When it comes to cutting costs or reducing the budget, many executives request cost-cutting in all areas. But, it is not an effective approach to reduce the overall cost. In some cases, there requires more spending on preventive activities which is most often ignored by businesses. Do you know that continuing to provide poor quality products usually leads to higher costs to a business? There are a lot of businesses in developing countries that think producing lower quality products saves them more. This is not the whole truth.
Here are the costs of poor quality:
- Lost market opportunities – A lost customer due to quality issues can be a very heavy loss that may dwarf all the costs showing on your P&L statements. Most often, a business loses more than one customer due to quality issues, which means you are suffering a huge loss.
- Costs incurred due to product recalls and increased inspection – Throwing away an entire batch due to poor quality or any fault is often more expensive and if it’s not detected early, it leads you to pay penalties and chargebacks from customers.
- Cost of maintaining an army of quality controllers and inspectors – When your products are the result of inconsistent systems and processes, you need to focus more on quality control and inspection, and therefore spend on paying more quality controllers and inspectors.
How do auditing and Quality Inspection help a business cut down these costs?
By encouraging your management to install and set up proper systems in place! Work with your suppliers to fix the sources of those problems. There are many businesses where management is constantly busy solving problems. It is sometimes exhilarating and addictive. But when a manager solves one problem, there comes up another problem. Many businesses and management teams would say to this that this is the nature of business.
In our opinion, this should not be the nature of your business. Rather than staying busy all time in problem-solving, you should fix the problem from its source so that it rarely produces any problem.
- If your equipment keeps breaking down, becoming better at repairing things is not going to help you. You need preventive and sometimes predictive maintenance.
- When there are constant production stoppages because of supplier quality issues, then you need to work with better suppliers rather than tightening incoming QC.
- Do your production operators keep forgetting important guidelines or specifications? If yes, don’t fire them. You need to provide intensive training and mention clear work instructions, visual aids, etc.
It’s because better processes and operations result in better products, which ultimately means fewer Quality Inspections, fewer quality issues, and fewer lost customers. Using the right auditing and quality inspection approach regularly really helps factories run in the right direction and reduce the overall cost.