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Tuesday
07Apr2009

what is quality worth?

source: www.tangram.co.ukQuality has been all the rage in post-war manufacturing management but the influence of quality thinking has now spread to non-traditional processes, including sales, marketing and procurement. So what is quality worth? How much should companies invest in quality conformance? While the cost of poor quality, or non-conformance, can be intangible and hard to measure, if you include rework, returns, complaints, and lost revenue, the hit can range from 15%-40% of business costs.  The good news is that it is not uncommon to find deliberate quality improvement projects reducing the total Cost of Quality (i.e. Prevention+Appraisal+Rework) by 50%.  See robust research including results from a range of industries and models from McGill, here (pdf). It is clearly better to get it right than to have to put it right with such a high return on quality. The trick is getting the investment balance right.