ASQ and Forbes Insights Research: Quality Practices Boost Profits and Efficiencies
Milwaukee — Continuous improvement practices and initiatives have a direct, positive impact on an organization’s finances, according to senior executives and quality professionals surveyed in March by ASQ and Forbes Insights, the research arm of Forbes media.
The results of the survey, featured in “The Rising Economic Power of Quality: How Quality Ensures Growth and Enhances Profitability,” shows that organizations embracing formal quality initiatives are more likely to attain higher levels of productivity than those that aren’t.
The research draws on responses from 1,000 senior executives and nearly 900 quality professionals from around the world and from a multitude of industries.
According to the results, the biggest benefits to businesses implementing formal quality initiatives include boosting customer growth and sales, followed by efficiency gains. Areas most likely impacted by quality initiatives include operations, customer service and production.
Forty-seven percent of respondents said quality programs increased their company’s profitability, and one in five said growth exceeded 5% in the most recent year as a result of these initiatives. Only 9% said quality initiatives decreased profitability while 15% of respondents didn’t know how quality impacted their bottom lines in the most recent fiscal year.
“Organizations that implement effective and innovative quality initiatives often experience increased profitability because of their emphasis on customer needs,” said ASQ CEO William Troy. “Quality can help organizations remain agile and responsive to meet the growing needs of its customers — customers who will offer repeat business as a result of quality products and services.”
But the results also show that ongoing quality issues, like employee turnover, quality issues from suppliers and lack of leadership support are affecting overall competitiveness. The data shows that 84% of respondents agree that ongoing issues are, or somewhat are, negatively impacting competitiveness.
Furthermore, 20% of respondents say these issues are costing them more than 10% of their total annual revenue.
Respondents who self-identified their organization as a leader in performance excellence report fewer losses due to ongoing issues. A higher percentage of these organizations, which often have enterprise-wide quality initiatives, report revenue growth due to their quality programs.
Other key findings include:
A spirit of collaboration and open communication is more essential to quality success than other initiatives. Stakeholders need to know they can speak up as issues arise, or if they have improvement ideas. While quality encompasses a broad variety of activities and programs, the most common denominators include collaboration and risk management.
Quality measurement is widespread, but more data is needed. Less than one-fourth of enterprises have extensive metrics for their quality efforts. The ability to obtain the right data at the right time is a continuing issue. Customer satisfaction is the metric most often leveraged.
Digital transformation means new ways to approach quality. It makes speed essential in the ability to deliver quality outcomes, as well as to measure and report results.
Download the full report at economicsofquality.org.