An Introduction to Total Quality Management – Part 3

An Introduction to 

Total Quality Management – Part 3

Improve Quality ……. What happens?

It leads to a chain reaction

- Costs decrease because of less rework, fewer mistakes, fewer delays, snags, and better use of machine, time and materials.

- Productivity improves

- Capture the market with better quality and lower price

- Stay in business ----- Provide jobs and more jobs

Continual reduction in mistakes, continual improvement of quality means lower and lower costs. Better quality and lower price with a little ingenuity in marketing will create a market, keep company in business.

Quality leadership and business strategy:

Among the factors which determine marketability, quality is given the highest weight. Quality includes the usual parameters of fitness for use plus the important factor of quality reputation of the manufacturer.

Quality and Value:

What emerges is that for many consumers perception of the quality - price relationship is derived from unique interpretations of the term used.

Quality is interpreted as including factors which go beyond the inherent functional features of the product. Price is interpreted as relating to Value and is paid for those added factors along with the inherent functional features. Companies whose products are in the high quality category have the option of seeking their reward through either higher price or higher share of market (or both).Generally company’s strategy has been to opt for higher price. The price itself is perceived by many consumers as a quality rating. There appears to be a widespread belief that a higher priced product is also a higher quality product and some companies have exploited this belief as a part of their marketing and pricing strategy.

Generally the market is willing to pay premium prices for quality products. However if the premium price is not demanded the market responds by awarding so high an increase in market share that the supplier ends up with a return on investment greater than that resulting solely from premium pricing. Finally the market share affects the morale of the people involved. It is an established fact that members of a winning team fight their competitors where as members of a losing team fight with each other.

Also the form of a nation’s economy and its degree of affluence strongly influence the approach to its quality problems. In all economies a shortage of goods exceeds the supply; users take what they can get. In contrast, a buyers market results in a tightening of quality standards.

Seven Myths about Quality:

1. Quality and productivity are trade-offs.
2. Quality makes goods and services cost more.
3. Quality improvement applies only to production.
4. You can set up a quality system like you set up a machine.
5. Quality is just another program.
6. Quality is determined by the manufacturer.
7. A nation’s ability to produce quality products depends on its culture.

 We all know that some companies keep improving their quality and productivity so fast that they become industry leaders and remain so, while others seem to lag behind despite pumping in huge sums of money into their business and facilities but end up doing badly.

What they do differently? Experiences of a large number of companies suggest that the way the human resources is managed is the key of productivity and quality, and there by leadership in competition. In leading companies most of the work force is involved in continuous improvement in quality, productivity, production and costs. In lagging companies this effort is limited to a few managers and specialists. The total employee involvement is the outcome of an enlightened approach to the management of men. This implies a management capable of specifying multiple goals weighing them interrelating them and finding synergistic policies. World class leaders give employees skills, knowledge and power required to effect change and inspire their people to reach beyond basic customer requirements to provide the uncommon, unexpected dimensions of quality and service that delight rather than merely satisfy their customers.

Customer Perception:

• 68% of the customers who stop doing business with a company do so because of poor service.
• Customers are five times more likely to leave for poor service than inferior product quality or high cost.
• The average unhappy customer tells nine other people about the experience. 13% tell twenty or more people.

• Losing a customer costs as much as five times the annual value of that customer’s account.

• The average happy customer tells five other people and many of these become customers of the business that was praised.

• 50-70% of customers who complain and have their problem resolved, continue doing business with the company; if the complaint is resolved quickly, 90% of the unhappy customers can be saved.