RELIABILITY



The concept of reliability or dependability is used in a variety of business and industrial settings. In general, the concept of reliability is applied where it is important to achieve the same results again and again. A manufacturing process is said to be reliable when it achieves the same results, within defined limits, each time it occurs. An automobile, or other type of product, is reliable if it performs consistently and up to expectations. The reliability of financial and other types of data may depend on how they have been compiled and prepared. Personnel are considered reliable when they perform consistently and are able to achieve defined objectives.

Reliability is measured by results. It is the yardstick against which performance is measured and evaluated. Reliability is applied to the performance of individuals, products, processes, and data, among other things. Reliable performance in all of these areas is critical to successful business planning and results. In order for a business to be successful, all of its components must be reliable.

In the area of finance and accounting, data is reliable when an independent audit has confirmed that financial records have been prepared according to generally accepted accounting principles. Annual reports and other financial disclosures from publicly held companies generally contain a statement from the auditing firm as to the reliability of the data contained therein. The statement of reliability affirms that the information contained in the financial report is free from error and bias and reasonably reflects the facts of the business operation.

Accounting data can be reliable without necessarily being verifiable. In order for such data to be verifiable, it must be possible to reconstruct the financial data and achieve the same results. In addition, two or more accountants working independently must be able to achieve the same results for financial data to be verifiable.

Reliability is also an important concept in manufacturing and engineering. Plants, processes, materials, and a host of other aspects of the manufacturing process are continually tested for reliability. Since reliability does not necessarily mean perfection, constant attention is paid to improving the reliability of a wide range of manufacturing functions. The reliability of such processes directly affects the profitability of a manufacturing firm as well as the reliability of its products.

Product reliability is important not only to the manufacturer, but also to the consumer. When consumers purchase products, they have certain expectations as to how well those products will perform and for how long. When manufacturers offer product warranties, they are standing behind the reliability of their products. A computer that has a three-year warranty can be expected to be more reliable than one with only a two-year warranty. During the warranty period, the manufacturer generally assumes the cost of any repairs or defects and, in some cases, may even replace the product at no additional charge.

A variety of legislation exists at the state and federal levels to protect consumers from faulty, defective, and unreliable products. Perhaps the most well known is California's so-called "lemon law," which provides consumers with remedies when they purchase consistently unreliable automobiles. That law also prevents automobile dealers from knowingly reselling a "lemon" without notifying consumers of the car's repair history. The reliability of some services, such as telecommunications, is also regulated by the government.

In the area of human resources and personnel, the reliability of individuals seeking employment is of concern to businesses. So-called dependability and integrity tests have been developed to screen potential employees. Businesses can give these tests to applicants to determine the probability of their having disciplinary problems, absenteeism, tardiness, and other counterproductive traits. Dependability tests complement mental and physical ability tests to provide employers with a better evaluation of potential new hires.

SEE ALSO : Product Liability

[ David P. Bianco ]

FURTHER READING:

Ellis, Ed. "Trains Must Achieve Reliability, but Can They?" Trains Magazine, August 1996, 14-15.

Hashim, Mohammad. "Measuring Reliability in Service Industries." Management Decision, July 1987, 46-51.

Ippolito, Richard A. "A Study of Wages and Reliability." Journal of Law and Economics, April 1996, 149-89.

Radford, Bruce W. "Electric Reliability: Sanctions or Commerce?" Public Utilities Fortnightly, I May 1998, 52-57.

Radosevich, Lynda. "ISP Performance Remains Steady." InfoWorld, 27 October 1997, 79-80.



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