The question asks how the management of quality can contribute to competitive advantage. Of course, having a product or service superior in quality to one’s competition is likely to drive increased sales and the ability to charge higher prices. The question asks about the management of quality, however. By this, we mean the approaches employed to specifically measure what aspects constitute quality and to manage processes so as to reliably replicate those product or service metrics.
The primary concept applicable to this is TQM or Total Quality Management. As a methodology, this achieved definition and general acceptance in the 1950’s. It is based on the ideas that:
Quality is measurable by means of defining what features are desired in a product or service and defining metrics for those features.
Quality is reproducible; the inputs and processes which produce quality can be defined and controlled.
Quality is a result of the combined action of the entire firm and the business ecosystem in which it operates, most importantly its supply chain, so managing it must take this ecosystem into account.
That being said, effective management of quality provides a firm with advantage over its competitors in two ways. First, it makes its product features reliable, so that the firm’s customers know exactly what to expect from each purchase. Second, it defines exactly the causes of specific quality outcomes, so that sources of inconsistency may be identified and eliminated, and so that improvements to quality can be made.
The sites referenced below provide more in-depth material on TQM and associated management practices.