Quality policy

To initiate the process of quality management a quality policy should be set by top management. The quality policy, in turn, should be derived from a corporate strategy. As an aid to setting these policies and strategies, the Strategic Planning Institute has done a study called PIMS (Profit Impact of Market Strategy). The basic purpose of this study was to determine what factors affected return on investment and by how much. One of its findings was that high-quality products and services are the most profitable.

With respect to market position, the PIMS study demonstrated that quality and market share usually go together. Firms with high-quality products also have the largest share of the market and benefit most from market growth. From the standpoint of policy, companies in a weak market position should emphasize quality as a way to build market share. They should use quality in preference to price or high marketing expenditures, since improvement in quality provides the greatest potential forROI. The PIMS study illustrates the role of quality in strategy, which has sometimes been overlooked in the past.

Recently, the strategic importance of quality has been dramatically illustrated by global competition. High quality is a primary strategy of the Japanese and Germans in gaining a U.S. market share in industries such as autos, electronics, and machine tools, to name just a few. This is causing U.S. companies to become more aware of the strategic role that quality plays.

After considering the strategic factors, top management should set a quality policy. Garvin (1988) gives the following example of a quality policy at Corning Glass.

It is the policy of Corning Glass Works to achieve total quality performance in meeting the requirements of external and internal customers. Total quality performance means understanding who the customer is, what the requirements are, and meeting those requirements without error, on time, every time.

This policy indicates that Corning is committed to meeting customer needs.

At Corning market sensitivity to customer needs has been coupled with internal attention to process control and improvement. Employees identify their internal customers and the needs of those customers. Corning has used statistical process control for years and aggressively pursues education of its employees in quality principles. These efforts are aimed at carrying out the Corning quality policy.

Policy statements should be followed up with detailed quality objectives set on a periodic basis, usually annually. If the company has a management by objectives (MBO) system, the quality objectives should be incorporated into it.

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