Majority of Manufacturers Unaware of Financial Impact of Quality Assurance

How much did quality assurance save your company last year?

If you don’t know the answer, you’re not alone.

The American Society for Quality (ASQ) recently published the Global State of Quality 2 research report in collaboration with the American Productivity and Quality Center (APQC). The report’s findings are based on 1,665 survey respondents from organizations around the world.

According to the report, 60 percent of respondents don’t know or don’t measure the financial impact quality has on their organization.

Two other notable statistics from the report concern quality’s perceived role in the organization.

(Image courtesy of ASQ.)

36 percent of respondents consider quality a strategic and competitive differentiator. This is a significant increase over the 2013 report, in which only 22 percent of respondents characterized quality in this way.

In addition, 14 percent of respondents characterized quality as mainly a compliance activity—a decrease compared with 22 percent in 2013.

These shifts indicate a trend toward recognizing the importance of quality, as well as its potential to be active as well as reactive. But if that’s the case, then why aren’t more organizations aware of quality’s financial impact?

Beth Cudney, associate professor at Missouri University of Science and Technology, said the intangible aspects of quality—like lost market share or company reputation due to poor quality—are difficult to measure.

“Capturing (the cost of those intangibles) and truly putting a financial number to that is still so difficult, and no one’s doing that well,” Cudney said. “There needs to be more work in that area to find a better way to capture that number so companies have a good estimate.”

World-Class Quality Organizations

In addition to these and other statistics, the Global State of Quality 2 introduces a world-class designation for companies with the strongest end-to-end quality practices. The idea is to enable other organizations to see how their own programs compare to the best of the best.

According to the report, the essential features of a world-class quality organization include:

Measuring the cost of remediation
Having visible metrics on performance against customer needs
Comprehensive training for employees and suppliers

Using these and other criteria, the study identified 28 world-class organizations (19 in manufacturing and 9 in service) or 1.6 percent of the 1,665 respondents.

(Image courtesy of ASQ.)

As an example of the difference between world-class and non-world class organizations, 100 percent of the former have increased their investment in quality over the past three years. In contrast, only 54 percent of non-world class organizations have increased their investment while 28 percent stayed the same and 10 percent decreased it.

For more information, or to download the full report, visit the ASQ website.