A conversation with Cority’s Director of Product Management, David Hartmann on Quality Management.
- What is the cost of poor quality?
- How can companies measure good and poor quality?
- What are direct and indirect costs of poor quality?
- How can quality management software help companies improve their quality?
“Quality means that your product meets or exceeds customer expectations.”
Stuart Cook: Can you tell us a little about your background? What led you to become Cority’s Director of Product Management?
Hartmann: My background is in Electrical Engineering. I have a bachelor’s and master’s degree in electrical engineering, and I started in Pharmaceuticals in Manufacturing. A lot of what you do in Pharma is documentation and testing, so I was involved in a lot of software validation and quality. I was essentially working in software quality in the pharmaceutical industry and then went into quality systems. For the last 23 years, I’ve been involved in quality management systems in some way, shape, or form – either in building them and deploying them or managing a team of people that deployed them.
Stuart Cook: Can you talk a little about the cost of poor quality? Is it as simple as it sounds?
Hartmann: No, I don’t think it’s as simple as it sounds. At the heart of it, we’re looking at how much does creating unacceptable material or service cost the company? In its simplest form, for example, let’s say a company creates widgets and 3 out of every 1,000 widgets are defective and need to be thrown out. In that situation, you can easily calculate the cost of poor quality by calculating how much was spent on creating those 3 widgets (assuming you catch all of the items that were unacceptable before they were released). However, an example of a more complex situation would be a pharmaceutical company releasing a product with the wrong expiry date on it. There’s nothing wrong with the product itself but now every item from that lot needs to be accounted for. Every package that has the wrong expiry date needs to be found and that is a monumental task. You’d have to figure out who it went to, what distributors have it, and if any of it was already sold.
Stuart Cook: In that example of a more complex situation, what other costs may be associated with that incident if not all the products are found?
Hartmann: There’s also an exposure to liability. Let’s say the expiry date that was printed was two years later than the actual date. What happens if someone takes it past the real expiry date? Maybe it doesn’t work or, worse, it has an unattended reaction. So, there’s a huge liability sitting out there. It’s not as simple as throwing something away – the cost grows exponentially as the problem is found later and later in the process.
Want to learn more? Check out our previous blog, What is the Cost of Poor Quality?
Stuart Cook: We know that quality doesn’t just impact physical products so, can you give us an example of how quality can impact every vertical?
Hartmann: Of course. Quality can impact services as well. For example, cell phone services. Companies don’t sell you the physical phone, they sell you the service. If someone is not satisfied with the service they’re receiving, they’ll leave and choose a new provider. In this scenario, it can be as simple as the customer’s level of expectations aren’t met.
Stuart Cook: How exactly do you measure good and poor quality?
Hartmann: Well, I don’t think there’s one single metric you can point to. It really depends on the industry. For example, car manufacturers can look at mean time between failures and number of recalls. For a software company, like Cority, it could be the number of bugs per 10,000 lines of code or the number of verified customer complaints. There’s never going to be one metric that measures quality universally for every industry, product, or service.
Stuart Cook: What are some examples of the indirect costs of poor quality? How can these be identified and measured?
Hartmann: An example of an indirect cost is the impact a product or service may have on the brand’s reputation. There’s a direct cost associated with recalling a product but there’s also an indirect cost associated with the brand’s image. Recalling a product or failure to identify quality issues can result in a huge negative impact on the brand’s image and, once it’s there, it’s hard to escape. For example, the flight control software failure that led to multiple plane crashes in recent years. In my opinion, indirect costs are largely underestimated and can’t be recouped.
Stuart Cook: Do you think the difficulty in measuring indirect costs is a reason why quality doesn’t get the resourcing or financing that it may require?
Hartmann: Well, if you look at the total addressable market for quality management software, it doesn’t begin to compare to any of the other markets. Companies do spend money on quality management software – it may not be all in one place, but most Fortune 500 companies have all of those systems in place. However, for other companies, I do think it’s similar to insurance – you don’t need it until you do. You think, ‘Will this really happen?’. I don’t think those companies really understand how big the risk is or they don’t know the impact that it can have on the organization.
Stuart Cook: What are the benefits to using a quality management software vs using spreadsheets or documenting on paper?
Hartmann: Visibility. As soon as it’s in a centralized, digital system, everybody can see it and know about it. Someone can track it, put metrics around it, and act on trends. Regardless of if a company wants to or not, they have to measure and account for issues. But with software, they’re able to develop a feedback process and reduce waste while increasing brand perception.
Stuart Cook: Do you have any advice for companies looking to invest in quality management software?
Hartmann: Almost 100% of the time there’s a return on investment for implementing a quality management system. Just in the ability to measure how well you do something and understand where you can improve. So, the first step is to ask what’s the ROI? The second step is doing a cost benefit analysis and seeing what the short- and long-term benefits are.
At Cority, we believe that quality management can and should be simple. Built by quality professionals (like David Hartmann) for quality professionals, the Quality Cloud was designed to consolidate efforts into one simple and integrated system.
Interested in learning more? Check out our new Quality Management Essentials solution which is ideal for organizations seeking to digitize their quality programs by using a cloud-based SaaS solution, refine their existing digitized Quality Management processes, or integrate a Quality Solution with their existing EHS management.