This portion of the quality system is conceptual. It is more about management’s role in increasing motivation and the determination to make the first part run smoothly. It is rooted in the communication between management and employees, which was discussed earlier. In most cases, the employees who are performing the activities and process know how to improve the quality. This part of the system should allow employees to make recommendations and motivate them to want to improve quality.
The inclusion of customers in a quality program can take many different avenues, including the cost of losing a customer, the customer’s perception of quality, and the satisfaction level of the customers. The customer portion of a quality program is going to be unique for every industry and organization, but it must capture how quality plays into the customer’s value system and how quality drives the purchase decision.
In service industries, in particular, quality is measured in customer retention rates and the cost of losing a customer. If typical accounting measures could capture the exact cost of losing a customer it would be easy for managers to allocate the exact amount of resources needed to retain customers. According to the Harvard Business Review, companies can increase profits by almost 100 percent by retaining 5 percent more of their customers. Customers over time will generate more profits the longer they stay with the same company.
Perceived quality by customers leads to referrals; in service industries, referrals can equate to more than 60 percent of new business. If a company can increase the number of referrals through increased quality, it is going to have a substantial effect on the bottom line of the business.
Purchasing is an area in an organization where substantial gains in quality can be realized through the implementation of just a few policies and procedures designed around quality. Today’s suppliers need to be partners in the quality effort. A company’s products or services are only as good as the combination of all the inputs.
The first step in molding the purchasing system to collaborate with the entire quality system is to take all the standards developed for all incoming materials that can be qualified as an input to routine process or activity. If the quality system’s performance standards and procedures are completed as described in the design phase these standards should already be established.
The second step is educating the purchasing personnel on how the standards are important to the process flows of the organization. If standards are not upheld, the quality of the product or service will be jeopardized. The employees should also be educated on how to measure and communicate the required standards. This may involve materials or statistical process control education, and it could even be as simple as cross-training the purchasing personnel so that they know exactly how the inputs fit into the organization. Once the purchasing area knows how the products are used and what problems can arise, they will have a better chance of procuring inputs that meet all the specifications.
Once steps one and two are complete it will be the purchasing department’s responsibility to communicate the requirements to suppliers and hold them accountable for the quality. This sometimes may not be a simple task and could involve finding new suppliers or working with current suppliers to develop higher quality standards.
Education and Training
The education of employees for the purpose of reaching higher quality standards has many different facets. For example, the quality education of management is going to be different than the quality education of the general workforce, because they play different roles in the process. Because most quality problems start at the top, so too should education.
The education of management on quality issues should start with a general discussion of quality systems and the roles management plays in quality programs. With respect to general knowledge, management must understand the history of the quality movement, who the major players were, and how quality programs have affected the business world. More specifically, managers must know how quality programs have affected their specific industry in the past, and they should have an idea of what role quality programs play in the future of their industry. Management must also keep abreast of new developments in quality. The discussion of the roles that management must play in a quality system is the most important aspect of their education. Management must understand how employees view their actions or inactions, how their individual actions and jobs impact quality, and the overall importance of dedication to quality by management. Managers must understand that without strong leadership and reinforcing dedication to quality, a quality program will not be meaningful.
The education of employees for a quality program will include a discussion of how these programs will affect their jobs on a daily basis. It should also include a brief overview of quality as well as the tools employees will use in order to ensure outputs and how their roles add to the overall quality goals of the organization.