Definition: Actual quality is about meeting specs. Perceived quality is about how customers feel. In the end, customers pay for perception.

Example: A smartphone may have the best processor, but if the screen feels cheap, users perceive it as low quality. Over-specing (adding performance nobody notices) wastes money.

Tips:

• Define Minimum Acceptable Quality (MAQ) — the threshold that satisfies customers.
• Ask: “Do customers actually notice this?” before raising specs.

Definition: Specs and tolerances translate customer needs into measurable limits.

Example: Toyota defines strict tolerances but allows workers to stop the line if parts deviate (Andon system).

Tips:

• Keep specs measurable and unambiguous.
• Align engineering, production, and customer expectations.

Definition: You can only manage quality if you can see it. Measurement means turning performance into numbers that show whether you are inside or outside your defined boundaries. These numbers give you early warnings, highlight risks, and confirm when improvements are working.

Why it matters: Without measurement, problems stay invisible until customers complain or costs explode. The right measurements give you a clear picture of current performance and help you react before issues get bigger.

Types of measurements:

• Leading indicators (predict problems early): e.g., first-pass yield, number of process deviations, scrap rate, downtime.
• Lagging indicators (show results after the fact): e.g., customer complaints, warranty claims, product returns.
• Perception indicators: e.g., customer satisfaction scores, NPS, star ratings.

Baselines and targets: Before you improve, you need a starting point (baseline). From there, set targets that match your quality specs (for example, “98% of products right the first time”).

Visualizing quality: The best way to see performance is with a simple traffic-light dashboard (Green = on track, Amber = needs attention, Red = act immediately). This makes quality visible for everyone, not just managers.

📊 Example Quality Dashboard

Legend: Green = On track • Amber = Needs attention • Red = Act immediately

Tips:

• Choose a handful of critical metrics instead of tracking everything — focus on what really drives customer satisfaction.
• Link every metric to a clear boundary (from Quality Specs) and to a clear action (from Escalation).
• Make your dashboard visible to the whole team so everyone knows whether quality is on track.

Definition: Boundaries mean nothing if nobody reacts when they’re crossed.

Example: Toyota’s “Stop-the-Line” authority empowers workers to prevent defects from passing through.

Tips:

• Create a clear escalation matrix (minor, major, critical issues).
• Include customer communication plans for critical failures.

Definition: The best systems fail without a culture of ownership and care.

Example: At Toyota, anyone can stop the line. At Ritz-Carlton, employees are empowered to spend up to $2,000 to resolve a guest complaint — instantly.

Tips:

• Encourage psychological safety: people must feel safe to flag problems.
• Celebrate “caught early” issues as much as “perfect deliveries.”

Definition: Quality always competes with cost and speed. You can’t maximize all three.

Example: Fast fashion brands prioritize speed and cost over durability. Luxury brands prioritize perceived quality, even at high cost and slower delivery.

Tips:

• Decide strategically: Where does your brand sit on the triangle?
• Communicate trade-offs clearly across the company.