Reference no: EM133415853

Case Study: THE EVOLUTION OF QUALITY: HIGHER QUALITY OUTPUT, LOWER COST OF QUALITY
Disaster has a way of concentrating the mind. Massive recalls and lawsuits-over beverages, dairy products, detergents, beauty products, and others-become almost totemic reminders of what a lapse in quality can mean. And for companies everywhere, simultaneous increases in supply-chain complexity and media reach mean that the aftershock of a quality lapse is likely to be much larger than in the past. But despite their impact, these events are only part of the story. Indeed, as important as it is to keep rare disasters from happening, focusing too closely on them can distort an organization's understanding of what quality really means. Fundamentally, quality is about meeting or exceeding customer expectations:
every day, every shipment, in each product and project, year after year. That's where the true value is, measured not only
in higher revenues from greater customer satisfaction but also in higher operational efficiency and effectiveness due to increases in productivity and innovation-and even employee engagement.
Yet organizations face constraints. Rising margin pressures, particularly in consumer-oriented industries such as fastmoving consumer goods, limit how much companies can spend on quality practices. Organizations therefore cannot just be good at quality-they need to be smart about it as well. To achieve the right balance, organizations must learn to think about quality systematically. At the very earliest stage of quality awareness, organizations start to hear the voice of the customer and project stakeholders more clearly while stabilizing their operating systems and promoting greater transparency about quality problems. As these practices take hold, the next stage of maturity centres on strengthening cross-functional accountability and collaboration for quality-such as with new performance standards so that quality standards inform the design of products and the management of supply contracts.
At the third stage, quality informs much of the organization's decision making, embedding itself so deeply that it becomes a part of the culture and essential to the company's value proposition. Finally, among a small group of the very highest performers, quality becomes the basis for their reputation. These exceptional organizations expand their perspective on quality to address customer problems in ways that push their businesses into new areas, building on behavioural research and process analytics to develop deeper solutions and customer relationships. Achieving these outcomes requires investment. But the good news is that the organizations whose quality practices are the most sophisticated are not necessarily the ones that spend the most on quality. Instead, these leaders prioritize so that what they spend on
quality is highly effective. At each stage of maturity, the advantages build: from essentially non-existent to basic, from
basic to average, from average to advanced, and from advanced to industry leading.
For example, a major dairy manufacturer at a basic stage reduced its "cost of poor quality"-such as for warranty claims, yield losses, and rework-by about 35 percent. A mid-level food producer's facility reduced process deviations by more than 30 percent, while at the same time reducing the time to market by 30 percent. On average, the top personal-care and food plants produce dramatically better-quality results on factors such as yield and consumer complaints, both of which have significant cost implications (Exhibit 1). At every stage, therefore, companies across industries are achieving higher quality at competitive cost, building capabilities that prepare them for further stages of quality evolution.

Question
"Quality informs much of the organization's decision making, embedding itself so deeply that it becomes a part of the culture and essential to the company's value proposition". In light of statement provided advise project managers on the values that they need to adopt in order to ensure that quality is part of the organisation's culture and central to its value proposition.

Question
As highlighted in the case study, achieving exceptional quality requires investment. Why is this the case? Make sure that to provide relevant evidence in substantiating your response.