It’s Not the Cost of Quality, It’s the Cost of Poor Quality

“Quality is like our health, we tend to take it for granted, and only notice it when it fails. As we are seeing it only takes one small error to have a massive disaster.” – Sipho Tjabadi

I just returned from the ASQ Audit Division Conference 2012, and I walked away with one overarching message: it’s not the cost of quality, it’s the cost of poor quality. This is a new way of looking at quality assurance. Instead of focusing on the costs of testing and validation, focus on the costs of producing a failing product.

Sipho Tjabadi has been a keynote speaker at the ASQ Audit Division Conference for the past 2 years. He showed this video during his presentation at the 2011 conference. In this video, Sipho uses 3 big examples of what happens when quality is overlooked.

The first example Sipho gives is the 1986 Space Shuttle Challenger, which exploded less than 90 seconds after take off. This massive disaster was caused by the mere break down of an o-ring seal. This video explains that NASA had knowledge regarding their supplier’s product having a “potentially catastrophic flaw”, but they overlooked this flaw. NASA looked at this issue from one side, the cost of quality. It was determined that redesigning the o-ring would have cost a couple hundreds of thousands of dollars; however, the exploding Challenger costs NASA over a billion dollars. This is the cost of poor quality. Not to mention, 7 lives were lost by overlooking the quality of the o-ring.

The next example is Toyota’s recall of 9 million cars in 2009. Toyota became so enthralled with expanding in the marketplace, that they lost sight of quality, and put 9 million cars on the market with problematic floor mats and defective brakes that led to unintentional acceleration. This cost Toyota over 5 billion dollars, and a human toll of over 50. When companies lose track of quality, and its customers pay the consequences, the cost of rebuilding a quality reputation is near insurmountable.

The final example used to express the importance of quality assurance is the 2010 BP oil spill. In this situation, overlooking quality resulted in the biggest environmental disaster of all time. Ineffective cement was used around the oil well, and it was not strong enough to prevent the spill. The cement was never properly tested, a test that would have cost a hundred thousand dollars. It can be seen once again that whatever money is saved by cutting quality costs will be made up for and then some by the cost of poor quality.

These situations exemplify the importance of putting quality first and foremost, rather than placing it on the back burner, and waiting for smoke signals. I’m glad I was given the opportunity to attend the 2012 Audit Division Conference, and meet people like Sipho working to achieve and promote the importance of quality across different industries. I hope this blog entry and the video help remind everyone how vital it is to put quality first.