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Welcome to my blog for all things related to business quality (processes, systems and ways of working), products and product quality, manufacturing and operations management.

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April 2010
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Quality is a strategic issue

I’d like to take an overview of what quality is… and why it’s strategically important to your business.

What is Quality?

Quality means meeting requirements. It isn’t about providing more features, or complexity, or performance that increases cost, takes longer to provide or makes it more difficult to use and may not be required. A good quality product or service or business process, in the words of Ronseal, “does exactly what it says on the tin”.

The business leader and academic Peter Drucker explains that “Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for. A product is not quality because it is hard to make and costs a lot of money, as manufacturers typically believe. This is incompetence. Customers pay only for what is of use to them and gives them value. Nothing else constitutes quality.“

The quality guru W. Edwards Deming tells us “quality is everyone’s responsibility” but, of course, it needs leadership and example-setting from the top as nothing will undermine a quality improvement initiative more than management paying lip-service to the initiative whilst not following it themselves.

Quality needs to become part of the organisational culture and part of the product lifecycle; it needs to be built into the product from the start, it isn’t something that can be ‘sprayed on’ later. It has to be automatic and implicit; as Henry Ford said, “quality means doing it right when no one is looking.”

A huge benefit of improving quality is that you can save both time and money by producing quality products in a quality way – keeping things consistent and simple, doing the work correctly once rather than badly several times, and not wasting money or development time.

A Quality Strategy

I believe that quality should be a critical part of a company’s strategy. Quality of product and of business operations is key to satisfying customer needs and expectations and also to a company’s success and profitability.

Philip Crosby’s Quality Management Maturity Grid gives some very clear pointers as to the goals for quality. His most advanced stage of quality management has six preventive, consistent and assured characteristics:

Management understanding and attitude: Consider quality management an essential part of the company system.

Quality organisation status: Quality manager on board of directors. Prevention is main concern. Quality is a thought leader.

Problem handling: Except in the most unusual cases, problems are prevented.

Cost of Quality as % of sales: Reported 2.5%; actual 2.5% (i.e. the company knows exactly what the CoQ is, and it is very low).

Quality improvement actions: Quality improvement is a normal and continued activity.

Summary of company quality posture: “We know why we do not have problems with quality.”

Few companies match all of these characteristics but Crosby’s approach can help you develop a strategic quality route-map to move in the right direction.

So what should you include in your Quality Strategy? Here are some suggestions, in no particular order:

  • What are your customers’ quality requirements and expectations? How can you work together with your customers to improve quality rather than rely on the traditional supplier/buyer relationship?
  • What recognised industry quality standards do you need to have? What do your competitors offer? How can you ‘punch above your weight’ and gain strategic advantage in a crowded marketplace through improved quality?
  • What quality management standards will you adopt – ISO 9001? TL 9000? TickIT? Good Manufacturing Practice? Etc. How will you ensure these really benefit the company and are not merely badges? If you are simply going it alone, how will you ensure that you adopt best practice?
  • Quality ownership and management; who will provide leadership and management and continuous improvement in this area? How will you train your staff to contribute to quality? Who will devise and improve your operational processes and systems, and how?
  • Preventive Action processes and escalation paths; how do you prevent things going wrong before they cause you a problem? Philip Crosby says that “quality has to be caused, not controlled”. How are you going to design inherent quality and reliability into your products and services?
  • Corrective Action processes and escalation paths; what do you do when things go wrong and how do you make sure the problems have really been fixed and the lessons learnt?
  • Measurement and feedback; what are your quality Key Performance Indicators, what actions will you take to meet them, how will these change over time? What levels of defects on delivery, or in warranty, are acceptable – 5%? 1%? Zero Defects?
  • How can you ensure that your supply chain manages quality to your expectations? How can you work with your suppliers to improve quality rather than rely on the traditional buyer/supplier relationship?
  • And consider how the strategy will change – and how your quality will be continuously improved – over time.

Quality is Free

Improved quality does not need to be a cash-drain on the company. It should not slow things down or make things more difficult. In fact, the converse; business management expert Tom Peters tells us that “almost all quality improvement comes via simplification of design, manufacturing… layout, processes, and procedures.“

Philip Crosby’s book ‘Quality is Free’ is based on the premise that, by improving quality, you can save far more than you spend doing it; it can directly lead to increased profits. He explains that, if you don’t yet analyse and understand it, your Cost of Quality is probably around 20% of your turnover; possibly more than your margin. Even if you do analyse it, you are very possibly under-valuing it by several percentage points.

In many companies there is, therefore, a huge opportunity for improvement. The most quality-mature organisations know what quality really costs and can drive it down to below 5%. Can you afford not to improve quality?

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