3.3.1. Lesson: Quality and Strategy

QUALITY AND STRATEGY

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Quality and Strategy

  • To make sure that products and services have the quality they have been designed for strategy to achieve quality throughout the organization is required.
  • This approach to management of quality throughout the entire organization has evolved in what is generally referred to as a Quality Management System (QMS).
  • Quality is a wonderful tonic for improving operations.
  • Managing quality helps build successful strategies of differentiation , low cost , and response
    • Differentiation strategy involves the development of unique products that differ significantly from those of competitors.
    • Low cost strategy is a pricing strategy in which a company offers a relatively low price to stimulate demand and gain market share.
    • Response strategy is broader than just delivery to a customer of a good or service. It also includes the organization's ability to adjust timely to other factors or changes in the marketplace. It is the set of values related to rapid, flexible, and reliable performance.
  • Quality, or the lack of quality, affects the entire organization from supplier to customer and from product design to maintenance.
  • Quality helps firms increase sales and reduce costs
  • Building a quality organization is a demanding task

Defining Quality

Quality is the totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs.(American Society for Quality)

  • An operations manager’s objective is to build a total quality management system that identifies and satisfies customer needs

Different Views of Quality

  1. User-based – better performance, more features
  2. Manufacturing-based – conformance to standards, making it right the first time
  3. Product-based – specific and measurable attributes of the product

 Benefits of Quality

Business organizations with good or excellent quality typically benefit in a variety of ways:

  1. An enhanced reputation for quality
  2. An increased market share
  3. Greater customer loyalty
  4. Fewer production or service problems-which yields higher productivity
  5. Fewer complaints from customers
  6. Lower production costs
  7. Higher profits

 

Implications of Quality

  • In addition to being a critical element in operations, quality has other implications.
  • Here are other reasons why quality is important:
  1. Company reputation
    • An organization can expect its reputation for quality—be it good or bad—to follow it.
    • Quality will show up in perceptions about the firm’s new products, employment practices, and supplier relations.
  1. Employment practices
  2. Supplier relations
  3. Product liability
  • The courts increasingly hold organizations that design, produce, or distribute faulty products or services liable for damages or injuries resulting from their use
  1. Reduce risk
  2. Global implications
  • In this technological age, quality is an international, as well as OM, concern.
  • For both a company and a country to compete effectively in the global economy, products must meet global quality, design, and price expectations
  • Improved ability to compete

 

Key Dimensions of Quality

  1. Performance: The expected basic operating characteristics of a product or service.
  2. Features: The “extra” items added to the basic features of a product or service.
  3. Reliability: The probability that a product will operate properly within an expected time frame. Usually closely related to performance. This is important to customers who need the product to work without any errors and contributes to a brand or company’s image.
  4. Conformance: The degree to which a product meets pre-established standards. It is about to what extent the product or service conforms to the specifications. This dimension is closely related to the dimensions performance and features
  5. Durability: How long the product lasts; its life span before replacement. It is about how long a product will last or perform and under what conditions it will perform
  6. Serviceability: The case of getting repairs, the speed of repairs, and the courtesy and competence of the repair person. Dimension that reflects on if the product is relatively easy to maintain and repair.
  7. Aesthetic: How a product looks, feels, sounds, smells or tastes and contributes to the company’s identity or a brand.
  8. Perceived Quality: This is how the customer perceived the standard of quality of the product.
  9. Value: Value hugely relies on individual perceptions and the sentimental or emotional element of products or services.

International Quality Standards

  1. Malcom Baldrige National Quality Award. This was established in 1988 by the U.S. government and designed to promote TQM practices. The recent winners of the award include the following: Premier Inc., MESA Products, Sunny Fresh Foods, Park Place Lexus, North Mississippi Medical Center, The Bama Companies, Richland College, Texas Nameplate Company, Inc.
  2. ISO 9000 series (Europe/EC). Common quality standards for products sold in Europe (even if made in U.S.). 2000 update places greater emphasis on leadership and customer satisfaction.
  3. ISO 14000 series (Europe/EC) - focuses on Environmental Standards. Environmental management, which includes auditing, performance evaluation, labeling, and life cycle assessment

Costs of Quality:

The costs of doing things wrong—that is, the price of nonconformance.

  1. Prevention costs - reducing the potential for defects
  2. Appraisal costs - evaluating products, parts, and services
  3. Internal failure - producing defective parts or service before delivery
  4. External costs - defects discovered after delivery

Managing Quality

Quality management is the act of overseeing all activities and tasks that must be accomplished to maintain a desired level of excellence.

This includes the:

  1. Determination of a quality control
  2. Creating and implementing quality planning and assurance
  3. Quality control
  4. Quality improvement

The Consequences of Poor Quality

Loss of business

  • Poor designs or defective products or services can result in loss of business.
  • Failure to devote adequate attention to quality can damage a profit-oriented organization's image
  • Lead to a decreased share of the market,
  • It can lead to increased criticism and/or controls for a government agency or nonprofit organization

Liability

  • Organizations must pay special attention to their potential liability due to damages or injuries resulting from either faulty design or poor workmanship.

Productivity

  • Productivity and quality are often closely related.
  • Poor quality can adversely affect productivity during the manufacturing process if parts are defective and have to be reworked
  • Poor quality in tools and equipment can lead to injuries and defective output, which must be reworked or scrapped, thereby reducing the amount of usable output for a given amount of input.
  • Similarly, poor service can mean having to redo the service and reduce service productivity.
  • Conversely, improving and maintaining good quality can have a positive effect on productivity

Costs

    • Poor quality increases certain costs incurred by the organization.

Leaders in Quality

  1. Edwards Deming - 14 Points for Management
  2. Joseph M. Juran - Top management commitment, fitness for use
  3. Armand Feigenbaum - Total Quality Control
  4. Philip B. Crosby - Quality is Free, zero defects

Ethics and Quality Management

  1. Operations managers must deliver healthy, safe, quality products and services
  2. Poor quality risks injuries, lawsuits, recalls, and regulation
  3. Organizations are judged by how they respond to problems
  4. All stakeholders much be considered

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REFERENCES

Main References:

Reference: Heizer,  J and Render, B. (2013).  Operations Management.  Upper Saddle River, New Jersey:  Prentice Hall

Heizer,  J., Render, B. and Munson, C.  (2017). Operations Management: Sustainability and Supply Chain Management. 12th Edition. Global Edition. Singapore: Pearson Education, Inc.  

Stevenson, W. J., and  Chuong, S. C.  (2014).  Operations Management. 2nd ed. Asia Global Edition. Singapore: McGraw Hill.

Online Sources:

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