5 Simple Ideas: Quality and cost – it’s not what you think

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5 Simple Ideas That Will Improve Your Efficiency Part 2 – Quality and cost: It’s not what you think

The thing about quality is that it costs. If you want the best then you have to be prepared to pay for it and the higher the quality the higher the cost. This is something we are all familiar with and it’s a universal truth. Except…when it isn’t.

Let’s take a step back for a second and think about why we have this understanding of the relationship between quality and cost. For that, we’ll look at coffee.

There’s a small rodent-like creature that lives in the forests of Indonesia called the Asian Palm Civet. Along with berries and fruits, the little civet loves to eat coffee beans. These beans then pass through the civets very own internal production line and are ‘deposited’ by them onto the forest floor where farmers pick them up and sell them on.

Once these beans have had a little wash down, they eventually make their way to the cups of Europe, America and Asia, branded as Kopi Luwak coffee. The price for this delicacy? Up to $100 per cup. That’s right…Per. Cup.

Kopi Luwak is understandably pretty rare which explains a lot of that price but the fact that coffee connoisseurs are willing to pay top dollar for something that is essentially a waste product tells you that the quality is pretty good too.

The other big reason for the huge price tag though is time. It takes a while for the little civet to create his masterpiece and the production process is a complex one. So time and resources are a necessary pre-cursor to quality – you pay more for a ‘hand-made’ item than one created on a production line.

But what if you work in a world where your customer doesn’t care about how long it takes you or the experts involved. In fact, what if they want it to take as little time as possible and still pay a lower price? Does that sound familiar? This probably describes most back-office processes and it’s the reason we want to improve efficiency.

So where does this leave us? Quality is directly related to time and resource. But not always in the way you might think.

Research shows that up to 60% of the time spent by back-office teams dealing with business processes is spent on handling exceptions. Unfortunately, we don’t live in an ideal world and when things don’t go according to plan it takes time and experts to bring them back on track. Time equals cost.

So, to reduce cost you need to reduce these exceptions. Or put another way, you need to improve quality.

Hence the way we think about the relationship between quality and cost can be turned on its head. In the world of business processes – improving quality actually reduces cost.

If you’d like to find out how our clients are using the features of LEAP to reduce the number of exceptions and improve the quality of their processes get in touch or request a demo HERE.

Now…anyone fancy a hot, steaming cup of rodent poop?