Agriculture Reference
In-Depth Information
“beauty,” everyone has his or her own idea of what “quality” is. It becomes the manager's
job to understand what type or level of quality their customers expect, want, and need.
Quality is a factor that must be present to market any product, but the issues include what
kind of quality and how much quality. From a planning perspective, managing that quality
is a critical element in any successful food and agribusiness operation.
These types of issues, including a new defi nition of convenience, the number of choices
available, and an overriding demand for value in purchases has placed unprecedented
demands on operations managers. The challenge for the operations manager is to ensure that
quality is effectively delivered consistently, at a price buyers are willing to pay.
The defi nition of quality may differ depending upon to whom one is talking. Consumers
typically defi ne quality as fi tness for use . Currently, many companies have come to interpret
fi tness for use as “meeting or exceeding customer expectations.” Consumers also tend to talk
about value , or how well the product or service meets its intended purpose at the price the
consumer is willing to pay. On the other hand, manufacturing managers offer a different
quality defi nition: conformance to specifi cations .
Fitness for use and conformance to specifi cations provides the fundamental basis for
managing operations to produce quality products. Marketing and design's role is to under-
stand customer needs and then to translate those needs into appropriate specifi cations for
goods and services. With these specifi cations, it is up to the manufacturing or service opera-
tion to ensure that the specifi cations are met or exceeded. Poor communication between
marketing, design, or operations can result in inferior quality.
What are the implications of good-quality products and services? From a marketing
standpoint, higher quality can increase profi ts and/or market share. One important aspect of
market share is attracting and retaining customers. A recent study revealed that of the cus-
tomers who make complaints, more than half will give the fi rm a second chance if the com-
plaint is resolved. The fi gure jumps to 95 percent if the complaint is resolved in a timely
manner. Higher profi ts are realized because high-quality products and services can typically
be priced higher than comparable, but lower-quality products.
From a cost standpoint, defective products or services can increase the costs of produc-
tion. Production costs related to quality include the following:
1.
Prevention costs
2.
Appraisal costs
3.
Internal failure costs
4.
External failure costs
Prevention costs are the costs associated with stopping defects before they happen.
Appraisal costs are incurred in monitoring the quality level of products and services during
the course of production. Internal failure costs are the costs that are generated during the
production and/or rework of defective parts and services. Finally, external failure costs are
incurred when the product or service fails once it is in the consumer hands.
Since the 1980s, food and agribusiness fi rms have made signifi cant improvements in their
product and service quality, which have enabled many to gain a signifi cant advantage over
competitors. Today's emphasis on Six Sigma programs to identify defects can be traced to
the total quality management movement of the 1980s.
In the food industry, hazard analysis critical control point (HACCP) has become an
important, recognized food safety program. It has gained rapid acceptance as the result of the
public and legislative demands for increased food safety protection. Also, the increased
 
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