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As organizations strive to increase bottom-line performance, they often forget to integrate two important planning activities-strategic and quality planning. This is often due to a lack of understanding of the cause-and-effect relationships among strategy, quality, productivity, profitability and competitiveness. To maximize profits, organizations should align business objectives and priorities, at all levels of the organization, with the quality improvement process.
Organizations need to select quality improvement projects that link strategic business objectives to their goals. If the strategy is to increase market share, focus projects on areas that have the greatest impact on future customers. However, if the business strategy is to increase profit on a specific product or service, projects should focus on reducing quality costs by reducing or eliminating errors and eliminating non-value-added activities or waste.
Another challenge to understanding this relationship is the definition of quality. Basically, quality is meeting customer requirements, error free, at the lowest possible cost. Can quality be too good? This is usually the case of a product exceeding customer requirements. Quality exceeding requirements can be considered a form of waste to an organization.
One byproduct of a quality initiative is productivity improvement. By eliminating errors, non-value-added activities and waste, resources become available. However, this presents another challenge to management. If these resources are not deployed to meaningful work, there is no real impact to the bottom line. Management has learned through experience that if employees are let go, then the improvement process can be utterly destroyed. Successful organizations find ways to use free employees due to improvement projects as valuable resources to address priority outcomes.
Increased quality reduces the overall production cycle time and increases the availability of machinery and equipment due to less rework.
Quality and productivity improvement increase the profitability of the organization. Margins increase due to these lower costs. Sales results increase because of higher quality conformance, better on-time delivery and the opportunity to reduce the selling price. White-collar operating costs are also reduced as poor quality, waste and non- value-added activities are reduced or eliminated.
Quality improvements have been shown to improve the operating environment and employee satisfaction as organizations increase organizational competitiveness. Customer satisfaction increases when conformance to requirements improves, on-time delivery is better and costs are lowered. Sales and market share will increase as customer satisfaction improves and perceived value increases.
Historical ApproachHistorically, organizations have treated strategic planning and quality improvement planning as two separate activities. Most organizations do not schedule quality improvement planning regularly. When organizations finish their current improvement projects, they may identify new ones, but generally they wait until a crisis surfaces.
In most cases, improvement projects are added to the regular work schedules of the individuals involved with the projects and tend to get worked on only when these individuals have time. This approach ultimately results in projects not being completed in a timely manner, if they are ever satisfactorily resolved.
While strategic planning is conducted on a regular and formal basis, many organizations do not communicate these plans because they consider the output as confidential. However, the organization is expected to achieve these plans, even though they have not been communicated. This is not a recipe for success.
Quality improvement planning should be part of the strategic and business planning process. Organizations that link their strategic and business planning process with quality improvement planning have a sustainable, strategic, competitive advantage because they positively affect their bottom-line profitability. In the business climate today any competitive advantage can mean the difference between just surviving and thriving.