Quality Management

1. Quality Assurance

Quality can be thought of as the degree to which performance of a product or service meets or exceeds expectations. In a culmination of efforts, quality begins with careful assessment of what the customers want, followed by translating this information into technical specifications to which goods or services must conform. The specifications guide product and service design, process design, production of goods and delivery of services, and service after the sale or delivery.

Quality assurance is the proactive process of ensuring that materials and processes are optimized for quality. Quality control is a process that evaluates output against specified standards and takes corrective action when output doesn’t meet these predetermined standards. Both are essential to quality management.

Within operations management, quality assurance serves as the foundation for efficient and successful production. It encompasses a systematic approach to ensuring that goods and services consistently meet predetermined standards. This proactive strategy identifies and addresses defects throughout the entire process, minimizing errors and ensuring customer satisfaction.

IN CONTEXT

Have you ever found a small piece of paper in a new article of clothing with the statement, “Inspected by #8,” or simply “8”? This indicates the person who did the final quality control evaluation of the piece. The paper assures the customer that the company has a set of standards and that this article meets or exceeds those standards.

But quality control in clothing once a garment is finished is only the last step. Most companies have several steps to ensure quality in their clothing. First, clothing companies inspect the raw materials, such as the fabric, buttons, and zippers, to ensure quality before an item is produced. This is quality assurance. During the production process, there are various checkpoints at different stages to catch defects early. For example, a checkpoint may be checking for loose threads after a hem is sewn. Once something is produced, the final garments are checked for loose threads, incorrect stitching, and visual aspects like ensuring patterns match. This is quality control.

Effective quality assurance fosters several key benefits. First, it reduces waste. By catching issues early, businesses avoid rework, scrappage, and the associated financial losses. Next, it safeguards brand reputation. Delivering consistently high-quality products fosters customer trust and loyalty. Finally, quality control assurance improves operations. Businesses can maintain smooth production flow and optimize resource allocation by preventing defects. In a nutshell, quality control is not just an inspection function—it's a strategic investment that underpins operational excellence.

Quality assurance relies on three core organizational qualities:

1. Integrity in establishing and monitoring processes, designing jobs, establishing and measuring performance criteria, etc.
2. Competence, such as technical skills, knowledge, and experience, which comes from recruitment, training, and retention of qualified staff.
3. Soft skills across the organization, such as personal integrity, confidence, motivation, team spirit, development of organizational culture, and building quality relationships.

Responsibility for overall quality lies with top management. Top management must establish strategies, institute programs for quality, and motivate managers and workers.

Most of the time, managers aim to improve or maintain the quality of an organization with attention to both ends of the supply chain; as you learned earlier, this is called total quality management (TQM). We will take a deeper look at TQM later in this challenge, as well as other (and compatible) strategies for quality assurance.

The benefits of quality assurance are manifold. Having good quality:

• Gives a competitive advantage against others who offer similar products or services in the marketplace,
• Raises a company’s reputation,
• Rationalizes premium prices,
• Decreases liability costs, and
• Increases customer satisfaction and loyalty.

Failure to meet quality standards can damage a company’s image and reputation or lead to external criticism. In the manufacturing field, the quality of raw materials or equipment can affect the whole manufacturing process. If defects or poor quality are not detected on time, companies may face various costs to solve problems. Discovering and fixing problems on time reduces costs. In the service industry, quality assurance is also important. For example, if a technician comes out to fix an air conditioning unit, running checks to make sure it is working means the company won’t have a repeat visit, costing time, money, and customer frustration.

terms to know

Quality

The degree to which performance of a product or service meets or exceeds expectations.

Quality Assurance

The proactive process of ensuring that materials and processes are optimized for quality.

Quality Control

The process that evaluates output against specified standards and takes corrective action when output doesn’t meet these predetermined standards.

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2. Quality Control

In all organizations, quality control is essential for customer loyalty and word-of-mouth marketing. Attention to quality of final product (whether a good, a service, or both) is important for reporting purposes to stakeholders, such as shareholders in a for-profit setting and boards in non-profit settings. For contract work, particularly work awarded by government agencies, quality issues are among the top reasons for not renewing a contract.

In manufacturing, quality control requires product inspection, where every product is examined visually, often using a stereomicroscope for fine detail before the product is sold on the external market. Inspectors have detailed lists of qualities to check on, particularly those that affect product quality but also cosmetic flaws like discoloration.

Manufacturers may use statistical control methods where not every item is checked, but instead, a sample of items is collected. An error found in one batch will lead to a closer inspection of all items in that batch.

Once items are packaged, items may be checked again to ensure labeling, tagging, and packaging materials meet the quality standards. Companies also rely on customer feedback to refine their quality management processes.

In the service industry, quality control usually involves monitoring of performance, such as randomly selecting calls to customer service or sending “secret shoppers” to stores and restaurants to report on the customer experience.

But important to overall quality is that almost any business delivers both goods and services. A manufacturing company will still be attentive to the service arm of their industry—the sales reps, distribution managers, or any customer-facing job. The service industry will consider the whole customer experience, which of course includes the food at a restaurant, purchases at a store, etc.

EXAMPLE

Similar to clothing manufacturers, restaurants also have quality control methods. Raw materials such as meats and vegetables are checked for freshness, proper storage conditions, and expiration dates when they arrive at the restaurant. Then, using a FIFO (first in, first out) method you learned in a previous challenge, they can better manage their food inventory to ensure freshness. Restaurants also standardize recipes by ensuring portion size, presentation, and taste is the same no matter who makes it, and kitchen staff are trained in these methods. Standards are set for sanitation and hygiene to ensure food safety. Like clothing manufacturers, restaurants also depend on feedback from customers to ensure the quality of the products produced.

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3. Costs of Quality

Effective quality control hinges on an organization's dedication of resources. This commitment goes beyond financial investment. It encompasses personnel, training, and infrastructure to establish a robust quality framework. Allocating skilled personnel for inspection and testing ensures consistent vigilance. Ongoing training equips employees with the latest quality control techniques and fosters a culture of quality focus.

Investing in necessary equipment and technology streamlines quality checks and data analysis. While sometimes a significant upfront investment, dedicating resources to quality control ultimately translates to cost savings through reduced defects, improved efficiency, and enhanced customer satisfaction. An organization's commitment to quality control resources fuels its path towards excellence. Quality control requires the commitment of resources from an organization, particularly:

• Appraisal Costs: costs of activities designed to ensure quality or uncover defects, such as the staff performing inspections.
• Prevention Costs: costs of preventing defects from occurring, such as increased production time to avoid flaws and variability.

However, these must be weighed against the costs of poor quality:

• Internal Failures: failures discovered during production that require reworking or discarding goods.
• External Failures: failures discovered after delivery to the customer.

This doesn’t mean that quality control should be so extreme that the cost of production exceeds what customers are willing to pay, particularly in areas where customers don’t notice minor variability in products. Successful management of quality requires that managers have insights into which factors matter most to the customer and balance the costs of quality control with the cost of poor quality.

EXAMPLE

Say a company makes “Hermes”-level (not the expensive handbag designer!) ballpoint pens. Recall that this means they are differentiated by a low cost. The quality control team would ensure that the pens work out of the box but might decide that durability or long product life is not as important to customers, who do not expect a long life for cheap pens.

People in quality control may also have to balance customer satisfaction with the goals of the company. This is a common problem in the service industry, where agents are encouraged to engage in suggestive sales techniques. While some suggestive selling might be perceived as convenient or even helpful to customers, too much pressure makes for a poor customer experience.

EXAMPLE

A pizza chain monitors random calls of customers ordering pizzas for quality assurance. Their rating criteria of customer service staff include factors like answering the phone in a pleasant manner, giving the customer a realistic time estimate of when they would get their pizza, and being familiar enough with the menu and prices to answer customer questions. The scoring criteria also include that the agent suggests customers order bottles of soda or appetizers with their order. These criteria do not improve the customer experience, and indeed customers may perceive persistent suggestive sales techniques as pushy.

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4. Dimensions of Quality

Understanding which qualities need to be controlled is one of the most important decisions for quality control. Controlling these qualities also requires specifications to be clearly set. The dimensions of quality framework provides a powerful lens for operations management in manufacturing. These eight dimensions represent the critical aspects that define a truly excellent product. By strategically focusing on these dimensions, manufacturers can achieve:

• Enhanced Customer Satisfaction: Delivering products that consistently meet or exceed expectations across all quality aspects fosters customer loyalty and positive brand perception.
• Reduced Costs: A focus on quality from the outset minimizes rework, scrap, and warranty claims, leading to significant cost reductions.
• Improved Efficiency: Streamlined processes built around achieving specific quality dimensions ensure optimal resource utilization and production flow.
• Improved Competitive Advantage: By strategically prioritizing specific dimensions—for instance, reliability in industrial machinery—manufacturers can differentiate themselves in the marketplace.

With the integration of the dimensions of quality into operations management, manufacturers can gain a holistic view of product excellence, ultimately achieving a sustainable competitive advantage.

Dimensions of quality in manufacturing include:

• Performance: main characteristics of the product.
• Aesthetics: appearance, feel, smell, taste.
• Special Features: extra characteristics.
• Ease of use—how quickly the product can be assembled, installed, or used; this also reflects on the quality of the instructions.
• Conformance: how well the product conforms to design specifications; for many products, there are design standards with parameters of variability established by organizations like the International Organization for Standards (ISO).
• Reliability: consistency of performance surpasses expectations of the customer.
• Durability: the useful life of the product surpasses expectations of the customer.
• Perceived Quality: indirect evaluation of quality, such as by analyzing complaints, returns, and other customer feedback.
• Serviceability: handling of complaints or repairs is prompt and courteous; clear instructions are provided on how to return the item or get support.

Dimensions of quality in service include:

• Convenience: the availability and accessibility of the service.
• Reliability: ability to perform a service dependably, consistently, and accurately.
• Responsiveness: willingness to help customers in unusual situations and to deal with problems.
• Time: the speed with which the service is delivered.
• Assurance: knowledge exhibited by personnel and their ability to convey trust and confidence.
• Courtesy: the way customers are treated by employees.
• Tangibles: the physical appearance of facilities, equipment, personnel, and communication materials.
• Consistency: the ability to provide the same level of good quality repeatedly.

No matter how good the quality control, products may fail, problems with usage may occur, or customers may have a bad experience. This is when service after delivery is important through recall and repairs of the product, adjustment, replacement or buybacks, or reevaluation of a service. Customer loyalty may be won through a prompt response to problems as much as initial quality.

EXAMPLE

Customers who travel a lot often recall instances where issues were handled well better than they recall instances where there were no issues at all, such as a hotel promptly giving them a new room when they report problems, or an airline treating customers to a meal and access to their VIP lounge for a long delay. This leads to customer loyalty because they know if there are problems, they will be dealt with.