MODULE 5 | QUALITY ASSURANCE ## CHAPTER 3: DEFINING QUALITY ### 3.1 QUALITY PRINCIPLES It is essential to have a clear understanding of the definition of quality, since everyone has their own opinion of what good quality is. That is often the problem, as we all understand the concept differently. - The quality of a product or service is the clients' perception of it and this perception takes into consideration their total experience of those features that they consider important. - Peter Wickens in the Ascendant Organisation Quality can be viewed as conforming to client requirements. The ultimate goal is to build quality into the system. Built-in quality is a strategy that minimizes the need for inspection 'after the fact' and enables prompt problem-solving. The focus is to rather be proactive and not reactive, as it is much less costly and keeps clients happier. Quality cannot simply be inspected into a service - it must be built in. Contrary to built-in quality, inspected-in quality is a strategy that you depend on 'outsiders' to keep poor quality from reaching the client. It is very reactive and it comes at a high cost both to the process (company) and the client. Quality is really about clients and how they perceive it. To one person, a service might seem fine, but to the next it can be unacceptable. For this reason, it is very important to base the definition of quality on the clients' definition of quality and not on our own opinions. It is also very important to know who our clients are. There are many clients in the process, the most obvious one being the patient. Patients are considered external clients, because they are outside of Mediclinic. There are also very important clients inside the company. They are called internal clients or client teams, i.e. teams functioning in the next downstream process from your team. This concept is discussed in detail in Module 1. Another important concept is that of conformance and non-conformance. When there are specifications for a service (as defined by the client), a process or service will either conform to that standard or not. When a product, service or process conforms, it meets all the requirements of the defined standard. Non-conformance occurs when the product, service or process deviates from any of the requirements, for example, incorrect information, and incorrect tone on the telephone or errors in the operating system. In other words, anything that does not meet the standard 100% is a non-conformance. ### 3.2 THE COST OF POOR QUALITY For an organisation to remain competitive, it will have to invest in quality improvement, but organisations often overlook the enormous costs associated with poor performance of services and processes - the costs associated with not meeting client requirements, not providing services on time or reworking services to meet client needs. This is the cost of poor quality. If quantified, these costs will get immediate attention at all management levels, because when added together, the cost of poor quality makes up as much as 15% to 30% of all costs. To put the opportunity into perspective, look at the traditional costs of poor quality and, even more critically, the hidden costs of poor quality, as shown in the next two figures. #### FIGURE 2 Traditional Cost of Poor Quality When quality costs are initially determined, the categories included are the visible ones, as depicted in the iceberg below: (4-5% of sales) - Waste - Client returns - Rejects - Testing costs - Rework - Inspection costs - Recalls It is the hidden costs that must be quantified to get a complete picture of losses due to poor performance. These costs of poor quality could disappear entirely if every activity was performed without deficiency every time. #### FIGURE 3 Cost of Poor Quality As a company gains a broader definition of poor quality, the hidden portion of the iceberg becomes apparent: - Waste - Client returns - Rejects - Testing costs - Rework - Inspection costs - Recalls - Excessive overtime - Premium freight costs - Excessive field service expenses - Client allowances - Lack of follow-up on current programs - Development cost turnover of failed product - Unused capacity - Pricing or billing errors - Expediting costs - Excessive employee capacity - Late paperwork - Planning delays - Excess inventory - Complaint handling - Overdue receivables - Excessive system costs - Incorrectly completed sales order - Time with dissatisfied clients The cost of poor quality ranges from 15-25% of the total cost. Three major categories of the cost of poor quality exist in companies: - Appraisal and inspection costs - Internal failure costs - External failure costs ### APPRAISAL AND INSPECTION COSTS Appraisal and inspection costs are associated with inspection, checking or assuring that non-conformance is discovered before clients are affected. Examples of appraisal and inspection costs in Mediclinic are the following: - Inspecting equipment or supplies - Reviewing theatre charge sheets and correcting errors or omissions before submission for billing - Auditing of nursing documentation to ensure procedural errors and training needs are picked up timely ### INTERNAL FAILURE COSTS Failure costs within a company are attributed to the repair, replacement or discarding of defective work that the client does not see. Examples of internal failure cost in Mediclinic are: - Postponing other work to make up for unplanned downtime - Working overtime to make up for lost time - Replacing damaged equipment or tools - Overstocking parts or supplies in case of defects or shortages - Poor theatre scheduling resulting in scrambling and disruption in a nursing unit to ensure a theatre case is not postponed ### EXTERNAL FAILURE COSTS External failures affect clients directly and usually are the most expensive failures to correct. External failure costs may result from: - Satisfying claims - Investigating complaints - Offsetting patient dissatisfaction with a recovery strategy, e.g. replacing a patient's cellular phone or clothes that got lost between different storage areas for patient valuables - Collecting bad debts - Correcting billing errors - Repairing reputational damage resulting from patient complaints that went public - Writing off debt in the Emergency Centre that resulted from incorrect changes to triage colours ### IMPORTANT INFORMATION There are four major steps in measuring the cost of poor quality: - Identify activities resulting from poor quality. - Decide how to estimate costs. - Collect data and estimate costs. - Analyse results and decide on the next steps. COPQ = Tc x P COPQ = Cost of poor quality Tc = Total cost of all required resources to perform the activity P = Percentage of resources used for the activity related to poor quality ### ACTIVITY 3 1. Write down your definition of quality. 2. Make a list of your internal and external clients. #### INTERNAL #### EXTERNAL 3. Identify at least five non-conformances that your clients complain about. 4. Identify the direct costs of poor quality for your team or department. 5. Identify the indirect (hidden) costs of poor quality for your team or department.