Quality is an investment

Quality is free... [and]... It’s not a gift.

P Crosby

The bottom line is that setting off on the road of quality, or continuous improvement, does have immediate set-up costs. Quality is only free when you get the return on investment.

Set-up costs

If you approach costs from the top down, the company decides what it is prepared to pay for quality improvement. Then you live with it. Or you can work bottom up, starting from estimates of the time and other costs each aspect will consume. The top-down approach can seem arbitrary, but you get to an answer more quickly. Bottom-up can be superficially accurate, but leave some activity un-funded because you forgot to include it. It’s usually guess-work anyway, so in truth it’s no more accurate than the top-down approach.

Initial investment

An initial investment is needed to cover

  • Consultancy and potential external assessment
  • Training courses, workshops and materials
  • Process improvement work
  • Getting and keeping all interested parties on side and involved.

You can keep costs down by doing as much as possible in-house, where you have the skills. This will ensure you get what you (think you) want, if you have the skills. But don’t underestimate the opportunity cost (see below).

Skilled external support can help you

  • Get what you really want (if you spend enough time with your experts)
  • Reduce the hidden opportunity cost of people
  • not doing their day job
  • teaching themselves new skills
  • reinventing wheels.

Initial return

Early improvements to your processes should soon reduce the costs of poor quality, including

  • Supervisory checks
  • Reworking
  • Scrap
  • Complaints and so on
  • Whatever else is relevant in your business.

In the medium term

In the medium term, you can expect to reduce operating costs by improving working practices and savings on waste of materials and/or effort. You may soon reach a point where you can see gains from changing the current structure, Of course, any restructuring will incur more costs, perhaps significant ones. However, if the case for any proposals is well-researched, the business case for further investment will be clear.

In the longer term

The return on investment depends on normal business criteria, on how you define success and on how well quality has taken root in your organisation. Benefits may be internal, in the sense of reduced costs or improved management, or external – increased market share or repeat business, ability to command higher prices and reduced marketing costs relative to sales.