Cutting profit, the Cost of Poor Quality

“I don’t have a quality issue.” That’s what a senior leader told me, rather confidently. He had plenty of challenges, sure, but quality? Not one of them. Why? Because the customers never received a defective product. 🤔
Slightly in disbelief, I asked, “At what cost?” 😲
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Let’s talk about the cost of poor quality (CoPQ). Too often, organizations define quality strictly in terms of the final product that reaches the customer. If that quality is 100%, great! 🎉 But Lean Six Sigma enthusiasts like myself aren’t just focused on the end result, we care about the process. Because if that flawless end-quality comes at the expense of bloated, sluggish, and wasteful operations, then quality is quietly killing profitability. 💸

Poor quality is a margin killer. It drains money in two ways. Directly, through rework, scrap, and inefficiencies. However also indirectly, by leaving teams stuck firefighting instead of innovating. So, where does this cost hide in your processes? Mainly in these 3 areas:

1. Red tape. Bureaucracy, excessive approvals, and compliance overhead slow down value creation. ⛔
2. Rework. Missing information, parts, or small defects create a cycle of correction that devours time and resources. 🔄
3. Scrap. Whether leftovers of irreparable defects. 🚮

Scrap is easy to spot. The other two? Far more difficult to recognize. They’re hidden in daily operations, disguised as ‘necessary’ steps. 😒

Want to uncover your hidden CoPQ? Then run a Value Stream Mapping (VSM) session. Identify every activity in the process and label them as either ‘Non-Value Adding,’ ‘Business Value Adding,’ or ‘Customer Value Adding.’ The costs lie in the first two, and you’ll be surprised how many fall into these categories. Eliminate or reduce them, and you’ll streamline operations, cut costs, and boost speed; all without compromising end-quality. 🚀

So, don’t be misled by 100% end-quality. Dive deep into your processes, uncover hidden wastes, and let the true Cost of Poor Quality reveal the pathway to a more efficient and profitable future. 💰

I’d love to hear your thoughts. Email me at tom@theleansixsigmacompany.com 📩 or drop a comment below. 💬