Quality Imrovement Increases Profitability


For leaders who are reluctant to turn their attention avvay from the bot-tom Üne, the final Baldrige characteristic offers a back door: The new model values results. The pursuit of quality excellence does not come at the expense of financial excellence. Rather, financial results are another way of measuring the effectiveness of the system. The difference is that the goal of the new model is not profits; it is customer satisfaction, with the understanding that profits will improve as quality improves.

Value creation model:

It reflects the experiences of quality leaders worldwide. Delighting customers, reducing waste, and increasing productivity are natural by-products of a systematic process of continuous improvement.

  • It represents one way to look at the financial benefits of im-plementing the new management model. However, the connections be-tween improving quality and improving profitability are not ahvays this evident.
  • The new management model gives leaders the ability to control and improve their entire company, but it does not make the decisionsfor them.


Financial performance depends on how well a company does in three areas, and the new model strengthens a com­pany's position in all three:

1.  Strategy developmentit contributes to more efficient strategies and better business decisions, which improves the development of strate­gies and helps companies respond to a changing environment.

2.  Market performance.it increases customer retention, market share, and revenues, which improves performance in the marketplace.

3.  Internal performance.it improves asset utilization and productivity and lowers operating costs, which improves performance throughout the organization

                                                                                                                                                     Requirements — Your Customers — Satisfaction

The new management model:                       


  •  It identifies the key elements in the new model and the ways in which they are interconnected.   
  • The model is driven by customer re-quirements and directed toward customer satisfaction. Leadership and information affect every part of the organization.
  •  Leadership commits everyone in the company to meeting customer requirements through con-tinuous improvement; information is gathered from ali critical points to evaluate and improve current operations and to help people make deci-sions based on facts.