F4 - THE IMPORTANCE AND BENEFITS OF QUALITY MANAGEMENT

Overview of key concepts Quality is all about customer satisfaction. Quality is important because if affects a customer’s perception on the business – therefore it can affect present and future sales. There are several ways businesses can ensure quality is achieved – either through quality control systems or quality assurance systems.

Quality Definition: ‘Is 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.’ Quality is a matter of personal opinion – so it is subjective and can vary from one customer to another.

Quality The quality of a product depends on its ability to meet customer requirements consistently. This will depend upon: How well the needs have been defined (from market research) How well the firm has designed the manufacturing process How well designed the product is (the product’s USP)

Benefits of quality Gaining a competitive advantage – if a business can create a product that is of higher quality than its competitors through a patented method, this will give them a CA Impact on sales – if product meets customers’ demands then demand should rise (JLP) Creating a USP – unique selling point can increase demand (The Ritz afternoon tea – tangible and intangible quality) Impact on selling price – USP means higher prices will be charged; ‘perceived quality’ (M&S, Waitrose, Harrods, Hotel Chocolat) 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 for each size of purse. (British Airways) Cost reductions – less waste and therefore reduced costs which can be passed on to customers. Firms reputation – not having a quality system in place can damage reputation.

Issues with any quality system Costs – it is a costly business, especially admin costs Training – the whole workforce may have to have a change of culture and training Disruption to production – can cause major disruption when being implemented

Benefits of improving quality Gaining a competitive advantage Increasing sales volume Creating a USP More scope to increase selling price Greater opportunity for pricing flexibility Cost reductions Greater brand loyalty and reputation

Difficulties of improving quality Difficult to convince people there’s a problem Difficulties in agreeing the best solution Quality systems give greater responsibility to staff – may require changes in how they are managed or their approach – may not go down well Resistance to change Costly and time-consuming Keeping pace with customer views on quality may be difficult Expense (a business must ultimately decide if the improvements to quality will outweigh the costs) Training Quality systems Information systems Testing Inspection Installing equipment