- to eliminate waste. Waste comes in many forms: products which simply can't be used and have to be discarded; the cost and time spent correcting or repairing poor quality products; the customers which are lost because of poor quality levels. According to one estimate from the DTI, 25 per cent of an average company's turnover is wasted on poor quality.
- to offset waste. The traditional response was to check, but checking is also expensive. Companies employed supervisors and quality controllers simply to identify the waste generated in the first place through poor quality. By the time the checkers have got to the problem it is generally too late; the product is made.
Quality replaces the emphasis on waste and checking with systematic approaches to avoiding the problems in the first place. In the past a production line produced products which were inspected. Now attention is being paid to the people and the process at the very start. If they are better trained, have better equipment and are given more power they can save on waste and eliminate the need for checking.
Many small businesses are naturally quality conscious and have no need (or the money) for costly checking. They pride themselves on their personalized high quality product or service. The trouble now is that for many of their customers this is not enough. They want their suppliers to have proof that they are quality organizations. Small businesses are increasingly expected to have a quality accreditation such as BS 5750. If a small business wishes to expand into a new market it may well find that the only stumbling block is that it has to go through the rigmarole of achieving a quality label, even if it is already a high quality company.
There is a great deal of controversy surrounding the issue of standards for quality. BS 5750 is the most often cited business quality standard, but its deficiencies are often commented on. Currently this standard is not appropriate to the typical small business with its informal, hands-on approach to management and quality control. The Forum of Private Business estimates that an average small business owner spends about a third of his or her time working alongside employees, knows customers and they know the quality of the product. Such business people don't need the rigid and formal process of BS 5750 (which has now been renamed BS EN ISO 9000). However, obtaining a quality standard can be an important statement to your customers that you are committed to quality products or services. If you choose not to achieve such a standard you have to prove that you are quality conscious in other ways.
Watch the Competition
Too often businesses ignore the people who spend their lives trying to put them out of business - competitors. In practice you need to be comparing the way your competitors do business and how they perform financially against your own performance. If you don't learn from them, they might well be learning from you. Among the factors you should consider are:
- Market share. Is the market share of your competitors changing? How is it different from your own?
- Turnover. Are there means by which you can discover the turnover of your chief competitors?
- Profitability. Are there means by which you can discover the profitability of competitors? Look at annual reports, press cuttings, tell your sales people to keep their eyes and ears open.
- Key customers. Do you know the main customers of your competitors?
- Service. How does the service provided by your competitors differ from your own? Could you offer similar or better service?
- Products. Get hold of some of your competitors' products and examine them. How do they differ?
- Marketing approaches. How do your competitors market themselves?
