‘Quality’, the Biggest Differentiator for Your Business: Why SMEs Should Take Note.
Manufacturing industry

‘Quality’, the Biggest Differentiator for Your Business: Why SMEs Should Take Note.

Why SMEs Should Take Note

Irrespective of the type of an enterprise, quality is an anchor that gives credibility to a business. As far as MSMEs are concerned, quality is a sina-quo-non for business success. It has to be looked as a strategy for scaling up for survival. What drives repeat purchase for MSMEs is the trust that develops due to superior product quality and flawless service. If this trust is broken, customers will not shy to move to other players. Unlike large corporates, MSMEs do not have deep pockets to spend on marketing and to attract the customer’s attention and influence purchase.

I am not trying to scare MSMEs, but the fact remains that quality is at the center-stage of their entrepreneurial effort. Creating a business known for quality is not easy and requires a whole lot of things that need to be done in tandem to get things right. To get this agenda going, I would recommend MSMEs to follow the LIMCA principles of quality. “LIMCA” is an acronym coined by me and refers to the five strategies that a business owner should adopt and relentlessly follow them. So here are the LIMCA principles:

L = Leadership is the prime driver of quality

Quality has to be the agenda of the business owner or the CEO driving the business. You ca not delegate this to someone junior and continue to have the aspiration to provide quality product or service to your customers. Quality has to be treated as a key strategy for business success.

As the father of modern quality management, Edward Deming, rightly said: “94% of quality improvements is the responsibility of management (business owners in case of MSMEs). Commitment to quality for a small business owner means being hands-on in his effort which is doing things such as regular performance reviews, keeping an eye on metrics, building a culture, getting deep into complaints and never comprising on quality to make sale.

It is leadership and only leadership that makes quality possible. MSMEs which I have mentored have been successful because they had a business-owner who was passionate about quality. The owner had an open mind and knew that getting the quality right was not a matter of choice but a must for business success.”

I = Improvement and not certification is the name of the game

I have come across business owners of MSMEs who have this notion that getting a quality certification such as ISO is the end goal of a quality implementation. A journey of quality improvement does not have an end. It only has many milestones. An ISO certification is one such milestone which indicates that the business has well-defined quality systems. However, what a business needs are to move beyond and embed an engine of continual improvement which ensures existing systems and processes are improved on an ongoing basis.

It is about following a structured approach to make an organization better, bridge its shortcomings and sustain leadership in marketplace. As a matter of fact, a business owner should get worried if things are status-quo. These improvements could be triggered by customer feedback, complaints, competition, future requirements and so on.

M = Mindsets are the silent force

As you create a quality organization, do not forget employees and their mindsets. If processes make products, it is the people behind them who make it happen. It is employee habits, beliefs and behavior towards quality that will drive enterprise culture. Among all the five LIMCA principles, this is the most difficult and takes time to accomplish. There are no short cuts here. To change mindsets, one has to use tools such as training, communication, performance review, rewards, recognition, quality circles, etc. As Das further adds, “One of the main reasons why MSMEs are not able to produce a high quality product at low cost is because they focus on the wrong or incomplete set of metrics. They do not realize that it is both efficiency and effectiveness measures that need to be kept on the radar.”

C = Costs get reduced as quality deployment matures

It is commonly believed that focusing on quality adds to cost. Well, this is not true. As a matter of fact it is just the opposite. A successful deployment of a quality improvement program leads to a reduction in costs over a period of time. How does this happen?

This is due to reduction in “cost of poor quality” (also called: COPQ) which refers to costs that get incurred due to defective products or sub-par service. It includes things such as rework, defects, scrap, spoilage, supplier quality issues, warranties, replacement etc. It has been found that COPQ can be as much as 15%-20% of sales revenue. So when defects reduce, complaints go down or there are lesser service breakdowns, the COPQ automatically reduces. And this has direct impact on product cost which makes it more competitive in the marketplace. This should be music to the ears of an entrepreneur.

A = Ascertain performance of quality effort

At the heart of a quality deployment are the organizational processes. The outcome of quality is measured on how these processes perform. Typically, when people think about quality, they just think it is ensuring that the product or service meets the customer’s requirement. Actually it is much more. ‘Effectiveness’ or meeting customer requirement should be the first milestone of a quality journey. However, a holistic quality deployment positively impacts two other metrics which are “Efficiency” and “Adaptability.”

”Efficiency” is about how effectively resources get used in a process and includes people, materials, other inputs etc. Remember, a good quality product should be both effective and efficient which means that the product not only meets the customer’s requirement, but also be produced in the most cost-effective manner. A business owner should keep a sharp focus on both these metrics. However, as his business matures, to remain competitive in the marketplace, he should also track “Adaptability,” which is the ability of a process to manage the changes in the requirement of customers and larger business context without impacting effectiveness and efficiency.

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