How Quality Impacts Bottom Line
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Transcript of How Quality Impacts Bottom Line
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Many companies know quality is important, but they don’t know how to tie it to the bottom line.
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Once you understand how to measure the impact quality has on your bottom line…
… the easier it is to get your company headed in the right direction.
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For example, at Johnson Controls, they realized that a one-point increase in customer satisfaction equaled $13 million in additional revenue for the company.
Source: Making the Economic Case for Quality, by John Ryan
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Extensive research conducted by the Baldrige National Quality Award found that when a company focuses on quality, they have:
• Better employee relations• Higher productivity• Greater customer satisfaction• Increased market share• Improved profitability
Source: Baldrige National Quality Award
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Additional research found that companies that win quality awards have better operating income, sales and total assets.
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Better quality leads to better customer service.
Boeing Aerospace Support focused on quality and, as a result, now delivers products and services to clients within 3 days (vs. 40 days for their competitors).
All that happened because of their relentless focus on quality.
Source: American Society for Quality; www.asq.org
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Samsung launched a quality initiative that resulted in $1.5 billion in financial benefits in just two years.
Source: Making the Economic Case for Quality by John Ryan
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Ford Motor Company saved $1 billion in just three years by incorporating its “Consumer Driven Six Sigma” quality program.
Source: Making the Economic Case for Quality, by John Ryan
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SSM Health Care increased its market share18% when they implemented a quality improvement program.
How’s that for a healthy increase in
business?
Source: Making the Economic Case for Quality by John Ryan
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The Baldrige Index shows that, in some cases, companies focusing on quality outperform the S&P 500 by as much as six to one.
Cumulative Results Through Year
Baldrige Index S&P 500
1 92.00 33.00
2 248.70 58.50
3 324.90 111.80
4 362.30 148.30
5 425.63 173.27
6 841.29 221.55
7 685.26 163.11
Source: The Baldrige Award
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“Total quality management has been called a fad by many. However, if TQM is a fad, it is one of the longest and most significant fads ever.”
-- George Easton and Sherry Jarrell, Emory University
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Employees of Clark American Checks generated more than
20,000 ideas on how to improve quality at their company. After implementing several of the
ideas, marketing share increase 50% over the next five years.
Source: Making the Economic Case for Quality by John Ryan
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Texas Instruments saw on-time delivery increase to more than 95% as a result of its efforts on quality improvement program.
Source: Making the Economic Case for Quality by John Ryan
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Research into 288 companies in Europe found that 65% of the companies analyzed saw significant benefits once they focused on quality.
Benefits
Qua
lity
Source: Making the Economic Case for Quality by John Ryan
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Are you ready to take the first step toward
improving the quality of your
products?
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Download a free trial of QAComplete and take control of your test management and quality assurance!