A GUIDE FOR IMPLEMENTING QUALITY ASSURANCE SYSTEMS:
A LESSON FROM THE CLOTHING INDUSTRY
Background of the Firm
The firm is a major player in the clothing industry with strong market base n offering superior value for casual wear for both men and women. Although years of experience mark the firm as one of the leaders, competition is becoming more and more intensive with the entry of global manufacturers. As the firm is only operating primarily in a certain region, it must rely on the skills and expertise of its designers in the aspect of innovation and effective publicity to the public as well as its merchandising information system to sustain competitiveness. Further, corporate resources related in patter-making, launching studio, quality standards and outsourcing of raw materials must receive high priority. With the vertical integration the firm enjoys, the key area of cost-effective product development and quality assurance are almost settled.
However, its competitive shield is currently infiltrated by major customer (i.e. distributor) demanding stricter quality standards through provision and adherence to integrated quality assurance system. Although the firm adopts certain quality standards, it is isolated to a particular division and also fragmented in which other departments tend to lack quality checks (i.e. sales). The firm follows the principles of transnational strategy where regional efficiency and local responsiveness are critical to success. As a result, an integrated system is necessary not only to maintain the loyalty of the major customer but also to align every department towards a single and comprehensive quality path for stronger effort towards sustaining competitive edge.
A simple glimpse to the high-end Asian apparel industry is noteworthy caters its products/ services (see Figure 1). Scale advantages is low because there are several niche market to exploit while the need for differentiation is the driving force of intense competition. Capital requirement is high to remain competitive and be a leader because attracting the market requires advertising, R&D and customization costs. Switching costs are also high because expensive products tend to reflect the status and lifestyle of the customer. Access to distribution is very important as online shopping is not yet matured while government policy is low due to elimination of textile quotas within regional (i.e. ASEAN) and global (i.e. WTO) members where dumping is yet to be strictly policed.
Bargaining power of suppliers is low as Asia (i.e. China) is considered an efficient location for cheap materials and labor. Bargaining power of customers is high because there is only limited high-end market in Asia unlike Europe or America. Although imitated products are abundant, their impact to high-end customers is minimal. Due to the entry of Western manufacturers, the industry will also have heightened intensity of competition. This is aggravated by equally balanced competitors within the high-end sector, slow growth of high-end market, high fixed costs that players must recoup, high differentiation, high strategic stakes on Asian market and existence of high exit barriers from substantial investments to assure market loyalty, maintaining vertically-integrated operation and marketing costs. In this view, the industry is attractive to potential and current players but the importance of continuous quality assurance is highlighted by the importance of being competitive and limited market base.
Assurance System of the Clothing Firm
The methods of Deming are focused on minimizing variability from departing to quality standards. His plan-do-check-act (PDCA) cycle put emphasis to systematic adaptation/ improvement of quality processes. On the other hand, suggested the creation of annual quality programs as separate strategy with corporate objectives (i.e. cost leadership) as they may have conflicting outcomes. Coordination of aims is vital in yearly programs and he recommended a breakthrough key to solve bottleneck in quality improvements where corporate-wide effort is a crucial platform. Third, Crosby believed that the cost of poor quality will be undermined by the substantial cost in rework due to defects. To avoid this, top-down approach should be initiated to execute quality control policies. concretises this finding by stating that visionary leaders are required to sustain quality improvements. Finally, to complete quality integration model, Ishikawa posited quality circles that contain internal customers (i.e. manufacturing is a customer of raw material/ inspection section) to describe how quality satisfaction in the firm-level can be an effective guide in assuring that external customer’s perception of quality is addressed.
In obtaining an integrated assurance system, all productive processes must be considered and their functions well-defined. Marketing, sales and research are responsible for collecting valuable information from the customers. The engineering department must analyse the data gathered by the former and turn them to deliver product designs, details and any resource necessities. The role of engineers is vital to the whole system because after products are conceptualized they will undergo mass production and changes in specifications in the post-design will result to substantial cost of change and adjustments. Domino effect is the constraint attached to the product design. To follow, purchasing division is expected to acquire materials consistent to the needs of the engineers in both effectiveness and efficiency dimensions. After raw materials and production systems are in place, the human resources department will supply the production floor with skilled and motivated workers.
With these variables, top-level management is responsible to plan and execute policies to provide resources for the intended results. Of course, they are thinking about the intervention of the assurance system. Accountants and advisors can contribute in the realisation of this engagement, which is, aligning quality to overall corporate strategy (i.e. increase shareholder’s wealth). When production of the products is completed, it is the role of packing, storing and shipping departments to assure that quality emphasized in the design, procurement, resource allocation and conversion phase are kept until products reached its users. As ultimate safety net to the system, the firm must also provide after-sales support (i.e. warranties for quality) that can address the feedbacks, queries and problems of customers regarding the delivered product. With the vertical structure of the firm, functional areas must collaborate on quality while corporate must serve as monitoring and apprehending mechanism to ensure compliance.
It is also important to discuss inherent features that the assurance system of the firm should establish. Apparel quality is derived initially in the purchase of raw materials. Therefore, the firm must adopt single-sourcing to maximize bargaining power in the aspect of timeliness and quality of textiles. Partnering will be entered through long-run purchase contract. In the finished product area, customer survey will be conducted regarding the performance of the assurance system on their opinion. This will serve as an evaluation and which can also be applied to other stakeholders (e.g. employees, suppliers, government). Although e-marketing has big potential for the firm, this is less useful for the Asian market that prefers personal shopping and actual observance to the product. To provide customization, satisfaction and give impression that every customer is crucial to business success, other forms of media will be used to advertise the product. In this regard, the firm can pursue human contact. This is a strategic move as the firm has vertically-integrated structure that makes it relatively easy to affect specific processes according to customer needs. There is flexibility and customer-centered approach to manufacturing is possible.
Benefits of the Assurance System
Strategic quality development and maintenance are proved to be closely-inclined to above average profits. When there quality is guaranteed, risks of poor quality will reduce, productivity will rise, competency will be generated and market base will expand. In relation to indirect benefits, workplace will be more conducive to employees, production traffic will be prevented and monitoring will be applied at all levels. The assurance system can aid in protecting the narrow market through serving the sophisticated needs of customers and also minimize cost of design and innovation by imposing quality assurance in the design and final product. In addition, underdevelopment of internet capacities can be addressed by applying breakthrough solutions. All function areas will have awareness of quality that isolation to traditional manufacturing-based concept will be eliminated.
With the policy of prevention (i.e. of costs) is better than cure (i.e. using contingencies), economies of scale through standardized store lay-out can be achieved. The motif, ergonomics and position of model apparels in the store of high-end sellers are important to personal shopping experience of customers. Further, zero-defects can stimulate customer loyalty and opportunities to potential and capable franchises. When quality circles are existent, managers and employees can exchange views and deepen motivation of the workforce and building of possible creative/ innovative organization. As each employee respects the quality of their contribution for the finished products, the wide acceptance and loyalty of end-users will be highly appreciated and also connect to human resource self-esteem on their job. When there are several opinions about quality, the firm also encourages market duplication inside its functional areas. This duplicate market reflects the opinions of the real market to the employees within the quality circles.
With the vertically-integrated structure of the firm, departmental framework of quality will be consolidated to single schema. This would necessitate modification of job scope to insert the role of employees to product quality. As a result, they will become more sensitive on their responsibilities because quality audits and evaluation will be corporate-wide and not simply on manufacturing division. Work relations will also be loosened and each employee under different departments can relate more to one another. Relation constraints or gaps will be minimized as the quality assurance applied to other technical workers is also existent to other rank-and-file employees. Accountability and integrative approach in measuring performance (i.e. as it can affect the final products) will increase. For example, sales team will have more confidence in telling the features, design and other advantages of using the product because there is close-relationship with the technical/ manufacturing team. Irresponsible sales talk will also be prevented because sales team is more knowledgeable to the nature of the finished products as the fruit of close collaboration and related effort of the other units.
Supplier partnering is earlier considered as efficient way to acquire necessary raw materials. However, as quality is integral part of corporate growth, acquisition of major suppliers can be considered in the latter stages of implementation. When this happens, the need for flexible outsourcing partner will be reduced and the firm will have the control on purchasing policies. In effect, just-in-time (JIT) production can be installed towards creation of a more responsive, cost-efficient and profitable business organization. Further, although online distribution channel is less effective on the part of the market, database using the platform can expedite customer surveys useful for decision-making related to quality. It will not displace store selling rather it will keep the historical complaints and other issues raised (i.e. positive feedbacks) regarding the products of the company. As a result, the quality circle’s contribution to quality will be vividly guided and framed towards direct aspect of customer satisfaction.
Implementation of the System
Appendices
Figure 1: Rating Industry Forces in Clothing Sector
General Forces
Specific Forces
Rating
Threat of new entrants
Barriers to entry
· Economies of scale
Medium
· Product differentiation
High
· Capital requirements
Medium
· Switching costs
High
· Access to distribution channels
High
· Cost of disadvantages independent of scale
High
Governing policy
Low
Expected Retaliation
Medium
Bargaining power of suppliers
Low
Bargaining power of buyers
High
Threat of substitute products
Medium
Intensity of rivalry among competitors
· Numerous or equally balanced competitors
High
· Slow industry growth
High
· High fixed costs or high storage costs
High
· Level of differentiation or switching costs
High
· High strategic stakes
High
· High exit barriers
High
References
Books
Journals
Electronic Sources
Credit:ivythesis.typepad.com
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