Linking Quality to Business Finances

The Quality profession has always been about improving processes, products and services. From TQM to PDCA to Six Sigma, all Quality methodologies are focused on eliminating defects and the root causes of those defects. It involves products that satisfy your customers, running processes at greater efficiencies, producing less waste and increasing business productivity. All of this, of course, is based on the fact that these processes are driving financial benefits.

If it didn’t make sense financially, would you still do it? In some cases you might, but as a rule of thumb you can’t sustain a business unless you bring in revenue and produce a profit. The Six Sigma methodology, in particular, emphasizes the financial results of a project. What does all of this do for your company?

1. Before a project is initiated, a scoping analysis of financial benefits is performed. This allows management to prioritize, along with other business specific factors, potential projects
2. After or during the completion of a project, a final financial analysis is performed based on the actual results of the project. This forces the business to quantify the return on investment for the Quality department. Is it paying off as you would expect any other investment in the business?
3. It opens the eyes of management to what is actually happening on the floor, in the shop and in the cubicles, translating day-to-day activities into terms that they are concerned about – meeting the budget, increasing profits and driving shareholder value.
4. It educates employees about the whole financial picture. Because Six Sigma uses employees to drive projects and improvements, it also modifies their work behaviors to cut costs and increase profits.

Many businesses have found the successful recipe for Quality. When employees are allowed to exit from the intellectual vacuum where they are deprived of business and financial information, they then can see the whole picture. They understand how their actions do make a difference and how they are needed to make business processes successful. You don’t need ‘Six Sigma’ necessarily, but you do need to tie process improvements to financial results in order to be successful.