Debunking The Cost Of Quality And Productivity

I hear an awful about the cost of quality and how it impacts production in such negative terms. I thought maybe it's time to debunk the myth that investing in quality negatively impacts production.

Quantify This

the cost of quality is not defined as the expenses in creating, deploying and supporting a quality system as most think. It is rather the cost of not adopting a program. How much does it cost you to loose a contract for low quality? What does that do to your credibility? How does your bottom line suffer from your inability to gain more customers and secure more contracts? Actions speak a lot louder than words, as do bottom line realizations.

So, how much does it really cost?

It is a well know fact that poor quality costs the average business 15 to 30% because its product or service was not done right in the first place. So what is in the 15-30%? Rework, returns and big dollars. Is it worth the risk of loosing 15 or 30% for low quality? I am sure each of you can find something better to spend that money on.

1-10-100

So how much does a quality program really cost? An accurate rule of thumb suggests that a quality problem costing $100 to resolve in the field would cost only $10 to correct if discovered during design review and merely $1 to prevent in the first place. Surely, your reputation and bottom line are worth a dollar. There are four basic areas that will need your attention in developing your cost of implementing quality are Prevention, Inspection or Appraisal, Internal failure and the dreaded External failure cost. That makes them about a quarter each, a bargain at twice the price!

Investment

You have invested in the best machines, hired the brightest and smartest programmers in the industry to work on what you believe, it the best product or service around. I know you believe that or you would not get up every morning to go in to work. With all your dedication, hard work and effort, your investments are depreciating by the hour and being over utilized to clean up the mistakes made. This is a vicious cycle that feeds itself, the harder you work, the more you push, the deeper you get. Would you like a return on this investment? Quality programs actually appreciate with time. Your initial dollar ends up being two dollars in a year!

Lessons Learned

In conclusion, it is fair to say that we have witnessed quite a few failures recently due to poor quality programs. Had Mattel implemented quality standards into their contract with the firm who manufactured the toys that are responsible for the death of children with high lead levels, their stock would be riding high. Imagine if Topps had done better inspections of the beef and internal process checks, they might still be in business today instead of bankruptcy court. The cost of poor quality is high on many levels. It's worth a dollar.