Assignment 220
Delp10
B207BPowerpoint-Week10.pptxB207B
Shaping Business Opportunities II
Block 3- Reading 11
The importance of quality
Quality and business sustainability
Quality is important because any organisation that has ongoing issues with quality will ultimately suffer in a range of ways.
For example, quality issues such as late delivery or production of defective goods can adversely affect a business’s relationship with customers.
It may also lead to reputational damage. Any quality issues that cause waste or reworking could make the cost of the operation rise, Quality issues have a tendency to accumulate and escalate.
Many organisations target quality issues and defects in an effort to reduce them to a minute level, often using techniques such as ‘Six Sigma’. This is a management approach to improving business processes by reducing the probability an error or defect will occur.
Reading 11: the importance of quality
Quality management
For an organisation to fully manage quality it must consider quality from the perspective of the customer and define what quality means in terms of what the customer needs.
Organisations should measure quality in a way that equate organisational performance with the perception customers have.
As such, quality is commonly defined as: ‘meeting and/or exceeding customers’ expectations’
Reading 11: the importance of quality
Quality management
When it comes to achieving quality there are certain approaches that successful organisations have in common:
Managing quality is the responsibility of the whole organisation, not just a specific quality department.
Internal processes are dealt with as customer-supplier processes, even to the degree that service level agreements exist internally.
They focus on ‘looking for improvements at each stage of the process’ rather than ‘not making errors’.
Individuals take personal responsibility for delivering products or services to the customers (internal or external).
Read example in Box 1: Tumble dryer recall
Reading 11: the importance of quality
Cost of quality
Costs associated with quality include:
prevention costs – making sure errors do not happen
appraisal costs – establishing and measuring the level of quality achieved in products or services
internal costs of defects – the cost of dealing with defects when found during production
external costs of defects – the cost of dealing with a defect that reaches the customer (in some organisations customers can be internal as well).
Reading 11: the importance of quality
Quality assurance and quality control
Quality assurance (QA) covers all the elements needed to make sure that the finished product or service meets all the criteria given or expected by the customer.
It spans all elements of delivering a product or service, including design, marketing, finance, operations and human resources, and all the actions necessary to ensure that a product or service will satisfy the requirements set or expected by the customer.
Quality assurance is about making sure the different systems work together correctly so that quality issues do not happen. You could consider quality assurance to be a proactive approach to quality.
Quality control (QC) covers all the elements needed to fulfill the technical product or service requirements for quality.
Quality control tends to focus on the manufacturing or delivery end, and involves monitoring outputs to detect quality issues as quickly as possible.
Anything related to the monitoring of a process to reduce poor performance or defects can be considered part of the quality control system. You could say that quality control is a reactive approach to quality.
Reading 11: the importance of quality
Quality systems
Developing suitable strategies to deal with quality can be costly and requires expertise. As such it is common for an organisation to utilise an externally designed and approved quality system.
For example, ISO 9000 is an internationally recognised quality management system that many organisations employ.
Designed, licensed and assured by auditors, the system can be tailored to any operation.
This type of system is very popular with larger organisations as they can be implemented without requiring internal experts and the international standards help with customer perception.
Reading 11: the importance of quality
Block 3- Reading 12
The seven key tools to controlling quality
The seven key tools to controlling quality
There are seven tools that are broadly accepted as key to quality control. They are the:
Histogram
Control chart
Scatter diagram
Pareto chart
Checklist
cause and effect diagram
Stratification
Reading 12: The seven key tools to controlling quality
Histogram
Histograms can be used to show the distribution, mean and standard deviation of data. It allows users to study the density of data and identify any patterns.
Histograms can be used to prioritise areas for immediate action and to highlight when elements fall outside the expected range
Reading 12: The seven key tools to controlling quality
Scatter diagram
The scatter diagram is a statistical tool that can suggest relationships between variables, and help users identify any groupings of performance that stand out.
For example, consider the relationship between sun cream and ice cream. If plotted together there is likely to be an increase in consumption of ice cream at the same time as an increase in the amount of sun cream sold.
But you cannot conclude that using sun cream makes you eat ice cream.
They merely have a common factor: the sun.
Pareto chart
The Pareto chart can be used to investigate the cause of failures or quality issues with the greatest impact. It derives from the Pareto principle (otherwise known as the 80:20 rule) that a large proportion of effects come from a low number of causes.
The Pareto chart can be used to focus efforts on actions that will give the greatest returns.
Checklist/tally
The checklist or tally is useful in collecting quantitative data.
The tally sheet is used to capture events in tabular form, allowing for easy updating.
It can be a good way of tracking fast-moving events quickly and can show patterns in the events being measured.
Cause and effect diagram
The cause and effect diagram is a useful visualisation tool for categorising potential causes that may lead to a particular effect or problem.
Once an issue is identified, the cause and effect diagram can be used to narrow down specific issues.
Stratification
Stratification is a method of dividing data into sub-categories and classifying data based on group, division, class or levels.
This can help users to derive meaningful information from data and help them to understand an existing problem.
In Table 1, for example, there were 21 paintwork defects noticed in a factory and when broken down into causes the information became more useful.
While the tools can be used individually, they are most powerful when used together as part of a process to control quality
By using the tools to answer questions about quality, users can gain meaningful information that help them to understand reliably whether there is a problem and what could be causing it, whether efforts to address it are working and whether certain variables are being successfully controlled.
Reading 12: The seven key tools to controlling quality
Reading 12: The seven key tools to controlling quality
Activity
Work on activity 9.3 “Quality control tools” in session 9: quality and improvement.
Block 3- Reading 13
Improving performance
Improving performance
when an organisation is looking to steer its operations strategy in the longer term it needs to make a clear link between improvement activities and market requirements.
They need a way of spotting any gaps between the market requirements and their actual performance, ideally one that can give some sense of how important the gaps are.
Reading 13: Improving performance
The importance-performance matrix
Slack’s (1994) importance-performance matrix suggests a four-stage process for spotting gaps between market requirements and an organisation’s actual performance.
Stage 1: Judge the importance of performance measures to customers
Stage 2: Judge the performance against competitors
Stage 3: Match performance against characteristics
Stage 4: Develop improvement plans
Reading 13: Improving performance
Stage 1: Judge the importance of performance measures to customers
Reading 13: Improving performance
Step 1: Judge the importance of performance measures to customers
Customers usually make a purchase decision based upon a range of criteria.
These criteria are related to operations performance.
These criteria will be very specific to the market segment.
For example, business travellers might be more interested in speed of service but not as bothered about price if they are claiming on expenses.
Step 2: Judge the performance against competitors
An organization’s performance of an operation is always assessed relative to their competition.
An organization that provides moderate service quality in a sector that usually provides poor service quality still has some kind of advantage.
Reading 13: Improving performance
Step 3: Match performance against characteristics
Once an organization has established both the importance and performance of each priority, it can put them into the importance-performance matrix:
The ‘excess’ zone show where an operation has a high performance in factors that the customer does not consider important. (this could be traded off with better performance elsewhere)
The ‘appropriate’ zone is where the importance is matched to the relative performance in the marketplace. (No action needed)
The ‘improve’ zone shows where there is some scope to improve an operation. Maybe the competitors are slightly better at these aspects. (Improve to gain market share or repeat customers)
The ‘urgent’ zone: show where the operation underperforms in areas of importance to the customer. Business is probably being lost as a consequence. (Improve these areas).
Reading 13: Improving performance
Step 3: Match performance against characteristics
Reading 13: Improving performance
Step 4: Develop improvement plans
The performance-important matrix can be used to direct improvement activity. It shows where urgent action needs to be taken, and informs the analyst where no change is needed or where the operations performance can be deliberately lowered to save on resource.
Reading 13: Improving performance
