Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Quality Management

What it is:

Quality management is the act of ensuring that a company's goods and services are built and delivered to spec, on time and at the appropriate cost.

How it works (Example):

For example, let's assume that Company XYZ makes widgets. The widgets come in blue and pink. To ensure that all the widgets are the same color pink and that the dye department is making the color consistently, it might create a quality control team that takes random samples of widgets and compares them for color consistency. If the team finds any variance, it has the authority to stop the production line until the process is corrected. The company might also incorporate a just-in-time inventory method to ensure that it has only the newest, most up-to-date widget parts on hand when it fills customer orders. Quality control usually monitors the finished product; quality assurance monitors the integrity of the production process.

Why it Matters:

Quality management is a crucial part of running a successful company. If customers receive or perceive inconsistent products and services, they will stop coming or become less loyal. For this reason, a variety of management strategies, including just-in-time manufacturing, total quality management (TQM) and six sigma have been developed to help companies produce higher-quality products.

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