Quality and Environmental Costing for Red Manuka Restaurant and Winery

Similarities and Differences between TQM, ISO 9001 and ISO 14001

Red Manuka Restaurant and Winery

Niall owns and operates the Red Manuka Restaurant, located on the lakefront in Queenstown. Four years ago, Niall was having problems attracting and retaining customers so he implemented an ISO9000-based quality management system and gained ISO9001 certification. Building on the success of that certification process, Niall has recently completed the implementation of a Total Quality Management (TQM) programme. This programme appears to have already been successful, as Niall has noticed that the number of customers (both new and repeat) has increased and that his operating costs have reduced. However, Niall is concerned that as his competition is also focusing on quality improvement he may not be able to sustain his improving financial performance.

Further, due to recent concerns over wine quality and security of supply, Niall has decided to purchase a winery which is based in Otago. He plans to rename the winery, the Red Manuka Winery. This winery, although producing a good wine, has a poor ecological record and reputation. In an effort to address this, the winery has recently obtained ISO14001 certification. Niall is considering the implementation of a TQM programme into the winery. However, he first needs to know the financial impact of Red Manuka’s current ecological problems. The wine maker and accountant for the Red Manuka Winery have prepared the following environmental revenue and cost analysis for the previous financial year. Total annual costs for the plant were $4,911,270. 

Niall is not sure what the relationship between environment quality and quality management is and what this all means for the future of the Red Manuka Restaurant and Winery. He asks you, his business mentor, for advice. 

Write a report to Niall that:

a) Explains the similarities and difference between TQM, ISO 9001and ISO 14001.

b) States what a quality cost is and identifies within each of the FOUR cost of quality categories, possible quality costs for a restaurant.

c) Prepares an environmental (ecological) cost report for Red Manuka Winery showing the FOUR categories of ecological quality costs. Express these as a percentage of total environmental costs.

d) Compares and contrast the four cost of quality categories to the four ecological quality cost categories.

e) Using the environmental (ecological) cost report prepared in (c) and other relevant information, makes recommendations to Niall as to what the winery should do to improve its ecological performance and advises whether he should implement TQM at the Winery.