The economic power of quality
The report shows that organizations embracing formal quality initiatives are more likely to attain higher levels of productivity than those that aren’t.
Is there any doubt that quality can have a direct impact on a company’s bottom line?
A survey conducted by ASQ and Forbes Insights, the research arm of Forbes media, found that continuous improvement practices and initiatives have a direct, positive impact on an organization’s finances.
In March 2017, senior executives and quality professionals surveyed and the results were featured in “The Rising Economic Power of Quality: How Quality Ensures Growth and Enhances Profitability.” The report shows that organizations embracing formal quality initiatives are more likely to attain higher levels of productivity than those that aren’t.
The research draws on responses from 1,000 senior executives and nearly 900 quality professionals from around the world and from a multitude of industries.
According to the results, the biggest benefits to businesses implementing formal quality initiatives include boosting customer growth and sales, followed by efficiency gains.
Areas most likely impacted by quality initiatives include operations, customer service and production.
47 percent of respondents said quality programs increased their company’s profitability, and one in five said growth exceeded 5 percent in the most recent year as a result of these initiatives.
Only 9 percent said quality initiatives decreased profitability while 15 percent of respondents didn’t know how quality impacted their bottom lines in the most recent fiscal year.
“Organizations that implement effective and innovative quality initiatives often experience increased profitability because of their emphasis on customer needs,” said ASQ CEO William Troy. “Quality can help organizations remain agile and responsive to meet the growing needs of its customers — customers who will offer repeat business as a result of quality products and services.”
But the results also show that ongoing quality issues, like employee turnover, quality issues from suppliers and lack of leadership support are affecting overall competitiveness. The data shows that 84 percent of respondents agree that ongoing issues are, or somewhat are, negatively impacting competitiveness.
Furthermore, 20 percent of respondents say these issues are costing them more than 10 percent of their total annual revenue.
Quality measurement is widespread, but more data is needed. Less than one-fourth of enterprises have extensive metrics for their quality efforts. The ability to obtain the right data at the right time is a continuing issue. Customer satisfaction is the metric most often leveraged.
Digital transformation means new ways to approach quality. It makes speed essential in the ability to deliver quality outcomes, as well as to measure and report results.