All business concerns exist to provide goods and services to society. They can be profitable and successful only when the products and services are for use and meet the needs of consumers. Such ‘fitness for use‘ of product is known as quality. While deciding the quality of his products, a manufacturer has to reconcile two conflicting trends, viz., customer satisfaction and cost of production.
Higher is the quality greater is the satisfaction of customer. But every improvement in quality means additional costs. It is the responsibility management to build a quality level which provides reasonable customer satisfaction at economical cost. The level of quality ultimately depends upon the type of market (level of customer wants and the price he is willing to pay for). Within a certain range quality level is a management decision taken on the basis of costs and profits.
For example, it may be more profitable to supply a medium-quality item at a low price which people can buy rather than to supply a top quality at a price so high that very few people can afford. Thus, the level of quality has direct relation with customer’s purchasing power. This is the economics of quality.
Meaning of Quality: Quality may be defined as the sum-total of features of a product which influence its capacity to satisfy a given need. Quality of a product consists of the following attributes
(a) Appearance of the product
(b) Product design or planned quality
(c) Suitability from customer’s viewpoint
(f) Degree to which it conforms to the product specifications
(g) Its marketing and service, etc.
The quality of a product may be defined as the sum of number of related characteristics, such as shape, dissension composition, strength, workmanship, adjustment, finish and colour. —W. R. Spriegel
Quality characteristics may be directly measurable, e.g., diameter , volt-age, weight, etc. But some quality features are non-measurable, e.g. blow holes, cracks, dents, etc. Quality is of two types :
(a) Quality of design refers to the manufacturing specification of the product. It consists of appearance, life, safety, maintenance and other features of product design. For example, a Longines watch and a Citizen watch may serve the same basic need but they differ in design or specification.
(b) Quality of conformance implies the degree to which the product actually conforms to the design specification. For example, two Longines watches one of which is working and other is non-working differ in quality of conformance even though quality of design is the same for both. Quality of conformance is measured by the level of defects in the finished product.
Usually, higher quality of design means higher cost while higher quality of conformance means lower total cost. Perfection in any type of quality is rarely possible and it may mean infinite cost Moreover, exceptionally high quality product may not be accepted in the market unless sufficient number of customers can pay for it.
Factors Affecting Quality
Quality of a product or service depends upon the following factors
(i) Market. Customer demand, his needs and purchasing power are the main determinants of quality level.
(ii) Materials. The availability of right type of materials is essential for maintaining quality level of finished products. A wide variety of materials may be available but material with right specification has to be used.
(iii) Technology. Nature of technology and machinery used has a direct bearing on product quality. Modem technology, methods and equipment have led to improvements in product quality level.
(iv) Labour. The knowledge and experience of people who design and produce products exercise significant influence on quality level. Competent and trained people can design and manufacture better quality products.
(v) Cost. Cost of quality maintenance and improvement has increased significantly. Increasing competition, growing mechanization and decreasing profit margins may not permit greater expenditure on quality improvements. Scrap and rework losses have become serious.
(vi) Management. The attitude and policy of management towards product quality is important Some managers tend to be more quality conscious than others.