The document discusses key concepts related to quality management. It defines quality as the extent to which a product or service meets customer expectations by being fit for purpose. It then outlines several quality management techniques including quality control, quality assurance, total quality management, benchmarking and the use of quality awards. The document emphasizes that quality is important for businesses to control costs and protect their reputation, while noting that quality management requires commitment from the entire organization.

2.  Process of streamlining operations and
processes to reduce all forms of waste and to
achieve greater efficiency. This should lead to
improved quality and reduced costs.
 This was first used in Japan during the 1950s;
businesses were trying to reduce wastage or
‘muda’ (Japanese term for ‘waste) in the
production process.

3.  Materials and resources – wastage of
materials and resources that have not been
used efficiently, such as floor space.
 Time – delays in the production process have
a large negative impact on productivity and
perceptions of quality.
 Energy – leaving on lights, heating or AC
when not needed is a huge & unnecessary
drain on financial resources.
 Human effort – tasks may need to be
reworked due to waste from substandard and
defective output.

4.  Waste minimization – business to remove any
operation or process that does not add value
to the product. It involves making more
efficient use of a firm’s scarce resources
(land, labor, capital).
 ‘Right first time’ approach – businesses aim
for zero defects by identifying and resolving
all problems at source.
 Flexibility – resources must be adaptable to
the changing needs of the business (ex. Firms
might use multiskilled workers who can work
on several projects simultaneously.

5.  Kaizen (continuous
improvement)
 Just-in-time (JIT)
 Kanban
 Andon
Activity: Assign each of the methods

6.  Japanese word for a philosophy of
‘continuous improvement’
 Kai – meaning change; Zen – meaning better
(changing for the better)
 Process of productivity and efficiency gains
come from small and continuous
improvements rather than a large one-off
improvement because:
◦ People tend to be resistant to change, esp. change
that is large scale and disruptive to the organization
◦ Smaller changes are easier to manage
◦ See Page 492 Box 5.3.a

7.  Inventory management system based on
stocks being delivered as and when they are
needed in the production process.
 Stocks are delivered just before they are
used; finished goods are dispatched as soon
as they have been produced – this eliminates
the need for storage; inventory is costly and
wasteful.
 JIT system relies on automation, bar codes
and the use of highly skilled and motivated
workers.

8.  Ensures that inventory is based on actual
customer orders rather than sales forecasts.
 Uses a card system with an inventory number
attached to each component in the
production process.
 Kanban – Japanese for ‘visual’ card
 Example: sushi restaurant (customers placing
their orders using a card system)
 See Figure 5.3.b

9. Common mistake
 Kanban is not a stock control
system. Instead, it is a lean
production method used to
control the logistical (supply)
chain. It is one way to achieve
JIT production.

10.  Visual control system used to indicate the
status on an aspect of the production process
 Typically color coded:
◦ Green = normal operations in progress
◦ Yellow = attention will be needed soon
◦ Red = immediate attention is required
 In a factory setting with mass production, an
andon system provides visual feedback to
workers and supervisors on the production
floor.

11.  Bringing instant attention to production
problems as they arise in the manufacturing
process
 Providing a consistent and simple
communication tool for all factory floor
workers and supervisors
 Encouraging workers and supervisors to take
immediate action to deal with production,
quality and safety problems
 Improving the ability of supervisors to
identify and resolve production issues in an
efficient and cost effective way

12. Common mistake
 Students often comment that lean
production gives a business
significant competitive advantage
over its rivals. While this can be true,
make sure you substantiate your
comment. This competitive
advantage will not exist if, for
example, rivals have access to the
same lean production technologies
or if the firm has to use lean
production technologies just to keep
pace with market leaders.

13.  Refers to a sustainable model of production
based on natural processes, thus benefitting
the environment.
 There is no waste in nature making it
sustainable
 By contrast, ‘cradle to grave’ refers to one
time use, which is the most common form of
manufacturing
 The use of ‘recycling’ and/or ‘reuse’ allows
for sustainability
 Eco friendly businesses use C2C practices

14.  ..the extent to which a product or service
meets the expectations of the final user
 Factors reflecting quality:
Physical appearance
Reputation of the manufacturer or seller
Reliability
Durability
Fit for purpose
Safety features
Customer service
After-sales service

15.  Poor customer service at the cinema
◦ Customer dissatisfaction is a sign of poor quality
(service)
 A laptop that keeps breaking down
◦ The laptop is clearly not fit for its purpose and
therefore represents substandard quality
 Food that is overcooked in a restaurant
◦ This represents second-rate (poor quality) food
preparation in a restaurant

16.  Gives competitive
advantage
 Encourages return
purchases
 Provides customer with
information and builds
consumer confidence in
the brand
 Reduces costs incurred
in solving post sales
problems
 Helps improve efficiency
and so reduce costs
If quality control breaks down,
the cost can be severe.
Source: Photolibrary Group

17. EXAM TIP!
Quality does not mean that a product
has to be expensive, prestigious or
exclusive. Many students
incorrectly define quality as
products that are the ‘best’ in their
industry, such as a Rolex watches.
There are plenty of quality watches
that are relatively inexpensive.

18.  The quality of an organization’s products is
important for 2 main reasons:
◦ Its reputation
◦ Its ability to control costs
 QM is the function concerned with
controlling business activities to ensure that
products are fit for their purpose.

19.  Increasing consumer awareness – any mistake
made by large multinationals is likely to be
reported in various sources very quickly all over
the world
 Increasing competition – quality as a form of
product differentiation can give a firm a
competitive advantage
 Government legislation – changes and
developments to competition laws have forced
businesses to improve their quality standards
 Increasing consumer incomes – with greater
disposable income, consumers are more able to
buy higher quality products

20.  Quality control (QC) – is the traditional way of
quality management that involves inspecting,
testing and sampling the quality of work. It helps
identify problems before products are sold to
consumers.
 Quality assurance (QA) – is the management
process of guaranteeing (assuring) the consumer
of the product’s quality by ensuring that
everything is done ‘right the first time’, ie. no
defects. It informs customers that products have
been made to the required specification and that
certain quality standards have been met.

21. Advantages Disadvantages
 QC is used to prevent
faulty products reaching
the customers
 Cheaper to have trained
QC inspectors than to
have every individual
being trained to be
responsible for QA
 QC inspectors can find
widespread issues and
problems across the
organization
 QC does not prevent
mistakes being made
yet can be expensive
 The root cause of the
problem is not dealth
with as there is a lack
of a quality culture (ie.
substandard output is
rejected or reworked)
 Individuals are not
accountable for the
quality of their work

22. Advantages Disadvantages
 QA programmes involve
employee participation as
workers have more ownership &
recognition for their work
 Employee participation can help
to generate new ideas
 QA can help break down a ‘them
and us’ culture
 Less wastage and reworking as
products & processes are
checked at every stage of output
 Time, energy and
training needed
to nurture a total
quality culture
within the
organization

23.  See page 497 Box 5.3.b ‘The costs of poor
quality’

24.  Reject rates – the higher the reject rate, the lower
QA tends to be
 Level of product returns – faulty & substandard
products are far more likely to be returned by
disgruntled customers
 Product recalls – faulty products may need to be
recalled by the firm to prevent a major public
relations disaster
 Level of customer satisfaction – dissatisfied
customers are more likely to complain
 Degree of customer loyalty – good quality =
repeat purchases
 Market share – good quality = increase sales

25. EXAM TIP!
The concept of quality can be
somewhat subjective, i.e. what
constitutes as ‘quality’ will depend on
the product in question and personal
opinions will vary from one individual
to another. Furthermore, not all
aspects of quality are easily
measurable, e.g. the value of a brand
or a firm’s reputation. Finally, it is
important to note that quality is
always evolving and is expensive to
implement. Hence, while quality is
important to all businesses, it is
necessary to ensure the benefits of
quality assurance outweigh the costs
in the long run.

26.  Quality Circles – meetings of relevant
workers to discuss issues relating to
maintenance and improvement of quality in
the business – may also be a form of
empowerment and motivation.
 Benchmarking or Best Practice
Benchmarking (BPB) – refers to a business
comparing its products, operations and
processes with others in the same industry,
esp. market leaders. (see pg. 500-501
types, stages and adv/disadv. of
benchmarking)

27.  Total Quality Management (TQM) – is a
process that requires the dedication of
everyone in the organization to commit to
achieving quality standards. TQM removes
wastage and inefficiencies in all forms of
business activity (production, marketing,
finance and personnel).

28.  Improved motivation as all workers are
involved in the process
 Lower costs of production due to less
wastage
 Improves the reputation of the business
 Gives a competitive edge over rival firms

29.  High costs to set up the quality control
system
 Only works if everybody in the organization is
committed to quality assurance
 TQM can become quite bureaucratic as
procedures and processes must be properly
audited and administered
 There is a time lag before the benefits of
TQM actually surface.

30.  Awards are used to show that certain quality
standards have been met.
 Businesses that meet or exceed these standards
can include the quality award symbols or logos
on their products and in their promotional
campaigns. This helps assure customers that the
products are of high quality.
 International Organization for Standardization
(ISO) is the most prominent global organization
for QA. Its goal is to facilitate international trade.
It’s one of the most powerful NGO in the world as
it is influential in affecting government
legislation.

31.  Promote quality awareness within the
organization
 Improve organizational performance
 Recognize quality achievements
 Motivate the workforce
 Help attract high caliber employees
 Strengthen the firm’s competitiveness

33.  Is the process of using dedicated computer
hardware and software in the design process,
such as three-dimensional designs of a
product.

34.  Is the process of using sophisticated
machinery and equipment in the production
process.

35.  Refers to the approach used to eliminate
waste (muda) in an organization.

36.  Means that a good or service must be fit for
its purpose by meeting or exceeding the
expectations of the consumer.

37.  Refers to the methods used by a business to
reassure customers about the quality of its
products by meeting certain quality
standards.

38.  True or False
 Quality means that a product is high-class
and one of the best in its industry, such as
Rolls Royce cars or Rolex watches.

39.  True or False
 Poor quality means that a firm’s prices are
higher than the industry average.

40.  True or False
 An objective of quality assurance is to reduce
the need for huge Research and Expenditure
spending.

41.  True or False
 The implementation of TQC tends to reduce
the level of employee motivation.

42.  The customer’s perception of product quality
is ultimately measured by:
◦ A) Price
◦ B) Image
◦ C) Value for money
◦ D) Excellence

43.  A feature of total quality management is
◦ A) High production levels
◦ B) Zero defects
◦ C) Social responsibility

44.  The effects of substandard quality includes
◦ A) Higher levels of customer services
◦ B) Improved customer relations
◦ C) Higher wastage levels
◦ D) Lower costs of production

45.  A product that serves its purpose in fulfilling
a customer need or desire is known as
◦ A) Fit for purpose
◦ B) Quality assurance
◦ C) Class excellence
◦ D) Commercial honesty

46.  Which of the reasons below does not explain
why quality is important to a business?
◦ A) Quality is essential in order to satisfy customers
◦ B) Quality can provide a competitive advantage to
the business
◦ C) Quality raises the goodwill of the business
◦ D) Quality means less stress to employees due to
the reduced workload