Before we can understand why quality matters, we need to define what quality actually is in relation to the customer experience.

While quality can be defined and measured in a variety of different ways, it must always be driven by the expectations and needs of your customer. When you are able to meet, or exceed, the needs and expectations of your customers you are providing and quality service (or product). The benefit of this is that customers will not only return but will also start sharing your business with their various networks.

There is a cost associated with quality and while good quality will help your business grow, bad quality, even if it is just perceived, can do lasting damage to your business.

• Defining the cost of quality



As an organisation, how do you define the cost of quality? This is an important cost to determine as it will help your organisation to determine what areas need to be improved and what areas are doing well. The Cost of Quality (COQ) is a simple calculation: COQ = CoGQ + CoPQ. This simple calculation is important in determining how well your organisation is doing when it comes to quality.


Cost of Quality = Cost of Good Quality + Cost of Poor Quality

- CoGQ are costs that your organisation has in place to inspect, test, appraise and audit quality. It also includes prevention costs.

- CoPQ are all the costs that are incurred and managed internally, e.g., rework, reinspection, scrap, defects, repairs and servicing, warranty claims, complaints, returns.





While quality can be defined and measured in a variety of different ways, it must always be driven by the expectations and needs of your customer. When you are able to meet, or exceed, the needs and expectations of your customers you are providing and quality service (or product). The benefit of this is that customers will not only return but will also start sharing your business with their various networks.



• The cost of poor quality

The cost of poor quality can be destructive to your business and should be avoided at all costs. In 2008 British Airways during the disastrous opening of Terminal 5 in Heathrow, lost £16 million due, in part to IT issues, but largely due to poor quality control .

During the first five days after opening new terminal, British Airways misplaced more than 23,000 bags, cancelled 500 flights and made losses of £16m.

What were the problems:
-lack of testing,
-staff had not been trained properly,
-no parking spaces for staff on day of opening,
-staff security searches were delayed,
-construction work on parts of the building was not finished when the airport opened,
-out of 275 lifts, 28 were not working - 17 are still broken,
-loading staff could not sign on to the baggage-reconciliation system (staff had to reconcile bags manually, causing flight delays),
-problems with the wireless LAN (at some check-in stands meant that staff could not enter information on bags into the system using their handheld devices),
-technicians installed software in the baggage system that was meant for test phase only, but it was accidently left in place after the terminal opened (Terminal 5 system did not receive information about bags transferring to British Airways from other airlines. The unrecognised bags were automatically sent for manual sorting in the terminal's storage facility).

The reputational damage BA suffered was immeasurable.


The cost of poor quality:


• Reputational Damage: Unhappy customers like everyone to know they are unhappy and with social media it is very easy for unhappy customers to damage your reputation in a short amount of time. It can be expensive and time consuming to try to fix this damage once it is done.
• Customer Satisfaction: A happy customer will return. An unhappy customer will not. Customer satisfaction is a big part of what keeps the wheels of your organisation moving. If you do not have customers, you do not have a business.
• Loss of revenue: Poor quality can lead to returns and complaints – all of which cost your organisation money. Products that need to be remade due to poor quality can lead to a loss of revenue and impact your bottom line.
• Time: Dealing with complaints takes time (and manpower). Reworking takes time and this additional time costs money!
• Missed opportunities: If you are spending time dealing with poor quality you don’t have time to focus on growth and new opportunities.



• How to minimise the cost of poor quality?

Poor quality can be easily minimised if you have proper checks in place within your organisation.

• Focus on prevention: Preventing bad quality is much more effective that trying to deal with the cost of bad quality.
• Set up quality metrics: When your organisation has a very clear idea of exactly what level of quality should be achieved, it is easier for them to achieve it.
• Perform quality audits: Audits are a vital part of the process; they assess how your organisation is doing when it comes to meeting the quality standards.
• Streamline processes especially inspection process: Many of these processes can be easily automated making them more objective.
• Have corrective plans in place: When the standard of quality is not achieved, make it clear to your organisation exactly what steps need to be taken.
• Train existing employees: Make sure that your employees know exactly what the level of quality is and how they can go about achieving it.
• Invest in software that focuses on quality: Software can be really beneficial because it allows you to track