12 DE OCTUBRE DE 2022

QUALITY MANAGMENT ESSAY

MAIN PRICIPLES
DANIEL MOLTO SEMPERE
UNIVERSIDADE DO PORTO
FEUP

º
The first thing is to describe what quality means in our
environment. On an easy and brief way, we could say that it is
an absence of errors in the product or service you are offering
and to be conform to specifications.
As an example, talking about the manufacture of an object, it must be
adjusted to the specifications and characteristics previously established. A
transport company must ensure delivery on time and the premeditated
quantities in the established locations.

We can observe that quality depends largely on management decisions, so

quality of products and services reflects how good is being this management.

To ensure quality there are two approaches:

• Product control: is the most traditional, it consists of the control of the

product at the end of its production system. It has big disadvantages
because some errors may occur during the process so trying to fix them
at the end causes big delays in case of reworkings and of course
additional costs also in inspections. This way if one product has one
defect by the time it is detected there will be many others already
produced with the same one.

Example: At the 80´s, Peugeot´s plant in Villaverde had this model but, because
of the reasons mentioned before they had a big need of repairs due to the
accumulation of errors during the process. That is the reason why the repair
section was always full (it was the bottleneck). Looking at these problems, in
addition to the long lead times and extra costs they decided to make a
change inspired by Toyota’s model, the process control.

As we can see, it is an outdated method that has many associated problems

and slows down the process, so I would not recommend its use in a large
production chain

• Process control: based on the control of each stage of the production

process, prevent instead of fix. This requires the proper design of every
operation to be carried out, to register all the working procedures and to
have every worker adjusted to the plan. All the errors should be
detected and corrected immediately so this leads to a final product with
zero defects. This method, known as Total Quality, was invented by
Taiichi Ohno, Toyota´s director in the 50´s. The idea is not to have the
need of a final inspection at the last stage, so this means that it also
leads to having to place greater trust in workers throughout the process.

Continuing with the Peugeot´s case, with the foundation of their New Quality
System based on the process control a lot of changes had to be done. To be
able to have confidence in workers first they had to teach them how to do their
job in the right way offering them formation and after that, trying to motivate
them giving them more responsibilities (for example, in case there was, they
would have to fix it by their own or report it to his line manager if he was not
able to solve it). This also creates a better relationship between managers and
employees. Trying to develop people and empower them is a crucial part of
this method. Anyway, they had the right to make mistakes because they knew
you can´t expect to make everything perfect. Having zero errors eliminate the
need to have an inventory of raw materials for production because of the lead
time reduction and the least variability of the process. This way they could work
Just In Time with zero inventories placing smaller orders with suppliers arriving
directly at the beginning of the production chain. Thanks to all this changes the
company experimented good results since the first year of implementation,
improving quality and reducing costs.

Working with the JIT system brings numerous advantages, among which we
could highlight:

o Reduction of the stock level of stocks. Only the necessary quantity

requested by the next phase of the supply chain is produced, thus
optimizing the storage time of the products and the use of space.
o The expiration or deterioration of products stored for excessive time is
avoided. The JIT system will need to be supported by the optimal
warehouse management system to comply with this correct stock
rotation.
o Loading and unloading times of merchandise are reduced.
o Reduction of storage and inventory costs and therefore improvement of
the competitiveness of companies.
o It is a highly adaptable system once implemented since it simplifies all
phases of the supply chain.

But of course, it carries some associated risks that make the decision making of
its implementation sometimes not easy, for example:

o An erroneous implementation of the Just in Time system can lead to

delays or lack of stock in any of the phases of the supply chain, which
would imply the delay of the following phases.
o It requires great coordination and communication between customers
and suppliers, all participants in the supply chain must be informed of the
situation in the rest of the phases.
o The Just in Time philosophy must be adopted by the entire company,
without the involvement of all areas of the organization its correct
implementation is complex.
o Purchasing in smaller quantities is likely to result in higher purchase prices
from the supplier.
o Increases the cost of changing providers if necessary. For this reason, the
reliability and seriousness of the supplier is key in the Just in Time system.

Despite these possible disadvantages, we can see how most industrial

companies have taken this path in recent years, as we have seen in the case
of Peugeot. This is due to the great advances that it implies in the speed of the
process and of delivery to the client that it allows. I consider that to scale a
company today and with the great competition that exists, it is essential to work
in this way to be able to live up to the level of service and quality of the
competitors. In addition, the empowerment of workers applied in total quality
affects not only their relationship with superiors, but also their performance, so I
think it is a fundamental tool.

A different view of what quality means would be the customer focus, which
defends that quality is defined by the client, that a product does not have
quality for its own, it is established by its target clients, so it is something
dynamic.

The companies must anticipate future customer needs and preferences and
react accordingly. To know customer’s needs and expectations could be quite
challenging for companies also because sometimes they don´t even know
what they want until it is shown to them. For example, before the appearance
of the smartphone, no one knew that it would be such an important tool in their
lives that would allow them to facilitate so many actions such as
communicating or working, in fact, no one imagined that it was possible. That is
why it is also important to understand the behaviour and needs of society and
not only current customers, because we do not know how many potential
customers before the launch of a new product could be, for example.

Zara would be a clear example of this customer focus. Using the fast-fashion
model (in the 90´s) they can design, make, ship and sell a piece of clothing in
days. It is based on the zero stock JIT and Total Quality methodologies. That
allows them to react quickly to changing customers’ demands. Instead of
creating new fashion trends Zara tries to detect emergent ones at the earlier
stage and react very quickly to them. To make these trends forecasting they
use their own stores in real time using a sales tracking system.

About Zara supply chain they just have a big central warehouse where the
garments stay for few hours until the arrival of the trucks and the rest of the time
Is almost empty. Due to this way of working without stock and with temporary
storage it is not possible for them to manufacture in low-cost countries in Asia,
they need a faster supply. That´s why the trendy products are sourced from
local suppliers across the Iberian Peninsula such as many small companies.

We could consider this as a possible disadvantage since it is more expensive to

manufacture in European countries such as Spain and Portugal instead of in
countries with fewer regulations and lower wages. Nevertheless, they can offer
a higher quality and flexibility and of course a greater capacity to react to the
market thanks to the speed of the process, which is the main cause of the
company's success and the competitive advantage that differentiates it from
the rest of the competition, so it is a good decision for this type of volatile
business.
Zara launches around 10000 new designs each year and to make this business
profitable in which they also sell the clothes at a very affordable price, they
must sell huge amounts of products which also leads to certain problems, the
main one pollution and environmental impact. The manufacture of products
supposes a great contamination in all aspects, from the obtaining of raw
materials, the elaboration of products and transportation. All of this without
considering the fact that we do not need so many clothes, since as it is a
passing fashion, most buyers will probably stop using it or even throw it away in
a short period of time. In addition, there are more and more large companies
applying this business model as Shein, but not only in the fashion sector. For
example, Amazon uses the same principles with their distribution operations.

This entire global system of fast services is not sustainable in the long term as it
has been designed so far, so alternative ways should be sought. The use of
renewable energies or the introduction of environmentally friendly products
could be interesting options. Of course, it is difficult to risk making these types of
changes in a market as competitive and globalized as the one we have today,
considering that most rivals are only interested in the growth of the company
and profits.

Concluding about the customer focus, we could say that its existence would
be impossible without the application of the methods explained above that
allow the rapid supply of products while maintaining quality.

Another important concept would be continuous improvement or Kaizen. Its

main principle is that doing well is not enough and we should always try to
improve our actual situation. Every part of the team should work on this
improvement as each worker knows better than the rest their task and its
performance, in particular the field workers. This relates to the Total Quality
when we talk about giving workers more responsibility and empowerment. This
approach focusses on the teamwork and denies the traditional hierarchical
structures. This entails having an open mind to new changes and being willing
to be creative.

In the Peugeot case we saw how the middle management operators where
resistant to the new quality system, what also carries big problems at the time of
implantation. The whole team must work together in the same direction to be
efficient. This requires an effective leadership that keeps the workers involved
and motivated which not always easy.

We can see Kaizen approach goes hand in hand with the Total Quality
concept because having many small improvements leads us to avoid re-
occurrence, prevent and assure quality.
Some of the main KAIZEN advantages could be:

o Elimination of useless and repetitive processes.

o Increased productivity.
o Increased satisfaction and recognition of workers.
o Greater retention of talent.
o Increased employee commitment.
o Enhancement of the company's competitiveness.
o Increase in customer satisfaction.
o Quick resolution of errors and problems.
o Decrease in the number of occupational accidents.
o Better adaptation of processes to technological advances.
o Ability to accommodate changes generated in the market.

Example of a real application: In a furniture factory for offices and industries,

Mónica Méndez, an area leader, decided to implement the Kaizen method to
optimize the workspace.

She made a request to the company's board of directors and thus managed to
create a work team with 5 heads of different areas (blacksmithing and design).
Together, they defined as an objective that the workspace should be more
hygienic and organized during the sessions. They looked for significant change
to exist in two months or less.

They solicited the opinion of their colleagues and colleagues, while taking
pictures of the state of the factory during a normal workday and they classified
the levels of order and hygiene in «neat», «acceptable» and «not adequate».
After that, they generated organization strategies for each workstation. With
the help of a budget, they added utensils and shelves to keep order.

Over 3 weeks, they documented and tracked the results achieved in each
area. They optimized the processes that were not working and reinforced the
ones that were. They documented the process to be followed at the
workstations and brought the results to the board of directors. In this way, both
the workers and the people in management are on the same line regarding
the needs of hygiene and order in the factory.

In conclusion, we can observe that the set of the three quality approaches
studied lead us to an improvement in the coordination and motivation of the
workers, a higher rate of production and customer service and a high level of
quality in the final products.