Quality Management

Quality management deals with ensuring products conform to standards and at the right cost. It involves:

• Quality planning
• Quality assurance
• Quality control
• Quality improvement

Managing quality involves several methods, including:

• Quality circle
• Benchmarking
• Total quality management (TQM)

Quality

Quality is about how well a product fulfills its purpose and meets user expectations. It affects the value perceived by customers, which in turn affects their satisfaction. On the other hand, it affects the cost and the company’s competitiveness.

Companies must explore customer expectations for their products. These expectations become the minimum standards they must meet to satisfy customers. They then develop systems to achieve those standards. Thus, customer dissatisfaction is minimized.

Quality is achieved using high-quality raw materials and training employees to minimize defects or damage. Additionally, other methods may involve:

• Quality assurance
• Quality control
• Quality management
• Benchmarking
• Quality circles

Companies may also employ mystery shoppers in service businesses, such as retail. They act as the customer and will report back to the company about their experience. The company then uses the feedback from the mystery shopper to help improve the service.

The importance of quality

Quality is an essential factor for a successful business. Companies depend on it to ensure products appeal to customers. Quality also allows customers to be happy and loyal to the product. When customers are satisfied with the product, it gives the company a competitive advantage and supports a superior product image. Other benefits include:

Driving more sales. Good quality will encourage customers to buy again in the future. And it will also attract new customers to try using it.

Increase in market share. Increased sales mean the potential to increase market share. A company can generate high sales by encouraging repeat purchases and attracting new customers. If the company’s sales grow more than its competitors, its market share will increase.

Superior reputation. Improving quality is a way to satisfy customers. If the company maintains it over time, it will create a solid reputation as a superior-quality product.

Good brand image. A good reputation and image will lead to more money in the future. This is because customers prefer to buy high-quality brands.

Strong brand loyalty. Satisfied customers will be more likely to repurchase the product. They want to deal with and be more involved with the company. They will not want to buy a competitor’s product because there is a risk involved; namely, the competitor’s product is unsatisfactory.

Higher prices. Customers are generally willing to pay more for quality products. Thus, it has the potential to increase company profits.

Positive publicity. Customers who are satisfied with quality are likelier to recommend it to their friends or family. Or, they might say nice things about the company on social media or other communication channels, which could go viral.

Reducing costs. Good quality minimizes additional costs, such as dealing with customer complaints and replacing goods. And throughout the production process, quality reduces the potential for rework and waste.

The costs involved in managing quality

Managing and improving quality is not free. There are costs involved, including:

• Market research to explore customer expectations and then use them as standards
• Inspection to ensure quality is met in the production process or final output
• Costs for training to make workers more skilled and reduce errors in work
• Production shutdown when a defect occurs – may be required to track and correct errors

Quality raw materials

Raw material quality contributes to output quality. Quality output requires quality input.

Additionally, using reputable suppliers to supply quality inputs is becoming a marketing tool. For example, companies like Unilever aim for net zero emissions. The target requires the company to deal with environmentally friendly suppliers. The slightest negligence, for example, a supplier not meeting standards, could damage the company’s reputation.

However, getting quality input does come at a cost. Quality raw materials may be more expensive. In addition, the company must find reliable suppliers, of which there may be few.

Quality control

Quality control is systematic monitoring to ensure output quality conforms to specifications and standards. It requires several employees to routinely take, inspect, and test samples.

Quality control aims to ensure quality and defect-free products when delivered to customers. The team will take a random sample, test and check it. If the product doesn’t meet quality standards, it will be sent for rework. Or the product is discarded altogether.

Quality control is important and offers several benefits, including:

• Minimizing poor quality products reaching customers
• Reducing associated costs such as product returns due to defects
• Reducing customer dissatisfaction
• Ensuring a quality operating system

Quality control is important to take follow-up steps. For example, defective products were found in almost all samples. That most likely happened because there was a disruption in the production process. So, the company can take further steps to find the cause.

However, quality control also has some limitations, including:

• The process is quite expensive because the company must recruit a specific team to conduct the inspection.
• Reworking a faulty product can be time and money-consuming.
• If the inspection is only done at the final stage, it requires another step to find the root cause.

Quality control method

Quality control involves several methods, including:

• Preventive control ensures raw materials and components are free from defects. The team inspects them before they go into production, ensuring they meet requirements.
• Proactive control, also called concurrent control, monitors the ongoing production process. The team regularly tests products to see if quality standards have been met.
• Post-action or feedback control examines the final output to determine whether they meet standards. If an error occurs, the output is sent for correction. And that may involve adjusting design or production processes to ensure the same mistakes are not repeated.

Quality assurance

Quality assurance refers to systematic efforts to manage quality by preventing errors rather than catching them. It emphasizes the need for employees to get it right the first time rather than relying on someone else to check it in the final stages.

First, the company must have a strict quality control by establishing standards and procedures. Then, they monitor and oversee the production process, ensuring the activities and outputs at each stage are up to standard.

If these standards and procedures are met, quality is guaranteed. For example, the company introduced a policy for all staff at each stage to check the output in their area. They have to ensure the output is up to standard. Thus, when it is passed on to the next step, there is no problem with quality.

Effective quality assurance will prevent defective products from being produced. Or, in the early stages, it prevents unsuitable materials from entering the production process. And in the end, quality assurance ensures the company has flawless products. In addition, quality assurance offers several other advantages, including:

• Identify faults or damage as soon as possible
• Reduced waste because the output at each stage meets standards
• Reduces wastage due to incorrect product identification early in the process
• Minimizes the potential for defects in the final product, minimizing the associated costs
• Saves costs to repair the product because the root cause can be identified
• Less need to check the final output because the process is correct and meets standards
• High customer satisfaction because the product is not defective
• Encourage higher responsibility to employees for quality in their area

But, ensuring quality at every stage can be very expensive. The company regularly checks during the production process. Other drawbacks are:

• Production delays due to routine inspections
• Lower productivity – companies chase quality over quantity

Quality assurance vs. quality control

Quality control focuses on the end result. The company checks the final output before sending it to customers.

Meanwhile, quality assurance focuses on processes. It ensures the operation at every stage – and its output – meets agreed standards. Thus, the final output should also meet the criteria.

So, quality assurance prevents errors before they occur in the final output. Meanwhile, quality control checks for possible errors in the final output.

Quality assurance reduces waste by identifying possible errors early in the production process. However, it can take more effort than quality control. In contrast, quality control saves time and money because fewer checks are required during production.

Quality management

Quality management aims to prevent customers from receiving defective products. It requires companies to build a quality chain where everyone in the production stage is after them as a customer.

For example, people in the logistics area treat production employees as customers. Thus, they will satisfy customers by, for example, delivering products on time and according to specifications.

Likewise, production people will regard the warehouse team as customers. As a result, they ensure goods are free from defects before they enter the warehouse and are shipped by the people in outbound logistics.

Quality management drives continuous improvement. And its success depends on well-trained staff and a zero-error approach. It also requires companies to use only quality inputs. In addition, a strong focus on internal and external customers will ensure processes and outputs at every stage meet standards to create customer satisfaction.

Quality circle

Quality circles are small groups of staff tasked with solving problems and generating ideas to improve processes or products. They are usually employees from different departments and levels.

For example, they are managers, assembly line workers, and engineers. They get together regularly to discuss issues related to their work – related to production systems, for example. Each freely expresses an opinion. In addition, everyone values and respects each other’s views.

Besides the potential to generate ideas for quality improvement, quality circles can also be a way to motivate employees. Being involved in the group makes them feel valued, encouraging them to give their best for the company. Plus, when they are valued, they often have better ideas about how to improve processes.

Benchmarking

Benchmarking compares internal performance or quality to standards. Standards are best practices in the industry by taking certain companies as peers. Or it uses historical data as a reference.

Benchmarking is important in setting excellence standards and quality targets. With it, companies can drive continuous improvement by identifying and finding solutions for any gaps in their operations.

What is being benchmarked can include areas such as:

• Product performance
• Customer service
• Business process
• Technology
• Production cost

Types of benchmarking

Benchmarking is generally divided into two:

• Historical benchmarking
• Inter-firm benchmarking

Historical benchmarking compares something to the past. The company identifies areas for improvement and compares them with past data to study causes and find improvement solutions.

For example, suppose a company reports a decline in sales this year. Whereas a few years earlier, the company posted strong sales growth, outperforming its competitors. The company then investigates related data and information such as:

• Market growth
• Competition intensity
• Incentives to salespeople
• Ad spending
• Product strategy
• Pricing strategy

The data and information are used to identify whether the decline in sales occurred due to problems within the company’s internal or external. Say, the decline in sales occurs because market growth slows down. That means the current strategy is fine. This information then becomes the basis for improving competitive strategies in the future.

Meanwhile, inter-firm benchmarking uses other companies as a comparison. The market leader is usually the peer. The company then compares its products, operations, and processes with market leaders to identify gaps and find areas for improvement.

In other cases, peers may be top companies in different industries but have an advantage in certain areas the company wants to build.

Stages in the benchmarking process

Benchmarking involves the following processes:

• Identify what the company wants to benchmark, for example, the production process
• Measures current performance, such as the time between incoming materials and output being delivered to the customer
• Identify and define peers to compare their production processes with
• Develop methodologies for data collection, either through internal research or relying on external researchers
• Analyze data to compare internal production processes with peers
• Identify gaps and areas for improvement, for example, perhaps with inbound logistics and production scheduling.
• Set standards for improvement, perhaps by modifying peers’ standards
• Develop action plans, implement improvements, and monitor progress
• Re-measurement to see if the new, higher standard is reached
• Setting a new standard as a target to run in the future

Benchmarking advantages and disadvantages

Benchmarking drives continuous improvement. By learning from best practices in the market, companies can improve their performance in the future.

Benchmarking also offers several other benefits, including:

• A faster and cheaper way to solve the problem
• Making organizations more competitive in the market through continuous improvement
• Provide goals for employees about what needs to be improved
• Increase motivation by providing clear goals to employees
• Encourage people to generate new ideas

Benchmarking can be costly when companies fail to recover all the costs involved in implementing the action plan. In addition, best practices are not always implemented effectively due to differences in the:

• Resource
• Organizational capabilities
• Company culture
• Management style
• Business environment

Other limitations are:

• Inhibits innovation if the company only copies ideas without modifying and adapting to the internal situation
• Difficult to collect the necessary data and information, especially if the peers are competitors
• Time-consuming to learn best practices and can be complex, as it is influenced by many factors
• Internal limitations, for example, financial, making it difficult to implement best practices effectively
• Failure due to data and information obtained is irrelevant, accurate, or up-to-date

Total Quality Management (TQM)

Total Quality Management (TQM) is an operational philosophy committed to improving product quality and reliability. It aims to satisfy customers through continuous product improvement. In addition, it helps companies to lower costs – by increasing efficiency in business processes – and improve quality.

TQM requires all employees to commit to achieving quality standards and minimizing waste and defects. It instills quality as the main principle in every operation and business process.

8 Main principles in TQM

The TQM approach includes the following 8 principles:

• Customer focused
• Total employee involvement
• Process-centered
• Integrated system
• Strategic and systematic approach
• Continuous improvement
• Fact-based decision making
• Communication

Customer focused. Satisfying customers is the main focus. Customers include both internal and external customers. Internal customers have an interest in getting quality output from the previous stage. For example, the production team wants the incoming logistics team to deliver quality materials on time. Meanwhile, external customers want a defect-free final output to be satisfied.

Total employee involvement. Quality improvement must be carried out at every stage in the production process. Therefore, it requires participation from all employees. It also requires companies to empower employees by upgrading their skills – through training – in performing tasks and achieving standards in their area.

Process-centered. Process improvement is the foundation for managing quality. TQM ensures a quality approach at every stage in the production process, from receiving and converting inputs to sending outputs to customers.

Integrated system. It emphasizes cooperation and synergy across process areas. Even though they may have different targets and tasks, they must be united to achieve quality standards.

Strategic and systematic approach. Managing quality requires planning and setting objectives and standards to achieve. It provides clear direction to employees. In addition, companies must also allocate resources and recruit the right employees. They must also ensure each individual has the procedures, targets, quality standards, and resources to complete their steps.

Continuous improvement. TQM emphasizes continuous improvement. Producing quality products must be supported by an effective and efficient process. Thus, each stage in the production process has quality output, meets standards, and minimizes waste or waste. Quality improvement requires employees to understand how quality and efficiency in their area can be improved. They must also have the courage to take small steps for improvement.

Fact-based decision making. This requires companies to collect data and information at each stage. They then analyze it to support measurable, accurate, and precise decisions and policy making.

Communications. Effective communication makes the recipient understand the message conveyed by the sender. Thus, there is no room for misunderstanding. This becomes important if the message said becomes material for evaluation or decision-making. Then, the right message can lead to the right decision.

Key aspects of TQM

A quality chain is a functional value chain to achieve quality. It emphasizes on supplier-customer relationship for each stage in the production process. As mentioned, the current stage is the customer of the previous stage. For example, a team in the processing/conversion stage is a customer by a team in inbound logistics. Likewise, the team in the processing stage considers the team in outbound logistics as the customer.

Quality circle. Employees form a small group to meet regularly. They discuss issues and problems related to their work. They then brainstorm to identify potential improvements.

Internal customers. The supplier-customer relationship at each stage encourages employees to provide satisfaction by producing and delivering only quality output to employees at later stages. So, it’s about more than just delivering flawless products to external customers. But it’s also about ensuring quality is delivered at every stage.

TQM’s benefits and limitations

TQM offers several advantages, such as:

• Improve performance by reducing inefficiencies in the production process
• Improve product quality by getting it right the first time and quality control
• Supporting social responsibility by reducing waste
• Promote quality awareness to everyone in the organization
• Motivate workers by empowering them to make quality improvements in their areas
• Increased customer satisfaction due to quality products and no defects
• Brand loyalty due to guaranteed quality, driving more repeat sales
• Cut costs through less waste, customer complaints, and product remanufacturing
• Increased profits through increased sales and operating efficiency
• Strengthen competitiveness through higher customer satisfaction and reduced costs

TQM is more expensive to implement than relying solely on quality control. That’s because companies need more checks on production processes to ensure quality. Other limitations are:

• Requires intensive employee training, which is expensive and time-consuming
• Potential interruptions during production due to having to stop stages to trace and fix quality issues

The role of training in quality management

Training is critical to support quality management. Employees are those who operate at each stage in the production process. So, if skilled, they can carry out tasks and work according to standards and comply with applicable procedures.

Employees must be proficient with functional skills in their work area. For example, the quality control team must know how to select samples properly. It requires training to increase their knowledge about sampling.

In addition, training is required to handle other aspects. For example, they understand what to do when a sample is selected. Then, if there is an unacceptable error, they should know what to do when they find it.

Then, in quality assurance, employees must be trained to understand the methods used to achieve the set standards. They must also understand the steps required when standards do not meet guaranteed levels.

Meanwhile, in TQM, employees must also understand what an internal customer is and how the quality circle works. In addition, they are responsible for identifying how to improve quality and efficiency in their area and therefore need to be equipped with related knowledge.

How to make minor repairs and how they are open to communicating mistakes or errors – not seeing them as risks but as opportunities for improvement. They should also be equipped with the knowledge to build a culture of “quality first” and “continuous improvement.” In addition, training to encourage them to think from other people’s perspectives is also important to reduce bias in decision-making, such as bounded rationality bias.

Quality standard

Quality standards are prerequisites or specifications by which a product is called quality and is made in a quality way. Therefore, promoting and encouraging quality awareness within the company is crucial. Fulfilling it also contributes to strengthening the company’s competitiveness in the market.

Companies adopt quality standards to ensure their materials, products, processes, and services consistently serve their purpose. The standard may be qualified nationally or internationally.

International Organization for Standardization (ISO) – covers several aspects, such as quality management (ISO 9000), food safety (ISO 22000), social responsibility (ISO 26000), and environmental management (ISO 14000).

CE Marking – a standard for health, safety, and environmental protection requirements for products sold in the European Union (EU).

BSI Kitemark – product certification by the British Standards Institution (BSI). Products with such trademarks indicate they have met BSI’s minimum safety and quality standards.

Fairtrade mark – a registered certification label for products sourced from manufacturers in developing countries and indicating compliance with Fairtrade standards.

Good Manufacturing Practices (GMP) and Good Laboratory Practice (GLP) by the US Food and Drug Administration (FDA) – GMP is a quality standard for food safety. Meanwhile, GLP is the standard for non-clinical laboratory studies.

IATF 16949 – product quality standard and assembly parts for the automotive industry.

International Aerospace Quality Group (IAQG) 9100 – standard in the aerospace industry, including aviation, space, and defense.