System Quality is Job 1!
Ford Motor Company has been telling us for years that "Quality is Job 1." It really should be for all of us. In a broad sense, our commitment to quality reflects our personal standards and determines whether we can compete in the game of business. Let's take a closer look.
You have designed a system, acquired all of the components, and put it into operation. Now you are interested in the quality of the product or service that your system produces. The output of the process may move to the next process in a production path, or to the end-user. In either case, the receiving party is the customer and your system output must meet their specifications and expectations.
The customer's idea of quality may take different forms. For example, does the product or service meet their technical specifications? Is the workmanship acceptable? Does the product function as promised? Was it delivered on time? Did the customer have a good buying experience? In short, does the product or service meet or exceed customer expectations in every way? Any quality considerations that are critical to the customer must be critical to you, or the customer will take their business elsewhere. You must listen to the "voice of the customer."
What are Quality Standards for Your Systems?
More specifically, quality refers to the "yield" of any business system—how many times the output meets the quality standards, or conversely, how many mistakes cause rejects, waste and rework. Since systems aren't perfect, certain tolerances are acceptable to the customer and fall within standards. For example, a local furniture company tells the customer they will deliver between 8:00 am and 10:00 am. Anywhere in that range is a success. Delivery outside the promised time is a failure to meet the standard. System results are either acceptable or not, and easy to measure.
As I mentioned earlier, systems with high quality or high yield have lower costs. Everything you do to improve your business systems and processes comes down to removing defects and delay—the waste of the business that drives away customers and steals profit.
A typical small business like yours produces about 3% waste in its business processes. At first, this may seem reasonable. However, this level of waste—much of which goes undetected—is what prevents many small business owners from achieving healthy profit margins.
For example, a business has annual sales of one million dollars. Three percent (3%) of sales are attributed to the waste of time and materials throughout all of the business processes. This loss of $30,000 comes directly off the bottom line! If the business in this example is striving for an 8% profit margin, or $80,000, the 3% waste amounts to nearly 40% of the profit. In other words, $30,000 of the possible $80,000 profit is lost. A seemingly small waste factor of 3% robs the business of a large portion of its profits. Many small businesses have much more than 3% waste and this is a major reason for failure.
Small business processes with a 99% yield, or 1% waste, are not only achievable but also essential in a competitive marketplace.
Continually Seek Quality Improvement
There are many opportunities to improve quality in your business—defects and delays are everywhere. However, it would be a daunting task to correct every mistake in every business process. In fact, no one has ever done it. However, it is essential that you improve process quality wherever it adversely affects customer satisfaction, profitability and growth. Stunning improvements can be made in a short period of time!
Box Theory™ incorporates a powerful method called Six Sigma for identifying quality problems and achieving high-performance results—defects of less than 1%.
Begin building your bottom line today by minimizing waste and maximizing yield of your core systems and processes. If you are still hesitating, I urge you to order my eCourse at www.boxtheorygold.com/business-course. One idea can quickly pay back the cost of the course. Dramatic results are common!
Tomorrow we will discuss another characteristic of high-performance systems. Like a diamond, this powerful principle has many faces and you will find it to be of great worth!
Wishing You Prosperous Times,
Ron
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