What is Quality?

Quality is…

hard to define because it is an attribute of something else.  We all recognize good, or even great, Quality.  We admire the personal qualities of people that are influential in our lives.  We recognize the exceptional quality of the great masters of the Renaissance in painting and sculpting.  In business, then, what is Quality?

Quality is meeting an established criteria for a product or service.  The criteria can be mandated by Regulators, specified by customers, or complied with voluntarily.  Quality is not (traditionally) a direct financial measure, however customers are often willing to pay more for exceptional Quality and Poor Quality can be quantified in financial terms.  Consider that the Rolex Submariner watch sells between $7,000 and $9,000 USD because of legendary Quality.

What if luxury is not your brand?  Does Quality still matter?  Mass produced items achieve high quality relative to their price as a result of many retailers offering no hassle or no question return policies.  If customers are dissatisfied with the product’s quality, they return the product and this is a cost for the business.   This cost is often multiplied due to “unseen” costs- the cost of the item refunded, the cost to return or restock the item, and all of the costs associated with stocking the product for sale, selling it, and then having it returned.  For even a$15-$20 dollar item these return costs and unseen costs quickly use up the small amount of profit that was made when the customer initially purchased the item.

Can you lose money by improving Quality?  In the short term, yes.  Improving Quality is an investment, and with any investment there is a cost to implement the improvement and then the investment is recouped over time as the product is sold and the costs incurred due to defects or customer dissatisfaction are prevented.  Over time, this becomes the new norm and the improved performance becomes expected.

Competition can also lead to improved Quality.  The Big 3 U.S. Automobile Manufacturers improved automobile Quality as the result of competitive market pressure from Japanese Automobile Manufacturers.

What is your competitive strategy? Are you winning in the marketplace? Are you leaving money on the table?  These are key questions when considering what aspects of business or organizational performance may need to be improved in order to succeed and to excel.

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