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Quality Management in Business
1.1 & 1.2 discussion on definitions of quality in terms of business and services provision and illustrate the processes of inspection and assurance of quality.
The term ‘Quality’ is a defined as ‘’a certain degree of perfection’. This means that quality is the degree of meeting the needs of a specific buyer by a given product and/or service. The above definition is as simple as it is flexible because it indicates the possibility of grading quality in relation to individual needs. In other words, goods or service that is considered by some customer to be of high quality may not have that quality at all for another customer. Therefore, if we assume that customer satisfaction = quality / price, then after a simple transformation we will obtain the formula ‘’quality = customer satisfaction x price. (Riley, 2009)
Nowadays, shelves are packed with different products from all over the world, the companies are looking for ways which will enable them to stand out in the market. Without a doubt if the company wants to achieve a success they must take care of quality of their products and/or service. Therefore, many organisations ask themselves ‘what they should do’ to keep up with the high quality of their products or services. Each of us pays attention to different features that are important when buying a good or service.
We decide what is important to us. The present world gives us unlimited opportunities to use things, the creativity of entrepreneurs encourage us to look for other criteria of excellence. The most important is what entrepreneur says about the product to the customer is consistent with the image that the customer registers in his/her individual perception of what he gets.
Briefly refer to the following;
1) Quality according to producer/manufacturer – technical and user specifications of the product or services (1paragraph)
2) Briefly refer to ISO international standards and how they influence organisations to meet quality (1 paragraph)
3) Briefly discuss the responsibility of the organisation to ensure quality – this paragraph should naturally introduce the need for quality inspections and assurance before you present them below.
Quality inspection (QI) – means to check, measure or test one or more characteristics of a goods or services to compare results with the specification of assumed values to confirm the compliance of a product or service with the requirements. At this stage the task is mainly performed by specialised inspectors or employees who have been trained to perform such a role as this is not the part of responsibilities of production employees who do not have adequate knowledge and skills. Products that do not comply with the specifications are rejected or submitted for correction. (MBN, 2019)
Therefore, if the company wants to have high standard products and/or services, quality inspection must be carried out throughout qualified inspectors, using appropriate tools which will enable to find defects in the process of production in order to minimise potential costs such as, labour, materials, utility bills etc. and most importantly to avoid the dissatisfaction of stakeholders.
Quality assurance ( QA) means ensuring the perfection of the manufacturing and delivery process. The basis for such proceedings is the claim that if the work at any stage of the process is of high quality, a high quality product is created at the output of the process. In practice, the parameters characterising product quality must be within specific and narrow limits. If this is the case, it is said that the process is stable. If, on the other hand, it is determined that one of the product quality parameters does not fall within the given limits, one should look for the places that are the cause of the defect in the process, and then remove these reasons. In this way, feedback is realised between the output of the process and places in the process that determine its perfection. (MBN, 2019)
Table of systematic and staged processes of quality inspection & assurance
Tools & assurance
Raw materials control
This type of control is necessary when the company has the desire to check raw materials e.g. milk (colour, fat, smell, consistency, level of bacteria etc.). The company should focus on purchasing ingredients from accredited suppliers. In case of any issues arising during the process on production lines, steps should be undertaken to raise the level of quality of ingredients.
The company must use certain tools to assure the best quality of purchased raw materials from its suppliers (stakeholders). External inspection should be made before the raw materials are brought over to the company. If ingredients fail inspection control they should be rejected and the company should seek another supplier of goods to assure high standards. (Satyendra, 2016)
The quality inspection of the product at every stage on production line is very important due to the costs, because the detection of irregularities at an early stage allow to eliminate possible risks. The aim of inspection at this stage is to test the product at certain stages. This will help to foreseen if product is within the manufacturing tolerances and if the end-product will be fault free. (Satyendra, 2016)
Quality inspection supervisors follow the whole process from start to finish on the production line. One of the popular quality tools systems used in food industry companies is – Hazard Analysis and Critical Control Point (HACCP) and it is carried throughout the entire process to ensure the safety of food to establish control systems which used mainly for prevention during the process not necessarily on end-product testing.
Total Quality Management (TQM) and ISO: 9000 standards, also relate to inspection on production line process which focuses also on food safety and other potential food risks which can have bad influence on end-product. (Sumaedi, Yarmen 2015)
Finished product inspection
This is the last stage of inspection of the product in which the company can detect any possible irregularities before the final product will be sent out to the customer. Final inspection of colouring, taste, smell, consistency, durability etc. They also focus on this stage at packaging which will be used to deliver the item to consumers and at correct labelling which is essential to identify goods which helps to promote the product as well as to provide correct information about it. (Satyendra, 2016)
At this stage the appropriate assurance is essential. The final inspection can be done by internal inspectors or employees who have been trained to perform such a role successfully of checking the food safety of the product. (Satyendra, 2016)
The company can also use focus groups which their aim would be to do a market research about the product by giving out samples of our products which will enable the company to gather the opinion of consumers according to a proposed survey from the rate 1 to 5 about the packaging, durability, taste etc. Gathered feedback & recommendations from consumers will be used adequately weather the entire process from start to finish needs to re-evaluated and performed again from the beginning.
Source: ispat guru, 2016
To conclude the above table, illustrations, definitions and explanations show the systematic and staged processes of quality inspection and assurance and highlights how important it is at every stage of the manufacturing process starting from the very beginning of purchasing raw materials followed by production process up to the finished end-product to satisfy the customers’ requirements of needs and expectations. This process requires involvement not only of inspectors and tools that are being used, but all employees as whole must be involved in the production process because if not this will lead to low quality of product and/or service.
1.3 & 1.4 Discuss range of approaches to quality management and explain the similarities and differences between the different methods.
Quality management (QM) is undertaking planned and coordinated activities focused on improving the efficiency and flexibility of the organisation that are aimed at meeting the requirements and expectations of customers. It is worth paying attention to two aspects of this definition, on the one hand, we have customers’ expectations that we need to satisfy, but on the other hand we have the efficiency and flexibility of the company so we must ensure that our company will have resources that will meet customers’ requirements, so we must always take into account not only quality, but also the economic side of it. This quality must be beneficial for us and we must know how to count it. (Edosmwan, 1995)
The most popular quality management systems used in organisations are:
Total Quality Management (TQM)
TQM was established in early 1940s by American and Japanese scientists and engineers (W.E. Deming, J. Juran). The main principles of TQM philosophy are: engagement of management, focus on customer and/or employees, paying greater attention to facts, continuous improvement, communication and employees engagement. In Total Quality Management (TQM) concept every factor in organisation or in its surrounding has an influence on quality. The aim of TQM is to integrate the goals of the company with the customers’ requirements. Implementation of the objectives must be carried out with the full involvement of the employees of the organisation and the leading role of the management. (wikipedia, 2019)
An important advantage of implementing TQM is the teamwork, the mutual support and the organisation’s spirit. It favours internal integration and loyalty of groups of employees and, as a result it has a positive influence on the efficiency of work and efficiency of management. This implementation requires the company to constantly monitor the changing needs of customers and this will allow the company to quickly adapt to changes in the market.
The biggest disadvantage is the decline or lack of management’s involvement. Enthusiasm and commitment comes at the beginning of a relatively easy start of the implementation of the system, but with the passage of time often involvement and enthusiasm decreases, it is limited to the routine. Another disadvantage of the implementation of TQM is the lack of visions and plans, the sense of necessity of changes is so dominant that the company focuses only on the current needs of customers and not on challenges of the future.
Source: smart sheet, 2019
The ISO 9001:2015 standard is a universal standard which was first published in 1987 and then later on updated a few times in 1994, 2000, 2008 and lastly in September 2015. Any organisation can use it, regardless of whether it is large or small company in areas: manufacturing, machine tools, food processing, sanitation, fabrication, banking, chemicals, health care, education etc. Any organisation that wants to keep pace with customers and present a good level of management and customer service, can find in the Quality Management System based on ISO 9001. (ISO, 2015)
One of the advantages of implementing ISO 9001 system from my point of view is reduced operational expenses. During the implementation of this ISO system there are often shortcomings in various operational areas. When these problems are revealed, the company can take the appropriate steps to repair them. This will help the company to save money. When company uncovers what they should do to improve the quality of the final product such effort will have a positive influence on customers’ satisfaction. Also, companies with ISO certificate are more attractive to stakeholders make them stand out in the global marketplace and against its competitors which will lead to more profitability and the trust among its stakeholders and/or shareholders.
Achieving ISO 9001 certificate can be very expensive especially for small companies. Another vital disadvantage is that process requires a lot documentation which needs to be created in many areas which is time consuming and implementation of this system takes many months to complete.
Source: certification Europe, 2019
Source: certification Europe, 2019
Hazard Analysis and Critical Control Points System (HACCP)
HACCP is a food surveillance system introduced in 1996 and was launched by the Dutch food-processing industry, and is aimed at eliminating the immediate causes of health hazards directly at the place where they arise. This system cannot be treated as a permanent procedure which was developed just once, it has to be revised again and again, including documents that result from it. This HACCP system should ensure food safety through constant monitoring of biological, chemical and physical hazards in the production, storage and marketing of food. The essence of the HACCP system in organisation is that all data and documentation regarding any food-related activities must be monitored, recorded and updated on ongoing basis. Any changes in the organisation should be taken into account e.g. regarding the expansion of production, changes in technology, type of food produced, equipment, repairs of modernisation of an organisation which may cause new food safety hazards. (P. A. Baffour, K. B. Sekyere, E. A. Addy, 2013)
The advantages of implementing HACCP within a company will help to meet the requirements of food law and fulfilment of customer expectations, guaranteeing a safe and high quality product. Minimises the potential costs that a company could suffer from e.g. court claims caused by poisoning of customers due to insufficient quality of food products. Implementation and certification of HACCP system raises the credibility of the company in the consumers and the competitors eyes.
Some of the disadvantages of HACCP system are that it requires expenditures to organise an appropriate team of employees to implement HACCP, and training of all employees and the constant updating of their knowledge. Also, associated costs might be needed with the purchase of equipment, e.g. for monitoring for systematic verification, as this system is very bureaucratic which needs professional management, organisation and keeping documentation.
To summarise all of the above systems, a company must organize and optimise all processes in the organisation based on the implemented and certified management systems and systematic conduct of further improvement activities which will lead to reduced loses and increase profits.
Source: sea food, 2017
2.1 & 2.2 Discuss what is meant by customer satisfaction and explain the meaning of continuous improvement of quality
The customer satisfaction is the feeling that consumer experiences after using the offer that meets his/her expectations. Customers are happy when their expectations are fully satisfied or exceeded. The customer is the final element of the business chain that verifies quality product. His/her needs and expectations about the product/service, its delivery and consumption should be fully understood and satisfaction should be measured and analysed in terms of its loyalty. (my accounting course, 2019)
The role of customer satisfaction
Customer satisfaction means a state of mind in which the customer is convinced that his/her expectations have been completely satisfied. This state of mind leads to a sense of loyalty and encourage to re-purchase. The level of customer satisfaction is a reflection of the extent to which the final product (brand, price, product, distribution and service) offered by a given organisation satisfies a set of its requirements. The opinion about the product is always subjective, the customer’s satisfaction is a subjective feeling.
According to H. Takeuchi and J. Quelch (1983) research based on a survey 96.7% out of 3000 customers who are satisfied are more likely to re-purchase goods/service from the same company. Many customers, nowadays do not necessarily pay attention only to the price of the product, but the quality. Therefore, it is obvious that regardless of how much money the customer spents or how high is the standard of service, the most important is quality of the product and/or service. The customer who receives defective or poor quality of product will not be satisfied, even if it is purchased at a bargain price or how quickly and easily he/she will be served by the company. On the other hand, a customer who will appreciate the excellent quality of the product will return to the store more often, despite the higher amount that he/she had to spend. Regardless of the changing times the basis is and will be a well-made product and service.
One of the main factors that will have bad impact on the company is the dissatisfied customers who are not satisfied with the products and/or service quality. The company must take into account that such a customer may return an item ask for a refund and that he/she will be looking for the same or similar product/service which the competitors supply of. Customers feedback is very crucial, if there are many negative feedback left the company must take vital steps to resolve the arising issues with the product/service. Negative feedback left once can have a serious long-term consequences, as many potential customers read online about other people’s experience with the company and based on that make final purchase decision. Every day we talk about the goods/service with members of our family, colleagues and friends etc. Therefore, negative opinion sent via word of mouth, can cause a visible decline in drop of sales.
Summarising, the growing economy, and thus increasing competition results in higher customers’ requirements and force companies to adopt to the competitive market. Currently companies pay more and more attention to the quality of offered products and services, satisfaction of customers and their loyalty. Research shows that these are extremely important factors enabling you to achieve a leading position in the market. Understanding the meaning of these factors, their interrelation and impact on the overall image of the company is the basis of success. To build a good customer relationship the company must take into account customers’ preferences that requires knowledge about their behaviour, expectations, shopping activity etc.
The base of quality management (QA) is a continuous improvement cycle, which was originally developed by Walter A. Shewhart then refined and developed by Deming, and in this version today we use it, which is why we call it the Deming’s cycle or Deming’s circle. This cycle consists of 4 PCDA steps: plan, do, check and act. Plan – in other words, means to describe your process, describe what you want and how you want to do it. Do – implement your plan. Check – assess whether you plans have been completed, however if they were not completed successfully, then in step four Act – correct what was wrong, make corrections to the production process. And, if the company have achieved the goals, the management can raise the bar, set new plans that will have an even higher level of quality, and so every Deming’s cycle result in that the quality level is gradually growing, thanks to a longer period of doing these cycles we can raise the quality of the whole organisation. (Sieuwert van Otterloo, 2017)
Continuous quality improvement with PDCA
The PDCA cycle
Summarising, in order for continuous improvement to work, we need some security and we need to document what has already been achieved and this is used to standardise. If the management implements for example, ISO 9001 system only to have a certificate somewhere on the wall, it is a waste of time and money. It will only translate into the higher costs of the organisation. The management has to approach it differently, the company must implement continuous improvement and ISO 9001 system must be used as a security for what we have already achieved and develop this system in the light of our progress, this system must actually work, live and be used by employees.
2.3 & 2.4 Illustration of the benefits and advantages of good quality (of products and service) – show key advantages and benefits to the organisation and its stakeholders & illustration of how quality information can be communicated as part of marketing
High quality products/services produce less customer complaints and returns. The best world brands devote a lot of time and money to create a high quality range of products/services before they are released on the market. This results in a small number of customers returning products and make complaints. What’s more, if customers are satisfied with the initial experience with products/services they will repeat purchase from the same company which will result in customer’s loyalty and constant profits. (Business, 2018)
High profits from selling good products/services and overall good condition of the company benefits both company and its suppliers (stakeholders) for example, company will purchase more raw materials – more money for suppliers, which will make them stay with the company for a longer period of time. If the company builds strong relationship, then in the future when the company has financial problems the suppliers might give trade credit to the company to be paid within a set specific time without interest charges, instead of paying upfront for what they have ordered due to its good previous relationship with its suppliers. (Gregory Sidor, 2016)
Recognition, trust and prestige – A company that offers its customers high quality products/services quickly gains the trust of its customers, becomes more recognisable on the market and builds prestige that determines the day to day success of the company and gives competitive advantage over others. This advantage means that the products of such organisations are more willingly bought. Good reputation without a doubt means that better educated, motivated and skilled people want to work for the company. More importantly banks are most willing to lend money. Such companies have better financial condition than competitors and they can dictate higher prices. (Robert, 2017)
It is very important that quality information are appropriately communicated to customers as part of marketing. It is not so easy to satisfy and interest the contemporary customer, therefore adequate knowledge, patience and the ability to show interesting content is vital. Content marketing is based on the creation of useful and attractive information that need to attract potential customers. The era of image and funny advertising slogans has passed, nowadays the most valuable is interesting information. To gain recognition among customers you have to show that you have an adequate knowledge about product/service and that you are an expert and you know everything about the product/service and the industry you represent. The customers must know what they purchase and also expect security and confidence that they buy the best product/service on the market. High quality of content increases interest in potential customers. The description of product quality must highlight any of its features – why it is so important and what this product will provide to the customer. The customer wants to know what benefits he/she will get from the purchased goods.
For example: company’s website can be one of the marketing communication tools to promote its quality of products/service and the company’s positive image as a whole. It is worth placing information about quality of product/service on the website. Describe the curiosities or news about your product, include articles where experts will recommend good quality of this product/service. This is definitely more interesting for internet shoppers than empty words about your unique offer.
Another example could be for the company to place information on the product’s label about ingredients (fat, vitamins, preservatives etc.) it gives the customer knowledge how healthy product they buy and what influence it will have on their health. If, the product for instance, contains healthy ingredients they will be more keen to purchase it, as it has ingredients that can benefit customer’s health. (safe food, 2019)
To conclude, in today’s world customers are looking for quality products and/or service at a low price, and this will certainly not change. Poor products/services do not have the chance to hit the buyer, therefore the company’s strategy cannot be based only on cost indicators. The real challenge for managerial staff is the quality aspect around which all business in the world moves. Quality today means meeting customers’ expectations, so company needs to focus on customer because company’s profits will highly depend on whether it meets the requirements of customers.
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- MBN (2019) What is an inspection [online] available at: https://marketbusinessnews.com/financial-glossary/inspection-definition-meaning/
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- Sik Sumaedi, Medi Yarmen (2015) The effectiveness of ISO 9001 implementation in food manufacturing companies [online] available at: https://www.sciencedirect.com/science/article/pii/S2211601X15000498
- Ispat guru (2019) Stages of inspection and testing ) [online] available at: http://ispatguru.com/role-of-inspection-and-testing-in-maintaining-product-quality/
- Integrating productivity and quality management, Johnson Aimie Edosomwan,2nd ed, Marcel Dekker,1995. [online] available at: https://books.google.co.uk/books?id=5zsE-HAih-kC&printsec=frontcover&dq=definition+of+quality+management&hl=en&sa=X&ved=0ahUKEwihv6CJiqriAhUsVBUIHaJtALkQ6AEIKjAA#v=onepage&q&f=false
- Wikipedia (2019) TQM W. Edwards Deming ) [online] available at: https://en.wikipedia.org/wiki/W._Edwards_Deming
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- P. A. Baffour, K. B. Sekyere, E. A. Addy (2013) [online] available at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3832398/
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- Certification Europe (2019) ISO 9001:2015 Quality management system [online] available at: https://www.certificationeurope.com/certification/iso-9001-quality-management-systems-certification/
- Sea food (2017) Hazard Analysis and Critical Control Point [online] available at: http://seafoodhaccp.cornell.edu/Intro/index.html
- My accounting course (2019) What is customer satisfaction? [online] available at: https://www.myaccountingcourse.com/accounting-dictionary/customer-satisfaction
- Sieuwert van Otterloo (2017) Information security and PDCA (Plan-Do-Check-Act) [online] available at: https://ictinstitute.nl/pdca-plan-do-check-act/
- Business (2018) 5 Ways product quality impacts your brand [online] available: https://www.business.com/articles/5-reasons-why-product-quality-matters/
- Gregory Sidor (2016) What is trade, and how can it help your business [online] available: https://www.dnb.co.uk/perspectives/finance-credit-risk/what-is-trade-credit-and-how-can-it-help-your-business.html
- Robert (2017) 6 Reasons why you should build a strong brand [online] available: https://www.prestigebusinesscoaching.co.uk/sales-marketing/6-reasons-build-strong-brand/
- safe food (2019) Food labelling requirements [online] available: https://www.safefood.eu/SafeFood/media/SafeFoodLibrary/Documents/Education/Whats%20on%20a%20label/GCE/What-s_on_a_label_GCE-Classroom-Slides-Topic-1.pdf
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