Unit 5.4 Quality Assurance

Content

• Quality and customer care/service

• Total Quality Culture

• Continuous Improvement

• International Quality Standards

Learning Outcomes

• Explain the move from traditional quality control techniques to a Total Quality Culture within the entire organisation.

• Show how International Quality Standards, for example ISO and EN have influenced the quality standards of individual organisations.

Reading Focus

• Stimpson, AS and A Level Business Studies, Chapter 24, pages 373-378.

• Jones, Hall, Raffo, Business Studies, 3rd Edition, Unit 83.

• Barratt and Mottershead, AS and A Level Business Studies, Unit 29.

• Jewell, An Integrated Approach to Business Studies 4th Edition, unit 37.

CONTEXTIt has to be established that quality does not necessarily mean

excellence in the sense of a ‘Rolls-Royce product'. Essentially, quality is about fitness for purpose; it is ‘the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.

Quality is a crucial issue at the interface between marketing and production. “To prosper in today’s economic climate, any organisation and its suppliers must be dedicated to never-ending improvement, and more efficient ways to obtain products or service that consistently meet customer’s needs, must constantly be sought. The consumer is no longer required to make a choice between price and quality, and competitiveness in quality is not only central to profitability, but crucial to business survival.

What is Quality?

Quality could be described as those features of a product or service that allow it to satisfy customers’ wants and it should be seen as a package which covers the whole process of buying and using a product or service.

Question1: Select two products that you use most days; make a list of what you consider to be important when buying your chosen products.

Question 2: Case Study 1

Source: Jones, Hall, Raffo, Business Studies 3rd Edition, Unit 83, page 601

Customers equate quality with the following features

Physical Appearance

Reliability and Durability

Special Features

Suitability

Availability of spare parts

Repairs

After Sale Service

Image

Design

Production Process

The importance of quality• Quality is an essential requirement in the process of satisfying a

customer.

• It may provide the competitive advantage that a business is going to gain.

• Good quality helps to reduce the number of complaints about the product and therefore reduces the likelihood of its reputation being damaged and loss of subsequent sales. It also avoids any reduction of goodwill of the business which can be a valuable asset.

• Competition and the growing willingness of customers to complain if they are not satisfied have meant that businesses must give quality a much higher priority than in the pass.

Question: Why are faulty goods that are returned by the customer costly to the business?

Quality in Production

Traditionally, in manufacturing, production departments have been responsible for ensuring quality. Their objectives might have been to ensure that products:

• Satisfy customers’ needs.• Work under conditions they will face.• Operate in the way they should.• Can be produced cost effectively.• Can be repaired easily.• Confirm to safety standards set down by legislation d independent

bodies.

Mini Case: Kwik-Fit

Source: Jones, Hall, Raffo, Business Studies, 3rd Edition, Unit 83, question .

The Advantages of Producing Quality Goods and Services

• Easier to create customer loyalty.

• Saves on the cost associated with customer complaints, for example compensation, replacing defective products and loss of customer goodwill.

• Longer life cycles.

• Less advertising may be necessary as the brand will establish a quality image through the performance of the products.

• A higher price – a price premium-could be charged for such goods and services.

Note: Quality can therefore, be profitable.

Businesses and Quality AssuranceBusinesses are increasingly taking into account the needs of

customers. Quality Assurance about setting and agreeing to standards throughout the organisation and making sure they are complied with so that customer satisfaction is achieved. All areas of the firm are considered. These include:

• Product design• Quality of inputs• Production quality• Delivery systems• Customer service including after sale service.

Many organisations aim to receive recognition for they quality control framework they have in place. This is done by

qualifying for an internationally recognised qualification such as ISO 9000.

Product StandardBusinesses also include signs and symbols on their products which tell a

customer about the product’s standard. Example of such quality symbols include:

• Safety goggles which are awarded the BSI Kite mark, telling the customer that the product has been independently tested to specific standards.

• Inflatable arm bands which are awarded the CE mark, an EU award. This tells the customer that they have been tested not to deflate during use and carry a safety warning about supervision.

• The Lion Mark, awarded by the British Toy and Hobby Association ( BTHA), which shows that manufacturers have a strict code of practice on toy safety, advertising and counterfeiting.

• Some businesses support such guarantees with warranties . If goods are warranted, it means that the manufacturer will undertake any work necessary arising from a defect in the product free of charge. Warranties are popular with product such as cars and a wide range of electrical appliances.

Maxi Case Study

Case: Trinidad Tractor Factory Ltd – Quality becomes an issue.

Source: Stimpson, AS and A Level Business Studies, chapter 24, pages 376 & 377

Reading Task: Quality in practice.

Source: Barratt and Mottershead, AS and A Level Business Studies, unit 29, pages 333-334

TQM, TQC or CQI – What does it mean???

These terms are used to cover the same principles.

TQM – Total Quality Management

TQC – Total Quality Culture

CQI – Continuous Quality Improvement

TQM has world wide recognition, however, the term Total Quality Culture is what is really engrained in this principle.

Reading Assignment: Paper Presented by John A Woods

Title: The Six Values of a Quality Culture

Requirement: Read and write a summary, focusing on the values of A Total Quality Culture as described by Mr. Woods.

The Systematic approach to quality management

Good

DesignGood

Design

Consistent method

Consistent method

Consistent

equipmentConsistent

equipment

Consistent materials

Consistent materials

Satisfactory

InstructionsSatisfactory

Instructions

OPERATION

AND CONTROL PROCESS

OPERATION

AND CONTROL PROCESS

Consistently

Satisfied

Customer

Consistently

Satisfied

Customer

Feedback Channel

Total Quality Management – A Quality Culture

• TQM is a philosophy and culture that starts with the Chief Executive and works its way down through the organisation.

• It is learnt by Example and Expectation and experienced by Teamworking.

• Methods and procedures that will facilitate a TQM Culture can be taught.

Total Quality Management – A Quality Culture

• Total Quality Management is about people every organisation’s greatest assets, and how they work in relation to the business.

• Total Quality Management is:- Doing your job right – First time.

- Customer is No. 1.

- Management by example.

- Working as a team towards common objectives.

- Making decisions based on FACTS.

- Working to BEST PRACTICE standards of your industry.

Reading Task: Modern approaches to achieving quality

Source: Stimpson, AS and A Level Business Studies, Chapter 24, pages 377-379

Read and make your own notes

Total Quality Management – A Quality Culture

Quality ChainsTeamwork

Company Policy and Accountability Control

CUSTOMER SATISFACTIONCUSTOMER SATISFACTION

Features of Total Quality Management.

Monitoring the Process

Consumer Views

Zero Defects

The four stages along the path to TQM

Management

Commitment

A Continuous Cycle of Improvement

Diagnosis

Planned

Improvement

Review &

Consolidate

Management Commitment

-Understands the principles and objectives.

-Full involvement and commitment to the process.

-Cascade down through example and training.

-Communication.

Diagnosis and Preparation

-Identifying the true problems.

-Analysis and measurements.

Planned Improvement

-Establish targets and support team efforts.

Review and Consolidate Gains

-Establish or revise procedures.

-Transfer gains to other areas.

Using Total Quality ManagementTotal Quality Management helps companies to:

-.Focus on the needs of customers and relationships between suppliers and customers.

Achieve quality in all aspects of business, not just the product or service quality.

Critically analyse all processes to remove waste and inefficiencies.

Find improvements and develop measures of performance.

Develop effective procedures for communication and acknowledgement for work.

Develop a team approach to problem solving.

Continually review the process to develop a strategy for constant improvement.

Total Quality Management and Employees

It will increase job satisfaction through involvement and success.

Increase job satisfaction from doing a job well and gaining recognition from contribution to the company’s success.

Jobs and incomes are dependent on the on-going success of the business.

The on-going success of the company is dependent upon satisfying a market need with a product or service that meets or exceeds the customer’s needs and expectations.

It is very important for each employee.

Research and Presentation- Quality Theorists

1. Dr. William Edward Deming

2. Dr. Joseph M Juran

3. Philip Crosby

4. Tom Peters

5. Dr. Walter A Shewhart

6. Dr. Genichi Tanguchi

7. Malcom Baldrige

Requirements

1. For these presentations, each group must focus on the theories developed by your assigned quality theorist.

2. Suggest some of the problems of adopting your assigned theorist approach to quality for:

• A small partnership which is desperately trying to improve its cash flow.

• A multi-national company with over 5,000 employees in three countries and several factories in each country.

Key Principles of TQM/TQC – A summary of all presentations

Scope - Company wide

Philosophy - Prevention, not detection

Approach - Management led culture

Scale - Everyone responsible for quality

Measure - Cost of quality/Customer satisfaction

Standard - Right first time

Theme - Continuous improvement

Time scale - Lifetime

Tools to aid TQM

Quality Circles.Brainstorming.Pareto Analysis (rank problems in order of size).Root Cause Analysis (Fishbone)Data Collection/ensure that the facts are established.Histograms/Charts (analyse occurrence of problems)Customer needs perceptions analysis.Best Practice Benchmarking

Best Practice Benchmarking

This involves management identifying the best firms in the industry and then comparing the performance standards –including quality- of these businesses with those of their own business. This comparison will identify areas of the business that need to improve to meet the standards of quality and productivity of the best firms.

Stages in the Benchmarking Process

1. Identify the aspect of the business to be benchmarked.2. Measure performance in these areas.3. Identify the firms in the industry that are considered to be

the best.4. Use comparative data from the best firms to establish the

main weaknesses in the business.5. Set standards for improvement.6. Change processes to achieve the standard set.7. Re – measurement.

Note: Benchmarking is not a ‘one – off’ exercise and to be effective it should become a continuous process to achieve

long – term improvements in productivity and quality.

Benefits of Benchmarking

• Benchmarking is a faster and cheaper way of solving problems than firms attempting to solve production or quality problems without external comparisons.

• The areas of greatest significance for customers are identified and actions can be directed at improving these.

• It is a process that can assist the firm to increase international competitiveness.

• Comparisons between firms different industries, for example, customer service departments in a retailer compared to a bank, can encourage a useful cross over of ideas.

Limitations of Benchmarking

• The process depends on obtaining relevant and up-to-date information from other firms in the industry. If this is difficult to obtain then the benchmarking exercise will be limited.

• Merely copying the ideas and practices of other firms may discourage initiative and original ideas.

• The cost of the comparison exercise may not be recovered by the improvements obtained from benchmarking.

Maxi Case Study

Case: CaribSugar plc – Low price fails to keep customer ‘sweet’.

Source: Stimpson, AS and A Level Business Studies, Chapter 24, page 379

Quality CirclesThis is a Japanese oriented approach to quality. It is based on staff involvement in improving quality, using small groups of employees to discuss quality issues. Using team working and participation can – as well as leading to quality improvements – results, greatly increased worker participation.

The overall aim of the group is to investigate quality problems and present solutions to management o or, if a group is fully empowered to put this empowerment into effect itself.

Question: What are the benefits and limitations of Quality Circles as a tool of TQM?

Quality CirclesIn order to ensure quality certain conditions must exist:

• A steering committee must be set up to oversee the whole quality circle programme.

• A senior manager should ideally chair the committee. The manger must show commitment to the principles of quality circles.

• At least one person from the committee should be accountable for the programme.

• Team leaders should be properly trained.

Maxi Case Study

Case: Wiping out defects at Wheeler’s

Source: Stimpson, AS and A Level Business Studies, Chapter 24, pages 387-88

The Cost of ensuring quality

• The cost of designing and setting up quality control systems.

• The cost of monitoring the system.

• There will be costs if products are not up to standard.

• The cost of improving the actual quality.

• If the whole quality system fails, there may be costs in setting it up again.

International Quality Standards

This lesson will be conducted within the context of a number of reading

assignments, cases and research and presentation tasks

International Quality StandardsSome organisations/systems that exist to promote quality:

• International Standards Organisation (ISO)• European Number (EN)• The Caribbean Regional Organisation for Standard and Quality

(CROSQ).Research and Discussion Questions

1. List three other international organisations that exist to promote quality and discuss their roles in ensuring quality standards of organisations.

2. Discuss the nature of the ISO and its influences on quality standards on national and international organisations.

International Quality Standards

Reading Assignment 1- Handout

Total Quality Management and the International Organisation for Standardization.

Case Study: ISO 9002 Certification Case Study – One Company’s Story

Author: Lisa H. Harrington

Source: www.usfc.com

Case Study: A Quality Experience - ‘Keeping the brogue in vogue’

Source: www.bized.ac.uk

Research and Presentation

Choose a local organisation and make a presentation of how its adaptation of International Quality Standards, e.g., ISO has influenced its operations.

1. One organisation/Company per group.

2. Concentrate on organisations within Cebu City.

3. Make arrangement to visit your chosen organisation.

4. Conduct interviews.

5. Present you findings using power point.

BIBLIOGRAPHY

• Jones, Hall, Raffo, Business Studies 3rd Edition, Causeway Press Ltd,2004.

• Stimpson Peter, AS and A Level Business Studies, Cambridge University Press, 2002.

• Barratt Michael, Mottershead Andy, AS and A Level Business Studies, Pearson Education Ltd, 2000.

• Jewell Bruce, AS and A Level Business Studies, 4th Edition, Pearson Education Ltd, 2000.

• WWW.BIZED.AC.UK

END OF UNIT