Counting The Cost of Quality: The Cost of Action 

Every decision has a cost.

Large or small there is a cost to every decision. Of course there is a sliding scale of the size of a decision and it’s relationship to the overall implications to the organization. Some costs are economic and some are not.  Deciding on a bathroom cleaner or brand of pencil to stock have fewer implications than a capital purchase or facility relocation.

This the first of three articles focused focused on quality and considerations when making improvements to an existing system or completely starting from scratch. Also the costs associated with these actions that have far reaching implications to product quality within a manufacturing environment. In this post we are focusing on the cost of action.

Here are a few point for consideration.

Management acts on quality improvement but there is usually a trigger. Triggers that cause management to act are either external or strategic. External triggers often come from customers who require improvement in quality either due to a complaint or issue. They are also driven by the customer’s desire to focus on a specific industry sector that demands higher quality standards. Strategic triggers are based on the company moving into a new industry sector which (like the customer) demands an enhanced quality or documentation of quality. Regardless of the trigger it all boils down to one thing: economics. Losing a key account or losing out on a new opportunity to grow the business in a new direction can greatly affect revenue which can affect the business partly in the short term but mainly in the long term.

Management not only needs to be fully committed to a new quality system, they need to be the champions of it. Often it is management that has a neutral or “wait and see” attitude. This can be damaging to the success of implementing a new quality system. Or the efforts to make permanent the change in culture. Employees are watching. When management waivers, employees often follow.

We will expand on the potential negative affects in part two: The Cost of Inaction.

Commitment includes attention to the following areas:

Employees need to be fully supported. In the form of solid two communication between management and employees. They need to understand the reasons behind the change or initiative. When communication breaks down so does the trust.

Employees also need appropriate training. The company needs to provide the funding for training (and re-training) for all workers directly (and indirectly) involved in quality.

Resources are critical to the success. These include measurement and in process monitoring tools for validating and monitoring production. Also access to applicable quality standards for your industry. These tools provide data necessary to feed back to management on the current state of the quality system.  And levels of improvement over time. One important point. Providing new measurement tools is an important first step but often they uncover the current state of the quality system. They do not improve it. Training in conjunction with the above tools can provide the information needed to make the changes needed to drive quality improvements. But looping back to management’s commitment, they need to drive the changes needed (and the speed of change) and support the organization as a whole.

Capital Costs are important over the life of a quality improvement initiative.  As information starts flowing on the current capability of the production system, it may become evident that production equipment over the long term is not capable of repeatable results of a higher quality level. Replacement production equipment or major upgrades to existing equipment will be necessary.

In summary, making a decision to improve quality comes at a cost. In the attitude of management and employees, a commitment to invest in the resources and the capital needed to make an improvement in product quality. There is also a cost of inaction which we will cover in part two. And the benefits? Part three will uncover the reasons why sticking it out to the end will be critical to the company’s survival in rapidly changing business conditions.

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