Introduction: Quality management programs have been around for decades. They have been touted by consultants and quality control experts as essential to the success of any organization. Typically, the argument in favor of implementing a quality management program goes something like this: In an increasingly competitive global marketplace, a company's ability to deliver a quality product on time every time is a prerequisite for remaining competitive and for increasing customer loyalty and sales revenues. Consistent delivery of quality products and services can only be accomplished in an organization that has developed a quality control program to ensure consistent and sustainable levels of internal quality control. Quality management programs improve quality and productivity while lowering total cost and improving customer satisfaction and employee morale.
A company introduced a new quality management program. It then went about the task of trying to determine the costs and benefits of this program by examining the company's Sales Revenue as well as Prevention Costs, Appraisal Costs, Internal Failure Costs, and External Failure Costs over a seven-year period. This seven year time-span included the three years prior to the implementation of the new quality management program, the year the program was introduced, and in the three years following the implementation of the program.
Of all the metrics described above, changes to sales revenue based on the company's decision to implement a quality management program is the most difficult to prove. Any number of factors could have caused the change in sales in the chart shown below over the seven-year period being measured. For example, the company's marketing department might point to its efforts as the primary reason for the increase in sales. The sales department might point to its success in bringing in new customers and increasing revenues with existing custome...