The Cost of Poor Quality

Quality is the backbone of a company’s competitiveness. For a company to ensure it keeps its place in the market and that it stays ahead of its competitors at all times, it has first to ensure that its products are of an above average quality. This level of quality must be right for the target market. In order to ensure that the quality of products and services meet the standards required for the customers, the company will be required to identify, outline and specify what it wants to deliver. After which they should match the items against the standards set by the authorities of the land: usually government institutions or other mandated autonomous bodies, put in place for the purpose of quality control(Nixon, 2014).

By virtue of attaining the minimum acceptable quality standards, a company would be considered ready to compete, however, minimum qualifications does not by any means make a product or a service competitive. Competitiveness is achieved by, how well a company’s products or services meet and satisfy the consumer’s needs(Haghighi, 2013).   To understand one’s customer base; competitors and one’s competitive edge, a company will be required to contrast its products with those already servicing the market. It would then be required to conduct research with the aim of gauging the market sentiment vis-à-vis the products in circulation. Of paramount importance would then be to find out what the target market thinks and feels about the company’s products: whether or not the quality satisfactorily meets their expectancies. This research is expected to inform a company on their level of competitiveness and shine light on what give them advantage over the rest of the market. In the global market, quality of a product or service plays an important role in ensuring the competitiveness of a company.

Japan and Germany for instance, have used this strategy to earn their first place in the global market place; beating the United States, by ensuring the production of first-rate products; a reputation they have cultivated since the tragedy that hit their manufacturing industries during the World War(Baily, et al., 2005). The aptitude for competition hinges on the capability to produce and deliver products that have a positive influence on the value of life. In order for nations and organizations to competitively improve the world’s standards of living, an environment of resources, policies and systems that support healthy competition is essential.

Quality has always been associated with a cost. The higher the quality of a product, the lower the cost involved: in the short run and consequently, the higher the returns. The lower the quality however, the higher the cost involved in the long-run and the lower the returns expected. The cost of poor quality is not always straight-forward and true its nature it the obvious costs happen to be fewer in number while the hidden costs tend to out-weigh the scale(Nixon, 2014). The easily observable costs of poor quality involve costs associated with waste, recalls, rejects and customer returns while the more obscure costs are in the form of development cost involved in unsuccessful projects; unnecessary turnover; the process of managing complaints; field service expenses; payments for customers and extra inventory among other vague costs(Haghighi, 2013).

One of the greatest fallacies in the production of products and services is the notion that reduced quality can help to cut costs(Baily, et al., 2005). The fixation on returns in the short run, with little or no intention to adequatelyplan for sustainable products and services aimed at creating employment while ensuring the company maintains a healthy market share, is a great misconception.