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The New Microeconomics
posted by
Suresh Lulla
27 Jun 2008, 18:22
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labels: quality management, cost of poor quality
In a competitive environment, organizations strategize differentiation through:
- The features of their offereings, and
- The quality of their deliverables.
Better features benefit revenues. Higher quality reduces costs. This approach cements corporate branding.
With the current runaway prices, India Inc’s in a belt-tightening mode. Corporates across sectors have started resorting to drastic measures to cope with the difficult times – double digit inflation and high interest rates. Some of the initiatives being tried out include going slow on hiring, minimizing travel costs by video-conferencing, experimenting with work from home, and cutting down on entertainment allowance.
The reality is, even with runaway prices customer expectations are unlikely to change. They will want your offerings with the same features and the same quality; but at the same or lower price!
So what options does corporate India have? Clearly none. Organizations must contain their costs without sacrificing features and diluting quality. I am optimistic that our survival instinct will facilitate this breakthrough transformation – Unfortunately, county after country has embraced quality and transformation only when their backs have been against a wall.
To make a breakthrough transformation we need to make a habit of continual improvement and innovation. The key steps involve a breakthrough in management (not the worker) thinking:
- Identify your chronic waste
- Translate this chronic waste into the language of management – money! Dr J M Juran refers to this as the Cost of Poor Quality (COPQ)
- Strategically and aggressively apply a structured quality improvement methodology to achieve the desired results.
I assure you, there is gold in the mine (of your chronic waste). Pursuing gold in chronic waste at a time of runaway prices is what I call the New Microeconomics. I could rephrase it to read: Reducing 25 per cent of total costs that have been dedicated to chronic waste and legitimized through the budget!
Qimpro has a 20-year track record in COPQ reduction.
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