The best cost to eliminate is the cost of poor quality

Posted on by Thames1

Entrepreneurs always look for opportunity – it’s why people start businesses in the first place.

Running a company takes discipline. Sometimes that discipline means learning when to not pursue an opportunity and instead focus on your core procress until it’s perfected.

In 2014, Industry Week published an article on five steps to improved manufacturing quality.

These tips would have been as valuable in the days of Henry Ford as they are today:

  • Use a team mindset.
  • Define quality from the customer perspective.
  • Develop organizational understanding of the cost of quality.
  • Solve problems completely.
  • Employ strong process discipline.

Thames was brought in to manage a foundary several years ago. The foundary was so intent on growing its sales that it spent months testing new processes and equipment to chase business. It successfully landed several new contracts. And it was quickly going broke.

The new business lines were outside the company’s core expertise and not nearly as profitable. Meanwhile, it’s core customer base was experiencing longer wait times both in product received and response from executives. Thames came in and exited the new business quickly and personally visited the core customers to essentially let them vent.

Then we made a promise. We’d create a scorecard of measurables and visit every quarter to prove we were delivering. It took two years before they told us we didn’t have to bother with the visits. And profits rose as sales went back to prior levels.

In the end, it was less about what was made when and where and more about the relationship. The foundary management had lost track of what was important to its most important customers. That’s a recipe for bankruptcy.

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