Quality Management in Business
Quality management in a business organization is a technique used to pursue employees to produce high-quality products and services, by providing necessary quality assurance tools and setting appropriate standards. The importance of quality improvement is evident for any company struggling in an increasingly competitive environment worldwide. Quality improvement process on a continuous basis provides cost reduction of fixing errors and efficiency increase without necessary work overheads, additional workforce and investments in equipment. Thus, to stay ahead of competitors and achieve success, it is highly advisable for a company to provide quality management across all its levels. Especially it is crucial for a company that deals directly with customers to ensure that its service is kept at the highest standard.
When we, as customers, think about “quality” we expect the product or service to meet or exceed our expectation in terms of design and value. According to the American Society for Quality, “quality” can be defined as: 1) how well the product design matches the original specifications based on customers’ perception; 2) a product’s/service’s ability to satisfy customers’ need; 3) achievement of established standards within an organization (Stralser, 2012). The term “quality” is defined by ISO 9000 (2015) as a “degree to which a set of inherent characteristics fulfils requirement”. There are different approaches to quality management that a company should consider before initiating its implementation.
Total Quality Management (TQM) approach is most widely used nowadays. TQM emphasizes the quality control in each business aspect aiming at the improvement of the quality of products and services on the long-term basis, being centred on customer’s satisfaction and continuous improvement of product quality. Manager’s role is to develop an appropriate quality strategy, adaptable to each company’s department, based on stakeholders’ and customers’ needs, and aligned with business goals (Stralser, 2012). The Danish healthcare company Novo Nordisk, for instance, experienced a quality crisis in the 90s when the U.S. regulators nearly banned its insulin from the U.S. market, but the company’s culture did not allow saying bad news to its CEO, leaving him in ignorance and resulting in massive profit loss. The company had to change the entire quality management across all its levels and functions to implement new quality procedures and personnel training. It “extended to new-product development, manufacturing, distribution, sales, and support systems.” Thus, Novo Nordisk developed a new vision, values and management procedures, creating “a new culture of honesty” (Goffee & Jones, 2013).
Another approach is Quality Management Systems (QMS) of Standardized Systems ISO 9000. It is very similar to TQM, but ISO 9000 QMS provides certification to companies not according to the quality of products or services production but the improvement of business processes according to the established standards. “A Process Based QMS enables the organizations to identify, measure, control and improve the various core business processes that will ultimately lead to improved business performance” (ISO, 2015). ISO 9000 certification is internationally recognized and highly respected by customers and business partners. QMS works on eight basic elements (Bhalla, 2015): customer focus; strong leadership; involvement of people; process approach; system approach; continuous improvement; decision-making based on facts; creating value for the company, its clients, and suppliers. All quality standards of the business processes must be documented. Thus, this approach involves the optimization of all business processes; the processes are not person-dependent, so a newcomer knows exactly what is expected from him/her; key responsibilities and tasks are clear; corrective actions are easier to undertake; increase of control of environment and reducing ambiguity; better procedures understanding ensures compliance with the rules; consistency.
J.M. Juran’s, a guru of quality management, approach to total quality management is worth noticing. “The Juran Trilogy for managing quality is carried out by three interrelated processes of planning, control, and improvement” (Besterfield, Besterfield-Michna, Besterfield, Besterfield-Sacre, Urdhwareshe, & Urdhwareshe, 2011). Juran (1994) says that the quality design greatly depends on consideration what inputs of service production add direct value and “identification of what constitutes fitness for use”, but with the addition of some aspects inherent to dealing directly with the end buyer. These are: ‘Made to order’ Design; technical assistance; simplicity; auxiliary services. A crucial parameter of the service quality is consumer ‘well-being’ (Juran, 1994) with appropriate atmosphere; feeling of customer’s importance; clear information; service/product safety; and continuity of service. As Juran (1994) argues, service companies are weakly organized for quality improvement, comparing to manufacturing companies. In this case, the significance of top management leadership for quality is significant.
All the quality management approaches underline the importance of customer satisfaction that can be defined as the extent of meeting customer expectation towards purchased goods or services. Here, marketing plays an important role because the customer is more satisfied when he or she buys a product that matches marketing promotion campaign, and satisfies customer needs. Thus, if the product or service meets or outperforms customer expectation, a buyer gets a feeling of satisfaction.
To meet customer expectations and raise their loyalty to product/service, the companies should work on continuous improvement of quality. The above-described approaches emphasize the importance of continuous improvement that can be defined as a constant process of the quality audit and applying corrective actions to fill the gaps, aiming at improving product/service features. E. Deming, “credited with providing the foundation for the Japanese quality miracle”, provided 14 points theory of the importance of continuous improvement, productivity and competitiveness (Besterfield et al., 2011). Continuous Quality Improvement (CQI) is an approach adopted by different industries. For example, in service sector it is used by acronym FOCUS-PDCA:
- Find a process to improve. Clarify what is known. Select a process improvement.
- Then move through the process improvement plan:
- Plan—create a time line, including all resources, activities, dates, and personnel training.
- Do—implement the plan and collect data.
- Check—analyze the results of the plan.
- Act—act on what was learned and determine the next steps (Stralser, 2012).
An organization can gain different types of added value by managing various attributes of quality such as value of added quality to product/service; cause-related value when a company makes contributions to other communities; environmental added value when a company conducts ethical behaviour; and cultural value when a company complements customers with product/service offers based on their cultural differences. Effective marketing is important for meeting customer expectations and satisfying their needs because customers wish to buy exactly the same product they saw in a commercial and not to be fooled. It can use different types of information such as detailed and true information about product/service; information about company’s vision, a way of business conduct, etc; what auxiliary products are offered; are there any pitfalls, etc.
There are different tools helping to measure quality. The characteristics of quality that are measured in business and service companies include timeliness, courtesy, consistency, convenience, accuracy, completeness, and responsiveness. In manufacturing companies, quality is measured according to product output, time efficiency, number of defects, etc. The service output is intangible and, therefore, difficult to measure. “In service industries, in particular, quality is measured in customer retention rates and the cost of losing a customer” (Stralser, 2012). ISO 9000 provides quality measures by setting standards according to which the achieved quality is evaluated. As Harvard Business Review study showed, companies can increase their profits by 100% by retaining 5% of their customers (Goffee & Jones, 2013). That is why, customer feedback from customer surveys and questionnaires is so important in improving the quality of service. Some other quality measurement tools are mystery shoppers, auditing, new customer measure, telephone interview, etc.
A company can understand customers’ needs in various ways. The most widely used one is a user or non-user survey. This type of quality measurement requires much commitment and time, but discovered information can be very valuable for a company’s improvement. User survey is used to understand whether a company’s product/service meets customers’ expectations, how they are satisfied with it, what improvement can be done; what they like the most and what they dislike. A non-user survey, from the other hand, is information provided by non-users of product/service to understand why they do not buy it and buy competitor’s product, what they wish for that product/service to have in order to buy it. Both surveys have two opposite perspectives important to realize what product features are the most valuable to meet customer needs and how to increase their satisfaction.
While surveys are a proactive measure, complaint procedures are reactive. Nonetheless, the latter are of the same importance for a company because the dissatisfied customer will disseminate more negative than positive information about a product/service to others. “Every single complaint should be accepted, analyzed, and acted upon, for it represents the tip of the iceberg” (Besterfield et al., 2011). When a company discovers a particular number of complaints about a product/service, it has to take corrective actions. A study showed that more than 50% of customers would come back if their complaint was resolved, comparing to less than 10% of customers who would buy again (Besterfield et al., 2011).
However, many people ignore all types of surveys and complain. As Besterfield et al. (2011) say, a company should worry the most about people who do not fill complaint forms and just turn to competitors. Underrepresented groups can be encouraged to participate in quality improvement by different methods of consultation like interviews (individual or group); surveys and questionnaires such as form, telephone, electronic, or mail. Some companies choose to encourage them by the participation in promotion campaigns with a chance of winning a prize.
Quality management in companies with business and service provision must focus on customer satisfaction and employee performance that are related to intangible dimensions of quality, i.e., a degree of meeting customer needs and increasing customer satisfaction through efficient, pleasant, and timely service provision. The formula for creating the competitive edge for the company is simple: properly chosen quality assurance methods together with culture fostering quality improvement and leadership will result in high employees’ commitment and customer satisfaction.