22. Explain how higher quality can lead to lower costs.
The ability of a company to produce a good at a high quality leads to lower costs. When creating a product, many firms are faced with the question of what raw resources are necessary to form the product they wish to sell. In many cases, firms have the ability to acquire a wide range of raw materials to produce a single good. The decision by some firms to purchase raw materials from a quality distributor can make all the difference in the refining and manufacturing process. While quality raw materials are more expensive, the likelihood of a product made with quality materials to fail under regular usage is rare. Many times a corporation that produces materials with lower quality goods finds themselves facing a mountain of debts and other financial obligations associated with their customer service departments. A customer service department will more than likely process fewer return requests if the product they are selling is made with a high quality finish. Lower customer service costs (ex: man power, shipping costs, utility costs, commercial space and zoning requirements, etc) can lead to a very positive impact for a company's balance sheet.
The cost of producing higher quality goods may seem to carry a higher cost in the manufacturing phase but this is proved false when compared to a company who has to accept the burden of increased customer service claims, negative press/reviews, and ultimately, more costly problems than solutions.
Having high quality raw materials can be an integral element in lowering overall manufacturing costs in the long run. If a product is made well and ...
The expert explains how higher quality can lead to lower costs.