• The percentage of superior materials usage, expenditures for enhanced styling and features, and both
current-year and cumulative expenditures for TQM/Six Sigma programs, are major components of the
International Footwear Federation's annual calculation of your company’s S/Q rating for branded
footwear (the other factor is best practices training, which is entered in the next section of this screen).
The IFF's formula for S/Q ratings is programmed in so that you can immediately see the impact on your The Business Strategy Game Player’s Guide
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company’s S/Q rating when you enter decisions for superior materials usage, expenditures for
enhanced styling and features, and expenditures for TQM/Six Sigma. Some level of spending for
enhanced styling/features is needed annually to keep the company’s lineup of models/styles in vogue
and provide a look that helps the company’s brand stand apart from rivals. Spending to train plant
personnel in state-of-the-art use of TQM/Six Sigma quality control and the use of best practices has a
highly positive effect on workmanship, lowers the frequency of equipment breakdowns and work
stoppages, reduces materials waste, helps cut the number of pairs that fail inspection due to
production defects of one kind or another, and promotes smoother overall plant operations. However,
the benefits of progressively higher expenditures for styling/features and TQM/Six Sigma programs are
subject to diminishing marginal returns. In other words, the incremental gains from increasing
spending on styling/features from $5,000 per model to $10,000 per model will exceed the benefits from
increasing spending from $10,000 to $15,000 per model. Likewise, boosting TQM/Six Sigma spending
from $0.50 per pair to $1.00 per pair of capacity will have greater incremental benefit than boosting
spending from $1.00 to $1.50 per pair.