HIGHER QUALITY LEADS TO LOWER COSTS

HOW HIGHER QUALITY CAN LEAD TO LOWER COSTS?
(This essay is contributed by Ms. Nidhi Puri)

Different people perceive quality differently. Some relate it to the cost of the product, some to its brand. Quality in other terms is the way the value of a product would be perceived by the end user, depending on how well the product performs as per ones scale of expectation.
Quality is like a foundation for any company; be it in the manufacturing industry or any other. It’s rightly said by someone that a building can tolerate all adverse conditions if its foundation is strong. In an ideal situation, higher quality would mean zero percentage of defects in any product. But in day to day scenario it can be related to least defects and rejections. It might not sound cost effective to maintain quality standards at each stage in the process of procurement of raw material to the end product, but it does reduce costs. By maintaining quality standards we reduce the rework or alteration that would be required .This would automatically save our direct material, labor and energy costs. Improving quality at each step would help increase the productivity and also efficiency. There are probable chances that this would lead to cost reductions due to decrease in the number of rejections and the discounts that one has to give buyer for short deliveries and defected products.
The wastage of material and energy would also be reduced. There would be less scrap generation, which again adds on to the cost. Therefore it is quite justifiable to say that higher quality goes a long way in reducing costs on a daily basis. Though the reduction in cost at each step might seem trivial, but in totality it increases the efficiency of the firm and helps reduce the expenses.

References
1. http://www.entegreat.com/eg_industrysolutions_foodcpg_CostReduction.htm
2. www.asq.org/glossary/q.html