Linking Quality to Profit

Linking quality to profit is an effective means of communicating with your executive management. But this communication is difficult for some quality assurance and food safety professionals, especially during budget planning.

We know quality when we see it but there are times we don’t know where to look. But the more we look, the more we’ll find; the more we find, the more we can improve quality. We identify problematic areas, but there are times the resources have not been approved. Why is this? Many quality assurance and food safety positions from a plant floor level (e.g., HACCP coordinator) to a plant office level (e.g., quality manager) to corporate level (e.g., quality director) face difficulties linking quality to profit. What are some practical solutions?

In today’s world of documentation there always is much data to analyze, but you can be data-rich but information-poor which creates poor communication. Owners understand profits and have a responsibility to provide resources, and most will provide resources linking quality to profit. As such, there are two major ways to link the two: the cost of a non-quality approach and that of a process-efficiency approach.

NON-QUALITY APPROACH. The first area is the cost of a non-quality approach typically conducted by quality assurance personnel. (Quality assurance happens before, while, and after making a product.) The costs of poor quality will likely fall into one of four categories:

• External Failure. Costs associated with the use of poorly made products (e.g., consumer complaints, product recalls, product replacements).
• Internal Failure. Costs associated with the making of poorly made products (e.g., reworking, retesting, resampling, product downgrading).
• Appraisal. Costs incurred to evaluate conformance to requirement (e.g., inspection, testing, auditing, laboratory operations).
• Prevention. Costs encountered to assure poor quality does not happen (e.g., planning, training).

A quality professional needs sufficient information to show executive management that reducing the cost of non-quality is an opportunity to increase profit. The first step is to gather costs associated with poor quality. Communicate these costs and sources along with solutions to provide justification for quality and profit. In most cases the solution(s) will cost much less than the cost of the poor quality. This first area can be at your fingertips to measure and manage.

PROCESS-EFFICIENCY APPROACH. The second area is the cost of a process-efficiency approach typically conducted by quality control personnel. Quality control happens while making a product. The cost of process efficiency can fall into many categories, including:

• Net weight control: the overfill problem. If weight is declared as not less than 20 pounds, why provide 23 pounds in the packages? With statistical quality control (SQC), you can tighten the weight overfill with continuous improvement to minimize overpack within the process capability (no underfill). Additional package units will result from the same production volume, thus improving profit.
• Moisture control: water as a low-cost nutrient. If moisture is declared as not more than 10%, why provide 7%? Although there should be a desired target impacting other nutrients, utilizing SQC you can tighten the moisture variability. With a continuous improvement effort moving the target closer to the declared level without exceeding the upper control limit should occur. Cost savings of moisture efficiency with this low-cost essential nutrient should be a result.
• Protein control: protein as a pricey macronutrient. If protein is declared as not less than 25%, why provide 28%? Utilizing a sufficient supplier evaluation and incoming ingredient protein-testing program, you can identify the protein level in raw materials. An accurate prediction of the level in finished products should be a result. The protein in finished products should be closer to the declared level without exceeding the lower control limit. By maximizing protein efficiency, ingredient savings of higher priced essential nutrients should be a result.

These are three examples of process quality control attributes directly linking quality to profit. There are others; we just have to know where to look. Damage prevention, waste avoidance, microbial management, and cleaning efficiency with less downtime are examples of additional opportunities. Many millions of dollars of opportunity exist.

Although there has been much written about quality and profit, it is difficult to determine how many millions of dollars of quality can be linked to profit on a daily basis in the food industry. Meeting requirements and exceeding customer expectations is my favorite definition of quality. Not meeting requirements and not meeting customer expectations is a quick way of not linking quality to profit.

“Quality is not only free, but a bountiful source of profits.” — Philip B. Crosby