MNC Consulting Group Newsletter
February 2015
For Goodness Sake

 

How good is your business? While we can get into regression analysis and other measures of goodness and goodness of fit to answer this question, a stable indicator of how well a business is performing is your customer. Loyal and satisfied customers generally provide evidence of a company's quality.

 

What this means is that if your business is providing quality goods and/or services, then your goods or services are consistently meeting or exceeding customer expectations. This, in turn, means repeat customers as well as a growing customer base for the business.

 

In the 1980s, management's focus was on cost and, sometimes, on productivity. This is not to say that businesses in the 1980s did not believe in quality - they just didn't believe it was more important than the other factors.

 

But then a shift occurred. An unexpected increase in foreign competition was taking most of the North American profits. As you can imagine, this energized domestic companies in a big way.

 

North American companies scrambled to hire consultants and educate their employees (including executives) in what the foreign competition already knew:  Quality is not something that can be "tacked on" to products and services as an added feature. Quality is an integral part of goods and services.

 

Depending on whether your company is producing a good or delivering a service, there are different dimensions of quality. Here is a synopsis of each (adapted from "Operations Management" by William J. Stevenson and Mehran Hojati).

 

Dimensions of quality for goods include:

  1. Performance. These are the main characteristics or function of the product. For example, does everything work in the car you bought? How's the ride? Handling? Leg room?
  2. Aesthetics. This relates to the appearance, feel, smell, and taste of the product. For example, your car's interior design, soft touch, fit and finish, and grade of materials used.
  3. Special features. These are extra characteristics or secondary functions. For example, does your car provide convenience (e.g., placement of gauges and controls) and is it high tech (e.g., GPS, MP3, video)?
  4. Safety. Does the product reduce or eliminate possibility of risk of injury or harm? For example, does your vehicle have antilock brakes and airbags?
  5. Reliability. This refers to the product's consistency of performance over time (i.e., not failing for a certain length of time). For example, is your vehicle free of breakdowns in the first five years?
  6. Durability. This refers to the product's life. For example, your good quality car should have a long life and be resistant to rust and corrosion.
  7. Perceived quality. This is the subjective evaluation of quality such as reputation and image. Is your car in the top-rated listing?
  8. Service after sale. Quality in this dimension includes extensions of warranty, handling of complaints and maintenance.
  9. Latent. This dimension of quality is assumed quality; i.e., not expressed by customers, but is important. For instance, is your vehicle roadworthy and does it satisfy government regulations?

 

Dimensions of quality for services include:

  1. Tangibles such as physical appearance of facility, equipment, personnel, and communication materials.
  2. Convenience relates to the availability and accessibility of the service (e.g., convenient location of car repair shop and open evenings and weekends).
  3. Reliability is the ability to perform a service dependably, consistently, and accurately for a certain length of time. In other words, the problem is fixed right every time.
  4. Responsiveness is the willingness of the service provider to help customers in unusual situations and to deal with problems. For instance, is your car dealer willing and able to answer questions even if you're not there to help him make a sale?
  5. Time relates to the speed with which service is delivered. Wait time should be reasonable.
  6. Assurance is the knowledge exhibited by personnel and their ability to convey trust and confidence.
  7. Courtesy relates to the way customers are treated by employees.

 

While the list of dimensions of quality may seem long for both goods and services, not adhering to these dimensions can make for a very short business experience. 

Useful Quality Standards and Tools

 

The world's quality management system standard is ISO 9001. Companies seeking to do business with other companies, especially internationally, prefer those with the ISO 9001 certification.

 

For companies in the food processing industry, the Hazard Analysis Critical Control Point (HACCP)quality management system certification is available. It originated with Pillsbury in the 1970s. The HACCP is mandatory for fish processors in Canada. It is also becoming mandatory for the meat and poultry industry.

 

In addition to ISO and HACCP, the Canada Awards for Excellence (CAE) recognizes outstanding quality achievement by Canadian organizations. These are annual awards given by the National Quality Institute (now transitioning to "Excellence Canada").

 

To achieve certification and recognition for quality, continuous improvement and problem solving tools can help your organization detect and fix problems before your goods or services get to the customer. Some of these tools include:

 

  • Process flow diagrams to help you identify possible points in a process where problems or opportunities for improvement occur.
  • Check sheets to record and organize data to facilitate collection and analysis.
  • Histograms that chart the frequency distribution of observed values.
  • Pareto analysis to focus attention on the most important problem or opportunity for improvement.
  • Cause-and-effect diagrams to help categorize possible causes of a problem.
  • Other statistical tools such as control charts, run charts, scatter diagrams, etc.

 

But perhaps the simplest "tool" of all is the employee. Involving employees in the troubleshooting and analysis of problems that may occur in the day-to-day business is an excellent first line of defense. Employees can . Employees are your front line of defense to ensure problems do not make it to the customer. Treat your employees right and reap the rewards. 

In My Humble Opinion (IMHO)
On a recent trip to Mexico, my husband and I stayed at the Hilton, an all-inclusive beach front resort. In comparison to other resorts where we've stayed, the Hilton is smaller, provides less entertainment, the rooms are not quite a 5-star (but they are spotless), and their restaurants do not provide the large variety of food choices that we've experienced at other resorts. But the meal selections that were available were a foodie's dream. Their customer service? Amazing! No matter what we asked for, staff went above and beyond to fulfill our request (and sometimes even before we even asked!). My point is that in order to be a quality business, you don't need to provide the moon - you just need to be sure that what you are providing either meets or exceeds your customer's expectations. That's quality pure and simple. IMHO.
 

"No matter our talent, we all know in the midnight of our souls that 90 percent of what we do is less than our best."

- Robert McKee

 

About MNC Consulting Group
Our goal is to help you to dramatically increase efficiencies that immediately boost your profit margins.

 

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