Management 360 Review (Chs. 16,17,18) Chapter 16
Any control system has three components: (p. 354)
1. a performance standard or goal
2. a means of measuring actual performance and
3. comparison of actual performance with the standard to form the basis for corrective action The 1:10:100 Rule:
If a defect or service error is identified and corrected at the design stage, it might cost $1 to fix. If it isn't discovered until the production process, it may cost $10 to fix. However, if the defect is not detected until it reaches the customer, it may cost $100 to correct. The actual numbers are irrelevant, and the exact ratios differ among firms and industries. What is relevant is that the cost of repair or service recovery grows dramatically the further defects and errors move along the value chain. P. 354

Quality at the source means that the people responsible for the work control the quality of their processes by identifying and correcting any defects or errors when they are first recognized or first occur. Doing it right the first time is required. This requires that employees have good observation, data collection and analysis skills, as well as proper tools, training and the support of management. P.354

Statistical Process Control (SPC) is a methodology for monitoring quality of manufacturing and service delivery processes to help identify and eliminate unwanted causes of variation. P. 355

Common cause variation is the result of complex interactions of variations in materials, tools, machines, information, workers and the environment. Such variation is a natural part of the technology and process design and cannot be controlled; that is, we cannot influence each individual output of the process. P. 356

Special (or assignable) cause variation arises from external sources that are not inherent in the process, appear