tutor2u ™ GCSE Business Studies Revision Presentations 2004 Quality

tutor2u ™ GCSE Business Studies Introduction Quality is one of the most important challenges facing a business Nearly all markets are becoming more competitive:  Customers are more knowledgeable  Customers are more demanding  Customers are more prepared to complain about poor quality  Customers can easily share information about poor quality (e.g. via or internet discussion groups) If a business can develop a reputation for high quality, then it may be able to create an advantage over its competitors

tutor2u ™ GCSE Business Studies What is Meant by Quality? Quality is about meeting the needs and expectations of customers Think about your needs and expectations as a customer when you buy a product or service. These may include  Performance  Appearance  Availability  Delivery  Reliability  Price If a product or service meets all those needs - then it passes the quality test. If it doesn't, then it is sub-standard.

tutor2u ™ GCSE Business Studies Examples of Poor Quality Product fails – e.g. a breakdown or unexpected wear and tear Product does not perform as promised Product is delivered late Poor instructions/directions for use Customer service is hard to find (e.g. telephone not answered) Business employees appear rude or uninterested in the customer

tutor2u ™ GCSE Business Studies Costs of Poor Quality There are many costs of poor quality, including:  Lost customers (expensive to replace – and they may tell other people about their bad experience)  Cost of reworking or remaking product  Costs of replacements or refunds  Wasted materials Poor quality is a source of competitive disadvantage  If competitors are achieving higher quality, then a business will suffer

tutor2u ™ GCSE Business Studies Quality Management Producing products of the required quality does not happen by accident There has to be a production process which is properly managed Ensuring satisfactory quality is a vital part of the production process. Quality management is concerned with controlling activities with the aim of ensuring that products and services are fit for their purpose and meet the specifications There are two main parts to quality management  Quality assurance  Quality control

tutor2u ™ GCSE Business Studies Quality Assurance Quality assurance is about how a business can design the way a product of service is produced or delivered to minimise the chances that output will be sub-standard The focus of quality assurance is, therefore on the product design/development stage Why focus on these stages?  If the production process is well controlled - then quality will be "built-in“  If the production process is reliable - there is less need to inspect production output (quality control)

tutor2u ™ GCSE Business Studies Quality control Quality control is the traditional way of managing quality Quality control is concerned with checking and reviewing work that has already been done For example, quality control includes:  Inspection  Testing  Sampling. Quality control is mainly about "detecting" defective output - rather than preventing it Quality control can also be a very expensive process. Hence, in recent years, businesses have focused on quality management and quality assurance.

tutor2u ™ GCSE Business Studies Total Quality Management (“TQM”) TQM is essentially an “attitude” Whole business understands need for quality and seeks to achieve it Everyone in workforce s concerned with quality at every stage of production process Quality is checked by workers and not inspectors

tutor2u ™ GCSE Business Studies Advantages of TQM Puts customer at heart of production process Motivational since workers feel more involved and are making decisions Less wasteful than throwing out defective finished products Eliminates cost of inspection

tutor2u ™ GCSE Business Studies Research & Development and Quality Research and development - process by which:  New products are developed which meet customer needs and wants  Existing products are improved to reflect customer feedback Types of feedback from quality control Customer complaints Production problems