I believe: Continuous Quality Improvement can be the most rewarding profit-centre for an organization.
How often have you observed organizations boasting about the number of quality improvement projects in their organization? Much activity. No results.
The reality is that 20% quality improvement projects account for 80% reduction in Cost Of Poor Quality (COPQ). And COPQ in an organization is at least one-third the total costs.
How can we possibly ignore structured Continuous Quality Improvement? Particularly, in Business, Healthcare and Education.
Here are a few insights:
- Quality improvement addresses chronic problems.
- We mistake sporadic quality problems to be chronic quality problems.
- Chronic problems do not come with alarms.
- Chronic problems are budgeted for, inadvertently.
- Chronic problems are prevalent is value-creation processes, support processes, as well as supplier processes.
- The root causes for over 50% chronic problems are traceable to supplier processes.
In my experience, when Quality, Finance and Human Resources departments collaborate, they collectively deliver dramatic COPQ reductions for their organization. Examples: Tata Steel; ITC Packaging & Printing Division.
Sporadic vs Chronic Quality Problems
Of the Juran Trilogy, quality improvement plays a dominant role in reducing costs. However, please note, the COPQ in an organization is associated with both sporadic and chronic quality problems.
A sporadic quality problem is a sudden adverse change in the status quo, which requires remedy through restoring the status quo. Example: Put the fire out at Oberoi Towers.
For sporadic problems it means taking corrective actions on periodic problems; for process refinements it means taking such action as reducing variation around a target value. This is quality control.
A chronic quality problem is a long-standing adverse situation, which requires remedy through changing the status quo. Example: Crash the admissions process cycle time at Bumrungrad Hospital to half, in six months.
For chronic problems, it means achieving better and better levels of performance, each year. This is quality improvement.
The vital few chronic problems that deliver most of the COPQ reductions are simply not delegable.
The danger is that fire fighting sporadic problems may take continuing priority over efforts to achieve the larger savings that are possible through solving chronic problems.
Now, refer to the question I had asked in Quality Capsule 2: How should we start on our Road to World-Class Quality? My qualified response is, top management must start by identifying chronic problems in the organization and prioritize 5 to 10 pilot quality improvement projects.
My question to you this week is: Why should Quality, Finance, and Human Resource departments collaborate for quality improvement?
Next, my Quality Capsule 4 on Wednesday 29 July, will be on: How to assess Cost Of Poor Quality?