There is a direct correlation between product quality and the bottom line. It’s not hard to imagine the financial impact of a product recall to prove this point, but there’s more to the story. If you work in manufacturing, the term “cost of quality” is as familiar as the term “revenue”.
Cost of Quality (CoQ) isn’t the price of creating a quality product or service, it's the cost of not creating a quality product or service, according to The American Society for Quality which describes CoQ as: “A methodology that allows an organization to determine the extent to which its resources are used for activities that prevent poor quality, that appraise the quality of the organization’s products or services, and that result from internal and external failures. Having such information allows an organization to determine the potential savings to be gained by implementing process improvements.”
No doubt, CoQ is key – when LNS Research surveyed 400 quality management respondents to identify key initiatives, thirty-five percent said that reducing CoQ is their company’s top quality management objective. This is significantly larger than other initiatives, including: improving customer experience (19%), reducing non-conformances in manufacturing (13%), preserving brand equity (11%), and better managing operational risks (8%).
While reducing CoQ is a strategic objective for many manufacturers, strategies for reducing the cost of product compliance and organizational inefficiencies – all of which are related to quality challenges in product development – are also important.
Here are some of the most common challenges:
How do we build-in quality with such complex products and processes to support?
What process efforts will best improve time-to-market efficiencies?
How do we continually improve and repeat processes?
How can we ensure compliance in markets or with partners where it’s a must?
What efforts are needed to reduce product and business risks?
The processes that help manufacturers address these challenges, include:
Procedures for internal and external process audits
Change control for quality documents and records (including standard operating procedures, policies, and product data such as Bill of Materials, eCAD, mCAD, and software)
Risk and reliability techniques to build in quality early
Control of internal and external issues, such as nonconformances and customer complaints
Corrective and preventive actions to drive product improvements
However, the overarching product development problem is that quality is often seen as the responsibility of the Quality department. As such, quality information is often disconnected from core engineering, manufacturing, and service systems. Software tools and databases can vary by business unit, site, and department, thereby preventing broader access to valuable product and quality data. This causes similar issues to recur across products and functions, resulting in high costs and inefficiencies that not only impact the bottom line but jeopardize the company’s ability to retain market share if customer value is ultimately compromised.
Ironic as it may be, the Internet -- that same technology that enables frustrated customers to publicly vent woes about a product failure to a wide audience, and allows news of a product recall to spread quickly -- is the same technology that can help a company tackle its quality challenges. The Internet of Things is a game changer.
Internet of Things (IoT) technology enables smart, connected products to send manufacturers information about their quality and performance while in operation. Analyzing this data to understand failure rates, failure modes, and conditions at the time of failure, can improve root cause analysis and corrective preventive actions – closing the loop between engineering teams and their products in the field.
“For the quality management professional, the IoT is the gateway to decision-driving intelligence in performance, reliability, and all manners of in-field product data that was once unique to organizations like space agencies communicating with their assets,” states LNS Research in its report, Leveraging the IoT to Improve Product Quality. “This latest technology wave is the engineered product equivalent: making field performance feedback available to quality and engineering professionals on a scale never seen before, enabling engineering and development to adjust and design-in quality and reliability based on current field data.”
With these connected quality capabilities, manufacturers gain insights into ways to reduce quality challenges in product development and the cost of quality like never before. Learn more about connected quality.