Recalls, warranty claims, defects, litigation, and safety issues cost organizations from a wide range of industries billions of dollars a year. It has been estimated that poor quality in design, manufacturing, and service impact internal and external costs to the tune of 5%-20% of gross sales annually. Warranty claims alone can cost a manufacturer 1%-5% of sales. In the competitive marketplace, the Cost of Poor Quality directly impacts companies’ margins and revenue and can mean the difference between surviving and thriving.
But quality issues can have a more hidden impact on costs as well. Redesigns, corrective actions initiating change management, and additional testing due to design issues increase costs and can delay a product’s launch – forcing companies to miss out on critical market opportunities. Errors in manufacturing create low first pass yields and higher rework costs. In-service issues can increase customer calls and helpdesk costs. And a perception of poor quality can significantly hurt a company’s reputation in the marketplace, threatening its long-term customer retention.
Many organizations only treat quality as an important issue when something goes wrong. Even when companies attempt to address quality concerns with in-house expertise and tools, they are segmented and not integral to the rest of the product lifecycle. Instead, they are deployed in a silo and treated more as a check box that must be completed prior to product launch. In these cases, quality is not a large factor or metric in the design, manufacturing, and servicing processes. And too often there are gaps in the processes, tools, and the integration of them across the organization.
Additionally, the advent of smart, connected products due to the Internet of Things (IoT) offers a new opportunity for organizations to suddenly have access to tremendous amounts of data that will capture a full picture of how their products operate and perform in the field. This will revolutionize how quality can be tracked and analyzed. Not only will businesses need the appropriate processes and tools to take advantage of this data, but they will also need to ensure that the resulting analysis and insights are embraced by the organization and do not just end up in a quality silo.
Incorporating quality processes and tools throughout the product lifecycle can provide many benefits to a manufacturing organization. Integrated tools and data enable a closed-loop feedback process that provides the entire organization with visibility of data.
Better visibility of issues throughout the product lifecycle make it possible to identify quality issues earlier in the design process – reducing the total cost of product development. The sharing of quality information between design and manufacturing can limit variation in the manufacturing process and increase first pass yields. Capturing real-time field data from a product that is in-service through IoT and feeding that information back throughout the organization can identify product quality and safety issues quickly and allow for faster risk mitigation and issue resolution – directly improving customer satisfaction.
In order to reduce the Cost of Poor Quality, organizations should complete a global quality assessment of corporate interviews, surveys, reviews, and analysis to develop a company roadmap that addresses these challenges. After participating in one such appraisal with PTC’s Global Quality Assessment offering, an industry-leading electronics manufacturer found that, in the years following the development of a corporate quality roadmap, their customer complaints decreased over 15%.
During the assessment, PTC managed a proof-of-concept of adding a Failure Modes and Effects Analysis (FMEA) – a Reliability Engineering tool used for assessing and managing risk – to the manufacturer’s Design activities. Matching Failure Modes in the resultant FMEA to Failure Symptoms in the customer’s critical failure helpdesk system allowed PTC to identify the customer complaints and service calls that could be reduced. It was found that a 50% reduction in just 10 Failure Modes during initial Design could reduce system outages by 15%. In the following years, this reduction increased to 20%.
These improvements have a direct impact on warranty, service calls, and helpdesk costs – representing tens of millions of dollars in annual savings to the company’s bottom line. Interested in conducting your own Global Quality Assessment? Talk to a PTC Customer Success expert today.