Unit 4-Decision making to improve operational performance (4.4) Flashcards
What is quality all about?
Customer satisfaction
Why is quality important?
Affects customer’s perception of the business, therefore it can affect present and future sales.
What are the 2 ways through which businesses can ensure quality is achieved?
- Quality control systems
- Quality assurance systems
Define quality.
A measure of excellence which is free from defects or significant variations.
A product or service whose features consistently allow it to satisfy (or delight) customers
Is quality objective or subjective?
Subjective
Define subjective.
based on or influenced by personal feelings, tastes, or opinions.
Why is quality subjective?
It is a matter of personal opinion.
Can vary from one customer to another.
What does the quality of a product depend on?
Its ability to meet customer requirements consistently.
What does the quality of a product depend on?
Its ability to meet customer requirements consistently.
What will a products ability to meet customer requirements depend on?
How well the needs have been defined
How well firm has designed the manufacturing process
How well designed the product is
What are the 2 key features of quality?
Intangible
Tangible
What is intangible quality?
Not able to be touched or measured, and difficult to describe or explain.
Define tangible.
Something real; perceptible by touch
Give tangible quality examples.
Appearance
Reliability
Durability
Functions (added extras)
After-sales service
Repair and maintenance needs
Give intangible quality examples.
Image and brand
Reputation
Exclusiveness
Give a business example of intangible quality.
Brand name such as iPhone
Give a business who has a reputation for quality in all the tangible qualities.
VW-Volkswagen
List the first 4 benefits of quality.
- Impact on sales
- Creating a USP
- Impact on selling price
- Pricing flexibility
List the last 4 benefits of quality.
- Cost reductions
- Firm’s reputation
- Gaining a competitive advantage
- Brand loyalty
Why is quality beneficial to sales?
If products meet customer’s demands then demand should rise.
Why are USP’s benefits of quality?
They can increase demand.
How does quality benefit selling price?
USP means higher prices will be charged because of ‘perceived quality’.
What is perceived quality?
The quality that customers recognize via the look, touch and feel of a product.
Why does quality benefit pricing flexibility?
Can charge higher prices or have a range of products for different target customers enabling business to have a range of quality products.
How does quality benefit cost?
Less waste and therefore reduced costs.
How does quality influence a firm’s reputation?
Not having a quality system in place can damage reputation.
How does quality help a business gain a competitive advantage?
Occurs when products that have unique qualities that cannot be easily replicated by competitors.
How does quality benefit brand loyalty?
High quality will encourage stronger brand loyalty.
What are the 2 quality management systems?
Quality control
Quality assurance
What are the issues with any quality system?
Costs
Training
Disruption to production
Why are costs an issue with any quality system?
It is costly, especially admin costs.
What are administrative/admin costs/expenses?
Indirect expense as they are related to operating and maintaining a business overall e.g., rent, utilities
Expenses that an organisation occurs which are not directly tied to a specific core function such as manufacturing, production or sales.
Why is training an issue with any quality system?
The whole workforce may have to have a change of culture and training.
Why is disruption to production an issue with any quality system?
Can cause major disruption when being implemented.
Define quality control
A system that uses inspections to check the quality of work at stages of the manufacturing process
3 pros of quality control.
- Quality checks at the end can stop faulty goods reaching customers
- Inspectors can spot common problems and put them right
- More secure system than one that trusts every individual to do his or her job properly
3 cons of quality control.
- Does not encourage team responsibility
- Expensive to operate
- Responsibility rests with inspectors, therefore staff take no responsibility, which could reduce motivation
Define quality assurance.
A system that improves quality by arranging every process to get products right first time
4 pros of quality assurance.
- Workers take responsibility
- Motivates workforce
- Reduced costs because of less waste
- Greater consistency of quality products because responsibility is spread throughout workforce
3 cons of quality assurance.
- Needs a change in the culture of the organisation
- Can take time to embed the system because of cultural change
- Could increase costs in the short term
How could improved quality influence price of products?
Higher prices can be charged; costs are reduced therefore high profit margin and lower unit cost
How could quality influence the workforce?
Workforce is better motivated because producing quality product; appreciated; higher wages
How could quality influence reputation?
Great marketing tool – if quality is there it helps to build and maintain brand image
How does quality create resistance to economic conditions?
Quality businesses are bucking trend and still making money – possibly quality products are recognised and we will pay the prices.
What is TQM?
Total quality management.
Define TGM.
An approach to long-term success that aims for improvement continually throughout every functional area of a business.
Is TQM short-term or long-term?
Long-term
What could TQM transform if done correctly?
The organisation through changes in attitudes, practices, structures and systems
Who does TQM involve?
All employees in a firm.
What is the key for TQM?
‘Getting it right first time’
How does TQM reduce costs?
Reduces wastage costs
What does TQM allow for?
A consistent and flexible approach to quality.
How does consistent quality in the TQM system affect price?
If products have a reputation for quality, then businesses can charge higher prices for them.
List the quality assurance systems.
Kaizen
Total quality management (TQM)
Quality standards- BS5750 and ISO9001
Define kaizen.
Japanese philosophy-A policy of implementing small, incremental changes in order to achieve better quality and greater efficiency
Kaizen is a corporate culture. What does it encourage?
Employees to identify possible ways of improving the operations.
What is corporate culture/company culture?
A set of beliefs and behaviours that guide how a company’s management and employees interact and handle external business transactions.
Name some objectives/targets of Kaizen.
Improve productivity/quality
Faster product turnover
More rapid return on investment
Reduce waste
Eliminate unnecessary hard work
Improve the workplace
What is product turnover?
A measurement for the speed a company sells the products or inventory it has on hand
What are the quality standards?
This is a set of criteria used to establish quality systems which are accredited (British Standards and International Standards).
What does achieving the quality standards mean for a business?
Business can gain marketing advantage
Customer assurance is guaranteed
What are the 2 quality standards?
BS5750 (British Standards)
ISO9001 (International Standards-International Standard of Organisation)
6 consequences of poor quality.
- Productivity problems
- Reduced profitability
- Low/No customer satisfaction
- Increased costs
- Negative reputation
- Lower sales volume
What is quality assurance linked with in regards to employees and why?
Employee motivation because it gives employees responsibilities
Where is quality checked in quality control and assurance?
Quality assurance = Everybody responsible for quality throughout the process
Quality control = Products quality checked at stages
How does poor quality influence productivity?
Poor quality costs money because of productivity problems.
What types of productivity problems could poor quality lead to?
Low-quality parts used
Breakdowns
Slow-downs in production and even stoppages
How does poor quality influence profitability?
If quality increases profitability, then poor quality reduces profitability, especially in terms of a negative working environment for employees.
How does poor quality influence customer satisfaction?
Quality is directly related to customer satisfaction; dissatisfied customers are more vocal.
It is now easier to complain and reach a large audience with websites and reviews.
How does poor quality influence costs?
Using poor quality, cheaper parts may be better in the short term, but the long-term effects might be far more expensive.
How does poor quality influence reputation?
Can damage a business’s reputation
How does poor quality influence sales volume?
If a product fails to meet the standards expected by customers, the demand will decrease.
