Risky Business: Is Cost Cutting Putting Your Quality at Risk?
Risky Business: Is Cost Cutting Putting Your Quality at Risk?
These are still difficult times for many businesses, including dental laboratories and dental practices. A real challenge can be how to balance economic stress on your business yet maintain the quality of your product. Are you sacrificing long-term quality for the short-term benefits of an improved gross margin? Toyota’s series of vehicle recalls is a prime example of that action. Here are some of the warning signs that have been identified by quality professionals:
- Repeating cost-cutting cycles.
- Ignoring or delaying operational signals.
- Aging equipment or degradation of maintenance services.
- Cutting quality or operational excellence personnel.
- Eliminating or outsourcing of customer assistance resources.
Cost Cutting
As business owners, we tend to use cost cutting as our primary strategy to increase profit. This is where quality is affected. Combining cost cutting with continuous improvement actions is a better answer. In other words, using your quality system to reduce remakes, for instance, adds to your bottom line and is a cost cutting measure that also improves customer satisfaction. Improving customer satisfaction can increase your business and reducing remakes improves your profit margin.
Ignoring Signals
Your dental clients are working on an appointment schedule and so are you. Getting the work out on time is critical to customer satisfaction and you meeting your standards, however, if you and your workers develop the attitude of just get it out the door on time, then quality can suffer. There should be procedures in your quality system for monitoring internal reworks, excessive use of materials, excessive scrap, etc. Are you paying close attention to these signals and addressing them immediately? These can be indicators that there is a failure in your processes and changes are required.
Aging Equipment
Equipment sales in the dental industry have certainly suffered over the past several years. Of course, this is a direct result of cost-cutting measures, but does the quality of your product suffer and in the long run is it going to cost you? A critical component of your quality system is maintenance of your equipment so it continues to operate at its optimum. The performance of your equipment is affected when you cut maintenance personnel, discontinue service contracts, or reduce your preventive maintenance cycles.
Cutting Quality Personnel
Most dental labs operate with quality checks in production, but that’s just one component of a quality system. At this time, it seems to me that the No.1 reason that dental laboratory owners are developing their formal quality system is to meet the FDA’s mandatory requirements for dental laboratories and also to pass an FDA inspection. Even if this is your incentive for assigning this responsibility to someone in your lab, this individual and the entire quality team must receive support from the top. The time that these individuals are allowed to monitor and improve the lab’s quality system is a direct measure of the commitment to the quality program. One of our client’s management representatives recently told me that the best thing she has been allowed to do is to form a quality team. It has been a motivational tool that has provided greater awareness of quality issues and has improved the quality of their product. The results: a greater profit margin. Don’t cut these personnel or any operational excellence personnel.
Outsourcing Customer Service
Satisfying your customers is the key to your business’ success. From industry experts who advise dental laboratory owners on how to survive in this industry, I hear them speak of the importance of communication with your customers. Another critical component of your quality system is the identification of problems and quick handling of the issues. When you fail to meet your customer’s expectations, you risk losing that customer. If a dental lab is contemplating reducing the number of staff in customer service, then the efficiency of the customer service process may need to be improved. Develop ways to streamline the process and keep customers satisfied.
It’s a Balancing Act
If you’re facing the need to improve your profit margin (and who isn’t), you should consider what drives customer satisfaction along with what lowers your costs. Don’t let a short-term fix affect your long-term quality. It’s definitely a balancing act, but by applying the basic principles of a quality system you will greatly improve the quality of your product.
