Quality, operations,

performance and benchmarking

Md. Rashidul Hasan
Professor
Department of Agribusiness and Marketing
Sher-e-Bangla Agricultural University
Dhaka
The strategic performance objectives

Successful organizations share a number of important objectives with

respect to these customer-driven quality and operational performance
aspects of the value chain. The key to success in the most important
part of the value-adding process can be expressed in simple terms:
The strategic performance objectives

▪ Do the right things right – i.e. provide the goods or services that the
customer wants, without mistakes. This means providing the product
that the customer wants, right first-time, every time.
The strategic performance objectives

▪ Do things quickly, giving the fastest possible turn around for a

customer, from placing an order to receiving the ordered products.
The strategic performance objectives

Be reliable, which is providing the customer with products or services

on time and keeping any delivery promises made.
The strategic performance objectives

▪ Be flexible and responsive to change – to be able to deal with

unexpected circumstances, or simply to deal with changes in
customer requirements.
The strategic performance objectives

▪ Be cheap – providing products or services at competitive

prices while still maintaining a profit. Or, in the case of
non-profit-making businesses, giving best-value performance.
The customer’s influence on quality and
performance

The most important set of factors that impact on any organization’s

operations strategy are those set by the customers. The purpose of any
operations function is to manage the value-adding activities inside the
business in such a way that customer requirements are met in full.
The customer’s influence on quality and
performance

What ‘matters’ to the customer will, of course, vary from market to

market. For each element of product that is of concern to a customer,
organizations will have an internal response that facilitates the
satisfaction of the customer concerned. The most successful
businesses are those that can most effectively configure their
operations to meet customer requirements.
The customer’s influence on quality and
performance

The various areas of focus for an organization when developing

competitive strategy are listed in Table 12.1. It is notable from this list
just how important quality and customer focus become in the overall
strategic focus.
The customer’s influence on quality and
performance

The quality of products (goods and services) can be seen to extend

from the original design, to on-time delivery, reliability in service
through to after-sales service. This is what we mean by customer-
driven quality.
The customer’s influence on quality and
performance

Quality begins with the quality of product design. Do the specifications

achieve what the customer wants? Does the company fully understand
the customer’s needs and requirements? Quality extends into the
manufacturing or service processes. Can the company deliver the
products at the right price?
The customer’s influence on quality and
performance

The efficiency of work processes and the competences of employees

need to be such that products can be made cost-effectively and
consistently to design specifications. Have all wasteful processes –
those that do not add value – been eliminated? In the case of service
operations, the customer is often in face-to-face contact with the
employee providing the service.
The customer’s influence on quality and
performance

The customer should be made to feel confident that the service is

speedy, professional, efficient and provides value for money. Product
reliability is another important issue. From the customer’s perspective,
product reliability is measured by the product’s functional
performance and so the product must perform as expected.
Continuous good functional performance over time is also important.
The customer’s influence on quality and
performance

The product must continue performing throughout what the customer

considers to be a reasonable life-expectancy. Reliable fast delivery of
products or off-the-shelf availability of consumer products is also a
major consideration. Can the company meet the delivery lead time
requirements? Does it do so reliably and consistently?
The customer’s influence on quality and
performance

In the case of service industries, the service provided is less tangible

than physical products and therefore it is often the customer’s
perception of the reliability and timeliness of the service provided that
is important.
The customer’s influence on quality and
performance

For many businesses ‘what really matters for customers’ can be seen
to extend beyond the above issues. Customer-driven quality often
requires innovation and the use of leading-edge technologies. Such
innovation can be applied to materials and product design, or even to
the manufacturing processes or the way services and facilities are
provided.
The customer’s influence on quality and
performance
Table 12.1 Factors affecting customer-driven quality and the operating
performance characteristics of an organization
What matters to customers in How a business responds to the customer
selecting a product purchase demands

Low price (value for money) Producing efficiently at low or reasonable unit cost

High-quality products Building quality into processes and products

Fast delivery Short manufacturing lead times, ex-finished goods

stock or fast distribution
The customer’s influence on quality and
performance
What matters to customers in How a business responds to the customer demands
selecting a product purchase
Product and service reliability Building reliability into products and delivering
dependable service
Innovation (using leading-edge Keeping abreast of latest developments and
technologies) emphasizing R&D
Wide product choice Flexibility to change and wide product mix
Responsive to changes in customer Flexibility in volume and delivery, quick response
requirements times to change
What is quality?
Some of the most noted thinkers in the field have described quality
in respect to ‘excellence’, or more accurately, ‘perceived excellence’.
Although quality means many things to different people, in general
we can consider quality as meeting customer needs or expectations.
What is quality?
Table 12.2
Some definitions of quality
Quality defined by Definition of quality
Deming Quality should be aimed at meeting the needs of
the consumer, present and future
Juran Quality is fitness for the purpose for which the
product is intended
Crosby Quality is conformance to requirements (either
customer requirements or the specification
predetermined for it
Oakland Quality is meeting customer requirements
What is quality?
Quality defined by Definition of quality
Kaoru Ishikawa Stressed the importance of statistical methods, using
his ‘seven tools of quality’ for problem-solving. Also
recognized for his contributions to the company-wide
quality-control movement, involving all staff at all
levels through quality circles.

Genichi Taguchi Developed the ‘quality loss function’ concerned with

the optimization of products and processes prior to
manufacture. His methods can be applied in the
design phase of products or systems, or in production
to optimize process variables.
What is quality?
Quality defined by Definition of quality

Philip B. Crosby Believing that ‘quality is free’ and ‘zero defects’ should
be the target, Crosby rejected statistically acceptable
levels of quality. He believed in a ‘top-down’ approach
to quality management and proposed his four
absolutes of quality: quality is defined as conformance
to requirements; a system of prevention not appraisal;
performance standard should be zero defects; the
measurement of quality should be the financial cost of
non-conformance.
Total quality management (TQM)

Today, TQM is an holistic approach, which provides awareness of the

customer–supplier relationship and continuous improvement effort
in all departments and functions. There has been much written on the
subject of TQM, and the philosophy means many things to different
people.
Total quality management

Some have used an external customer focus, aiming to ensure

employee awareness of customer needs and an elimination of faulty
goods or services. Others have focused on the tools of quality such as
brainstorming, statistical tools, control charts, etc., to encourage
problem-solving and a right-first-time attitude.
Total quality management

Many have used teamwork and ‘empowerment’ in an effort to develop

a ‘quality’ culture, to improve staff motivation and an ongoing cycle of
quality improvement.
Total quality management (TQM)

There are as many approaches to TQM as there are consultants selling

their own formula for success, but whatever the approach the
following features of TQM are usually present:
Total quality management (TQM)
▪ It is strongly led by senior management;
▪ It is customer-oriented;
▪ It recognizes internal customers in the value chain and external
customers;
▪ It represents a fundamental change away from controlling bad
quality to preventing bad quality from happening – it causes good
quality
Total quality management (TQM)

▪ It encourages a right-first-time approach to all activities;

▪ Everybody is made responsible for quality;
▪ Training and quality ‘tools’ are introduced in support of the quality
regime;
Total quality management (TQM)

▪ Employees are encouraged to look for ways for improving quality in

their own areas, such as by process ‘tightening’;

▪ The introduction of measurement systems to eliminate and control

waste
Waste
Waste describes any activity in an operations process that is not value
adding. It costs money but does not create value commensurate with
its cost.
Waste
Examples include:
▪ Process inefficiency (say as a result of bad design);
▪ Any process that does not add value – e.g. unnecessary inspection
activities or materials handing activities (say from station to station in
the process);
▪ Any stock that is not actually being processed (and to which value is
therefore not being added); this includes all raw materials, all finished
goods and any work-in-progress that is queuing between production
stages;
Waste
▪ Stocks that have failed a quality test, either in-process or at final
quality control.
▪ Machine ‘down-time’ – i.e. production time lost through machines
not being operable for any reason such as break down, or through
tooling up or tooling down between batches.
▪ The time and stock involved in producing unsold or unsaleable stock
Important instruction

Try to related your answer with appropriate agribusiness