Strategic Importance of Quality - Nestle - Case Study Example

Table of Contents 1.0. Introduction 02 2.0. Quality Imperatives 03 3.0. Strategic Importance of Quality 04 4.0. Quality Philosophies 05 5.0. Quality Tools towards Goal Achievement 07 6.0. Strategic Alliances and Methods of Managing Quality 08 7.0. Quality Problems and Recommendations 09 8.0. Conclusion 10 9.0. References 11 1.0. Introduction Nestle is the leading food company in the world associated with the production of high quality, customer and consumer focused products. The company was set up by Henri Nestle in 1867 when the first European condensed milk factory was started in Cham, Switzerland. The first development of the baby food was a combination of cow’s milk with wheat flour and sugar leading to a product that helped save a child’s life. The company has focussed towards becoming a nutrition, health and wellness company. It has established itself as a leader in research and development and the scientists of the company work in all areas for the creation of healthier and more nutritious foods. Maggi has become a world renowned product which is available to the catering trade and the development of Maggi ‘A Natural Choice’, in UK, which itself is very unique (Business Case Studies. 2015). Nestle has commissioned various market researches and customer interactions to get better and deeper insight into chef and consumer views. The strength of the company is to develop products which are available to fit market requirements. The quality improvement of the products at Nestle has been more towards creation of natural taste and also offering value for money. The products at Nestle have also focussed on better nutrition levels and improving the levels and more informative labelling. New product launching and development have been a strong backbone of the quality improvement process of the company. The company has transformed over the years with a diversity of products beginning from baby milk and food towards development of Maggi and instant coffee machines making them a leader world over. 2.0. Quality Imperatives The basic levels of manufacturing suggest that quality is conformance to specifications. With the rising expectations of customer demands the absolute requirement for manufacturing has come to the forefront and thus demanding some imperatives to be followed for the completion of the manufacturing process. The company has undergone a lot of tedious work in its research and development department to improve the quality and the standards of the products that they produce. The quality, at Nestle, goes far beyond its products. Nestle has deployed variety of quality imperatives in this direction which has assisted them to move to a situation at which they currently stand. Some of the quality imperatives implemented by the company are economic, social and environmental imperatives which are discussed hereafter. Economic Imperatives: The economic imperative element is to be correctly used by the companies for the betterment of their performing countries as this is something that is done because it is right. The entrepreneurial activities provide support the successful implementation and stabilization of strategies for the economy. In the pursuit of the same Nestle health science has launched a program called Enact which helps towards the quality improvement through nutrition. Nutrition has been derived as a positive contributor towards healthcare outcomes but there still exists an under-leveraged and under-valued element of patient care. Enact aims towards the reduction of this gap (Nestle Health Science. 2015). Social and environmental imperatives: Concern for the society and the environment is always on top of charts for the big MNC’s and Nestle also looks forward in the same way. The Company continuously looks towards the commitment and management of environmental and social sustainability as this assists in encouraging sustainable growth and development of the community and country in which they operate. They have been committed towards greater taste, healthier and trusted products and have simultaneously worked on nutrition, water and rural development. With the running of big product brands like Nescafe, they have promoted high quality coffee plantations and assisted the social aspect with also proper rendering of knowledge to the farmers has provided them support the environment (Nestle, 2015). 3.0. Strategic Importance of Quality The set strategic targets of an organisation help in attainment of final goals through proper operations, administration and effective and normative decision making. The mission of and objective of any company helps in devising of such strategies that backs them in carrying out the operations of the organisation and providing direction to all the activities of the organisation. The ultimate goal for any company is profit-earning and satisfying the needs of the customers. In order to achieve the same they require setting long and short term strategic goals which finally help in the achievement of the objectives. Such objectives should be specific, measureable, and achievable and be time lines associated. Nestle had set itself a goal of being recognised as world’s leading nutrition health and wellness company. The operations of the company are set on certain pillars which are strategic in long-term and competitive (Nestle, 2015). They are: Operational efficiency Whenever, wherever and however Innovation and renovation Nutrition, health and wellness Emerging markets and popularity positioned products Out-of-home consumption Being premium Unmatchable product and brand portfolio Unmatched R&D Unparallel geographical presence Consumer engagement and operational efficiency They aim towards meeting today’s need without compromising the ability future generations to attain their needs, thus, setting targets, achieving their goals and continuously improving their quality. 4.0. Quality Philosophies The trio of Deming, Juran and Crosby had each proposed an approach of Total Quality Management (TQM) that helped in serving the customers through involvement in the entire process and systems for the improvement of products and services as per the needs of the customers and also considering the needs of employees and relationship with the suppliers (Kat, 2003). Deming devised a cyclical process of plan, do, check and act process under this model for quality achievements. Juran approached the TQM process through quality planning, control and improvement and also stating that quality management begins at the top of the organisation and continues it work on the way down. Crosby laid conformity of quality standards based upon four absolutes of quality management stated as under: Quality being defined as conformance of standards. Prevention being the system for causing quality. The performance standard is not arbitrary and without defects. Measuring the quality is a price of non-conformance. The table below depicts the name of some quality gurus and their contribution towards quality improvement and management. Quality Guru Main Contribution Walter A. Shewhart Contributed towards the understanding of process variability and developed the concept of statistical concept charts. W. Edwards Deming Stressed o the responsibility of the management for quality and developed the ‘14 Points’ guide for quality improvement. Joseph M. Juran Quality as ‘fitness for use’ and concept of cost of quality was developed. Armand V. Feigenbaum Introduction of concept of total quality control. Philip B. Crosby Phrased ‘Quality is Free’ and introduced the concept of zero defects. Kaoru Ishikawa Made the cause-and-effect diagram and indentified concept as an ‘internal customer.’ Genichi Taguchi Focus was laid on product design quality and developed the Taguchi loss function. Nestle has applied the concept that was proposed by Deming, Crosby and other gurus very effectively which is directly highlighted in the fact that it is the leading producer in world nutrition and applied TQM very correctly. Quality and food safety has created value for the customers as well as the employees who have become more dedicated through the plan, do, check and act process thus always thriving for better quality in the continuous process. With the following of proper norms of quality and prevention has raised the benefits of the employees too thus helping to keep the staff satisfied and better communicated (Nestle, 2015). With the stress being laid upon the 14 points of quality development proposed by Deming and considering quality as free proposed by Crosby has made the company to develop in quality and have satisfied customers at the other end. 5.0. Quality Tools toward Goal Achievement Quality has been the main aspect of concern for maximum producing companied globally and the maximum expenditure is incurred on R&D for quality matters. Measurement and other quality tools have been used by different manufactures to meet their goals and they are in the form of statistical process control, benchmarking, house of quality, Pareto Charts, Baldrige awards, etc. The quality tools are used only one at a time or a combination of more than one. The statistical process control is a process of quality control using statistical methods and basically used in the manufacturing process. The control and specification limits are determined and the actual terms production are measured through plotting on graphs. Benchmarking, another tool, is a technique of comparing and measuring ones performance against that of the other best in class companies and then further improve. Control charts help in deciding whether the production is carried out within expectations relative to some measurements like weight, width or volume. The Pareto chart is a unique chart containing both line graph and bars depicting the more significant situations. Nestle too has looked forward towards such quality tools in making its products better and quality efficient. The adoption of benchmarking has been the prior utility process for the company to improve on quality it further also started use ASSET4 as for benchmarking its environmental, social and governance performance (Nestle Quality Policy, 2014). Further the use of other tools like the control and Pareto charts were also regularised by the company to stay ahead in the run of existing competitiveness of the market and itself. With the implementation of the process developed by the quality gurus the company has also made extensive use of cause-and-effect diagrams, histograms, etc. Use of such tools has been fruitful for the company in the past and that is the reason why the company looks forward for a better tomorrow. 6.0. Strategic Alliances and Methods of Managing Quality Strategic alliances refer to agreements among firms where each commits resources for the achievement of a common set of objectives. Such alliances are formed with a wide range of players like customers, suppliers, competitors, universities or divisions of government which help the company in improving their competitive positioning, gaining entry into new markets, supplementation of critical skills or any cost of major development projects. Such strategic alliances are also built upon the principles of quality management leading towards improvement of quality. Other methods of managing quality are ISO9000, TQM, quality assurance, supplier improvement, skill based quality management, etc. which are further discussed. ISO9000 standards have set some eight quality management principles that help the organisations towards improving their performances. Such eight principles constitute a systematic approach and continuous improvement of quality for the company. Total Quality Management (TQM) is based upon the philosophies and others set by the quality gurus tend towards improving both the manufacturing process and the quality of the goods. It pinpoints the internal and external requirements that assist in improvement of quality, cost delivery and morale. Quality control and quality assurance combined together constitute the key towards quality systems. Quality assurance focuses upon providing confidence that all the quality requirements are fulfilled. The skill based quality management process is based upon a specific model which is wider in concept and looks towards the improvement of quality as a result of highly interconnected sub-processes like career development, business performance appraisal, business planning, etc. as they directly or indirectly ad towards the improvement and development of quality (Manghani, 2011). Supplier improvement shall leads towards procurement of quality raw material and inputs which otherwise take a toll on the quality of the finished products. Nestle has adhered to the methods of managing quality from the beginning and quality has been the major player in the development of it as a brand image in the world. As a matter to maintain its quality and safety, Nestle has adhered to the principles stated by ISO9000, quality assurance, TQM and other such methods of managing quality. As per the Quality Assurance Coordinator at Nestle, quality is considered as the corner stone for the success and satisfaction and consistency in the products define the quality of it. The strategic alliance of Nestle with General Mills, through a firm called Cereal Partners Worldwide, is considered as one successful move due to the compatible styles of their managers. 7.0. Quality Problem and Recommendation Quality problems are something which has troubled all the companies some time or the other and Nestle is no exclusion. All big giants and MNC’s face the problems and the limitations and rules of quality are different in different countries and they are required to comply to all with the change in the place of production. Few years’ back Nestle had to recall 2 million litres of baby milk from four European countries as there was some problem in the packaging of the product. The issue was the danger of ingesting some printing chemical which was considered to be a part of the product. This created a panic among the parents and the fear that their children were in danger has brought the company under the hammer. The problem was mainly due to the tetra packs where the some problem with it made the milk contaminated in the two product brands namely Nidina and Latte Mio (ElAmin, 2005). In a recent case in India, Nestle India had to call back the entire stock of Maggi in the market and stop the production immediately in India as the product was found to be added with increased levels of MSG, a taste enhancer, in the product and also the noodles contained lead levels which were beyond permission from the Indian food safety laws (PTI, 2015). Nestle should take more intensive steps and invest more in teaching new skills and techniques to the farmers so that high quality raw materials can be availed and also the farms to get more organised and better quality milk for the milk products. Also to prevent the problems that it has faced over the years it should be more specific in choosing its suppliers starting from the raw materials to the packaging materials. The food and safety obligations of all countries should be looked into with more care and that the company should not be questioned for anything on quality as it directly hampers the image of the company and the customer confidence. 8.0. Conclusion Quality of a product is the biggest aspect that leads towards customer attraction and retention and Nestle has been wonderfully successful in this direction and built an image in the world food industry. The principles of TQM and the philosophies proposed by the quality gurus have been very well implemented in the quality management and operations of the company. The use of quality management tools and methods of quality management has made it reach a pivotal position. Following the ISO standards and the use of quality assurance and others have been a strong move in the development of the company. The emphasis on the strategic importance of quality by the company has made it stand-out in the tough and competitive market. Overcoming the crunch situations rose due to the quality issues and the ability of the company to fight and re-launch the products into market has made Nestle a quality expert. 9.0. References Business Case Studies. 2015. Nutrition, Health & Wellness - New Product Development at Nestlé: A Nestlé case study. Retrieved on 1/10/15 http://businesscasestudies.co.uk/nestle/nutrition-health-wellness-new-product-development-at-nestle/research-and-development.html#axzz3nZZ97pDJ ElAmin, A. 2005. Nestle baby milk recall begins due to concerns over packaging ink. Retrieved on 10/10/15 http://www.foodproductiondaily.com/Safety-Regulation/Nestle-baby-milk-recall-begins-due-to-concerns-over-packaging-ink K. Kat. 2003. Deming, Juran & Crosby: Contributors to TQM. Business Courses, Principles of management. Retrieved on 04/10/15 http://study.com/academy/lesson/deming-juran-crosby-contributors-to-tqm.html Manghani, K. 2011. Quality assurance: Importance of systems and standard operating procedures. Retrieved on 08/10/15 http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3088954/ Nestle Health Science. 2015. NESTLÉ HEALTH SCIENCE LAUNCHES “ENACTTM: QUALITY IMPROVEMENT THROUGH NUTRITION” PROGRAM FOR HEALTHCARE PROFESSIONALS. Retrieved on 02/10/15 https://www.nestlehealthscience.com/newsroom/press-releases/nestle-health-science-launches-enact-quality-improvement-through-nutrition-program-for-healthcare-professionals Nestle. 2015. Nestle: And So Much More. Retrieved on 02/10/15 http://www.nestle.com/brands/brandscsv Nestle, 2015. Nestle: Strategy. Retrieved on 03/10/15 http://www.nestle.com/aboutus/strategy Nestle, 2015. Nestle: Quality & Safety. Retrieved on 04/10/15 http://www.nestle.com/aboutus/quality-and-safety Nestle Quality Policy, 2014. Retrieved on 06/10/15 http://www.nestle.com/asset-library/documents/library/documents/suppliers/quality_policy_nestle.pdf PTI, 2015. Business News: Govt turns heat on Nestle, seeks FSSAI report on Maggi quality; Paswan warns of lawsuit. Retrieved on 11/10/15 http://www.firstpost.com/business/govt-turns-heat-on-nestle-seeks-fssai-report-on-maggi-quality-paswan-warns-of-lawsuit-2270116.html Read More