## **Learning Outcomes**

After reading this article, you will be able to explain the difference between quality control and quality assurance and why each is important in business operations. You will understand the causes and consequences of poor quality, how inspection and preventive methods work, and the role inventory plays in achieving consistent results. You will be able to identify appropriate approaches to managing capacity, quality, and inventory issues in exam scenarios and apply these principles to real workplace cases.

## **ACCA Business and Technology (BT) Syllabus**

For ACCA Business and Technology (BT), you are required to understand the main approaches an organisation uses to manage quality and inventory. In particular, focus your revision on:

- Explaining the principles of quality control and assurance in production or service processes
- Identifying common causes of poor quality and their business consequences
- Describing the methods of inspection and prevention in quality management
- Outlining the function and importance of inventory in maintaining capacity and quality
- Recognising the link between capacity planning, quality, and inventory for efficient operations

## **Test Your Knowledge**

_Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision._

1. Which of the following best describes the purpose of quality assurance?
   a) Detecting defects after production  
   b) Preventing errors before production begins  
   c) Issuing refunds for faulty goods  
   d) Increasing inventory levels

2. Name two possible business impacts of failing to control product or service quality.

3. True or false? Inventory can help maintain smooth operations when capacity is uncertain.

4. Explain the main difference between quality control and quality assurance in a few sentences.

## **Introduction**

All organisations want their products or services to meet customer expectations as consistently as possible. This requires effective systems to control, assure, and manage quality during operations. Quality failures are costly, leading to waste, lost reputation, and dissatisfied customers. Because of the unpredictability in processes and demand, businesses also rely on inventory to manage capacity constraints and buffer against fluctuations.

> **Key Term: quality control**  
> The process of inspecting and testing outputs to ensure that products or services meet defined standards and identifying defects after production.
>
> **Key Term: quality assurance**  
> The structured set of activities designed to prevent errors and defects by embedding quality systems into work processes before production begins.

### Why quality matters

High quality improves customer satisfaction, reduces costs, and maintains competitiveness. Poor quality can cause refunds, repairs, reputational harm, and lost business.

Businesses adopt two main approaches for managing quality:

- **Quality control**—identifies defects after production
- **Quality assurance**—focuses on preventing defects before or during production

Optimal performance depends on balancing both approaches, ensuring defects are minimised, problems are prevented, and inventory is used wisely to maintain steady supply.

## Quality control: detecting errors after production

Quality control relies on inspecting finished outputs—such as products, batches, or service transactions—to identify and remove defects.

Common techniques include:

- Visual checks
- Measurements and testing
- Sampling—checking a subset of output if checking every unit is not practical

If defects are found, affected units are repaired, reworked, or discarded before reaching customers.

### **Worked Example 1.1**

A clothing manufacturer checks one out of every 100 shirts produced for loose stitching. If a quality control inspector identifies three defective shirts in one batch, the company investigates the batch further and decides whether to repair, reject, or accept the remainder.

> **Answer:** By inspecting a sample, the business attempts to catch problems before products leave the factory, but some defects may escape detection if sampling is limited.  
> **Exam Warning**  
> Relying solely on inspection catches problems after costs have already been incurred. This approach often leads to waste and does not prevent repeated errors.

## Quality assurance: building in prevention

Quality assurance aims to avoid problems rather than simply discover them. It involves establishing written procedures, training staff, standardising processes, and setting up regular monitoring at every step in production or service delivery.

Common practices include:

- Documenting work methods
- Using checklists or process controls
- Training employees in quality standards
- Setting up regular reviews to refine procedures

When applied, quality assurance reduces the likelihood of mistakes and supports continuous improvement.

### **Worked Example 1.2**

A hospital develops a procedure checklist for preparing patients for surgery. By following and auditing this checklist each time, nurses reduce the risk of missing key steps, leading to better patient outcomes and fewer errors.

> **Answer:** The checklist standardises the process, helping to prevent mistakes before they occur, rather than relying on post-event correction.

## Causes and consequences of poor quality

Defects and quality failures can have many sources:

- Inadequate training
- Poor maintenance of machinery or equipment
- Weak process design
- Lack of clear standards or instructions
- Variations in materials, staffing, or workload

Consequences include:

- Rework and increased costs
- Delays and missed deadlines
- Returns, refunds, or warranty claims
- Loss of customer trust and reputation

Consistently poor quality can threaten the business’s survival.

> **Key Term: inventory**  
> Items held by an organisation to support production, manage demand fluctuations, and help ensure consistent output.

## Inventory and capacity: supporting quality

Fluctuations in production rate, demand, or supply can make it difficult to meet quality standards. Inventory helps by:

- Buffering against delivery or production delays
- Allowing time to check and correct quality without stopping all activity
- Smoothing supply when demand exceeds or drops below available capacity

Effective inventory management ensures that high quality can be maintained even when unexpected issues arise.

### **Worked Example 1.3**

A factory experiences machine breakdowns, causing unpredictable delays in output. To avoid disappointing customers, the business builds up a small reserve of finished goods. If a defect is discovered, the business can isolate the problem units and still fulfil orders from inventory.

> **Answer:** The inventory acts as a buffer, supporting both capacity management and the maintenance of quality standards.

## Inspection versus prevention methods

Most organisations use a combination of inspection (quality control) and prevention (quality assurance).

| **Aspect**         | **Quality Control**                | **Quality Assurance**                             |
| ------------------ | ---------------------------------- | ------------------------------------------------- |
| Main focus         | Detecting defects after production | Preventing defects before or during production    |
| Timing             | End of process                     | Built into processes from the start               |
| Cost to fix issues | High—rework or waste               | Lower—costs avoided before issues occur           |
| Impact on quality  | Reactive—finds errors              | Proactive—reduces errors and improves consistency |

Balanced systems address both detection and prevention, supporting reliable quality and efficient operations.

### **Revision Tip**

Focus on how both quality control and quality assurance contribute to business success. In exam questions, always consider whether problems could have been prevented—or only detected after the fact.

## **Summary**

Effective management of capacity, quality, and inventory is essential for delivering consistent, customer-ready outputs. Quality control detects and corrects issues, but does not stop recurring problems. Quality assurance builds in prevention, improving systems and reducing error rates. Inventory serves as a buffer to support steady production when capacity is unpredictable or demand varies. Successful businesses combine both quality control and assurance, using inventory strategically to support operations, reduce costs, and protect their reputation.

## **Key Point Checklist**

_This article has covered the following key knowledge points:_

- Define and distinguish between quality control and quality assurance
- Explain causes and effects of poor quality in business processes
- Describe how inspection (quality control) and prevention (quality assurance) methods work
- Illustrate how inventory supports consistent output and quality during capacity changes
- Recognise the need for both detection and prevention to achieve high-quality results

## **Key Terms and Concepts**

- quality control
- quality assurance
- inventory

Capacity quality and inventory - Quality control and assurance basics