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It Pays to Get It Right the First Time

Ever heard the expression, “I don’t have time to double-check that right now?” It happens all too often when staff is pushed to meet a deadline, turn in an important report, or any of a myriad of other daily challenges. What happens when the customer rejects the product and it must be re-worked -- or the report is missing critical data that causes management to make a poor decision? Maybe there really was time to get it right at first, after all.

Part of this problem is related to company culture issues where more emphasis is placed on deadlines than on accuracy. Meeting one’s commitments is an honorable goal; however, if the result is that the recipient of the work is disappointed, nothing has been gained and often something has been lost. We’ll discuss some ways to address cultural issues in another blog; for now, let’s look at the real costs in time and money when things are not right the first time.

Any business process can be visualized as a pyramid where an action is initiated and through each step, more and more people become involved, expanding the number of people who will be affected if a correction must be made. The more levels and points of correction, the more difficult it becomes to contain any damage.

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Imagine the following scenario:

Company A is revising their pricing ahead of the first big industry trade show of the year. Sales and marketing have been working non-stop to set up the pricing to land in the perfect sweet spot for the market, but the process has taken longer than planned and they forego a review by the accounting department. Pricing is uploaded to the company website and provided to staff where it is rolled out as planned at the trade show. A couple of the distributors at the trade show comment that they will be able to sell a lot of a particular item because the pricing is so low. This message gets relayed back to headquarters where accounting does a quick analysis and discovers the sales price is at or below cost.

The company blew right through a Level 2 correction opportunity that would have allowed the error to remain in-house and now has a Level 3 issue that has gone outside the company to wholesale distributors.

Or this version…

Orders start coming in and one of the company’s order processors notice that an item purchased routinely is listed on a customer’s PO for $10 instead of $100. They place a call to the customer and point out the error to which the customer replies, “That is the pricing on the website.” Uh oh! Now what!? The company now has a Level 4 issue.

Consider the following costs:

  • If the company agrees to honor the pricing, they have just lost money on every one of these items sold. Part of this is actual hard costs for acquiring the product and part is lost revenue.

  • What about the time spent by key staff discussing and proposing solutions to the problem?

  • If the company feels they need to reach out to correct the pricing, time spent contacting each customer that orders this item, the cost of any concessions made, and the hit to the company’s credibility.

  • What about opportunity costs for deals not made when the company is focused on solving the existing problem?

The scenarios presented here are just examples of how correction costs can escalate. I suggest taking the time to work through an example within your own company to see how some up-front action can prevent an unplanned expenditure that your company has experienced. It all affects the bottom line and we all want the biggest bottom line possible.

In future blogs we’ll talk about how to identify and correct the points where accuracy is lost.

Jalene Greer is the owner and lead professional at Veritas Business Solutions where she enjoys sharing her experience and hard-earned wisdom with other business owners to support their success. She can be reached at jalene@veritasbusinesssolutions.com