ETQ, the leading provider of quality management solutions, today released findings from a first-of-its-kind research study – The State of Quality Management: 2020. According to the survey, companies are investing more in quality as a strategic business growth initiative that brings a significant return on investment (an average 23 percent). The report also finds that poor quality is costing organizations $49M per year on average.
ETQ commissioned the comprehensive study to uncover key trends and insights about quality management today and how it may evolve in the near future. Based on a survey of senior-level quality stakeholders in life science, food & beverage and manufacturing firms, the study found that good quality is adding an average of $156M, or 11 percent to bottom-line revenues (based on average surveyed company revenue of $25M to $1B-plus). On the other hand, the high cost of poor quality is attributed to sweeping product recalls, with 96 percent of respondents experiencing a recall in the last five years.
Results of the survey will be discussed during a live webinar today (April 14) at 2:00 p.m. ET— The Rise of Quality as a Strategic Business Initiative. It will be presented by ETQ leaders and industry experts, along with findings from a separate informal ETQ survey concerning the business and quality process impacts of COVID-19. To register, visit the ETQ website.
“The results from The State of Quality Management: 2020 are eye-opening on many levels and reinforce the financial impact quality has on corporate performance,” said Rob Gremley, CEO, ETQ. “As the survey shows, companies committed to quality as a strategic business driver benefit from stronger customer loyalty, less costly product recalls, competitive differentiation, and ultimately, stronger revenues.”
Quality’s Impact on Business Performance
The State of Quality Management survey was completed in January 2020 and uncovered other trends in organizations’ quality spending plans.
- Organizations currently spend an average of six percent of total organization revenues on quality programs and people.
- Organizations believe that a considerable investment level will be required to accomplish major quality initiatives over the next three-to-five years. Fifty-seven percent plan to make a moderate investment and 40 percent plan on making a substantial investment.
- The majority of respondents frequently meet organization quality goals even if it means a delay in product delivery.
- At the time of survey completion in Jan. 2020, 42 percent of organizations plan to increase quality spending at an average rate increase of 21 percent in 2020, and 39 percent of respondents plan to increase quality headcount in 2020.
Product Recalls and Supply Chain Management
Product recalls are widespread and occurring at an increasing rate for a large share of organizations. Recalls affect all aspects of an organization in terms of costs and damage to brand reputation and customer loyalty.
- According to The State of Quality Management, product recalls are widespread, affecting all organizations (96 percent) and occurring at an increasing rate.
- Twice as many organizations experienced an increase (56 percent) rather than a decrease (24 percent) in product recalls.
- Two-thirds (68 percent) of organizations were using a QMS solution at the time of a product recall, and 83 percent reported that their QMS solution helped them in their recovery process.
The study also found that while organizations are monitoring supplier quality, they frequently need to replace suppliers because of quality concerns.
- Eighty-seven percent of organizations use a quality management process in managing their suppliers.
- Seventy-two percent of respondents have needed to replace a supplier due to quality issues.
The Quality Performance Perception Gap
According to the survey results, there is also a quality performance perception gap between CXOs and quality management:
- Fifty-seven percent of the C-level respondents said their organization is doing “great,” on quality, while only 41 percent of quality managers agreed. Quality performance among staff with IT titles was even lower, at 33 percent.
This discrepancy could be attributed to the fact that CXOs are mostly focused on the big picture and not dealing with the day-to-day challenges of enforcing a quality program.
About the Survey Methodology
The State of Quality Management: 2020 research report was prepared by Salloway & Associates for ETQ to inform the life sciences, food & beverage and manufacturing industries on the state of the quality management market. As part of the comprehensive report, the company completed a total of 300 online surveys, from Nov. 2019 to Jan. 2020, among a broad cross-section of U.S. decision-making stakeholders of quality management programs in those industries. It included CXO management, quality or supply chain managers and IT managers that support quality and supply chain functions within mid-market ($100M – 500M) and enterprise-level organizations (above $500M).
Click here to reserve your copy of the eBook: The Rise of Quality as a Strategic Business Initiative: 2020 which will be released later this week.
ETQ is the leading provider of quality, EHS and compliance management software, trusted by the world’s strongest brands. More than 550 global companies, spanning industries including electronics, heavy industry, food and beverage, and medical devices, use ETQ to secure positive brand reputations, deliver higher levels of customer loyalty and enhance profitability. ETQ Reliance offers built-in best practices and powerful flexibility to drive business excellence through quality. Only ETQ lets customers configure industry-proven quality processes to their unique needs and business vision. ETQ was founded in 1992 and has offices located in the U.S. and Europe. To learn more about ETQ and its various product offerings, visit www.etq.com.