Business at work

Quality control

Quality control involves an organisation using some kin of inspection system for identifying materials, parts, components and finished products which do not meet the company’s specifications. Inspection or testing may be carried out at various stages of production to ensure that faulty items do not remain in the production chain.

The operative or inspection department may check every item or just a sample of production. Processing industries, such as the brewing and chemical industries, also test regular samples of their products. Quality inspection is supported by highly sophisticated monitoring, measuring and testing equipment. This allows organisations to make adjustments to machine settings and control devices to improve quality.

There are some drawbacks to a quality inspection system. Using an inspection system to control quality encourages employees to take it for granted that some output is bound to be defective. Less attention is paid to preventing errors and defects in the first place as they will be picked up later by the inspection system.

A quality control system must ensure that there is regular contact between those departments that have a particular interest in quality matters. The marketing department, for example, may identify issues raised by customers, while the design research and development departments should work with production on developing the product so that current defects are eliminated when work is being processed.

Quality assurance schemes

A quality assurance scheme is the means by which an organisation implements its commitment to quality. It helps firms to do the job properly the first time, because the scheme is designed to prevent failures rather than detecting errors once they have occurred. In this way a quality assurance scheme (QAS) differs radically from quality control systems which involve inspection procedures at various stages of production. The design of a QAS recognises that defects do not just happen; they are caused by people.

Assuring quality

Once an organisation has identified the reasons why people are responsible for defects and errors, it can develop a system which eliminates the causes of defects. In this way, quality is assured. There is no single format for a QAS, and an organisation chooses a system which is most appropriate to its particular product or service. What it must do is to insure that every stage of production (or in the provision of a service) that materials, equipment, methods and procedures are used in exactly the same way, every single time.

All employees should be aware of what is expected of them, and should know how their own particular performance has to meet certain clearly identified requirements.

Product Evaluation and Quality Assurance within Tesco plc.

What product evaluation and quality assurance in Tesco plc.

Tesco products are continually monitored and tested for their quality and customer acceptability; this is product evaluation. Tesco staff and management procedures are also monitored to ensure that they maintain the highest standards; this is quality assurance.

Product evaluation is carried out for a variety of reasons. These include:

• testing new products under development
• testing existing products when a change of supplier is being considered
• testing Tesco products against those of competitors
• to update information on the packaging
• to monitor quality and safety standards.

Even when a product remains the same, packaging information may have to be altered because of a change in legal requirements, changes in nutritional concepts, or advances in food preservation and cooking. For example, a product might have its packaging altered to indicate that it could be suitable for microwave cooking. It will therefore be necessary to test the product in company’s laboratory. Here Tesco inserts fibre optic probes into the product. This allows us to monitor the temperature of the product whilst it is cooking, in order to ensure that it reaches a high enough temperature for it to be consumed with safety.

Quality control tests are conducted regularly on all existing own-brand products at Head Office, in Consumer Advice Centres, and in specialist laboratories. These include tests on food safety.

The purpose of five Consumer Advice Centres in Sandhurst, Shoreham, Southport, Cheshunt and Perth is to carry out practical research with customers into new and existing products. Each centre is staffed by two consumer service officers who are qualified home economists. Their most important role is to conduct consumer acceptability tests and sensory analysis. Over a four-day period, six to eight products will be tested.

Their role also includes being available to the customer for any queries concerning diet, health and nutrition, PR work at a local and national level, quality control, and giving talks and demonstrations to local community groups.

Organising a taste panel

Market researchers will recruit customers who are shopping in the store. These customers take part in the test only if they fulfil the recruitment criteria that have been established for the product being tested. For example,Tesco might ensure that all participants are heavy users of the product, or a product aimed at children will be tested on children only.

As far as possible, consumers test Tesco products against a benchmark. This other product is normally the market leader; testing against it allows us to ensure that product matches or exceeds this quality standard. Products are tested "blind" and identified by codes so that consumers do not know which one is the Tesco product and which one is the benchmark.

The questionnaire is designed so that consumers give scores for various questions, such as their opinion as to the appearance of the product; they are also asked to tell us what they liked and disliked about the product.

Sensory analysis is a more technical evaluation of a product which is carried out by consumer service officers who have been specially trained to analyse the product using uniform objectives and technical descriptions. They will evaluate the product and forward a description of it to Head Office for use in the final report.

Data from sensory analysis, questionnaires and customer comments are collated and subjected to statistical analysis at Head Office which will lead to a product either passing or failing the tests. If it is failed, the product is reformulated according to the comments made by customers in response to the questionnaire. Products are then re-tested and will be launched only when they achieve a pass result.

Implementing of quality assurance

Quality assurance is implemented at all levels in Tesco. Everyone is "focused" on giving the customer the best possible shopping experience in terms of service, quality, availability, price, car parking facilities and store design. This "focus" is set in Annual Trading Plan and is implemented through various departmental objectives and through specific training programmes. Tesco invests large amounts of money in training, so that Tesco can achieve specific objectives, for example First Class Service initiative.

Usually each initiative has a sponsor, normally a Main Board member. It is the directors and managers who brief the teams, and then it is up to individuals to "buy in" to an idea. Tesco has found that this process works well as it is not prescriptive and it allows people to implement new ideas in their own way.

A common tool for creating "benchmarking" standards is called SWOT analysis. This stands for "strengths, weaknesses, opportunities and threats" and it provides a useful way of evaluating quality standards. Standards cannot exist in isolation, and SWOT allows comparison with competitors to be taken into account. Tesco therefore uses SWOT a good deal for specific products, for example in evaluating a new range of merchandising or evaluating a new process provided by a supplier.

Tesco Packaging design.

Tesco has many "Own Brand" products, and in order to promote its own brand correctly Tesco has its own Packaging Design Department. Products sell for a variety of reasons; in the first instance, the visual appeal of a product is important to attract customers to the product initially, as it is only after the first purchase that the customer is attracted because of the quality of the product and its value for money.

Usually value for product depends on one very important key – quality of the product, better quality – more tests are done – bigger value, but Tesco tries to keep prices lower than all other national supermarkets. Tesco adds value to its products by means of buying it from contractor for lower price, testing it, and selling it for higher price.

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Success of the business in meeting its objectives.

Tesco is one of Britain's leading food retailers and has 586 stores throughout Great Britain. In Europe Tesco has 41 stores in Hungary, 32 in Poland, 13 in the Czech Republic and Slovakia, 33 in Northern Ireland, 76 in the Republic of Ireland and 1 in France, to prove that business meets its objectives successfully I’ll present some diagrams and company’s financial records.

Turnover and profits of Tesco in 1997-1998

The turnover and profits for the year ending 28th February 1998 were as follows:

· Group Turnover (incl VAT) - £17.8 billion (£17,800 million), an increase of 18.7% on the previous twelve months. This figure is for 53 weeks compared to 52 weeks for the previous year and includes the newly acquired businesses in Northern Ireland and the Republic of Ireland. On a comparable basis with the previous year, excluding the Irish acquisitions, turnover was £16.4 billion, and increase of 9.2%

· Profits on ordinary activities before tax, integration costs and disposal loss - £832 million, an increase of 10.9% on the previous twelve months.

Changing of company's financial fortunes 1992-98

Graph 1,2: Group turnover and operating profit 1992-8
Graph 3: Share earnings and dividends 1992-8

Profits share

In 1998 the profits from Tesco after tax were £505 million. About 50% of the profits were distributed to shareholders as dividends. Subsequently approximately £250 million was retained by the company for investment in new stores and improving their service to customers.

Changing of share price in recent years

Between February 1997 and February 1998, the Tesco share price rose from 349p per share to 517p. It reached a peak in the period of 539p. In the year 1998-9, the price continued to rise, being 586p on 21st April 1998, and having peaked at 603p at the previous stock market high.

Market share of Tesco

Turnover, profits and market share of Tesco in 1999-2000

Profit and loss account

This year was another successful trading year for Tesco plc. Total sales increased by 9.8% to £20,358m and underlying pre-tax profit increased by 8.4% to £955m. Adjusted diluted earnings per share rose 8.6% to 10.18p. A final dividend of 3.14p per share is proposed, making the full year dividend 4.48p, an increase of 8.7% over last year.

UK retail sales have grown 7.4% to £18,331m. Like-for-like sales were 4.2% which consists of volume of 3.2% and inflation of 1.0%, with new stores continuing to perform well, contributing 3.2% to sales.

UK operating profit increased to £993m up 8.1% on last year. Tesco’s UK operating margin remained broadly flat at 5.9% in a year when Tesco made substantial investments in price.

Company change programmes continue to deliver increasing levels of efficiencies enabling us to invest for customers and grow profits.

Sales in the rest of Europe accelerated with total sales up 18.8% to £1,527m and contributed an operating profit of £51m, up 6.3%. Sales in the Republic of Ireland in local currency are up 6.1%, reflecting the benefits of company’s store rebranding programme. In Central Europe sales are up 76.8% at constant exchange rates. Tesco 11 new hypermarkets across the region have all traded strongly since opening.

Business in Thailand has seen good growth and the three new stores have contributed to sales of £357m up 96%. In South Korea, Tesco Homeplus achieved sales of £140m in the period since acquisition. In the Asian region Tesco made a small operating loss of £1m.

Tesco Personal Finance has now been trading for nearly three years and share of losses this year are £4m compared to a £12m loss last year.

Tax on underlying profit has been charged for the year at an effective rate of 27.4%.

CHRISTMAS & NEW YEAR TRADING STATEMENT
Monday 15 January 2001

GROUP SALES GROWTH CONTINUING TO ACCELERATE

Group sales for the seven weeks ending 6 January 2001 increased by 15.4%. This growth was driven by excellent performances from all four elements of Tesco strategy: a strong core UK, increasing non-food sales, rapidly developing international stores and expansion into retailing services.

OUTSTANDING UK GROWTH UP 10.5%

Total UK sales for this seven weeks, covering Christmas and the New Year, were up 10.5%. Compared to last year this period included one extra day's trading over the New Year. Like-for-like sales were up 6.9% driven by excellent sales volumes of 7.3%. This performance reflects determination to deliver the best offer for customers as Tesco continue to cut prices. Overall deflation was -0.4%.

STRONG INTERNATIONAL PERFORMANCE

In 2000 Tesco opened 32 stores internationally adding over 3m sq. ft. of new trading space. This represents an increase in International trading space of over 45% on the previous year. International sales were up 50% over the Christmas and New Year period as a result of existing stores maturing and new store openings.

RECORD NON FOOD PERFORMANCE

Company’s strategy of offering excellent value in non-food to customers was a resounding success this Christmas. Tesco achieved sales in all areas including 14,000 DVD players and 8,000 widescreen televisions.

TESCO.COM SALES QUADRUPLE

The roll-out of Tesco to cover 90% of the UK population helped drive the performance over Christmas with sales up 400% on last year. To meet this demand Tesco recruited 400 new staff, allocated 10,000 additional delivery slots and delivered 30m products.

Some examples of meeting its objectives by Tesco plc.

Product promotions

Objective: to give customers a broad range of strong relevant promotions in all departments of the store.

Examples: hundreds of MultiSave, Link Save and Special Offer promotions in all stores every month.

Product range

Objective: to give customers what they want under one roof.

Examples: constant development of new and exciting food products; introduction of clothing, CDs and videos.

Pricing

Objective: to be competitive especially with regard to the basic lines.

Examples: Value Lines and Unbeatable Value pricing, giving low prices on key brands and own-brand products.

Customer Service

Objective: to provide customers with outstanding, naturally delivered personal service.

Examples: baby changing facilities, no quibble money back guarantee, "one in front" queuing policy.

Store design

Objective: to provide an environment that is easy and pleasant to shop in.

Example: store layouts, fixtures and ambience improved to ease customer flow and make shopping more enjoyable.

Store refurbishment

Objective: to upgrade existing stores to the standard that is expected from Tesco.

Example: existing stores


29-04-2015, 04:40