In today’s tough economic climate – with increasing raw material costs, supplier costs, energy costs, and labour costs – it’s not surprising how many business owners are constantly trying to identify ways of reducing their costs.
However, this can often be a double-edged sword as maintaining high levels of quality is key to business growth and success – and reduced costs can often be synonymous with inferior quality.
Kirstie Penk is a director of The Legal Director (TLD) which provides ambitious SMEs with experienced in-house counsel on a part-time, retained basis.
Manufacturing Matters asked Kirstie for her views on the extremely important issue of quality in the context of pricing pressures.
Kirstie believes the key lies in ensuring you have the correct order contracts in place.
She said: “There’s little tolerance these days for anything less than optimal.
“Customers of service-based manufacturers expect perfect quality delivered on their timetables and without budget overruns. Failing to address quality standards in manufacturing can cost you business and customers.
“It leads to more scrap, more rework, and more waste – all of this cutting into your profits.”
She added: “If you’ve got a well written contract in the first place with your supplier of raw materials, it shouldn’t impact quality. You’ll have a specification agreed that they are required to deliver to and a mechanism for increasing their price to you.
“Very rarely are pricing and the quality schedule tied together – they’re two separate elements of the contract and a well drafted contract will mean if one thing changes (i.e. pricing) the other (i.e. quality) cannot be affected”