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The Future of Quality: Back to Basics and Strong Project Management

COMMENTARY 

By Giovanni Capozza

Italy
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The manufacturing industry in advanced countries must focus on the quality of their product to fight the global crisis. What is, today, the path to reach a level of excellence in quality? Occasional initiatives are not enough. We rather need some real targeted programs, which also require a strong co-ordination supported by project management efforts.

A good product quality is a driving force for sales and can reduce the firm’s costs! A simple and indisputable concept that affects inexorably, however, the income statement of any business organization, in the form of lost revenue caused by a quality of product not in line with the expectations of consumers, along with additional costs due to the bad quality of products (warranties, returns, rework and scrap, internal process controls, extra administrative and logistics costs, etc.). Moreover, some further indirect cost burden needs to be considered for the devaluation of the brand and expenses incurred by the customer.

In fact, it is not surprising to find companies with levels of bad-quality costs ranging from 10% to 25% of sales. That is to say that a company with a turnover of 200 million €, for instance, could incur in a cost ranging between 20 to 50 million € due to poor quality. In this scenario, a 20% improvement in product quality would ensure a reduction in costs of up to 10 million €, and an increase in profit that may be of two / three-digit percentages.

However, the path to a structured reduction of non-quality costs requires a highly “disciplined” approach. In this sense, in this article we suggest how to pursue the improvement of quality and the reduction of non-quality costs, through a Quality Management Program requiring the implementation of five specific steps, grouped into two main phases (as shown in table A).

From an organizational point of view, the realization of such a program, requires a two-tier structure (as explained better hereinafter) supported by one program manager and a steering committee, and the activation of several project team, entailing therefore a strong cross-functional project management effort.

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About the Author

pmwj26-sep2014-Capozza-IMAGEGiovanni Capozzaflag-italy

Italy 

Giovanni Capozza has been working since 2007 as a consultant in JMAC Europe, mainly in continuous improvement and processes optimization projects, in Italy and in other European countries.  His consulting efforts are devoted to lean methods application, both for R&D and Supply Chain processes –with the aim of improving companies operational performances (QCT), together with the parallel goal of coaching people-, and also to the Project Management of internal projects within client companies. Giovanni can be contacted at [email protected]