By John R. Brandt
More than 30 years ago, Philip Crosby declared that “Quality is free,” arguing that achieving high quality — ideally zero defects — is less costly to an organization than poor quality. He made the case that while there are investments required to achieve perfect quality, those expenses pale in comparison to costs for rework, scrap, lost customers, etc.
A similar case is can be made for other improvement efforts. The proof is in the numbers: A high percentage of manufacturing plants participating in the 2010 MPI Manufacturing Study report that they’ve increased profitability through various investments and initiatives in their facilities. For example, where an investment/initiative was applicable for a plant, we saw a “major increase” or “some increase” to profitability as follows:
- Use of improvement methodologies: 77% of plants report an increase to profitability.
- Development of new products/services: 68% of plants.
- Application of new capital equipment: 66% of plants.
- Investments in the workforce: 59% of plants.
- Implementation of new IT: 42% of plants.
Only a few executives worried that these efforts were harming the bottom line. For example, where applicable, just 3% of plants report that the application of new equipment decreased profitability (31% report no change to profitability).
Impact on Profitability
(% of plants)
Use of improvement methodology(ies)
Application of new capital equipment
Implementation of new IT
of new products/services
Investments in the workforce
Source: 2010 MPI Manufacturing Study
Your peers are investing and improving, and have the bottom-line results to prove it. What about you?
The 2010 MPI Manufacturing Study was conducted by the Manufacturing Performance Institute (MPI), with partnership support from Thomas International Publishing Co. If you would like to learn more about MPI and its research, including this study and the Next Generation Manufacturing (NGM) Study, please subscribe to the NGM newsletter and blog, click here.
© 2011 The MPI Group