Production and Quality 1

BTEC Business

What is Production?

• Production is the process of taking resources and changing them into products

• These resources could be either raw materials or component parts

• Production can take place within the primary, secondary or tertiary sector

What is Production?

• Where ‘inputs’ are processed and turned into ‘outputs’

• When raw materials or components are processed - we call it ‘adding value’

• Careful planning is needed in any production method (arrival of materials at correct stage in process)

Examples of Adding Value

• Dairy farmers can add value to their milk by processing their own products, such as cheeses, yogurt, butter, ice cream, and farm-bottled milk

• Many consumers will pay a premium for locally produced, high-quality dairy products

• Organic certification may also help

Examples of Adding Value

• Biz/ed’s Virtual Factory is an excellent source of information on production

• Go to: http://www.bized.ac.uk/virtual/cb/welcome.htm

• Navigate your way to the factory floor/production/theories for more

Production and Quality 2

BTEC Business

What is Quality?

• Quality is about the characteristics of a product or service that help satisfy customers’ needs

• Customers’ expectations are vital• Businesses can manage

expectations

What’s Involved?

The following may all be part of ensuring a quality product/service:

• Quality assurance• Best practice benchmarking• Total Quality Management (TQM)• Warranties

Quality Assurance

• Setting standards• Applying the standards across a

business’ activities• Guaranteeing that these standards

will be met

Best Practice Benchmarking

Targeting improvements to what a business organisation does so that:

• The best in the field is identified• Their standards are copied and

applied• Attempts are made to exceed

these standards

Total Quality Management (TQM)

• Quality standards are set• The whole process of meeting

customers’ needs is analysed• Every activity carried out is

important• The entire organisation is

responsible for quality (departments, units, individuals)

Warranties

• To reassure customers, firms sometimes offer warranties, especially on products

• Warranties cover a fixed time period• During this period faulty goods will be

repaired or replaced• Warranties can offer free service

agreements

Production and Quality 3

BTEC Business

More on Quality

• The Production and Quality 2 Presentation looked at the work of Juran and Crosby, two of the main theorists behind TQM

• We need to note the contribution made by another key thinker:

W. Edwards Deming

Who was Deming?

• Much over-looked in his native USA

• Deming helped Japanese firms in the 1950s

• He inspired many other management thinkers

Deming’s 14 Points

We don’t need to know them all, but some are worth reading from a ‘quality’ perspective:

• Don’t rely on mass inspection to achieve quality. Cut inspection by building quality into the product in the first place. Point 3

• Get rid of work standards (quotas) on the factory floor; Encourage leadership rather

than management by numbers. Point 11

Deming’s 14 Points

And finally….

• Cut out slogans and targets asking for zero defects and higher productivity. These only cause bitterness, as most of the reasons

for low quality and low productivity are to do with the system, not the fault of the workforce. Point 10

National and International Standards

Bodies that exist to promote quality:

• International Standards Organisation (ISO) issues global standards, including ISO 9000

• British Standards Institution (BSI) sets quality standards for British industry

• British Toy and Hobby Association (for example, covering a trade or set of markets)

ISO 9000 Benefits

• Businesses, can base their activities (products and services offered) on requirements that are accepted widely across the globe

• As these standards have a worldwide acceptance, consumers are served with an increasingly wide choice of products and services

• Technology becomes compatible across most business organisations

ISO 9000 Benefits

• A wider choice of suppliers meeting ISO Standards means greater competition which benefits consumers

• Greater understanding of what’s required to compete globally gives developing countries the information they need to decide what to produce

• We all benefit from wider use of international standards as the transport systems, machines and tools we use (for example) become safer

Summary of ISO 9000 Benefits

• Controls quality • Saves money • Makes for satisfied customers • Is widely used globally • All types of organisation covered• All sectors and markets included

Production and Quality 4

BTEC Business

Training and Development

The session on Production and Quality 3 discussed the following:

• TQM is about setting quality standards• This means analysing the whole process

of meeting customers’ needs• The whole of an organisation is

responsible for quality• So every activity carried out is

important

Training and TQM

We looked at the 14 Points of Deming, the ‘godfather of quality’. The key messages for training and development are that:

• Transforming a business is everybody’s job

• There should be constant improvement• Leadership is important, not

management

Training and TQM

To achieve constant improvement business organisations need to set up:

• A vigorous programme of education and self-improvement

• Job-oriented training in the workplace• Teamworking across departments

Training and TQM

Given what you know about TQM, which of the following training events (next slide too) are most/least useful?

• Job rotation days when staff from different departments swap jobs.

• ‘Be a Better Manager’ day, when managers get intensive training on how to control their teams.

• Social events where people from different departments are encouraged to mix.

Training and TQM

• ‘Name and shame’ sessions to stop repeated errors by individuals and teams.

• Computer skills training in lunch breaks.• Business finance sessions where all staff get

some basic financial training, to understand how the business is performing.

• League tables of product defects and the teams or departments responsible.