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More worrying still, few quality organizations can track the true costs
of poor quality (CoPQ) – costs that are largely invisible to top management.
The Quality organization cannot keep up; it is forced into quality-control
(QC) firefighting mode instead of continuously improving
quality assurance (QA) processes that prevent problems in the
first place. The financial consequences of CoPQ are stark. goetzpartners
estimates that CoPQ can hurt profitability by at least 5% and
sometimes by as much as 25%. If nothing changes, the costs of running
the typical quality organization will double in the next 10 years.
MANAGEMENT MISPERCEPTION: QUALITY AS TRADEOFF WITH COST AND SPEED
QUALITY
QUALITY
QUALITY
COST
SPEED COST
SPEED COST
SPEED
Improving
QUALITY & SPEED
at the expense of cost
Optimizing for
COST & SPEED
at the expense of quality
Improving for
COST & QUALITY
at the expense of speed
Source: goetzpartners
Change has to happen very soon. Complexity will only intensify. Under
pressure on many fronts, and hearing the business arguments
of managers in marketing and operations, more and more senior
executives have come to believe the fallacy that cost, quality and
speed of delivery are trade-offs – that quality can only be achieved
at the expense of other variables.
The consequences of that belief are very important to the chief executive
and chief operating officer – not just to those heading the
quality organization. They must be acknowledged and owned by
the company’s most senior executives before the internal struggles
start to be noticed by customers or begin to hit earnings, and long
before they lead to headline-grabbing disasters.