When it comes to quality management objectives, what many manufacturers don’t understand about cost of quality could hurt them.

A survey by LNS Research asked more than 500 manufacturing executives to identify their most important financial and quality management objectives. Across the board, growing revenue was the top financial objective, while reducing cost of quality was the top quality management objective.

One surprising insight, however, was that few executives selected both reducing cost of quality and revenue growth as their most important goals. Instead, the survey revealed:
• Those who said revenue growth was most important put other quality management objectives above cost of quality.
• Those whose top quality management objective was reducing cost of quality put other financial objectives above revenue growth.

This point reveals a fundamental error in thinking on the part of manufacturing leaders—one that may actually prevent them from achieving their quality management goals. Here we look at the true connection between cost of quality and revenue, and how manufacturers can leverage the 1–10–100 rule to improve performance.

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