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Understanding the True Cost of Poor Quality and How to Reduce It

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In today’s competitive apparel and footwear industries, brands regularly focus their efforts on acquiring new customers, increasing distribution networks, and preparing next season’s products. But what about reducing the cost of poor quality?

Despite success in other areas, companies that don’t understand and address their true cost of poor quality face substantial barriers to long-term growth. What’s more, the cost of controlling quality could ring in around 20 percent of total sales.

The cost of poor quality comprises not only the costs resulting from product defects, but also company processes, practices, or functions that generate defects and errors. Poor quality can also weaken consumer relationships, damage your brand, and add major operational and financial costs.

Consider the effect of a continued weakness within invoicing and logistics. Errors could result in shipments of the wrong product, which would mean increased freight costs, chargebacks and even lost sales.

Similarly, errors in the product development stage could result in a host of even more costs. Suppose first samples are not adequate; additional money must be spent on couriers and redevelopment, with compounding errors leading to production delays, chargebacks and cancelled orders.

In fact, companies lacking effective quality management often have a cost of poor quality equal to 20 percent of sales or more, according to a recent American Society for Quality guide.

Read more at Sourcing Journal.