Topic 11 - Quality. Higher Business Management

Transcription

1 Topic 11 - Quality Higher Business Management

2 Learning Intentions / Success Criteria Learning Intentions Methods to ensure quality. Success Criteria By end of the topic you will be able to describe: the importance of quality to the organisation and the customer the costs and benefits of a range of methods of ensuring quality the distinction between quality control methods (inspection) and quality assurance methods (prevention) the costs and benefits of: - quality standards and symbols - benchmarking - quality circles - a mystery shopper the inter-relationship between quality and motivation and training.

3 Quality It is important for the operations department to ensure goods are of good quality for the following reasons: Poor quality goods can result in customers returning their purchases, causing a loss in sales. Extremely low quality can result in products not meeting safety standards, which can lead to bad PR. Conversely, high-quality goods can result in a good reputation. Being associated with quality production can attract highquality staff. The highest quality goods can be sold for premium prices.

4 The advantages of a business providing a high quality product are: Customers are more likely to make repeat purchases. A good reputation is gained, which will encourage new customers. Customers are less likely to buy from a competitor. Profit and sales can be maximised. The market share of the business can grow. Wastage will be minimised, which helps protect the environment. Easier to recruit staff to work in a business with a good reputation.

5 Methods of ensuring quality Businesses can use different methods to help contribute towards producing a high quality product. They can: Use raw materials that are of a high quality. Make sure employees have the skills needed to make the product by only recruiting the best employees and by providing training. Ensure machinery and other technology is well maintained and regularly checked. Use quality control - checking the product at the end of the production process. Use quality management - trying to make sure that every product is made perfectly every time. This requires a commitment by the whole business towards quality.

6 Methods of ensuring quality 1. Quality control - a method of inspecting raw materials or finished goods to check they of an acceptable standard and quality. 2. Quality assurance - where products are checked to see that they are of high quality at different stages in the development and production process rather than just at the end. 3. Quality standards - are awarded to an organisation when it meets a particular specification or set of criteria. For example, hotels that meet standards to achieve a star rating, such as a 5-star hotel. 4. Benchmarking - involves comparing one product with another similar product, often using the market leader s standards as the benchmark. The organisation will then attempt to match these standards in their own products. 5. Quality circles - is a method on how to improve quality and efficiency. They involve a group of employees meeting with a line manager to discuss problems in the production process and how to solve them. 6. Mystery shopper - some organisations, often in retail, employ mystery shoppers to visit their store to make a purchase.

7 Quality control Quality control is the most basic method of ensuring quality. Quality control is a method of inspecting raw materials or finished goods to check they of an acceptable standard and quality.

8 Advantages and Disadvantages of Quality Control Advantages Ensures that faulty goods are not sent to customers. Limits the potential for a bad reputation due to faulty products. Disadvantages Can create a lot of waste as the quality of the goods are not checked until they are made and have to be thrown away if they do not meet quality standards. Products have to be reworked from scratch, costing the business time and money.

9 Quality assurance Quality assurance is a method of prevention, i.e. where products are checked to see that they are of high quality at different stages in the development and production process rather than just at the end. For example, a quality assurance manager might check the raw materials, inspect the machinery, speak to employees, sample work in progress and inspect finished goods.

10 Advantages and Disadvantages of Quality Assurance Advantages Less wastage, which decreases costs spent on discarded materials. Easy to identify where faults in the production process lie. Disadvantages Can slow down production as many processes are inspected. Can increase the costs of production, e.g. paying QA managers wages.

11 Quality At National 5, we explored the advantages of providing a high quality product as well as some of the methods that can be used to produce a high quality product. At Higher, you need to know about some different methods of ensuring quality: quality standards and symbols benchmarking quality circles mystery shopping.

12 Quality standards and symbols Quality standards are awarded to an organisation when it meets a particular specification or set of criteria. For example, hotels that meet standards to achieve a star rating, such as a 5-star hotel. However, it can be a time-consuming process to achieve and involves a series of checks and/or audits to be carried out. Being awarded a quality standard (or symbol) has benefits to the organisation and the customer. A quality standard or symbol proves that a product has met an agreed industry standard. For example, hotels that meet standards to achieve a star rating, such as a 5-star hotel. BSI, the business standards company is renowned for its marks of excellence including the globally recognised BSI Kitemark.

13 Advantages and Disadvantages of Quality Standards and Symbols Advantages Awards prove to customers that a product has met an agreed standard of quality. Symbols can be used as a promotional tool to gain a competitive edge. Customers will have confidence in purchasing the product and may repeat purchase. Higher prices can be charged as the product is of high quality. Disadvantages time consuming processes need to be completed to achieve the award. Agreed standards need to be maintained at all times. If any award is removed it would give the organisation a poor reputation. Annual checks and audits by awarding bodies can disrupt production.

14 The organisation benefits from: Having a recognised symbol attached to its name, which improves the image and reputation of the product. Having proof that it has met specific quality standards. Having a competitive advantage over products that do not have a quality standard, which can be used in marketing and promotional material. Help to encourage repeat purchases. Being able to charge higher prices. Receiving fewer complaints and reduced wastage.

15 Benchmarking Benchmarking involves comparing one product with another similar product, often using the market leader s standards as the benchmark. The organisation will then attempt to match these standards in their own products.

16 Advantages and Disadvantages of Benchmarking Advantages If successful, the product will be as good as the best on the market. Saves the business time developing their own approach to ensuring quality. Disadvantages Can be difficult to gain information about other organisation s quality methods. The business will only ever be as good as the benchmark at a time. The benchmark may improve, leaving the organisation behind. The business will never be better than the benchmark, wo will never be market leader.

17 Quality circles A quality circle is established when members of the organisation meet to discuss quality issues and then attempt to improve these and find solutions to quality issues. It involves employees at all levels of the hierarchy, which can be motivating. A quality circle is a method on how to improve quality and efficiency. They involve a group of employees meeting with a line manager to discuss problems in the production process and how to solve them. Suggestions are then passed to management for further discussion and may then be implemented.

18 Advantages and Disadvantages of Quality Circles Advantages Employees will be motivated as they get to have a say in decision-making. Management get well-informed suggestions from the workers who actually produce the product. Disadvantages Employees meet during paid company time, meaning production time is lost. Employees are often trained to join a quality circle, costing the business even more time and money.

19 Mystery shopping Some organisations, often in retail, employ mystery shoppers to visit their store to make a purchase. Feedback is then given to the organisation on how the shopper found their experience and the service that they received. Staff in the organisation will not normally know in advance that a mystery shopper will be visiting, in an attempt to provide an accurate representation of the shop and the service experienced.

20 Advantages and Disadvantages of Mystery Shoppers Advantages The mystery shopper is not employed by or directly connected to the business. This means bias is shown. Valuable feedback, which may be lost when a customer chooses simply not to buy a product, gathered when a product is below standard or unsatisfactory. The mystery shopper can suggest improvements that ensure a better match between the experience that the customer actually has and the business intends them to have. Dissatisfied customers are likely to share their poor experiences with others, whereas the mystery shopper is not permitted to do this. Disadvantages Staff may resent a mystery shopper evaluating them, if they are aware of it, and may take the feedback personally. The mystery shopper s feedback may not be fully representative of the business as a whole as it provides a limited evaluation, i.e. one day, one branch, one customer service assistant, etc. Allowances have to be made for human error in judgements. Mystery shoppers are people who have feelings and opinions, which may cloud their judgement from time to time. Businesses need to pay mystery shoppers, often through an agency, increasing costs.