Although, price is important in the purchasing decision making process it is only one factor. Another very important and often neglected element is the product quality. In today’s competitive export market a producer has to meet the requirements of its customers consistently as well as to anticipate future needs. Dr. Ashraf Ali Mahate, Head of Export Market Intelligence, Dubai Export Development Corporation, explains.
The export market is a very competitive arena with foreign firms from various countries along with domestic ones all seeking to attract the attention of the same pool of customers. But by consistently providing customers with the products they want which are right first time, without faults or errors, companies can hit the ground running.
The recent product recalls by major international companies such as Toyota highlight the fact that product errors are not only costly in terms of correcting the faults but have long term implications as far as customer perception and future buying is concerned.
For SMEs product errors can actually make the difference between survival and doom. The reason for this is consumers tend to form their opinion on a particular product or service based on their last experience. This means that every consumer experience has to be as good as the last if not better. Consumers naturally shy away from purchasing products or services where the experience or usage is not consistent.
At the practical level, product inconsistencies are the result of machine problems, human error or inappropriate inputs i.e. raw materials. To deal with such product inconsistencies firms need to develop a quality management that focuses on the following areas:
- The production process is capable of performing the required tasks.
- Constant improvements are made to the production process.
- Processes are in place to limit human error through better training or job rotation.
- Inputs are checked prior to use so that they meet the exporter’s specifications.
If the above are successfully implemented the move towards quality management will give the exporter a competitive advantage over his competitors. Moreover, quality management will also lead to cost savings in production by removing the need for reworking and scraping unusable products etc. and of course an improved market image.
A firm can set any quality level for its products on the basis of its marketing considerations and customer requirements. The former is based on how a company wishes to portray itself in the market that is as a high, middle or low end producer. This of course also depends on the market segment that a firm is seeking to attract. More often than not the development of a product quality system requires the implementation of a quality system such as ISO 9000 which assists firms to understand customer requirements as well as the changes that need to be made to its own processes.
The ISO 9000 family of international quality management standards and guidelines has earned a global reputation as the basis for establishing quality management systems. The familiar three standards ISO 9001, ISO 9002 and ISO 9003 have been integrated into the new ISO 9001:2000 system. The ISO 9001:2000 specifies requirements for a quality management system whereby a firm needs to demonstrate its ability to consistently provide a product or service that meets customer and applicable regulatory requirements and aims to enhance customer satisfaction.
The greatest value is obtained when an exporter uses the entire family of standards in an integrated manner. It is suggested that, beginning with ISO 9000:2000, an organisation adopt ISO 9001:2000 to achieve a first level of performance. The practices described in ISO 9004:2000 may then be implemented to make the quality management system increasingly effective in achieving organisational business goals. ISO 9001:2000 and ISO 9004:2000 have been formatted as a consistent pair of standards to facilitate their use. Using the standards in this way will also enable you to relate them to other management systems (environmental) and many sector specific requirements and will assist in gaining recognition through national award programmes.
One important aspect of the ISO 9000 quality management system (QMS) is that the company needs to have sufficient resources as well as processes and systems in place for the following:
- Management responsibility.
- Product realisation.
- Measurement, analysis and improvement.
The ISO 9000 standard obliges management to ensure that the required resources are determined and made available, and that these should be adequate for the continual improvement of the effectiveness of the QMS as well as for enhancing customer satisfaction. Among the resources essential for a QMS are the following:
- Human resources – competent staff to perform their work. This refers to the employee’s level of education, training, skills and experience, in order to conduct a particular set of duties.
- Infrastructure – whether the workspace, handling equipment, storage facilities, machine tools, hand tools, computer hardware, measuring devices, are adequate to ensure product conformity. This also includes whether support services (uninterrupted supply of water, electricity, steam, compressed air, effluent treatment, among others) available and facilities for the periodic maintenance of equipment exist.
- Work environment – which examines whether there are appropriate control of heat, humidity, light, air flow, noise, and vibration, at the work location. Also whether there are appropriate customer waiting areas and facilities (applicable to services) including proper sanitation and hygiene.
- Information sources and technology – which examines the access to information sources, such as reference books, other publications and information databases on export, import and regulatory requirements. This also includes whether the required technology (software) is available for converting data and information into knowledge for use by the company.
The amount of resources required will depend on the nature of the product provided and the scope of the company’s business operations. It is important to note that implementing the ISO 9000 QMS does not necessarily always involve investing in additional infrastructure.
More often it requires simple changes within the firm such as more clearly defined roles and responsibilities, better analysis of measurement results, and appropriate actions to prevent the recurrence of similar quality-related problems. The standard also allows the outsourcing of any process that may affect product conformity, provided the company takes responsibility for ensuring control of that process.
Once an exporter has implemented a quality management system he needs to ensure that the buyers are made aware of this achievement. Possible ways of making customers aware of an exporter’s achievements in the area of quality management include the following:
Maintaining effective communication with the customer. The most effective method of conveying your achievements in quality management to your customers is by:
- Consistently supplying products conforming to their requirements.
- Providing the agreed pre- and post-delivery services without any delays.
- Responding quickly and effectively to their queries or complaints.
It is also important to obtain regular formal or informal feedback from customers about their sense of satisfaction, as well as to take action on any such feedback. It may not be correct to assume that customers are satisfied simply because they do not complain.
Organised publicity. This would include publicising your achievements through:
- Periodic flyers or mailers to customers or prospective customers.
- -Highlighting achievements in publicity brochures and product literature.
- Advertising in newspapers, industrial journals, magazines, periodicals of industry and trade associations, in websites and electronic yellow pages, and in other print and electronic media.
Some industry or trade associations publish case studies of companies whose success can be attributed to implementing quality management systems or other quality improvement tools. This can be used as another source of publicity. Similarly, various organisations and industry associations organise seminars which give companies opportunities for presenting their own QMS case studies.
At the international level, the International Organisation for Standardisation publishes ISO Management Systems: The International Review of ISO 9000 and ISO 14000 every two months. It carries articles on, and case studies of, companies the world over, including SMEs. All these opportunities for publicising your success stories should be explored.
Acquire third-party certification of quality management system (QMS) by accredited certification/ registration bodies. This generates confidence among customers and other interested parties that the company/organisation is capable of supplying conforming products in a consistent way. Similarly, if your company receives a national quality award, you should inform your current and potential customers directly of the award and publicise it to a wider audience through print and electronic media.
Each accreditation body keeps an updated list of certified companies/organisations, and provides this list upon request to potential buyers or other interested parties. In some countries a national register of ISO 9000 certified companies/organisations is maintained by a government or, sometimes, a non-governmental organisation. These registers provide an authentic source of information to customers about the ability of a company to satisfy customers, and at the same time generates more business inquiries.
Although implementation of an ISO 9000 QMS gives an assurance that companies/ organisations can time and again deliver a product that comes up to customer requirements, the logo of the third party certifier cannot normally be used as a mark on the product or its packages. However, along with the logo of the accreditation body, it can be used by the certified companies on their letterheads and publicity materials to publicise their achievement of certification to ISO 9000. For this purpose, guidelines sent by certification bodies along with their certificates should be followed.
For SMEs quality management systems are an essential part of their road to expansion especially into foreign markets. The development of such a system will incur not only financial but also managerial resources but it also opens the doors to potential rewards. SMEs that have implemented a quality management system have found that not only have they acquired new customers but held onto their existing customers.
Dr. Ashraf Mahate is the Head of Export Market Intelligence at the Dubai Export Development Corporation (EDC), which is an agency of the Dubai Economic Department. Dr. Mahate is also the Vice Chair of the Economic Policy Committee with the Dubai Economic Department. He has written a number of journal articles, chapters in books and edited books in the areas of economics, finance and banking. He has also presented papers at major international conferences. Dr. Mahate has provided extensive consultancy services to various organisations in the areas of banking, economics and finance. He has been a director of a number of companies including a venture capital company and a private equity fund.
Dr. Mahate received his doctorate from Cass City University Business School in London (UK) which was ranked by the Financial Times newspaper as the 12th best university in the world for finance. He read Economics at University College London, followed by a Masters in International Economics and Banking at the University of Wales in Cardiff. Dr. Mahate is a professional educator and received his training at the Institute of Education (University of London). He is a member of the Chartered Institute of Managers (UK) and a Member of the Institute of Commercial Management (UK). He is also a member of the Association of Certified Anti-Money Laundering Specialists (ACAMS).