Tuesday, November 16, 2010

What do costs have to do with quality?

Can luxury be cheap? No. Can an anonymous mass production item be expensive? No. Both of these can be produced either cost-efficiently or inefficiently, but the grade of performance of the product determines the price level. According to the ISO9000 standard, the grade means a category or rank given to different performance requirements for products having the same functional use. Therefore the grade is definitely the point of departure of the product costs planning.

Is quality free? What does lack of quality cost? Can quality costs be optimized? Nothing is free, but the lack of quality always causes so much costs that prevention of quality-related problems is worthwhile.

Is cost-efficiency quality? What happens to quality when costs are cut? Cost-efficiency in the appropriate cases forms an essential part of performance, as otherwise the only destination that will be reached efficiently is a dead-end. If the issues are the right ones, the only way to cut costs without causing quality-related problems is to improve processes. In practice, this implies more effective structuring of processes, re-engineering functions, and process performance control.

What can I do?

  • I will learn to understand and consider the real overall costs accrued to a customer from our products.
  • I will understand that the value-added we create should surpass clearly these costs.
  • I will consider what a customer looses by selecting us. Is it something else besides money? How about in comparison with selecting our competitor?
  • What did a customer lose by selecting our competitor? Was it worth it?
  • I will know what we pay due to making mistakes, fixing them, unproductive work, and dissatisfaction. Who pays for all that? The perpetrator? With what and when?
  • I will distinguish between fixed and variable costs.


1 Comments:

Blogger Cassandra Clare said...

It feels awe-inspiring to read such informative and distinctive articles on your websites.President AQM

01 January, 2016 06:20  

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