Experts in marketing and sales state that it makes good business sense to deliver more than expected. If possible (and cost-effective), this can help produce very high customer satisfaction, as the customer is expecting one thing but is pleasantly surprised by getting something better. One of the best examples of this in action, is illustrated by Google’s Corporate Philosophy — Point number 10 “Great Just Isn’t Good Enough.” Under this point, they make the assertion that they will “always deliver more than expected.” They state “. . . Google is able to identify points of friction quickly and smooth them out. Google’s point of distinction, however, is anticipating needs not yet articulated by our global audience, then meeting them with products and services that set new standards.” This is the essence of thinking through the products and services you market and giving people more than anticipated!
The Cost of Quality
There are numerous costs to quality — and these are actual costs that can be quantified. Below, we will look at some of these costs (paraphrased from the American Society for Quality). The point we are attempting to make is that costs can be identified, and once identified can be monitored and your employees can be made aware of them. These are most applicable in a manufacturing situation, so in the feed and grain industry they may fit best in the case of feed manufacturing. However, there are some that fit for the grain industry, and we will highlight those where appropriate.
Prevention costs are the costs associated with activities designed to prevent poor quality in the products and services you deliver. Examples here might be planning for quality — where you as manager get together with your employees and analyze possible sources of mistakes or look at your manufacturing system to see where contamination or improper product handling might occur.
While the costs of these meetings might not be “out-of-pocket” costs in terms of dollars and cents, they do cost nonetheless — in terms of time and effort. Other processes that might cost time and money here would be education and training in the area of quality and analyzing suppliers for their ability to deliver quality ingredients. Prevention costs might include things like monitoring the settings on your grain dryer to ensure that grain does not dry down too much — so that you lose quality in the form of kernel breakage in corn or splits in soybeans — causing fines; or monitoring temperature in your grain bins to ensure that grain does not mold or heat and go out of condition.
The second class of costs of quality is termed “appraisal costs,” and these are expenses affiliated with measuring or testing products or services to make sure they conform to your quality standards and any associated performance requirements. In the feed business, this would cover all of your in-bound testing of ingredients, such as checking the protein level of incoming soybean meal.
Other sources of cost would include your in-line and final inspection/sampling/testing. Most feed manufacturers run periodic tests on finished product, and grain operators sample load-out shipments to check for blending quality and efficiency. In addition, other costs here would include those associated with calibration of your measuring and testing equipment as well as supplies and materials associated with all of the above activities.
The third area of quality costs are those termed “failure costs.” These are costs resulting from a product or service not complying with requirements or meeting customer needs. The experts divide these costs into internal and external failure costs.
Internal failure costs occur prior to shipping the product to your customer. These costs include anything resulting from having to “rework” or “downgrade” the product because it did not meet your specs. Examples would include remixing and remaking a feed that had poor pellet quality due to insufficient moisture in the feedstuff as it went through the pellet die. A load of wheat might have to be downgraded in grade because a slide was stuck open and allowed a larger volume of lower grade wheat to be mixed than planned — reducing the quality of the whole outbound shipment.
External failure costs occur after the product leaves your place of business and possibly during or after it reaches the customer. Generic examples here include costs associated with handling customer complaints, product recalls or customer returns. Specific examples in the grain and feed industry might include delivery of the wrong product to a livestock producer (18% pelleted complete feed delivered to a dairy farmer who needed a 38% concentrate); or perhaps a customer complaint on a grain shipment because of short weights due to a loose slide on a railcar.