Excerpted from Systems Architecting, Creating and Building Complex Systems, Eberhardt Rechtin, Prentice Hall, 1991.

MANAGERIAL RESPONSE II: TYING QUALITY TO COST

One of the most important effects of greatly increased global competition has been the simultaneous increase in quality and decrease in cost of commercially available products. Accomplishing both together was not coincidence. It was built into the methods used. Although based originally on American ideas (Deming and Juran), the close integration of several cost and quality methods evidently has been Japanese. Reducing cost thus became a driver for quality instead of a reason to slash quality-assurance programs. Value-added process-conversion operations were made more efficient while processes of little value to the customer—inventory, work in process, monitoring, and rework—were reduced.

In an effort to attract more customers, quality parameters of importance to the customer were selected, product factors that affected these parameters were determined by controlled experiment, and the product and process were designed to yield those factors in the most cost-effective manner—the Taguchi Method (Corcoran, 1989). Depending on the product, the result frequently was that higher overall quality was achieved at less cost. The apparent reason this result was that although increases in aesthetic quality (appearance and styling) generally increase cost, increases in functional quality (reliability) decrease it.

The importance of the new approach, if widely adopted by industry, is that all systems could rise on the tide of increasing quality. Referring back to the failure rate and cost heuristic, the constant multiplier will decrease. No longer need it be one failure per hour per million dollars, even for military avionics. For some systems, the improvement might be an order of magnitude reduction in system failure rate, a major step to ultraquality.