Effective Ways to Reduce Cost of Poor Quality

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Though the term “Quality” has been an intrinsic part of our business landscape for ages, we still tend to take it for granted – at least until we encounter a disruption in usual business. This is because of a  misconception that investing in anything to make quality better is an avoidable cost and we can do away with it. But what we fail to understand is that if there is a failure due to poor quality, the cost incurred is way more in magnitude – putting everything you would have earned over time, at stake.

Now, the questions which arise are – Will Cost of Poor Quality (CoPQ) really matter to me or my organization? Which components are key to minimize the CoPQ? Are there any metrics or strategies that can be adopted to keep the CoPQ in control? All these questions and more, make it difficult for organizations to qualify the metrics and measure them.

Research claims, for many organizations quality-related costs go as high as 15 to 20 percent of their sales revenue, with some even going up to 40 percent of total operations. Ideally, for a company to thrive, the cost of poor quality should be 10 to 15 percent of the operation cost. However, an effective quality management program can lower this cost substantially and in turn, directly contribute to the organization’s profits.

So, how do we ensure that quality is measurable and cost-free? Measuring quality is measuring the requirements to get the job done right the first time out. It requires the management to have an agenda, communicating it clearly with defined goals and measurements.

Below listed are the nine key strategies that you can adopt to minimize your CoPQ:

  1. Clear Product and Process Traceability
  2. Closed-loop Nonconformance and Corrective Action Program
  3. Systematic Preventive Maintenance Procedures
  4. Periodic Internal Quality Audit
  5. Seamless Change Management Process
  6. Aggregated Customer Complaints and Timely Return Management
  7. Streamlined Supplier Quality Program
  8. Effective Training for Employees and Suppliers
  9. Electronic Records and Documentation Management

To reduce your CoPQ, you need to look at it from an overall organizational perspective. Addressing quality issues in a holistic and proactive way helps you to identify the areas of concern that may accrue to high CoPQ. This approach not just aggregates all possible issues across the length and breadth of your processes, but also helps define the preventive measures and map it to the end result. This enables you to quickly assess what is going right — or wrong—and what you can do about it before it aggravates and turns out to be too late. The insight titled “9 Key Strategies to Minimize the Cost of Poor Quality” covers the aforesaid strategies in detail, click here to explore.

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