Costs and benefits of quality management

Managing quality means the checks and systems a business uses to make sure its goods or services meet the standard customers expect. It can protect a business from expensive problems, but setting it up and running it is not free.

Why managing quality costs money

Managing quality can be expensive because it may need:

• Specialist equipment – for example, a firm printing custom T-shirts might buy a colour-testing device to check every print.
• Trained staff – employees need time and training to inspect work properly and follow quality procedures.
• Quality systems – record sheets, checklists and testing routines all take time and money to set up and keep up to date.

A business must weigh these costs against the benefits. Spending £2,000 on training and testing may be worthwhile if it prevents £5,000 of faulty work, but not if it prevents almost nothing.

How good quality management saves money

Effective quality control and quality assurance can reduce costs by lowering:

• Waste – fewer materials and products are thrown away.
• Rework – fewer items need to be repaired or made again.
• Returns and recalls – fewer faulty products come back or have to be withdrawn.
• Complaints – fewer refunds and replacements to pay for, and fewer customers lost to rivals.

For example, a firm assembling mountain bikes could check the welds on every frame and test the brakes before each bike is boxed. If a fault is spotted at that stage, it can be put right in minutes. Once the bike has been packed and shipped, correcting it means unpacking it, paying for return delivery and rebuilding it. That helps the business control production costs, which can increase profit.

More checks are not always better. Extra inspection adds time and wages, so it only helps if it improves customer satisfaction or prevents costly faults. The right level of quality management balances the cost of prevention against the savings from fewer faults.