Quality and Quality Quality and Quality Assurance Assurance

IB Business and IB Business and ManagementManagement

What is Quality?What is Quality?

Quality is achieving a standard for a Quality is achieving a standard for a product or service which meets product or service which meets customers expectationscustomers expectations

What attributes do we associate with What attributes do we associate with good quality?good quality?

Key aspects of QualityKey aspects of Quality

Good design – looks and style Good design – looks and style Good functionality – it does the job well Good functionality – it does the job well Reliable – acceptable level of Reliable – acceptable level of

breakdowns or failurebreakdowns or failure Consistency Consistency Durable – lasts as long as it shouldDurable – lasts as long as it should Good after sales service Good after sales service Value for money Value for money

Why is good quality important?Why is good quality important?What benefits will it bring?What benefits will it bring?

Benefits of a Quality ReputationBenefits of a Quality Reputation Customer loyalty – they return, make Customer loyalty – they return, make

repeat purchases and recommend the repeat purchases and recommend the product or service to others. product or service to others.

Retailers want to stock the productRetailers want to stock the product As the product is perceived to be better As the product is perceived to be better

value for money, it may command a value for money, it may command a premium price and will become more price premium price and will become more price inelastic inelastic

Fewer returns and replacements lead to Fewer returns and replacements lead to reduced costsreduced costs

Task – Look at the following Task – Look at the following companies….. companies…..

1. How can these businesses 1. How can these businesses measure the level of quality of measure the level of quality of

their goods/services?their goods/services?2. What could these businesses 2. What could these businesses

do to make sure all do to make sure all goods/services are good quality goods/services are good quality

How is Quality Measured?How is Quality Measured?

• • Failure or reject rates Failure or reject rates • Level of product returns • Level of product returns • Customer complaints • Customer complaints • Customer satisfaction – usually • Customer satisfaction – usually measured by a survey measured by a survey • Customer loyalty – evident from • Customer loyalty – evident from repeat purchases, or renewal rates repeat purchases, or renewal rates

However......However...... Quality is subjectiveQuality is subjective Quality is always evolving because of Quality is always evolving because of

things like improved technology, better things like improved technology, better materials, new manufacturing materials, new manufacturing techniques and fresh competitors. techniques and fresh competitors.

• • Whilst controlling quality has benefits Whilst controlling quality has benefits to the firm, it can also be costly to do, to the firm, it can also be costly to do, so it is important that the benefits so it is important that the benefits outweigh the costs in the long term outweigh the costs in the long term

Costs of Poor QualityCosts of Poor Quality

Lost customers (expensive to replace Lost customers (expensive to replace – and they may tell others about – and they may tell others about their bad experience) their bad experience)

Cost of reworking or remaking Cost of reworking or remaking product product

Costs of replacements or refundsCosts of replacements or refunds Wasted materials Wasted materials

Benefits of Improving QualityBenefits of Improving Quality

Improved image & reputation, which Improved image & reputation, which should result in: should result in: • Higher demand, which may in turn mean • Higher demand, which may in turn mean • Greater production volumes (possibly • Greater production volumes (possibly providing better economies of scale) providing better economies of scale) • Lower unit costs because of less waste and • Lower unit costs because of less waste and rejected output rejected output • Fewer customer complaints (& more • Fewer customer complaints (& more satisfied customers) satisfied customers) • Potentially higher selling prices (less need to • Potentially higher selling prices (less need to discount) discount)

Quality Management Quality Management TechniquesTechniques

Quality ControlQuality Control Quality AssuranceQuality Assurance Total Quality ManagementTotal Quality Management

Quality ControlQuality Control

This is the This is the traditional method traditional method used by firms to used by firms to make sure goods make sure goods are of the right are of the right qualityquality

Quality inspectors Quality inspectors test products or test products or samples of products samples of products at the end of the at the end of the production processproduction process

Advantages of Quality ControlAdvantages of Quality Control

Requires little staff trainingRequires little staff training Suitable when staff are unskilled or Suitable when staff are unskilled or

temporarytemporary If all output is checked, faulty goods If all output is checked, faulty goods

will not reach the consumer will not reach the consumer

Problems with Quality ControlProblems with Quality Control

Sometimes only a sample is takenSometimes only a sample is taken As faulty goods are often only As faulty goods are often only

detected at the end of the production detected at the end of the production process a lot of goods have to be process a lot of goods have to be scrapped or reworkedscrapped or reworked

Staff can feel demotivatedStaff can feel demotivated

Quality AssuranceQuality Assurance

This is an approach that aims to achieve This is an approach that aims to achieve quality by organising every process to quality by organising every process to get the product ‘get the product ‘right first time’right first time’. .

Every stage of the production process is Every stage of the production process is examined for ways to improve quality examined for ways to improve quality

Documents are produced at each stage Documents are produced at each stage to outline the way to do tasksto outline the way to do tasks

Workers are responsible for ensuring Workers are responsible for ensuring quality at their stage of productionquality at their stage of production

Advantages of Quality AssuranceAdvantages of Quality Assurance

Costs are reduced because there is less Costs are reduced because there is less wastage and re-working of faulty products wastage and re-working of faulty products as the product is checked at every stage. as the product is checked at every stage.

DisadvantagesDisadvantages

Can be costly in terms of trainingCan be costly in terms of training Can create additional paperwork to Can create additional paperwork to

implementimplement

TQMTQM

TQM is a philosophy introduced by W. TQM is a philosophy introduced by W. Edwards Deming in the 1980’sEdwards Deming in the 1980’s

Originated in Japanese firmsOriginated in Japanese firms TQM aims to develop a TQM aims to develop a ‘quality culture’ ‘quality culture’ in in

the organisation. the organisation. There is a commitment to quality at every There is a commitment to quality at every

step of the production process and from all step of the production process and from all staff.staff.

Total Quality Management (TQM)Total Quality Management (TQM) More and more businesses are moving More and more businesses are moving

towards TQM…. This means:towards TQM…. This means: Quality is part of every processQuality is part of every process Quality is everyone’s jobQuality is everyone’s job This in turn:This in turn: Can increase employee motivation as they Can increase employee motivation as they

have added responsibility and don’t feel have added responsibility and don’t feel they are being checked up onthey are being checked up on

Can massively reduce costs of Can massively reduce costs of re-working/wastagere-working/wastage

Features of TQMFeatures of TQM

– Quality CirclesQuality Circles – meetings of relevant workers – meetings of relevant workers to discuss issues relating to maintenance and to discuss issues relating to maintenance and improvement of quality in the business – may also improvement of quality in the business – may also double as a form of empowerment and motivation.double as a form of empowerment and motivation.

– Statistical Process ControlStatistical Process Control – statistical data – statistical data generated to inform the evaluation of processes generated to inform the evaluation of processes within the business. These within the business. These Key Performance Key Performance IndicatorsIndicators are closely monitored are closely monitored

– Zero defectsZero defects – systems in place to ensure that no – systems in place to ensure that no product leaves the business with a defect – product leaves the business with a defect – important in building supplier relationships, image, important in building supplier relationships, image, reputation.reputation.

Requirements of TQMRequirements of TQM

Skilled workersSkilled workers Motivated workersMotivated workers Investment in trainingInvestment in training Creating a ‘Quality Culture’Creating a ‘Quality Culture’

Quality of ServicesQuality of Services

Quality of service is more difficult to Quality of service is more difficult to measure:measure:

EfficiencyEfficiency SpeedSpeed Interaction with StaffInteraction with Staff CleanlinessCleanliness

How can quality of services be How can quality of services be measured?measured?

How can Quality be Improved?How can Quality be Improved?

Watch the videoWatch the video ‘‘Gordon Ramsay eats at Guiseppes’Gordon Ramsay eats at Guiseppes’ What are the problems with QualityWhat are the problems with Quality What suggestions would you make to What suggestions would you make to

Guiseppes on how they can improve quality? Guiseppes on how they can improve quality? How could they implement:How could they implement: Quality ControlQuality Control Quality AssuranceQuality Assurance TQMTQM