Competitive Advantage and Revenue Growth

 Sustaining Edge Solutions, Inc. Newsletter

Performance Improvement Solutions for Your Business                              January 2013


This Month
* Competitive Advantage & Revenue Growth
* ISO 2011 Survey- Free Download
* The Customer is Always Right
* In the News
* Training Courses


February 6-9, 2013 Denver, Colorado.  We are a Sponsor of this Conference.  See you in Denver!  
Aerospace, Defense and Manufacturing Expo March 14, 2013 Phoenix, AZ. We are a Sponsor, Presenter and Exhibitor of this Conference.    


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Our newsletters provide information on business management systems.  These systems include ISO 9001 QMS, AS9100 Aviation, Space and Defense, ISO/TS 16949 Automotive, ISO 27001 Information Security, ISO 13485 Medical Devices, ISO 14001 Environmental, and others.  Subjects include performance improvement methods such as Six Sigma, Lean Enterprise, and other topics of interest to our readers.

If you have any questions regarding the content or have a subject of interest for a future newsletter, please let us know.  


 Competitive Advantage and Revenue Growth        

Last month our main newsletter topic focused on driving quality management metrics and best practices for performance measurement. Continuing with this important topic we found a recent study of interest on the relationship of financial objectives and quality management objectives conducted by Mike Roberts of LNS Research.  


Many companies do struggle with the best way to think about and incorporate the cost of quality into operations and financial results. This study shows how many companies fail to use reductions in the cost of quality as a driver for competitive advantage and revenue growth.


Quality and Operational Excellence


In building an operational excellence model, manufacturing and service companies typically create a set of objectives or goals to work toward. With the new year upon us, your organization may have already completed this strategic planning event.  Often, these goals are operational, customer or financial in nature.   

Quality management objectives can include ensuring compliance, improving design for quality, improving the performance of suppliers, preserving brand equity, or reducing the cost of quality. It’s important to note that these objectives have a direct relationship to financial and operational objectives. Quality management objectives shouldn’t be viewed in a vacuum, and this study shows why.


Financial Objectives

First, let’s take a quick look at the financial objective data from this study.


Based on more than 400 respondents, nearly 60 percent of executives have revenue growth as the top financial objective of their companies. This is significantly larger than the second and third selections: grow operating margins (19%) and expand into global markets (15%).


Quality Management Objectives


Responding to a similar question of which quality management objectives are most important to their companies, more than 35 percent of executives, reducing the cost of quality is the top quality management objective. The next highest response regards improving customer experience (19%), and the third reducing nonconformances in manufacturing (13%).

Tying the Data Together   

Interestingly, given the high percentage of companies in the top choices, there are relatively few companies that choose both growing revenue and reducing the cost of quality.


Instead, executives who choose the cost of quality as their top quality management objective are far more focused on other financial objectives, such as cutting costs, reducing risk, or ensuring compliance. On the flip side, companies not choosing the cost of quality are 56-percent more likely to choose growing revenue as the top financial objective.

The takeaway? Many executives don’t believe that reducing the cost of quality grows revenue, and this is a mistake!

For many companies, understanding revenue and the cost of quality model relationship is overlooked or misunderstood. Where revenue growth is a main focus, especially in rapidly growing, younger organizations, there may be the misconception that the cost of quality is solely focused on reducing costs and managing compliance.


ISO 2011 Survey – Free Download    


The 2011 ISO Survey of Management System Standard Certifications was released mid-December 2012. It covers seven standards and shows significant increase in certification to a number of ISO management system standards, including ISO/IEC 27001 for information security (up 12 % on 2010) and ISO 22000 for food safety management (up 8 % on 2010).   


Certificates to the environmental management and energy management standards also increased as did the quality management standard for the automotive sector. In 2011, seven standards were included in the survey. For the first time the full data set (excel files) is available to download for free.  The survey data is also available on a CD for the price of postage and packaging.  


The ISO 2011 Survey Free Download can be found at the ISO website.


The Customer is Always Right      


Companies have tried different approaches to get-and keep-customers. “The customer is always right,” is possibly the first worldwide slogan to make customers feel special but usually in response to something gone wrong. 

The recent ASQ Customer Service survey pointed out some interesting gaps in customer service. The survey was fielded in November 2012 and polled more than 600 quality and customer service professionals worldwide. The survey found that companies are much more likely to invest their resources in areas other than customer service. Only four percent of survey participants rank customer service initiatives as a top priority compared to 38 percent for new product or service development, 18 percent for information technology, and 13 percent for marketing and advertising.


The majority of companies (36 percent) also responded that they have not created a management-level customer service position to help manage the customer service experience, while 28 percent say that service is managed through the customer service department and 20 percent say that it is part of the quality department.


It is encouraging to see that one-fifth of the survey respondents noted that customer service is managed through the quality department. What we are unsure of is whether this is an upward or downward trend. What is certain is that companies must respond to customers’ unspoken needs to compete in today’s business world. Customers cannot always articulate what they want-big wins come from anticipating what customers want and providing it. This goes well beyond a marketing campaign and a few focus groups, it goes to understanding thoughts, actions, and habits!


The survey respondents offered these nuggets of advice for improving customer service experiences:

  • Change the approach to customers from a transactional focus to building long-term partnerships.
  • Consider a rapid response team charged with identifying and resolving customer service issues.
  • Systematize responses to customer complaints such as using a standard form for root cause analysis. Try to analyze failures to see if systematic issues can be resolved.
  • Educate product teams on what the customers’ expectations are and what the team’s priority is.
  • Make sure to share service survey analysis with upper management so they can support changes in service delivery.
  • Address issues as timely as possible-in the moment is preferred.

How do you envision customer experience and quality playing a shared role in your organization? Pass on your ideas to those who can help make it happen!

In the News    

2013-2014 Baldrige Criteria Available

The 2013-2014 Criteria for Performance Excellence for businesses and nonprofit organizations are now available for sale on the Baldrige Website. The Web site also contains valuable free content from the 2013-2014 Business/Nonprofit Criteria, including the complete Organizational Profile and a sample Criteria item. (The education and health care versions of the Criteria will be available for sale on the Web site in mid-January 2013.)


ISO Standards for the Construction Industry    

ISO has just published a new brochure – ISO & Construction – giving a concise overview of its substantial portfolio of International Standards for the construction sector.


The new brochure underlines how ISO standards tackle the challenges of sustainable development at the same time as providing requirements for technical and functional performance. The brochure underlines the benefits of ISO’s consensus-based approach, and outlines ISO’s solutions for good business practice, optimal management of resources and limiting impacts on the environment.


In the future, the construction sector will have to deal with issues such as climate change and its impact on buildings, as well as the energy efficiency of buildings, thus requiring standards for accurate measurement methods for the thermal properties of buildings and building products. The development of standards related to the delivery process of buildings and civil engineering works is also one of the next steps.


To download the PDF version of the ISO & Construction brochure, see the ISO Website. 


Training Courses

To see the course description, schedule, and on-line registration click on the course title below. We deliver onsite training for all these courses and customized training to fit your specific needs.  We offer group discounts.  


View all our Courses

View Our Web Based E-Training Courses   

ISO 9001 Quality Management

Understanding and Implementing ISO9001:2008

ISO 9001:2008 Process Based Internal Auditor 

Documenting Your Management System

AS9100 Aviation, Space and Defense

Understanding and Implementing AS9100C (9110 &9120) Aviation, Space and Defense

AS9100C:2009 Process Based Internal Auditor

Documenting Your Management System 

ISO/TS 16949 Automotive

Understanding and Implementing ISO/TS16949:2009 Automotive

ISO/TS16949:2009 Process Based Internal Auditor
Documenting Your Management System 

ISO 14001 Environmental

Understanding and Implementing ISO14001:2004 Environmental
ISO14001:2004 Process Based Internal Auditor

Lean Enterprise and CI 

5S Five Pillars of a Lean Workplace Organization
Continuous Process Improvement
Lean Six Sigma
8 Disciplines (8D) of Problem Solving

ISO 13485 Medical Devices

Understanding and Implementing ISO 13485:2003 Medical Devices
ISO 13485 Process Based Internal Auditor 

ISO 27001 Information Security

Understanding and Implementing ISO 27001:2005 Information Security
ISO 27001 Process Based Internal Auditor 

All courses can be delivered at your company. Don’t see a course, location, or date that fits your needs?

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