Achieving Effective Quality Control on a Budget
There is often a traditional management consensus which connotes quality control as an unavoidable expense; simply a part of the cost of doing business. Yet, in reality, this couldn’t be further from the truth. All disputes aside, the one precept that should be established is that proper quality control does not deplete, but essentially saves, costs. Make no mistake; certain blunders can dent a budget significantly.
“Quality means doing it right even when no one is looking.”
—Henry Ford
When a product is sent out the door, the company pays for shipping (or fuel, if shipped via a company-owned vehicle), and consequently, an employee’s wages. Of course, there is an intrinsic cost based on the labor and raw materials put into the product that was created.
If that product is unsatisfactory, the company might be contractually liable for the downtime of our customer, the cost to return the shipment to the factory, and the loss of any unsalvageable materials from the original product. They will also have to supply additional raw materials to reproduce a product to the customer specifications, pay for shipping again, and all the associated costs.
Not only has the company lost any possible profit on that particular product, but they have actually suffered a negative income – they lost money -- because the job wasn't completed properly. It is this notion that must be considered when shaping strategies for quality control.
If we do the job right initially, there are no additional costs. If you make a quality product the first time, without triple-shipping costs, and without rework labor, then, naturally, profit is at its maximum, and customer satisfaction is at its peak.
Quality doesn’t need to be expensive.
Many individuals contend that you need an ISO qualification to prove conformance to standards and to create quality products. That may be fine for a very large company, but small companies often can't afford the certification costs, which can be thousands of dollars per year depending on the certifying organization.
Small businesses may consider implementing the New Edition ISO 9001 for Small Businesses, yet some hold the belief that the certifications are not necessarily useful; that they are more of an income generator for the certifying organizations. Certain studies have shown that it's usually successful companies that apply for 9001 certification, rather than the ones that are not likely to benefit from it. Conversely, some parallel studies have shown that 44 percent of companies with ISO 9001 certifications have increased their income. Ultimate decisions must be drawn based upon the needs and abilities of your own particular company.
How do I improve quality?
The ISO 9000 lays out 7 principles for quality management. You must understand these principles before you can attempt to qualify for ISO 9001 certification. These principles are:
Customer focus
- Understand customer needs, and exceed their expectations
Leadership
- Every employee should be focused on quality
Engagement of people
- All employees should be involved and participate enthusiastically
Process approach
- People, activities, and resources are a single process
Improvement
- Always strive to improve quality; avoid status quo
Evidence based decision-making
- Don't guess. Improvements are based on factual analysis
Relationship management
- Understand your customers, service providers, and your suppliers. It's an integrated system. Assure that you understand your customers' needs; that your suppliers can provide raw materials at the quality level you require; that your service providers can meet your scheduling demands. The whole thing has to work as a system or else everything can collapse.
Once you have secured these principles, you can take the time to create a detailed, step-by-step process to assure that making "Product A" is carried out the same way every time. Repeat the same for "Product B", and so on, down the line. This is essentially what happened all the way up to the ISO 9001:2000 certification.
You create your processes, and then an independent certifying agency comes in and looks at them, checks that you're following them, and issues a certificate. The newest version, ISO 9001:2015, has actually done away with the requirement for a specific description of each process, but it remains optional, and most companies do it.
Once most companies obtain their certification, the temptation is to pay the annual fee and pay for recertification every three years. It's conceivable that following the principles of the program, without actually seeking certification, will result in much better quality and greater consistency than you currently experience. That may be all it takes to save money, decrease waste, and improve your business profile.
Ideally, with inline testing during the manufacturing process, any employee can spot an issue, and deal with it right away. Waiting until you've completed 1000 or 5000 units before you test can leave you with a big pile of useless product.
Once you've documented all your processes you're in a much better position to identify quality issues. From there, it is simply a matter of analyzing your available information and figuring out a solution to any ongoing problems.
A more vital aspect is to not just solve the problem one time for a particular customer, but rather to work out a solution or strategy to make sure that the problem never occurs again. That is how you're going to save money, and that's what makes quality essentially “free”.
The Takeaway
Whether you choose to actually seek certification, or simply adhere to the well-designed principles of creating a quality product, you'll be rewarded with lower costs and greater consistency. That in turn will be reflected in how your customers speak of your business to other companies, making quality control not only cost effective, but profitable.
Stewart, Cooper & Coon, has helped thousands of decision makers and senior executives move up in their careers and achieve significantly improved financial packages within short time frames. Contact Fred Coon – 866-883-4200, Ext. 200