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Cost Vs Quality

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  • #39754

    Fontanilla
    Participant

    My colleagues have been discussing this issue for a few days. We know that by improving quality is a warranty to customer. However, in reality customer is more concern in terms of cost. Well, they do complain supplier products/ service low quality or having defects flowing to them. However, if we are able to offer them a lower cost as compare to others competitor, they will still crawl back to us and pass the sales order to us, isn it? so what’s the points of achieving a 3.4 DPPM or zero defects?

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    #121631

    aravind
    Participant

    If a company is more concerned about cost than quality of the service, the company does not seem to have any long term goals. They are survivors and want to get away with current scenario. I know a big insurance company which sold one of its business because they were not able to manage the software system which have been maintained so poorly that it was unmanageable. The worth of that company being  $10b. 

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    #121634

    Nimmo Dragomelo
    Participant

    It is very well saying cost should be less focussed than quality. An example was given how an insurance company sold a business for cost reasons that now worth 10 Bn USD plus. The truth is that almost 90 % of the offshore projects that I had been informed are all cost driven (quality is there but mostly window dressing), short immediate gains with a heavy maintenance costs later. What I am trying to say is that quality awareness is improving but still a long way from the time when a CEO would look upon a project from a quality angle unless of course there were heavy regulatory requirements. It is sad but that is the truth in my experience.

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    #121640

    Sanjeev Sadavarti
    Member

    Cost and Quality both are important. In fact, we buy based on our understanding of perceived benefits at given cost.
    We need to understand our customers and their compelling reasons to buy. We need to communicate cost of each quality element added and allow our customers to take decisions on their resons to buy. In my experience collectively, we and our competitors, whole industry catch our customers unaware. As we educate them, they become more aware of what we are offering at a little extra, which has definite and substantial benefits, contracts flow to us. Also, an aware customer demands more from our competitors and keeps whole equation balanced.
    Remember if cost is compelling reason to buy over the other benefits offered, low cost is a quality feature, which we need to meet. A good businessman chooses customers based on maximum realization where quality and cost both are important.

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    #121645

    anuarg
    Participant

    Dear dan
    Ya I m agree with u that today is an competitive environment n price is 1 of the major player in the market , but I suggest u to think out of box
    1)    customer never buy an product ( hard part / services )  , he always go/buy  the benefits, u can lure him once or twice but not always.
    2)    Yes u can bring the price down by controlling few things ,we called them the hidden cost , here six sigma plays its part by impacting on the bottom line to eliminates these hidden cost.(rework, downtime   etc) also by u can cut down the cycle time of production, which ll impact on the top line growth and so to urs business. Also by six sigma u can improve urs service /after sale services ,that all going to give VALUE to ur product .so u can offer a product with HIGH VALUE and at LOW COST .

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    #121646

    Michael Schlueter
    Participant

    Hm, will I buy a brand new Mercedes for just USD 1.000 (low cost) ? Without working breaks (low quality) ? I mean: I notice the brake problem on my first tour riding at 280 km/h … (hidden low quality).
    Low quality, in my view, will cause inconvenience later, be it in terms of satisfaction (“I thought I could do .. with this !”), complaints (“What did YOU sell me?”) or just lost money (“Sadly, replacing was cheaper than repairing it …”) or just lost reputation (“Those guys won’t see me again”).
    Let’s go to an extreme and replace the term quality by the term safety. Safety is a specific, yet relevant product quality. What’s about low-cost, low-safety products? Yes, I do prefer zero defects here. Same with zero defects in company image etc.
    Which brings me to the conclusion: low-cost, high-quality, high-safety products are the ones attracting me.
    Just my thoughts.

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    #121771

    Mike Chad
    Participant

    For me, Quality is a Given not a Want, Grade and/or standard is variable to cost.

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    #121779

    Dion Koh
    Participant

    Hi
    I always like to explain things by using food as an example. If you were given a choice between a cheap hamburger but the taste is deplorable and one that cost slightly more but taste good, which would you go for? You might say go for the good one but it depends (not a 6 Sigma word btw). It depends on your income. If you not earning much, the cheaper one will do fine as long as it fills the stomach & vice versa for the the slightly more expensive one. The conclusion is we are dealing with different types of people with different wants. The question now is, which type of people do you want to deal with.
     

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