Quality, Cost & Profit Relationship

FICCI

CE

Quality, Cost & Profit relationship

FICCI

CE

Many people think that quality costs money and adversely effects profits. But these costs are the costs of doing it wrong first time . Quality in the long run results in increased profitability.

FICCI

CE

Quality , Cost and Profit relationship.

Cost

For example if we design the product right first time , build it right first time - we save all the costs of redesign , rework, scrap, resetting, repair, warranty work etc.

FICCI

Quality and Profit : Traditional thinking Cost

CE

FICCI

CE

Quality and Profit : Paradigm shift

Cost

Higher productivity

QUALITY

1.Higher production due to improved cycle time and reduced errors and defects 2.Increased use of machine and resources.

Increased profitability due to :

•Larger sales

3.Improved material use from reduced scrap and rejects 4.Increased use of personnel resources 5.Lower level of asset investments required to support operations. 6.Lower service and support costs for eliminated waste, rework and non value added activities.

•Lower production costs

•Faster turnover

Quality and Profit

If the organization does not offer high quality product or service , it will soon go out of business . But just having high quality will not be enough , because your competitors will also have the high quality. To win , companies will need to offer high quality for a lower price than their competitors.This requires organizations to identify and reduce their quality costs

High Quality

Lower price