the zero-defects model made the claim that it was cost-beneficial to reduce nonconforming
units to zero. Firms producing increasingly fewer nonconforming units
became more competitive relative to firms that continued the traditional AQL
model. In the mid-1980s, the zero-defects model was taken one step further by the
robust quality model, which challenged the definition of a defective unit. According to
the robust view, a loss is experienced from producing products that vary from a target
value, and the greater the distance from the target value, the greater the loss. Furthermore,
the loss is incurred even if the deviation is within the specification limits.
In other words, variation from the ideal is costly, and specification limits serve no
useful purpose and, in fact, may be deceptive. The zero-defects model understates
the quality costs and likewise the potential for savings from even greater efforts to
improve quality (remember the multiplication factor of Westinghouse Electric).
Thus, the robust quality model tightened the definition of a defective unit, refined
our view of quality costs, and intensified the quality race.
For firms operating in an intensely competitive environment, quality can offer
an important competitive advantage. If the robust quality view is correct, then firms
can capitalize on it, decreasing the number of defective units (robustly defined)
while simultaneously decreasing their total quality costs. This is what appears to be
happening for those firms that are striving to achieve a robust zero-defect state (i.e.,
a state with zero tolerance) for their products. The optimal level for quality costs is
where products are produced that meet their target values. The quest to find ways to
achieve the target value creates a dynamic quality world, as opposed to the static
quality world of AQL.
Dynamic Nature of Quality Costs The discovery that trade-offs among quality
cost categories can be managed differently from what is implied by the relationships
portrayed in Exhibit 15-5 is analogous to the discovery that inventory cost trade-offs
can be managed differently from what the traditional inventory model (EOQ) implied.
Essentially, what happens is that as firms increase their prevention and appraisal costs
and reduce their failure costs, they discover that they can then cut back on the prevention
and appraisal costs. What initially appeared to be a trade-off turns out to be
a permanent reduction in costs for all quality cost categories. Exhibit 15-6 display the changes in quality cost relationships.