Quali 2 - Aula 01 (17-08)

What is Quality?

Introduction to Quality in Strategy

• Professor Fernando Laurindo introduces the concept of quality, emphasizing its connection to management rather than just control.

• The discussion begins with a question: "What is quality?" Participants are encouraged to share their thoughts on pre-defined specifications as a measure of quality.

• A participant mentions that having low variability in measurements is crucial for maintaining quality standards.

Variability and Cost Reduction

• Beatriz highlights the importance of reducing variability, which leads to more concentrated results around a target value, impacting cost reduction strategies.

• The conversation shifts towards understanding different levels of quality and how they relate to product specifications and costs.

Practical Example: Product Defects

• An example is provided about purchasing a car that experiences defects shortly after purchase, illustrating real-world implications of product quality.

• The narrative continues with the customer’s experience at the dealership, highlighting frustrations when issues remain unresolved despite multiple visits.

Consumer Rights and Quality Assurance

Navigating Complaints

• Discussion revolves around consumer rights when products fail. Options include contacting the seller or manufacturer for resolution.

• The professor emphasizes the complexity of resolving issues with defective products, such as cars or electronics, especially when warranties expire.

Certification and Trust in Products

• The role of certification in assuring product quality is introduced. Companies often seek certifications to demonstrate adherence to established quality standards.

• Questions arise regarding why companies pursue certifications and how these serve as trust signals for consumers regarding product reliability.

Conclusion on Quality Systems

Quality System and Governance in Brazil

Importance of Quality Systems

• The quality system is essential for managing customer complaints. If a complaint is unresolved, it indicates that the complaint handling process is ineffective.

• Complaining to the certifying body also yields no results after a significant wait, raising questions about where to turn next for resolution.

Governance and Accountability

• There may be legal recourse against either the certifier or the product manufacturer if issues persist without resolution.

• Understanding governance involves recognizing that certifiers are accredited by higher authorities, which should ensure accountability in quality management systems.

Information Deficiency

• A lack of information among consumers contributes to poor quality systems in Brazil; many young individuals (ages 18-21) are unaware of their rights and available resources.

• If a certifier fails to act on complaints, they risk losing their ability to issue certificates, impacting their business significantly.

Role of INMETRO

• Historically, INMETRO has been reliable; there are few reports of failures. They address consumer complaints effectively and promptly.

• An example illustrates this: after filing a complaint with INMETRO at 9 AM, action was taken by 2 PM when a truck arrived to collect the vehicle in question.

Consumer Awareness and Certification

• Consumers should check if products have certifications from recognized bodies like INMETRO for better protection against issues.

• In addition to company support channels (like customer service), regulatory agencies exist for specific sectors (e.g., telecommunications with ANATEL).

Understanding Quality

Defining Quality

• Defining "quality" can be complex; instead, we focus on concepts related to quality that have evolved over time since World War II.

Evolution of Quality Concepts

• The initial concept defined quality as meeting specifications—often referred to as "basic quality."

Historical Context: Post-WWII Developments

• The context surrounding WWII influenced early definitions of quality. Countries involved had varying standards based on wartime needs and production capabilities.

U.S. Entry into WWII

• The U.S. entered WWII after observing Axis powers' advances; prior involvement included extensive military preparation through arms production.

Military Strategy and Production

• Before entering the war officially, the U.S. focused on producing weapons and training personnel while anticipating eventual conflict engagement.

Understanding Measurement Systems and Quality Standards

The Evolution of Measurement Systems

• Discussion on different measurement systems: American (miles, inches) vs. International System (SI).

• Introduction of ISO post-World War II to establish international standards for measurements.

The Concept of Quality

• Definition of quality as adherence to standards; emphasis on low variability in meeting these standards.

• Importance of understanding the evolution of tools and methodologies in quality control.

Key Figures in Quality Control

• Mention of Edward Deming and his association with PDCA cycle; clarification that he did not create it but popularized it.

• Reference to Joseph Juran, another key figure who contributed significantly to quality management.

Post-War Industrial Context

• Insight into the U.S. industrial landscape post-WWII, where American production thrived due to minimal destruction during the war.

• Discussion on the lack of immediate concern for quality amidst high demand and limited competition.

The Marshall Plan's Impact on Quality Management

• Overview of the Marshall Plan aimed at European reconstruction, which also influenced global economic dynamics.

• Explanation that this plan led to new institutions like IMF and World Bank, shaping international financial relations.

Inspection Practices in Japan

• Description of Japanese manufacturing practices involving 100% inspection before Deming and Juran's influence.

• Challenges faced with destructive testing methods leading to inefficiencies in production processes.

Shift Towards Customer-Centric Production

• Emphasis on how Deming and Juran introduced sampling methods instead of exhaustive inspections for better efficiency.

• Transition from a focus on survival during scarcity to a renewed emphasis on customer satisfaction post-war.

Adequation to Customer Needs

• Introduction of Juran’s concept focusing on producing goods that meet customer usage requirements effectively.

Technological Advancements in User Experience

Understanding Product Adaptation

The Concept of Adaptation to Use

• The discussion begins with the analogy of a pen having an eraser tip, emphasizing that products are designed for user comfort and efficiency.

• The speaker highlights the success of the Volkswagen Kombi, created for family needs in post-war Germany, showcasing how adaptation to use can lead to product success.

Historical Context and Market Needs

• In Brazil during the 1950s and 60s, large families needed vehicles like the Kombi for agricultural work, illustrating market demands driving product design.

• The Kombi's ability to accommodate up to ten people made it a practical choice for numerous families in São Paulo's rural areas.

Financial Viability and Longevity

• The Kombi project was financially successful; it paid off within six or seven years and continued generating profit for over 60 years.

• This long-term profitability is attributed to its consistent demand and effective market fit.

Economic Challenges and Shifts

Impact of Global Crises

• The speaker notes significant global crises in the 1970s, including oil shortages that shifted focus back onto customer needs after periods of abundance.

• Economic downturn led companies to reassess their strategies, moving from customer-centric approaches back towards internal efficiencies.

Evolution Towards Cost Adaptation

• During economic challenges, businesses began focusing on cost adaptation rather than just meeting customer needs.

• Key concepts introduced include reducing variability through statistical process control (SPC), which became prominent in Japanese industries during this time.

Productivity vs. Efficiency

Defining Productivity

• Productivity is defined as outputs relative to inputs; it's crucial for understanding business performance.

Distinguishing Between Efficiency and Effectiveness

• Efficiency refers to achieving goals with minimal resources while effectiveness focuses on meeting objectives regardless of resource expenditure.

• A clear distinction is made: one cannot be efficient without first being effective—goals must be met before optimizing resource use.

Lessons from Industry Examples

Competitive Strategies in Manufacturing

• Companies that succeed do so by minimizing costs while maintaining quality; this principle was exemplified by Japanese manufacturers in the late 70’s.

Case Studies: Xerox vs. Canon

• Xerox struggled against Canon due to high production costs stemming from inefficiencies, highlighting how waste impacts competitiveness.

Zero Defects Philosophy

Understanding Efficiency and Effectiveness in Business

The Importance of Efficiency and Effectiveness

• Discusses the relationship between efficiency and effectiveness, emphasizing that true efficiency cannot exist without delivering results. Wasting resources leads to 100% inefficiency.

• Recommends reading insightful books on productivity and effectiveness, which can enhance both personal and professional life.

Concepts from "The Goal"

• Mentions the book "The Goal" by Eliyahu M. Goldratt, highlighting its relevance to production concepts and theories related to operational efficiency.

Customer Needs Evolution

• Explains how customer needs evolved post-1970s crisis, leading companies to focus on meeting latent needs—those that customers may not even be aware they have.

• Defines latent needs as either unrecognized by customers or recognized but not articulated clearly.

Innovation's Role in Meeting Needs

• Stresses the significance of product innovation and research & development in addressing these latent customer needs, allowing businesses to outpace competitors.

• Uses the example of mobile phones to illustrate how companies created a market for products that consumers did not initially realize they needed.

Quality Management Tools

• Introduces tools developed by Japanese industries for quality management, such as KED (Quality Function Deployment), which simplify statistical applications in daily industrial practices.

Shifts in Marketing Dynamics

The Fifth Concept of Quality

• Identifies a fifth concept of quality linked with marketing strategies aimed at inducing latent needs among consumers during the 1980s and 1990s.

Changing Customer Satisfaction Metrics

• Reflecting on Philip Kotler’s marketing principles from the 1990s regarding customer satisfaction; satisfied customers spread positive word-of-mouth while dissatisfied ones share negative experiences more widely.

Impact of Social Media on Reputation Management

• Highlights how social media has amplified the reach of customer feedback; one negative comment can now influence thousands due to platforms like Twitter.

Modern Challenges for Companies

Importance of Customer Satisfaction and Retention

Understanding Customer Retention

• The concept of customer satisfaction is crucial for maintaining sales; retention isn't solely about repeat purchases but also about public acceptance of the product.

Loyalty Programs as a Strategy

• An example of loyalty programs includes coffee shops offering punch cards, where customers receive rewards after multiple purchases, highlighting the importance of customer retention metrics.

Cost Implications of Losing Customers

• Reacquiring lost customers can be five times more expensive than acquiring new ones, emphasizing the need for effective retention strategies in a competitive market.

Strategies for Customer Loyalty

• Various loyalty strategies exist; even small businesses like local pizzerias have long-standing reward systems, indicating that larger companies should also prioritize robust loyalty programs.

Financial Stability through Loyal Customers

• Loyal customers help cover fixed costs and keep business operations running smoothly. Their consistent purchasing behavior is vital for financial health.

Modern Approaches to Customer Engagement

Utilizing Technology in Loyalty Programs

• Supermarket apps serve as modern examples of customer engagement, allowing businesses to send notifications and promotions directly to consumers without overwhelming them with emails.

Competitive Advantage through Loyalty Management

• Airlines that effectively manage their loyalty programs will likely outperform competitors, especially when service levels are similar across providers.

Key Concepts in Quality Management

Tailoring Quality Concepts to Business Types

• Different industries prioritize various quality concepts; for instance, steel production focuses on cost efficiency while retail banks emphasize user needs and product innovation.

Balancing Cost with Customer Needs