Why We Should Replace the Term ‘Quality’ With ‘Value’

‘Utility divided by cost’ encompasses literally everything we need to know

"Life Time Warranty, Plate 2" Credit: Thomas Hawk

This article contends that we should replace “quality” with “value” to address an enormous array of previously unaddressed risks and opportunities. Poor quality is only one of the Toyota Production System’s seven wastes, and it is rarely the most costly one because it is also the only waste to draw attention followed by corrective and preventive action. The other wastes can hide in plain view for literally hundreds of years (as proven by brick laying) and are present 100 percent of the time as they are built into the job. Even the Toyota Production System’s seven wastes do not encompass all potential wastes.

It might even be instructive to say “value management” instead of “quality management,” and “value engineering” instead of “quality engineering.” The U.S. General Services Administration already defines value engineering as “... achieving essential functions at the lowest life cycle cost consistent with required performance, quality, reliability, and safety.” Investopedia defines value as the “ratio of function to cost.” This article will define it as the ratio of utility (i.e., what we can do with the product or service) to its overall cost.

Value = Utility/Cost

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Comments

Value and David Garvin

Thanks for the column William. I was hoping to see David Garvin's Eight Dimensions of Quality, published in Harvard Business Review in 1987. The column mentioned three of them. Here is the link to the HBR article: Competing on the Eight Dimensions of Quality (hbr.org) When we published The Improvement Guide in 1996, we had added six more, all 14 Dimensions are listed in the table below. We also defined the Value = Quality (Operational definitions of the 14)/ Total Cost (Price tag + cost to use). Total Cost leveraged Deming's Point #4, Stop buying on price tag alone.

Performance

Primary operating characteristics

Features

Secondary operating characteristics, added touches not included in other dimensions

Time

Time waiting, cycle time, product available in market window

Reliability

Extent of failure-free operation over time

Durability

Amount of use before replacement is preferable to repair

Uniformity

Low variation among repeated outcomes of a process

Consistency

Match with documentation, forecasts or standards

Serviceability

Resolution of problems and complaints; Service Recovery

Aesthetics

Relating to the senses such as color, fragrance, fit or finish

10.

Personal Interface

Punctuality, courtesy and professionalism

11.

Flexibility

Willingness to adapt, customize or accommodate change

12.

Harmlessness

Relating to safety, health or the environment

13.

Perceived Quality

Inferences about other dimensions; reputation

14.

Usability

Relating to logical and natural use; ergonomics

Excellent reference

The HBR article you cited is worth reading. This is something I did not know until I read it: "In 1950, only one-third of the U.S. Navy’s electronic devices worked properly. A subsequent study by the Rand Corporation estimated that every vacuum tube the military used had to be backed by nine others in warehouses or on order."

The eight dimensions cited seem to relate primarily to utility (the numerator of the value equation) noting that something that lacks performance, reliability, serviceability, durability, conformance, and so on is of limited utility even if it is given away for free. These are nonetheless important aspects of the needs and expectations of customers.