Question Two

Velinco is a company producing electrical items for hardware shops. A large hardware shop has requested a 10% price cut from Velinco to sell their items in the hardware shop. Yesterday Sirisumana, the Managing Director of Velinco met with Poornima, the Operations Manager of the company, to discuss the proposal from the hardware shop. Velinco had always operated with a traditional quality control system. The electrical items were checked once for quality at the end of the production line by a specialist team of quality control inspectors. The same inspectors were also responsible for trying to re-work any poor quality products they found.

Poornima began to think things through. Their current strategy of re-working defective products eventually produces a level of product quality that is acceptable to retailers. But surely their current way of working was wasteful. Secondly, the inspectors cannot examine every item produced because they do not have enough time. They only inspect small samples of finished products.

Sirisumana recently completed a Total Quality Management training program (TQM) conducted by Institute of Quality Development. He is wondering if the TQM approach can be used to reduce costs at Velinco. Sirisumana, on the other hand, is sceptical that higher quality will result in lower profits.

a. Explain 2 problems that can be created when using a traditional quality control system. (06 Marks)

b. Outline five main features of Total Quality Management. Elaborate your answer in the context of the given case. (10 Marks)

c. In order to be successfully implemented, TQM must be embedded in the organizational culture. Explain four changes that must be made in Velinco's organizational culture if Sirisumana is to see improvements in the organization. (08 Marks)

d. Identify and explain two obstacles Sirsumana and Poornima may face in implementing TQM in Velinco? What are the actions they can take to overcome these challenges? (04 Marks)

e. How do you explain to Sirisumana that the improvement of quality will eventually increase the profit of Velinco? (07 Marks)

(Total 35 Marks)