Quality Management (HL IB Business Management)

• Quality management involves a business carefully considering the characteristics and features of a product that satisfy the needs of customers and ensuring that it has effective systems and procedures to meet these
• Businesses need to maintain a level of quality that continues to attract and retain customers if they want to remain successful
  
• Customer perceptions of quality are related to a range of product or business features
   

Diagram of the Factors that Influence Quality Perception

The perception of quality is influenced by appearance, durability and the quality of customer service
 

• Customers may consider products or services to be of good quality if they
  • Look good and are sold by a reputable business or brand
  • Are reliable and durable
  • Are safe and fit for purpose
  • Receive good customer service, including after-sales service

Measuring Quality

• Businesses can measure the quality of their output in a range of ways

Reject Rates	Product Returns	Product Recalls
The percentage of output considered not fit for sale	The percentage of items returned by unsatisfied customers	Incidents of products brought back to be corrected

• In addition factors such as customer satisfaction, customer loyalty and market share can provide useful indications of customer experiences and perceptions of quality
  • Customers satisfied with quality are less likely to make complaints and are likely to give positive feedback in surveys
  • High quality can drive repeat purchases
  • Increased market share may demonstrate satisfaction with quality over that offered by rival products/services

•  A businesses approach to quality management falls into one of two categories
  • Quality control involves inspecting the quality of output at the end of the production process
    • Workers focus on maximising output
    • Products that do not meet standards are rejected before they are released for sale
      
      
  • Quality assurance involves inspecting the quality of production throughout the process
    • Workers check their own work and, sometimes, the work of others at various stages of production 
    • Some business take a whole business approach to quality assurance with systems such as quality circles, benchmarking and Total Quality Management (TQM)
      
      

An Evaluation of Approaches to Quality Management

Method	Benefits	Drawbacks
Quality Control	Quality specialists are employed to check standards An inexpensive and simple way to check that output is fit for purpose	The rejection of finished goods is a significant waste of resources  There is little focus on the cause of defects
Quality Assurance	Quality issues are identified early so products may be reworked rather than rejected The cause of defects is the focus so future quality issues may be prevented	Staff training and a skilled workforce is required so labour costs may be increased Reworking may lengthen the production process

• Quality circles involve  groups of workers meeting regularly to identify and solve quality problems in the production process

  • Groups are made up of volunteers from different departments

  • Meetings are typically chaired by a senior leader

  • Members work together to execute and manage solutions
     

An Evaluation of Quality Circles

Advantages	Disadvantages
Improved worker motivation as they are involved in decision making Relevant and focused solutions are likely as workers are familiar with processes Improved productivity as workers are engaged in solutions they have developed themselves	Management need to have trust in workers’ views and solutions  Workers are likely to need ongoing training to be able to contribute most effectively Meetings and structures must be organised regularly

• Benchmarking involves a business comparing its quality and performance with market leaders within the same industry
• Benchmarking can be internal or external

Internal benchmarking

• Comparison of different functions within a business such as finance and marketing
  • Performance 
    • Comparison of key performance indicators such as labour productivity or labour turnover rates
      • Process
        • Comparison of business operations and processes such as call centre queue times or delivery times

External benchmarking

• Comparison of key performance indicators (such as product recalls) against those of market leaders in an industry
• International benchmarking compares key performance indicators against those of market leaders overseas
   

An Evaluation of Benchmarking

Advantages

Disadvantages

Helps identify areas where businesses can improve their performance by learning from the best practice of other successful companies Can identify innovative practices and processes used by competitors Can support the setting of realistic performance goals by comparing current performance with industry standards Workers may feel a sense of pride and motivation when they see their employer striving to be a leader in the industry

Differences in metrics used to measure performance can affect the accuracy and comparability of benchmarking data Best practices from market leaders may not always be directly applicable to the unique needs of a specific business Small businesses may struggle to find the time and resources for data collection, analysis and implementation required for benchmarking Focusing too much on benchmarking against competitors may lead to a narrow view of success that ignores ideas for improvements that come from other sources

• Total Quality Management (TQM) places quality at its core and makes every worker responsible for quality throughout the business
  • Quality is considered from the customer's perspective
  • Inefficiency and wastage is removed from every business activity or function - including those that are not directly related to production
     

An Evaluation of TQM

Advantages	Disadvantages
Quality in all aspects of the business improves efficiency which should lead to improved profitability A positive culture of constant improvement and high standards exists throughout the business	All workers must be committed and receive significant continued training Careful monitoring and control is required by managers capable of setting a good example

• Implementing lean production and TQM can have a positive impact on various aspects of a business
  • It can lead to higher profits as a result of greater efficiency, less waste and lower costs
  • Fewer errors can lead to improved customer satisfaction and greater customer loyalty
     

Positive Impacts of Lean Production and TQM

Benefit	Explanation
Waste reduction	By eliminating all forms of waste costs are reduced and overall profitability is likely to be improved
Streamlined processes	Removing unnecessary steps from business processes leads to faster production and improved efficiency
Improved quality	The strong emphasis on detecting and eliminating defects early in the production process improves product quality and customer satisfaction This focus on customer satisfaction can lead to increased loyalty and repeat business
Employee empowerment	Taking ownership of quality can lead to increased employee morale and engagement
Environmental Impact	The focus on waste reduction often results in a lower environmental impact through lower energy consumption, reduced emissions and minimal resource usage

 

• However, successful implementation of lean production is likely to require a cultural shift and ongoing efforts to sustain improvements
  • Commitment to careful recruitment, training and engagement of employees 
  • 'Getting it right first time' should be at the heart of all processes
     
• It also needs strong relationships with suppliers
  • Defect-free components must be delivered on-time, in the right quantities
  • Trust needs to be developed with a small number of suppliers, emphasising quality rather than cost alone

• Quality standards include national and international benchmarks that demonstrate a businesses commitment to quality
  • They are administered by independent bodies that carry out stringent tests to ensure standards are met or exceeded
  • Businesses awarded these standards are revisited regularly to ensure that standards are maintained
     

Diagram with a Selection of Quality Standard Accreditations

Meeting strict international quality standards helps businesses to enter new markets more effectively

The Importance of Quality Standards

• Achieving accreditation reassures customers of their commitment to quality
• Accreditation also provides a range of further benefits
• Having quality accreditation can set a business apart from competitors
• Obtaining quality accreditation can allow a business to enter these markets 
• They reduce the risk of legal issues and penalties