Operations Management

1
Operations Management

• Quality issues

2
What is quality?

• Key aspects of quality for the customer include
• Good design looks and style
• Good functionality it does the job well
• Reliable acceptable level of breakdowns or
  failure
• Consistency
• Durable lasts as long as it should
• Good after sales service
• Value for money

3
Task 1 on worksheet
What is Quality?
4
Poor quality

• What recent incidences have their been with
  poor quality with
• Food.?
• Electronical goods
• ICT Hardware / Software
• Travel industry

5
Incidences in the news this month, concerning
quality issues!
J. K. Rowling, Harrys creator, is suing the
online auction hosting service eBay after
unscrupulous sellers used the Indian version of
the website to sell unauthorised versions of her
books.
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Task 2
Take one recent incident of poor quality.. Why
is it important for that business to improve
quality in the near future?
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Why is quality important?

• Quality helps determine a firms success in a
  number of ways
• Customer loyalty they return, make repeat
  purchases and recommend the product or service to
  others.
• Strong brand reputation for quality
• Retailers want to stock the product
• As the product is perceived to be better value
  for money, it may command a premium price and
  will become more price inelastic

• Fewer returns and replacements lead to reduced
  costs
• Attracting and retaining good staff
• These points can each help support the marketing
  function in a business. However, firms have to
  work hard to maintain and improve their
  reputation for quality, which can easily be
  damaged by a news story about a quality failure.

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How is quality measured?

• Firms can measure quality aspects such as
• Failure or reject rates
• Level of product returns
• Customer complaints
• Customer satisfaction usually measured by a
  survey
• Customer loyalty evident from repeat purchases,
  or renewal rates

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Measuring quality

• Task 3

10
Legal Quality checks
BS5750 is a British Standard for quality
assurance and ISO 9000 is the international
equivalent.
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Quality Standards ISO 9000

• This approach requires that firms set out clear
  procedures for all business processes usually
  these are set out in manuals and reinforced
  through staff training.
• Regular audits are carried out to ensure that
  processes are being carried out consistently
  according to standards.

• However, BS5750 can result in a rigid and
  inflexible, process-driven approach to providing
  products and services to customers. It can mean
  that employees are not encouraged to take
  ownership for improvement, and therefore it can
  be at odds with approaches such as Kaizen and
  Quality Circles.
• Furthermore, just because a firm holds BS5750 and
  is delivering a consistent service, it does not
  guarantee that the service is better than a firm
  that does not have the award.

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Quality Standards CE Mark

• In electrical products, the CE mark signifies a
  standard of safety.

13
British Standards and ISO

• The British Standards Institute (BSI, and the
  International Equivalent, ISO) publishes
  standards for many kinds of product and services,
  known as the Kitemark, which can be seen as a
  badge of quality.

14
Royal Warrants

• Some British firms are fortunate to gain a Royal
  Warrant, which allows them to state that they
  are endorsed by Royal Appointment to Her Majesty
  the Queen, to the Duke of Edinburgh or to the
  Prince of Wales. This accreditation will be
  proudly displayed on the product packaging and on
  the firms correspondence and marketing
  literature.
• Firms are awarded royal warrants when favoured by
  a member of the Royal Family, and cannot be
  formally applied for.
• Harrods famously lost its royal appointment,
  apparently following the public falling-out
  between the firms owner Mohammed Fayed, and the
  British royal family.

15
Investors in People

• Investors in People is the national standard
  which sets out a level of good practice for
  training and development of people to achieve
  business goals.
• A better control of costs
• Investors in People ensures your company stays
  truly competitive by implementing strategies that
  encourage you to continually evaluate your
  practices and see return on investment.
• Reduction of employee turnover
• Investors in People gives you the framework to
  ensure you are attracting, motivating and
  retaining the right people.
• Increased sales and productivity
• People are an organisations greatest asset, and
  to succeed everyone has to perform well.
• Higher customer and client satisfaction
• Investors in People helps to develop your people
  to become more customer focused.

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Branding as a mark of quality

• Many firms rely on their own brand to signify
  quality.
• Clearly, it is important that, in the long run,
  the product or service supplied does actually
  measure up to what the marketing says about its
  quality.

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Which firms place Quality at the centre of their
marketing?

• Firms such as
• BMW,
• Sony,
• Rolls-Royce and
• Waitrose
• all place quality at the centre of their
  marketing.

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How to improve quality

• TQM
• Continuous Improvement
• Zero Defects
• Quality circles
• Benchmarking

TASK 5 P386 387 Make own notes on Quality
Initiatives
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Some areas for evaluation

• Quality is subjective, it is a matter of personal
  opinion and what constitutes an acceptable level
  of quality will vary from one individual to
  another.
• Not all aspects of quality are tangible for
  example the degree of assurance given by a firms
  name or reputation can be very important even
  though it is hard to measure.
• Quality is always evolving because of things like
  improved technology, better materials, new
  manufacturing techniques and fresh competitors.
  No firm can afford to stand still as far as
  quality is concerned.
• Whilst controlling quality has benefits to the
  firm, it can also be costly to do, so it is
  important that the benefits outweigh the costs in
  the long term.