ETQ, a provider of management solutions, released findings from a research study, The State of Quality Management: 2020. According to the survey, companies are investing more in quality as a strategic business growth initiative that brings a significant return on investment (an average 23 percent). The report also finds that poor quality is costing organizations $49 million per year on average.
ETQ commissioned the study to uncover key trends and insights about quality management today and how it may evolve. Based on a survey of senior-level quality stakeholders in life science, food & beverage and manufacturing firms, the study found that good quality is adding an average of $156 million, or 11 percent to bottom-line revenues (based on average surveyed company revenue of $25 million to $1 billion-plus). On the other hand, the high cost of poor quality is attributed to sweeping product recalls, with 96 percent of respondents experiencing a recall in the last five years.
“The results from The State of Quality Management: 2020 are eye-opening on many levels and reinforce the financial impact quality has on corporate performance,” said Rob Gremley, CEO, ETQ. “As the survey shows, companies committed to quality as a strategic business driver benefit from stronger customer loyalty, less costly product recalls, competitive differentiation, and ultimately, stronger revenues.”
The State of Quality Management survey was completed in January 2020 and uncovered other trends in organizations’ quality spending plans.
- Organizations currently spend an average of 6 percent of total organization revenues on quality programs and people.
- Organizations believe that a considerable investment level will be required to accomplish major quality initiatives over the next three-to-five years. Fifty-seven percent plan to make a moderate investment and 40 percent plan on making a substantial investment.
- The majority of respondents frequently meet organization quality goals even if it means a delay in product delivery.
- At the time of survey completion in January 2020, 42 percent of organizations plan to increase quality spending at an average rate increase of 21 percent in 2020, and 39 percent of respondents plan to increase quality headcount in 2020.
The State of Quality Management: 2020 research report was prepared by Salloway & Associates for ETQ to inform the life sciences, food & beverage and manufacturing industries on the state of the quality management market. As part of the comprehensive report, the company completed a total of 300 online surveys, from November 2019 to January 2020, among a broad cross-section of U.S. decision-making stakeholders of quality management programs in those industries. It included CXO management, quality or supply chain managers and IT managers that support quality and supply chain functions within mid-market ($100 million to $500 million) and enterprise-level organizations (above $500 million).