This content is not included in
your SAE MOBILUS subscription, or you are not logged in.
Quality, Productivity, and Cash Flow
Annotation ability available
Sector:
Language:
English
Abstract
Currently the linkage between quality, productivity, and competitive position is stated as an hypothesis, “Improving quality leads to increased productivity which in turn results in a more robust competitive position.” This hypothesis has garnered many adherents and has a body of qualitative experiential data to support it. In this paper, equations are derived which permit the hypothesis to be studied as a theory. The key equation states productivity of a process as the ratio of value out divided by value in. The value out is decreased by poor quality called a “disvalue” term. With the “disvalue” due to poor quality recognized, other equations can be written to show that lower productivity caused by poor quality reduces economic profit. this means that the cash flow to the firm is deceased. Thus, the competitive position is damaged because less cash is on hand for strategic maneuvering. An example is given of a high-technology part which could cause an expensive subassembly to fail and jeopardize a major structure.
Recommended Content
Authors
Topic
Citation
Papadakis, E., "Quality, Productivity, and Cash Flow," SAE Technical Paper 960543, 1996, https://doi.org/10.4271/960543.Also In
References
- Deming W. E. Quality, Productivity, and Competitive Position 1982 Center for Advanced Engineering Studies M.I.T. Cambridge, MA
- Scherkenbach W. W. The Deming Route to Quality and Productivity 1986 ASQC Quality Press Milwaukee, WI 18 35 46
- Hoadley B. 1986 40th Annual ASQC Congress Trans. Anaheim, CA May 19-21 460 466
- Papadakis E. P. 1985 J. Qual. Techn. 17 3 121 127
- Samuelson P. A. Nordhaus W. D. Economics 1989 13th McGraw-Hill New York
- Potential Failure Mode and Effect Analysis: An Instruction Manual 1979 Engineering and Research Staff, Ford Motor Co. Dearborn, MI
- Mocarski S. Ford 1983
- Stephan C. H. Chesney H. L. Ford
- Lee P. Ford 1995
- Continuous Process Control and Process Capability Improvement 1983 Statistical Methods Office, Ford Motor Co. Dearborn, MI