In Lean, quality is often considered to be ‘good parts’. That is important because quality parts are a necessary condition to create flow.
Quality has several different applications.
Conformance to Spec.
Does the product do what it says it will do? Does it match the physical characteristics you say it has?
What is the perceived quality of the product? Do designer labels really add to the quality of a product, or does the reputation of the designer convey some of that added quality?
How long will the product last?
Suitability to application.
Does this product or service meet the needs of the user? The latest phone may have all the bells and whistles, look great, and last forever, but if it can’t receive calls in your home it is useless.
In most Lean situations, you will be considering conformance to spec—is the product made right. The general quality measure is defect rate, measured in PPM (parts per million) or PPMO (parts per million opportunities).
You may also see what is effectively the inverse of the defect rate—yield. When the yield of several processes are linked together, you can determine the rolled-through yield. First pass yield is the percent of parts that have good quality on the first try.
Many companies have an entire quality department dedicated to helping the rest of the organization improve its output.