Do quality and service improvements related efforts add cost to the production operations, or does it cut down wastage, improve product appeal and thus generate greater revenues Disjointed quality related efforts add expenses and do not contribute extra profits to the bottom line. Where as sincere efforts with active participation of all layers of an enterprise can rejuvenate and reinvigorate the entire organization and provide commendable competitive advantage. Having said all this we need to know what exactly quality is as identification of quality would result in its improvement and thus increase revenues. Literally quality originates from the Latin word 'qualis' which can be translated as 'such as the thing really is'. Quality has various meanings and each has a depth within itself. Before starting of with how quality and service results in enhanced profits we will identify what actually quality is and how various gurus have identified quality as. Quality itself has been defined as the ongoing process of building and sustaining relationships by assessing, anticipating, and fulfilling stated and implied needs.' (Winder, Richard E. and Judd, Daniel K., 1996, organizational orienteering: Linking Deming, Covey, and Senge in an Integrated Five Dimension Quality Model). Quality is all about conformance to requirements or fitness for use which can be defined through five principal approaches: (1) Transcendent quality is an ideal, a condition of excellence. (2) Product-based quality is based on a product attribute. (3) User-based quality is fitness for use. (4) Manufacturing-based quality is conformance to requirements. (5) Value-based quality is the degree of excellence at an acceptable price. Also, quality has two major components: (1) quality of conformance-quality is defined by the absence of defects, and (2) quality of design-quality is measured by the degree of customer satisfaction with a product's characteristics and features. (http://scrc.ncsu.edu/public/definitions.html).
Quality management enhances an organization's profits and gets them greater margins. The importance of quality can be seen by the fact that we as customers never want to associate our selves with a bad quality product. That can be with respect to:
This not only results in you never availing that service or product but spreading the word around to others you concerned with. This obviously affects the sales of the product or service causing problems for the organization. Goodman et al. (2000), based on a range of studies carried out by TARP (Technical Assistance Research Programs), states:
Quality and service improvements can be directly and logically linked to enhanced revenue within one's own company; and secondly, higher quality allows companies to obtain higher margins.
These arguments were proven by various surveys which resulted in the following conclusions which prove the relation of quality and service improvements to the revenues and profits of the organization. (Source: CMC Partnership Ltd. (1991))
- Problems decrease customer loyalty by 15 per cent to 30 per cent:
- 50 per cent of individual consumers and 25 per cent of business customers who have problems never complain