Quality matters to the company
Why does it matter? The short answer is quality enables you to stay in business. ‘Stack ‘em high and sell ‘em low’ is no longer a satisfactory formula for successful business.
Quality lends you a competitive edge
Not for long though. You will tend to win customers from competitors if you adopt a quality approach before them. But you will have to keep ahead of them. How long you keep (or increase) that lead will depend on further continuous improvement, and how genuine and deeply-rooted is your approach.
Quality affects profits positively
If you keep to the following ground-rules.
- Pay attention to external influences, such as competitors and the wider market, and make sure you are doing the right things.
- Focus on business-critical issues that are (or should be) in the business plans – make sure you do things right.
- Measure changes in costs and results – know what you’re doing.
- Ensure all the company’s systems and policies gel – in other words, planning, marketing, sales, production, logistics, plus back office tasks, such as recruitment, reward and procurement.
Quality can affect profits negatively
If you focus too much on internal procedures and measures – on what you think you should be doing rather than the customers’ points of view. Or if you ‘fix’ the results so you look good.
A business can go down the tubes despite having an excellent quality approach. To avoid this, you still need all the mechanisms in place to ensure
- Effective leadership and management
- Appropriate marketing strategies
- High-quality products or services, priced appropriately
- Convenient delivery method (time and place)
- Efficient business systems and organisational structures
- Staff with the ability and freedom to use those systems for the customers’ benefit.
However, in many market sectors these days, it’s a bit like having a Health & Safety policy. It would be a brave business that did not have some form of Quality Management System.
Someone somewhere will always be able to undercut you
Few businesses in the developed world can expect to compete with firms in low-wage economies elsewhere. Even if you are in a low-wage sector, how long will it remain so? Just think about Japanese cars. At one time they were considered cheap and nasty. Then their selling point became reliability and the ‘free’ extras. They were early adopters of quality methods to reduce the costs of waste, reworking and checking. Now they are quite upmarket. Just as well, considering how others are pushing into the low-price market and how many formerly up-market car makers have gone to the wall. Accident? Certainly not.
Quality saves costs
Most firms working in a quality way save on the costs of checking, waste and reworking. They often save on the cost of recruiting and training new employees too. This is because existing employees usually feel more empowered and therefore more committed. So they tend to stay longer, and the company doesn’t have to recruit so many new people.
Customer expectations are rising all the time
We’re all getting pickier these days. This is partly because it’s getting harder to balance the relative cost and quality of the different products available. This might simply be because there’s more choice around – perhaps due to easier international transport and reduced trade barriers. But whatever the cause, the effect is that most firms have to run faster than ever just to keep up. Ignore the customer and go down the tubes.
Tendering rules often insist on it
Invitations to tender often insist on quality accreditations as a ticket to the party and may well ask for details of your quality policy as a matter of course. You won’t even get an invitation without them! So, in many market sectors, you now have to have a visible quality approach just to stay in business.
Linkages have been found between employee motivation and effective quality approaches. Motivated employees tend to spot ways of cutting the cost of their work. For example, a post-room clerk working for a mail-order firm suggested a tiny saving in the weight of its catalogues. This saved thousands on postal charges. At that company’s margins, it would have taken millions of pounds’ worth of additional sales to make a profit of the same value.