Measuring the Value of Quality

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Posted on January 16, 2012 by borawski

 

I suspect many of you, like me, are always looking for the fact-based argument for quality. When pressed, I typically fall back on the cost-of-quality (poor quality) argument, and site the statistics I’ve heard over the years.
Twenty cents of every dollar of revenue in manufacturing is lost to poor quality. Thirty cents of every revenue dollar in service is lost to poor quality. Seventy cents in healthcare, and I’ve never heard a number cited for government but everyone agrees it’s north of 70%. Often these numbers will capture the interest of the discussion enough that I can delve into a more elaborate explanation for what contributes to the cost of quality other than scrape and rework. I often end my epistle with something like, “And this 20% (30%, 70% or more) is available to every company without raising prices, or finding new customers. Twenty percent to the bottom line!”
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