You don’t have to be an economics expert to know that doing nothing about quality control is not really a cohesive business strategy. A low-quality product will always come with a price. Mistakes happen, but quality should not be compromised due to wrong actions by the company.
It’s almost impossible to calculate, but there is a consensus that the actual cost is less related to inactivity and more in line with a company’s failure to control or maintain quality in the first place. It goes without saying that the act of literally doing nothing is unlikely to be part of a company-wide quality strategy.
Every organization will do something related to quality management, even if that is maintaining the status quo of using paper and manual-based processes. The caveat is that the status quo is insufficient in the modern business world. Therefore, companies that don’t invest in quality management are taking a huge risk, a decision that may usher in some or all of the following outcomes:
An additional cost if a company falls short in managing quality in a comprehensive way is a loss of potential gains. Choosing to “save the expense” of investing in quality will forego the potential cost efficiencies and expense-reducing revenue gains that can be achieved through tighter quality management and process control.
More often than not, the cost of quality (COQ) is aligned with the cost of poor-quality (COPQ). And although these two concepts might seem similar, COPQ relates more to the actual costs of delivering poor quality products to an end-user or consumer.
According to the knowledge-based quality community, American Society for Quality (ASQ), COPQ can be separated into four categories — prevention, appraisal, internal failure, and external failure costs.
Manufacturing companies integrating both COQ and COPQ into their quality management processes are more likely to understand the long-term effect of doing nothing. The key is to accept that organizations will pay for poor quality.
Many organizations will have true quality-related costs as high as 15-20% of sales revenue, some going as high as 40% of total operations. A general rule of thumb is that costs of poor quality in a thriving company will be about 10-15% of operations. Effective quality improvement programs can reduce this substantially, thus making a direct contribution to profits.”The American Society For Quality
The perception that a company is doing nothing to solve an identified quality problem is more often than not driven by a combination of consumer concerns, regulatory oversight or mandated inspection processes, and ultimately, the threat of legal action – all of which lead to a damaged brand and reduced corporate value.
Excellence or continuous improvement can be hard to achieve (or sustain) for companies, even more so when you consider the demands of modern society. Conversely, doing nothing creates a culture of mediocrity that struggles to react when something goes wrong.
The cost of doing nothing is, as we have said, often an incalculable amount. Doing nothing is not a business strategy, mainly because another company in the same space is likely doing something – innovating, changing, disrupting, expanding, and enhancing the customer experience. Companies that do nothing are missing the opportunities to grow, improve operations, be more effective and efficient, and gain more market share.
What is the best way to solve the problem? If the cost of doing nothing is having an adverse effect on a company and, importantly, its product quality, then how can this scenario be alleviated? The simple answer to these questions is quality management software.
QMS software fills in the gaps that might lead to a quality issue further down the line and provides companies with a transparent record of the product lifecycle. In other words, dedicated software solutions allow proactive or pragmatic companies to do something long before the cost of doing nothing becomes an insurmountable problem.