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Unit 5.4
Quality Assurance
Content
•
•
•
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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.
CONTEXT
It 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
Production Process
After Sale Service
Reliability and Durability
Repairs
Special Features
Image
Suitability
Design
Availability of spare parts
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
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Easier to create customer loyalty.
•
Saves on the cost associated with customer complaints, for example
compensation, replacing defective products and loss of customer goodwill.
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Longer life cycles.
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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 Assurance
Businesses 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:
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•
•
•
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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 Standard
Businesses 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
Design
Consistent
method
Consistent
equipment
Consistent
materials
Satisfactory
Instructions
OPERATION
AND CONTROL
PROCESS
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:
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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 Chains
Teamwork
Company Policy
and Accountability
Control
Consumer Views
Monitoring the
Process
Zero Defects
CUSTOMER SATISFACTION
Features of Total Quality Management.
The four stages along the path to TQM
 Management Commitment
-Understands the principles and objectives.
-Full involvement and commitment to the
process.
A Continuous Cycle
of Improvement
-Cascade down through example and training.
Diagnosis
-Communication.
Diagnosis and Preparation
-Identifying the true problems.
-Analysis and measurements.
Management
Review &
Consolidate
Commitment
 Planned Improvement
-Establish targets and support team efforts.
Planned
Improvement
Review and Consolidate Gains
-Establish or revise procedures.
-Transfer gains to other areas.
Using Total Quality Management
Total 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
Requirements
1.
2.
3.
4.
5.
6.
7.
Dr. William Edward Deming
Dr. Joseph M Juran
Philip Crosby
Tom Peters
Dr. Walter A Shewhart
Dr. Genichi Tanguchi
Malcom Baldrige
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.
2.
3.
4.
5.
6.
7.
Identify the aspect of the business to be benchmarked.
Measure performance in these areas.
Identify the firms in the industry that are considered to be
the best.
Use comparative data from the best firms to establish the
main weaknesses in the business.
Set standards for improvement.
Change processes to achieve the standard set.
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 upto-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 Circles
This 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 Circles
In 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 Standards
Some organisations/systems that exist to promote quality:
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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.
2.
3.
4.
5.
One organisation/Company per group.
Concentrate on organisations within Cebu City.
Make arrangement to visit your chosen organisation.
Conduct interviews.
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
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