Competitive Quality Strategy E-Book

Pierre Maillard

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 260

Veröffentlichungsjahr: 2013

Beschreibung

This book succinctly presents new methodological principles that will help you raise the quality of your valuable production to enhance your competitiveness. The concepts and models of principles of actions presented result from over 20 years of the author observing the ways in which companies of all sizes and in all sectors use specific mechanisms of quality production to give rise to long-lasting competitive factors. You'll find practical guides that will help you better understand and strengthen your approaches to create new competitive edges, based on your employees' culture of quality.

Leseprobe

Contents

Preface

Introduction

1 General Principles of Competitive Quality

1.1. What meaning should we attach to the term “quality”?

1.2. The role of quality in a company’s competitiveness

1.3. Conclusion

1.4. Summary of the basic ideas and concepts developed in this chapter

2 The Definition of a Competitive Quality Tactic

2.1. Introduction

2.2. A company’s socio-economic exchange motor

2.3. The concept of a competitive quality tactic

2.4. The major stages when devising a competitive quality tactic

2.5. The major stages in the drawing up of a competitive quality tactic in a domain of strategic activities

2.6. An atypical example of a competitive quality tactic

2.7. Another example

2.8. Conclusion

2.9. Summary of the basic ideas and concepts developed in this chapter

3 Deployment of a Competitive Quality Tactic

3.1. Introduction

3.2. The technical functions of a competitive total quality process

3.3. The input data for deployment of a DSA’s CQT

3.4. The distribution of roles

3.5. The impact of a competitive quality tactic on quality marketing

3.6. The impact of a competitive quality tactic on the competitive quality carburant

3.7. The impact of a competitive quality tactic on the qualification of the system of production of quality carburant

3.8. The impact of a competitive quality tactic on the monitoring of perceived quality

3.9. The impact of a competitive quality tactic on the assurance of the company’s gains

3.10. The impact of a competitive quality tactic on improving the efficiency of a competitive total quality process

3.11. Conclusion

3.12. Summary of the basic ideas and concepts developed in this chapter

4 The Conditions for Success of a Competitive Quality Tactic

4.1. Introduction

4.2. Raising the level of the system of production of a competitive quality tactic

4.3. Enhancing the value of the project to bring the system for production of competitive quality tactic up to scratch

4.4. The main markers of a quality culture

4.5. The amplifier of a CQT’s profitability

4.6. Conclusion

4.7. Summary of the basic ideas and concepts developed in this chapter

5 Selling a Competitive Quality Tactic

5.1. Introduction

5.2. Input data for a CQCA

5.3. The major steps in the design of a competitive quality carburant amplifier

5.4. The major steps in regulating the production of a competitive quality carburant amplifier

5.5. Conclusion

5.6. Summary of the basic ideas and concepts developed in this chapter

6 Management of a Competitive Quality Tactic

6.1. Introduction

6.2. Elaborating a competitive quality tactic

6.3. Deployment of a competitive quality tactic

6.4. Running the process of design or transformations of the competitive quality carburant amplifiers

6.5. Application of a competitive quality tactic

6.6. Capitalization on feedback

6.7. Conclusion

6.8. Summary of the basic ideas and concepts developed in this chapter

General Conclusion

Bibliography

Index

First published 2013 in Great Britain and the United States by ISTE Ltd and John Wiley & Sons, Inc.

Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licenses issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned address:

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John Wiley & Sons, Inc.111 River StreetHoboken, NJ 07030USA

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©ISTE Ltd 2013The rights of Pierre Maillard to be identified as the author of this work have been asserted by him in accordance with the Copyright, Designs and Patents Act 1988.

Library of Congress Control Number: 2012952184

British Library Cataloguing-in-Publication Data

A CIP record for this book is available from the British Library

ISSN: 2051-2481 (Print)

ISSN: 2051-249X (Online)

ISBN: 978-1-84821-451-4

Preface

All the concepts and models of principles of actions presented herein, dealing with competitive quality, are the author’s own brainchild.

They result from over 20 years of observations of the way in which companies of all sizes and in all sectors attempt to use specific mechanisms of quality production in exchanges with their stakeholders, to give rise to long-lasting competitive factors.

As Director General of the Institut de Recherche et de Développement de la Qualité (French Institute for R&D into Quality), I have headed numerous “intra”- and “inter”-company projects, both in France and elsewhere, aimed at using the technical-economic assets of companies and their quality-management capacity to develop and grow in a competitive environment.

Using the original models set out in my previous book, entitled Les pratiques performantes du TQM – le T-scar management (Effective TQM Practices: T-scar Management), I have been able to draw up practical guides which are general enough for any company to be able to better understand and strengthen (often implicit) approaches to create new competitive edges, based on their employees’ culture of quality.

I have also given precise definitions for each of the concepts used, in order to free readers from the commonly-recurring inaccuracies relating to the meaning of the terms used in the domain of quality management.

Finally, so that this book is concise and functional, I have deemed it appropriate not to weigh it down with extensive descriptions and explanations of tools that are fairly commonly used in the field of quality management. I refer the reader to classic works which discuss these tools in precise and minute detail, and to the numerous computer-based supports which facilitate their use.

Pierre MAILLARDNovember 2012

Introduction

Quality is always a means of value-creation in any economic exchange.

Each party tries to obtain the best possible quality of that which they receive, whilst producing the perceived quality of that which they provide.

When competitive pressure in a given market increases, companies are obliged to strengthen their competitiveness, or to move into new markets where the competitive pressure is less intense. As quickly as possible, they will make a display of their future competitive factors to stave off the progressive assaults of their competitors. No matter what happens, they will begin to wonder about the use of quality as a competitive factor.

The principle of such use is, of course, widely accepted. However, the true question is:

“How are we to use quality in the most efficient way, when we have chosen a policy which entails dealing with current or future competitive pressure, to buoy up our competitiveness?”

Companies need to be able to transform, quickly and constantly. They are increasingly less certain of making a profit on their investments, because the capacity of a competitive factor to penetrate a given market is increasingly short-lived. The situation is more favorable when this factor, or asset, is supported by a reputation in that market which the company has been able to build up.

Sometimes, a company’s immediate socio-economic environment can hold resources that can be used to enhance competitiveness (a metaphorical goldmine of competitiveness). Such is the case, for instance, when the company is based in a country which has historical deposits of natural resource. In general, these sources of competitiveness are long-lasting, because they are based on very long-standing policies. The company can “mine” or “prospect” in that environment to acquire significant competitiveness in terms of export. “Low cost” countries are particular examples of such a situation. However, this is also the case in certain countries which, historically, have progressively built up an international reputation that is in step with certain fundamental market needs. Germany is often cited as an example. France also has this kind of competitive advantage in certain sectors of activity.

The company can also benefit from the competitive dynamic of a group of companies which, together, present a spread of offerings. This scenario is better than competition and competitiveness in terms of catering for overall needs, to which a great deal of value is attached in the markets. The Italian model of regional clusters of industries (industrial districts) is a good example of this situation.

However, contrary to what is often thought, a technological innovation which does not feed an existing reputation, or which does not represent a major breakthrough in terms of catering for a long-standing and as-yet-unsatisfied need in a particular market, has little chance of providing a competitive edge in today’s world.

The current crises are causing a drop in purchasing power, leading consumers in ever-wider sectors of the market to prioritize price over proper satisfaction of their needs, or over assurance that a product will perform as advertised, or indeed over an investment that is genuinely worthwhile in the medium-term.

In addition, in populations with strong purchasing power, these crises give rise to two attitudes which can be set apart:

– the quest for luxury products, to satisfy a need for social recognition;

– the search for products with a long lifespan, to limit the cadence of their renewal, for fear of a situation where the value of capital rapidly decreases, which would considerably reduce these people’s purchasing power (precautionary purchases).

The slump in purchasing power naturally leads many companies to focus on reinforcing their competitiveness by reducing their cost prices. The low cost of manpower in developing countries thus offers a significant competitive edge.

The use of “lean manufacturing” methods is also amongst the measures commonly taken.

These companies are reticent to invest in other forms of quality tactics, because they increase cost prices and therefore increase the risk of an insufficient return on the investment. The absence of these other types of competitive edges is then often hidden behind advertising discourse that the consumers hardly believe, but which they accept because the reduced quality of the product is compensated by sale prices that are more compatible with their purchasing power.

This situation often leads to a progressive degradation in the overall quality of goods and services. It does not have an immediately apparent negative impact on sales, so the companies are given the impression that they have found a way to stand up to the competition. This illusion is generally short-lived.

The other two trends in consumption, which relate to populations with higher buying power, lead some companies to play on the effects of fashion, or on the visible strengthening of the value of the products (e.g. by very visible technological innovation, reliability, additional functions, etc.).

Companies in developing countries are not blind to these changes. Currently, they seek – often successfully – to inject the markets in industrialized countries with very high-quality products, even if this means increasing their sale prices and buying up “brands” which, historically, have a strong reputation in terms of fashion, innovativeness or reliability. This tactic also enables them to prepare for the new demands of the middle classes in their domestic market.

In these countries, the emerging middle class will gradually becoming very demanding as regards the quality of products and services. Then, the price will no longer be the primary factor that leads them to buy, and competition will be intense because these new markets will be highly coveted.

Will the culture of quality and the reputation of our companies, which are playing the productivity card at present, not be too greatly damaged to enable them to penetrate these new, high added-value markets?

Reducing the cost prices of goods or services can offer a competitive edge if that reduction is reflected in the sale price of the goods, or in certain provisions that the company offers to other stakeholders in competitive situations (e.g. increasing dividends, guaranteeing work, etc.).

Beware, however: certain measures taken in search of productivity can cost the company other, more important, competitive factors such as: flexibility, individual and collective creativity, or the provision of certain services to clients which set the company apart from the competition and that play a crucial role in its competitiveness, etc.

Certain economists believe that the quest to improve productivity is a sign of the company’s losing viability, which demonstrates that its creativity and the reliable reputation of its products are no longer capable of keeping it afloat in markets with high added value.

Others, however, believe that offering very low sale prices on products which merely fulfill “utilitarian” functions is a way to make significant gains in the long run, eliminating the competition on markets where these products are commonplace.

These examples show that a policy of reinforcing a company’s competitive edge must necessarily be pursued in the long term, and must anticipate the major trends in the evolution of the markets. A competitive factor will take time to produce profitable effects on a given market, even if it is based on an innovation.

Paradoxically, companies are often led to believe that any investment to improve the quality of their products or services, irrespective of the nature of these improvements, will necessarily enhance their competitiveness. This is incorrect. In the recent past, we have seen companies go under because they have attempted to invest in quality, but without any strategic or tactical reflections, contenting themselves with following a trend in managerial or organizational principles.

Faced with all these situations, we attempt to show in this book that while quality is among the most crucial of the possible competitive edges, a company cannot strengthen its competitiveness by investing blindly in fashionable forms of organization or management methods intended to improve quality. Companies must adopt tailored tactics that take account of the specific judgments their stakeholders are likely to make about the quality of their offerings. They must also have energy reserves to be able to react quickly: to opportunities to create new competitive edges, and to pressure exerted by their competitors.

Hence, we attach a new, more economic meaning to quality. We specify the mechanisms which can be used to exploit quality in order to make a lasting incursion into a market, by creating or reinforcing competitive edges. We also set out the managerial principles which must be implemented in order to overcome these challenges.

These mechanisms are already in use in many companies on an international level. They are replacing quality as the driving factor behind the economy, and lending flexibility to quality approaches which have often become rigid due to the improper use of normative models.

1

General Principles of Competitive Quality

The terms connected to the concept of quality often have different meanings according to the context in which they are used. It therefore seems necessary, in order to be sufficiently precise in the description of the main characteristics of “competitive quality”, to give a few definitions. These conform to the continuity of those definitions that are commonly used in Total Quality Management (TQM).

1.1. What meaning should we attach to the term “quality”?

We propose a characterization of the concept of “quality” that differs from those hitherto put forward. It is normal that the definitions of certain socio-economic concepts should evolve as Society evolves. These definitions serve as bases upon which to construct markers to guide continuous progress in response to the needs and expectations of humanity. Academics are well aware of the fact that a definition is destined to be debunked and replaced by another after having guided the evolution of knowledge for a certain amount of time. The same is true of the definition of the concept of quality.

Today, there are a wide variety of meanings given to the term “quality”. For instance, in the ISO 9000 standards, quality is defined as: “an aptitude of a set of intrinsic characteristics to [fulfill] requirements”, whereas a well-known accredited certification body defines quality as: “the result of a trade-off between consensual sacrifice and perceived satisfaction”. However, this organization is supposed to certify the conformity of companies’ management systems to these ISO standards. Today, the confusion seems to be even more widespread. In our book on effective TQM practices [MAI 11] we have shown that people tended to: “adapt quality to all purposes”. This tendency strips the concept of “quality” of all value.

A sociological study carried out in 20 companies of varying sizes by Professor Pierre Tripier [TRI 91], a major specialist in workplace sociology, shows that in a company, within the same production unit, there are extremely varied “indigenous views” on what quality is. In such conditions, how are we to make the players in these units work together as a team on projects aimed at improving quality?

Although the economist Garvin [GAR 92] said that “quality is an extremely nebulous concept, because it is easy to visualize and exasperating to try to define”, we shall take the risk of coming back to its definition.

One generally distinguishes the notion of perceived quality from that of quality of conformance.

Table 1.1.The concept of perceived quality

The perceived quality of a product is:

the way in which one perceives the fulfillment of one’s expectations

The main classes of expectations can be expressed in the form:

– having confidence in the ability of the product to conform to the advertised performances;

– being able to understand, procure, appropriate and use the product;

– satisfying needs by using the product;

– turning a profit on the efforts needed to understand, procure, appropriate and use the product.

Consequently, it is possible to divide this global perception of the fulfillment of expectations into categories of perceptions, each one relating to one of these types of expectations. These categories are called “quality perceptions”.

Table 1.2.The classes of quality perceptions

The main classes of quality perceptions are:

– perceptions of expectations relating to:

- access to use of the product,

- satisfaction of expectations by possession and use of the product,

- the “rentability” (profitablity) of the efforts needed to understand, procure, appropriate and use the product,

– perceptions of confidence in the product’s capability to conform to the advertised performances.

Conventionally, this concept goes hand-in-hand with that of quality of conformance, which is defined as follows:

Table 1.3.The notion of quality of conformance

A product’s quality of conformance is the way in which one perceives its performances and techniques specifications, compared to the performances and specifications fixed as a goal.

The performances or technical specifications fixed as a goal are set either by the company or by the stakeholders who wish to procure the product. They are defined in such a way that an objective measure of conformity can be taken by both parties (metrology).

Quality of conformance requires that a “contract” be agreed upon beforehand between the manufacturers of the product and the beneficiaries. Sometimes this contract is implicit or forms part of typical conventions between the two parties. In a hair salon, for instance, a not-very-explicit contract is agreed upon between the customer and the hairdresser. When the customer is used to a particular stylist, the contract may be limited to: “the usual”, with all the risks that this entails in terms of the results.

When a product is considered a “work of art”, the contract is between the artist and him/herself. This self-definition of a quality contract sometimes occurs in companies with people who consider themselves to be experts.

Quality of conformance is present in all activities of serial production. The quality contracts are often between the client who lodges an order and the supplier.

Any service has three levels of products: a standard product, an “if… then…”-type product (source variety), and an improvised, personal product which is essentially based on the skill of the producer (residual variety).

The quality of conformance of a service usually relates to:

– the performances and technical specifications of the “standard” component;

– the performances and technical specifications of the source varieties;

– the performances and technical specifications of the skills of the service provider.

We introduce the notion of a stakeholder to show that a company must not limit the scope of its investigations into the topic of quality to trading relations with its clients.

Table 1.4.The stakeholders of a company

The stakeholders of a company are:

– investors,

– clients,

– suppliers,

– employees.

Historically speaking, companies’ approaches to quality have been focused on clients. Today, the best-performing companies use the culture of quality that they have built up within their social context to extend these approaches to all their stakeholders. These approaches are collectively known as “Total Quality Management” (TQM – see [MAI 11]).

Table 1.5.The effects of a client’s judgment of quality

For instance, if the stakeholder is a client, the perceived quality of a product provokes a judgment of quality which triggers his act of buying, thereby securing his loyalty as long as he has the capacity to make the purchase, and which makes him a long-term carrier of the company’s reputation.

Each client may make a different judgment of quality. Thus, the quality of a product is specific to each client or group of clients when they share a common vision of certain characteristics of the product.

The quality perceived by an investor of a likely return on an investment provokes a judgment of quality that triggers the injection of the funds asked for by the company, so long as he has the means to make this investment, and enables the company to find other investors (word of mouth).

Table 1.6.A company’s judgment of the quality of a product

Judgments of quality made by the directors of companies about one of their products express whether that product is able to attract recompenses from a certain category of stakeholders that fulfill the directors’ expectations.

NOTE.– It is this type of judgment of quality that will always be at the heart of our methodological developments.

Table 1.7.T-scar management

The conduct of actions in a company that ensure the directors make judgments of quality about the company’s products and services offered to its stakeholders is called “T-scar management”. The term “scar” is a contraction of the terms: satisfaction, confidence, accessibility and rentability (profitability).

If a client has to make what he perceives as too great an effort to gain access to a product or service, he will not buy it. He will look to a competitor for a similar offering which requires less effort of himself. If a client perceives that he cannot satisfy a significant expectation by using the product offered to him, he will not buy it. If a client has the impression that all the efforts he has made to understand how to use a product, procure it, learn to use it and then use it are too great in relation to the significance of the uses he intends to make of the product, he will not buy it, or he will not buy it again. Finally, if the client does not have confidence in the truth of the advertisements presented to him regarding the performances of a product, he will not buy it, or not buy it again.

In any case, he considers it not to be a quality product.

The same reasoning can be applied with the other types of stakeholders.

Thus, if a stakeholder does not make a positive judgment of the quality of a product or service, he will not trade with the company on the conditions that the company requires, or he will not repeat a prior exchange. If that stakeholder comes into contact with a competitor, and deems that the quality of their offerings is better, he will prefer to procure those offerings, or will ask the first company to lower its demands for recompense (sale prices if the stakeholder is a client).

Any judgment of quality is therefore at the root of the inception or renewal of a trade relationship with a stakeholder. This judgment becomes a competitive edge when the company is in competition with another. Therefore, we introduce the notion of judgment of competitive quality.

Table 1.8.The concept of a judgment of competitive quality of a product

The judgment of competitive quality made by a stakeholder about a product is an appreciation of its perceived quality which produces a long-lasting relationship with the company based on the exchange of the product for the recompense sought by the company in spite of pressure from the competition.

Thus, it is a judgment of relative quality. When this judgment is less attractive than that of the competitor, the company must look for other ways to reverse this trend. In such cases, companies tend to reduce the demands for recompense for the products and services they offer (e.g. by lowering sale prices). Later on, we shall see that care must be taken when employing this type of behavior, because it weakens the company if it cannot be compensated by an increase in the revenue from exchanges with other stakeholders. In certain situations, it is unavoidable.

For instance, an investor who considers that a company is unable to quickly provide him with the desired return on an investment will prefer to invest more profitably in another company. An employee who believes he is not being paid enough for his skills will leave the company to join another that makes him a better offer.

This presentation of the concept of quality shows that quality results from a complex alchemy between certain intrinsic characteristics of a product or service, and certain characteristics of the potential for consumption of that product or service by a stakeholder in the company.

Based on the concept of a judgment of competitive quality, it is possible to define the notion of “competitive quality” as follows:

Table 1.9.The notion of competitive quality

The competitive quality of a product is the quality perceived by its potential beneficiaries, which gives rise to judgments of competitive quality.

The competitive quality is perceived before the relation is (or is not) formally contracted with the company. This is why we call the stakeholder the “potential beneficiary”. If a client is not satisfied with a product, he will not buy it again. In this case, the quality perceived when using the product becomes a negative competitive quality when the time comes to buy it again.

In order to produce services in the company which gives rise to positive judgments of competitive quality, we introduce a particular approach which fits in with the company’s other value-production activities, called a “competitive quality production”.

Table 1.10.The aim of a competitive total quality process

The aim of a competitive total quality process is:

– to identify the company’s working mechanisms upon which it can act in order to take better advantage of its stakeholders’ judgments of competitive quality so they will inject the resources the company needs to pursue its policy;

– to design or transform these mechanisms in order to optimize their contributions to the stakeholders’ judgments of competitive quality in the long term;

– to qualify the aptitude of the new configuration of these mechanisms to serve the objectives needing to be attained;

– to ensure the performances of these mechanisms are maintained over time;

– to fuel improvements to the performances of these mechanisms by way of feedback.

Later on, we shall explain these mechanisms, and that alchemy which must be found between a competitive total quality process and the company’s other activities, and formulate the main principles of its actions. First, though, in the wake of the definitions and characterizations given above, we prefer to attempt to give a more accurate assessment of the role that quality can play in a company’s competitiveness.

1.2. The role of quality in a company’s competitiveness

Once again, we are dealing with a concept which is not clearly defined: competitiveness. Note that everyone uses this term, but with very varied meanings attached to it. Furthermore, in order to be able to precisely link the concept of quality with that of competitiveness we feel it is crucial to give it the meaning described in the following table. This definition may seem vague to a specialist’s eyes, but nowhere in the body of literature on the subject have we found a more relevant description.

Again, we take the risk of proposing the following definition.

Table 1.11.A company’s competitiveness

A company’s competitiveness is its capacity to bring its stakeholders to procure the products/services it wishes to provide them with, rather than those of its competitors, in spite of the efforts the company requires of the stakeholders in order to procure, appropriate and use these products/services.

In order to act on a company’s competitiveness, one must identify and act on its competitive factors.

For instance, obtaining greater profit margins than those of competitors is a competitive edge in the eyes of the investors, the employees and even the suppliers, because these profit margins mean the company has a greater capacity for investment on equity, which enables it to adapt to changes in its environment. The competitive factor attracts the investors, employees and suppliers because it increases their confidence in the company’s capacity to fulfill their need. It enables the company to be more demanding in terms of the resources that it asks of them in return.

The more intense the competition, the more the company must capitalize on its competitive edges.

Competitiveness is born out of competition. It enables the company to continue to sustain itself by drawing resources from its environment in spite of the attraction exerted by other companies on the entities which supply these resources.

In certain luxury sectors, for instance, the competition is extremely fierce in terms of relations with suppliers who possess highly-specialized technical skills, which are increasingly rare. In other domains, competitiveness is important for relations with potential future employees who are in high demand from one’s competitors. We note that the stakeholders’ perception of a company’s competitive factors does not change at the same rate in the different types of trade relations that a company maintains with its various stakeholders.

For example, investors in companies that are not listed on the stock market have only periodical summaries – often distributed annually – about the company’s activities and performance at their disposal to make a judgment of quality about the gains they are likely to receive from their investments. However, the investors in companies that are floated on the stock market have daily indicators that help them to make a judgment about the value of the company’s shares and thus about the quality of their investments. Employees are surrounded by a constant stream of indicators about the “health” of the company, which can help them to make a judgment of quality regarding their working conditions, their means of remuneration or foreseeable changes in their contractual relations with the company, etc.

Similarly, there are different forms of inertia that change competitive factors. For instance, it is quicker for the company to react to a loss of competitiveness as regards potential employees by acting directly on the jobs market, rather than entering into negotiations with its trade-union partners.

The company can play on these different rhythms to define priorities in terms of creating or heightening its competitive edges. When a company’s competitors are more attractive to certain stakeholders, it must seek – by any means necessary – to establish new competitive edges, thereby enabling it to maintain or even further develop its relations with at least one particular faction of this group of stakeholders. Otherwise, it risks going under, because of the lack of resources that only this type of stakeholder is able to provide.

The central question is:

How can quality be a competitive factor, or how can it contribute to the emergence of other competitive edges?

When a stakeholder makes a judgment of competitive quality about some of the products or services that the company provides him with, this means that the company is more competitive