How would your response differ if the competitor offers better rates but worse quality?

To find out, we studied the deeds of hundreds of customers transacting in different markets over a five-year period with one of the country’s largest manufacturing companies. We tracked when competitors offered different prices and service quality levels and then investigated how customers behaved in response to this.

A formative way of inspecting products would occur at different points along the production line, and at the again at the end of the line. A defective part or product may be discovered at one of the stages, and at this point in time the defective item must either be scrapped, reworked or turned into something else. Each of these alternatives are costly.

“Inspection with the aim of finding the bad ones and throwing them out is too late, ineffective and costly,” Dr. Deming, a Quality Guru, says. Inspection will always be necessary but not to ensure quality. Inspection should be used to gather information. If quality is already built into the process, then inspection is only one tool that is part of the process.

If the supplier of the raw material produces inferior quality, then the end product (having gone through other phases of production) will only be as good as the original raw material would allow.

Companies should seek to create suppliers that can be counted on for quality. After the suppliers have reached the level of quality that meets a company’s needs, then a certain loyalty should be given in order to do business with those suppliers. In the past, companies have mainly used the supply basis that could meet the minimum specifications at the lowest price. The suppliers with the lowest price more often than not produce inferior products that are unreliable. Often these suppliers or freelancers go out of business before the warranty on their products expires.

Produce consistent quality in product.

Since high quality service can be costly to provide, companies that offer a better service tend to charge higher prices, which forces customers to make trade-offs. Some customers want great service and they are willing to pay more for it, while for others, it is the cost that takes precedence.

Competition should not come down to rates, it should be those that produce consistent quality in their products or solutions that take the spotlight.

The author of this article has several years of experience in Total Quality Management and has been working on a range of TQM and Quality Awareness projects since 1994, being part of the implementation and achievement of saving millions of dollars on many projects for different companies.

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