2JN is a large manufacturing organisation which is structured with a number of supervisors each responsible for their own work production unit. Supervisors report to a team of senior managers who in turn are accountable to a Managing Director (MD). Operations are supported by 2JN's own finance, sales, distribution and human resource units.
Within the past two years, 2JN has implemented a series of initiatives aimed at reducing product defects and customer complaints. The initiatives have included the appointment of a few quality control inspectors to support supervisors. Despite these efforts, 2JN has lost some of its major customers to its competitors and its profits are declining.
Discuss the claim that high quality 'will both put costs down and revenue up'.
At a recent senior management meeting the MD made clear that TQM is vital to 2JN and that high quality 'will put costs down and revenue up'.
High quality may bring costs down in a number of ways:
• Quality is orientated towards the elimination or errors and, if successful, reworking costs and scrapped items will be decreased. This will help drive down unit costs of products.
- Under TQM internal inspection costs will be decreased. With an improvement in quality inspection and testing, costs may be decreased or eliminated completely leading to decreased operating costs. Currently, 2JN operates a system of quality control including inspection of product quality. High quality through TQM will eliminate these costs as everyone becomes his own inspector and quality assurance replaces quality control.