Consumer Stakeholders: Product and Service Issues

1. Search the Web The American Society for Quality provides a web site with an aray of information on quality topics: www.asq.org Consumer Stakeholders: Product and Service Issues 13 1

2. Chapter Thirteen Objectives • Define quality and product safety issues • Explain the role of the Consumer Product Safety Commission and the Food and Drug Administration • Consider the concern about product liability, as well as strict liability, absolute liability, and market share liability • Outline business’s responses to consumer stakeholders 2

3. Chapter Thirteen Outline • Two Central Issues: Quality and Safety • Consumer Product Safety Commission • Food and Drug Administration • Business’s Response to Consumer Stakeholders • Summary

4. Introduction to Chapter Thirteen The chapter focuses on product quality and safety, product liability and tort reform.

5. The Issue of Quality Driven by an increase in family income and intense global competition The Issue of Safety Driven by the public’s increasing concern with safety and risk-free products—and business’s responsibility to address this concern Quality and Safety Two Central Issues

6. Performance Features Reliability Conformance Durability Serviceability Aesthetics Perceived quality Quality Issues Critical Dimensions of Product Quality

7. Quality Issues Ethical Dimensions of Quality • Contractual theory • Due care theory • Social costs view

8. Safety Issues Historical View • Caveat Emptor • Caveat Vendor

9. Top 10 List of Safety Principles 13-9

10. Reasons for the Growing Concern . . . FIRST . . .Product liability has become a major issue because of the sheer number of cases where products resulted in injury, illness, or death and the amount of the financial award. SECOND . . . We have become an increasingly litigious society. Product Liability THIRD…Rise in the strict liability doctrine

11. Product Liability Extensions of the Strict Liability • Absolute liability • Market share liability • Delayed manifestation cases

12. Product Liability Other Issues • Product tampering and extortion • Product liability reform • Tort law

13. Consumer Product Safety Commission • Protect the public against unreasonable risks of injury associated with consumer products. • Assist consumers in evaluating product safety. • Develop uniform safety standards. • Promote research into preventing product-related deaths, illnesses, and injuries.

14. Develop voluntary standards with industry Issue and enforce mandatory standards Ban a consumer product if public cannot be protected Recall a product or arrange for its repair Research potential product hazards Inform, educate and respond to consumers Consumer Product Safety Commission CPSC Risk Management

15. Consumer Product Safety Commission Challenges Facing the CPSC • Lack of corporate compliance • Limited public access to key information • Inadequate consumer notification • Insufficient funding

16. Food and Drug Administration

17. EstablishingConsumer Affairs Offices EstablishingProduct Safety Offices InstitutingTotal Quality Management Programs UndertakingCostumer Satisfaction Measurement Business’s Response to Consumers

18. Business’s Response to Consumers Consumer Affairs Offices (CAO) • Basic mission is to heighten management’s responsibilities to consumer stakeholders • Essential functions • Establish a database • Audit programs • Recommend programs, policies and practices • Establish effective communications

19. Business’s Response to Consumers CAO Factors for Success or Failure • Proximity to CEO’s office • Clear access to all information about the company’s customers and authority to create the information • Availability of quantified information about consumers • Accessibility to effective performance measures to evaluate all employees in the company

20. Business’s Response to Consumers Product Safety Offices Need for Greater Organization • Complexity of products • Subtlety of hazards generated during product use • Coordination problems in large organizations

21. Business’s Response to Consumers Levels at Which to Locate Product Safety Offices • Divisional level • Corporate level

22. Business’s Response to Consumers Other Functions of Product Safety Offices • Set the tone for the product safety effort • Structure and enforce penalties • Develop links to other quality and safety initiatives • Assist with product safety litigation • Assist the regulatory liaison • Set up product safety committees • Perform safety audits and tests • Design contingency plans for product recalls

23. Total Quality Management 13-23

24. Total Quality Management 13-24

25. Total Quality Management Sigma Six Version of TQM TQM on steroids • 3.4 defects per million versus sigma four 6,000 defects per million

26. Total Quality Management

27. Absolute liability Consumer Product Safety Commission (CPSC) Contractual theory Delayed manifestation cases Due care theory Food and Drug Administration (FDA) Market share liability Product liability reform Six sigma Social costs Strict liability Tort reform Total quality management (TQM) Selected Key Terms