the importance of quality

9.2 Quality Management – Quality Control and Assurance

Objective

To understand why quality is a strategic asset, how it influences every functional area of a business, and how Quality Control (QC) and Quality Assurance (QA) work together to deliver and sustain high standards.

Definition of Quality

• Quality = the degree to which a product or service meets the expectations of customers and other stakeholders (e.g., regulators, shareholders).

Why Quality Matters – Direct Business Impacts (syllabus wording)

• Customer satisfaction and loyalty – high‑quality offerings increase repeat purchases and positive word‑of‑mouth.
• Cost efficiency – fewer defects mean lower re‑work, scrap, warranty claims and reduced “cost of quality”.
• Brand reputation – consistent quality builds trust and can justify premium pricing.
• Competitive advantage – quality can be a differentiator in crowded markets.
• Regulatory compliance – meeting legal and industry standards avoids fines, product bans and reputational damage.

Impact of Quality on Functional Areas (one‑sentence impact statements)

• Operations – quality‑focused processes reduce waste, improve cycle time and raise capacity utilisation.
• Finance – the “cost of quality” (prevention, appraisal, internal failure, external failure) directly reduces profitability when it rises.
• Marketing & Sales – quality certifications (ISO 9001, TQM) act as credible promotional tools that enhance brand image.
• Human Resources – clear quality standards lower employee stress, encourage training and boost morale.
• Strategic planning – quality objectives are embedded in corporate strategy and performance measurement, guiding long‑term direction.

Quality Planning (linking QA to the design stage)

Quality Planning is the first phase of the quality‑management cycle. It involves:

• Identifying customer requirements and translating them into measurable specifications.
• Designing processes that are capable of meeting those specifications (process flow‑charts, FMEA, design of experiments).
• Documenting procedures, work instructions and control plans before production begins.
• Assigning responsibility for each process step (usually to process engineers or project managers).

By completing quality planning early, an organisation shifts the focus from “detecting” defects (QC) to “preventing” them (QA).

Quality Control (QC) and Quality Assurance (QA)

1. Quality Control (QC) – operational techniques used to detect defects in the final product. Product‑oriented and reactive.
2. Quality Assurance (QA) – systematic activities that prevent defects by ensuring processes are capable. Process‑oriented and proactive.

Comparison of QC and QA

Total Quality Management (TQM)

TQM is an organisation‑wide philosophy that seeks continuous improvement of quality in every activity.

• Principles
  • Customer focus – understand and meet customer needs.
  • Continuous improvement – incremental (Kaizen) and breakthrough changes.
  • Employee involvement – empower staff at all levels.
  • Process approach – view activities as inter‑linked processes.
  • Fact‑based decision making – use data and statistical methods.
• How TQM differs from QC/QA – TQM integrates QC and QA into a single culture of quality, rather than treating them as separate functions.

Benchmarking for Quality

• Definition – systematic comparison of an organisation’s processes and performance against best‑in‑class firms.
• Types
  • Internal benchmarking – compare performance across different departments or plants within the same company.
  • External benchmarking – compare with competitors or industry leaders.
• Purpose – identifies gaps, sets realistic quality targets and stimulates ideas for improvement.
• Illustrative example – a UK retailer benchmarks its return‑rate (0.8 %) against a leading European retailer (0.3 %). It adopts the latter’s defect‑tracking software and, after six months, reduces its own return‑rate to 0.45 %.

Benchmarking Worksheet Template (for student practice)

Cost of Quality (CoQ)

CoQ provides a quantitative view of how quality‑related activities affect profitability. It is divided into four categories.

Simple CoQ Calculation Example

Assume a manufacturing firm records the following annual costs:

• Prevention: £50 000
• Appraisal: £30 000
• Internal failures: £70 000
• External failures: £50 000

Then:

• Total Cost of Quality = £50 k + £30 k + £70 k + £50 k = £200 k
• Prevention represents 25 % of total CoQ, while external failures represent 25 % as well, highlighting opportunities for cost reduction through better prevention and appraisal.

This figure can be linked to the finance syllabus by showing how a 10 % reduction in external‑failure costs would increase operating profit by the same amount.

Benefits of Effective Quality Management

• Improved product reliability → fewer returns and warranty claims.
• Higher employee morale – clear standards reduce re‑work stress and encourage ownership.
• Stronger market positioning – quality certifications (ISO 9001, TQM) act as credible signals to customers.
• Enhanced profitability – cost savings from waste reduction plus higher sales from a premium brand image.
• Better decision‑making – data‑driven quality information supports strategic planning.

Common Quality Management Tools

• PDCA (Plan‑Do‑Check‑Act) cycle – continuous‑improvement loop.
• Six Sigma – aims for ≤ 3.4 defects per million opportunities (DPMO).
• Fishbone (Ishikawa) diagram – visualises root causes of quality problems.
• Control charts – monitor process variation over time and signal out‑of‑control conditions.
• Benchmarking – compares performance against best‑in‑class firms (internal & external).
• Flowcharts & process maps – clarify steps, hand‑offs and potential failure points.

Key Take‑aways

1. Quality is the degree to which a product or service meets stakeholder expectations; it directly influences customer satisfaction, cost efficiency, brand reputation and competitive advantage.
2. QC detects defects in the final product; QA builds processes that prevent defects – together they form a complete quality‑management system.
3. Quality Planning links QA to the design stage, ensuring that processes are capable before production begins.
4. Total Quality Management embeds QC and QA into a company‑wide culture of continuous improvement, employee involvement and customer focus (e.g., Toyota’s 84 % defect‑rate reduction).
5. Benchmarking and the Cost of Quality give quantitative bases for setting realistic targets, measuring financial impact and driving profitability.
6. Systematic use of tools such as PDCA, Six Sigma, control charts and fishbone diagrams leads to lower waste, higher morale, stronger brand image and sustainable profit growth.