What Are Quality Reputations Worth?

Abstract:The practical successes of Six Sigma have shown that quality initiatives have a substantial effect on an organization's bottom line. Yet quality professionals may experience difficulty convincing managers to keep up the efforts once a quality objective is achieved. The best approach is to focus on the most important long-term effect of good quality - a positive reputation. A reputation for quality affects sales by reinforcing the confidence of established customers, winning new customers, and inducing competitors' customers to switch. Reputation losses caused by quality problems pose a serious threat to a company's survival. A quality maintenance system is inexpensive to install and run and is more economical than an inspection system. The expected value of a maintenance investment can only be calculated by comparing the expected loss of reputation erosion to the depreciation rates of the maintenance …

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