If it costs $1 to prevent a problem, $10 to find it and $100 or more to fix it then we are better off spending our time to prevent problems, especially those that our customers will find. It is hard to argue with this logic but in practice we see organizations invest more time and resources on problem solving as opposed to problem prevention.
From another perspective – quality related costs run in the range of 10 to 30% of sales or 25 to 40% of operating expenses. This equation identified with Crosby’s (father of modern quality methods and techniques) cost of quality work has been around for many years but remains valid today. It’s not always as glamorous to address these issues when compared to new markets, new revenues and IT projects that typically garner our strategic planning efforts.
Where do these experts come up with these crazy numbers? You do the math on a few of your top cost drivers. How much time and money do you spend fixing, correcting a problem and then convincing the customers it’s not going to happen again? What are the lost opportunity costs, how much does this hurt future sales effort? How much time did you spend in meetings addressing a specific problem of your own making, or checking, verifying, approving because you didn’t have confidence in your quality?
Are you measure by bottom line results? Measuring these costs and their impact is not always easy but based on their enormity, definitely worth the effort.
In our practice we see all the typical excuses or barriers for allowing these costs to continue. A few examples include:
Management doesn’t believe in the numbers (might think it’s only 5% of total costs…denial)
It’s going to require change….and that’s hard
There is no structure for indentifying and addressing these issues
Expectations are low which typically results in achieving below what business needs or the customer deserves.
Bottom line, preventing errors and mistakes makes sound business sense for you and your organization. It’s not part of the latest book craze, it is and always will be part of operating a successful business. Remember the old saying- “if you don’t take the time to do it right the first time, when will you have time to do it again?
