Assessing the True Cost of Quality with an LMS

The True Cost of Quality


October 2007


     E-learning software


Quality, and the dedicated pursuit of improved quality, translates into increased earnings and enhanced market share over time. Every successful company knows that the quest for quality must be an integral part of planning, processing and execution.

Elevating quality is often a function of training. Through training fortified with quality initiatives, your quality standards and related messages will be reinforced and will permeate every aspect of your goals and objectives.

The most efficient training tool is a Learning Management System (LMS), and whether you are training 25 or 25,000 employees, it is a no-brainer to justify the cost-effective training solution an LMS provides. With online training throughout the organization, the cost of an LMS typically achieves an investment return of two to three times the initial cost in the first year alone.

Investing in an LMS for custom e-Learning may be the most gainful investment a company can make. Considerations centered around return on investment (ROI) reflect basic and obvious cost savings, such as reduced travel expenses and improved productivity. Add improved quality resulting in enhanced revenue and the ROI increases significantly.

Creating Added Value

For further added value, remember to calculate how the resulting achievements in lower production or service delivery cost, combined with improved customer satisfaction, usually result in higher sustainable profit margins and market share.

Essentially, when we consider the cost of training, we also take into account the value of quality. So, we ask ourselves, can we define the value of a better-educated sales staff or production team, or a company-wide quality surge?

The true value of quality is calculated in terms of cost reduction, customer approval and incremental sales. Seeing the whole picture can be elusive. To expand your vision, when calculating the ROI on your LMS purchase, include a reasonable return for achieving a higher quality benchmark. The discernible results will help clarify your decision.


The Cost of Deficient Quality

Once you've identified the cost of improved quality, try and calculate the cost of poor quality in both the short- and long-term. Inferior quality may be difficult to quantify, but measurements of employee turnover, diminished or flat sales returns, customer dissatisfaction and revenue shortfalls or decreases are strong indicators that quality is a fundamental component of your company's success.

Quality, and its costs, can be measured on both ends of the spectrum. Your competition is hoping you won't get the whole picture.


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