The preferred definition of “Quality” is the measurement of positive yield from an operation, process, or procedure.

As such, our approach is to reduce or possibly eliminate waste, scrap, shrink, and defects.

An unusable item costs the same to produce as a usable and salable one.  Therefore, by improving the yield of usable items by a small amount, the overall profits will increase.

For example:

By increasing the yield by only three (3) points (such as from 95% to 98%) the bottom line profits would respond dramatically.  This may not sound like much, but consider this total scenario.  Current costs of producing usable items are 80% of sales price.   Current before tax profit is 5% of sales.   An increase in yield of 2 points (i.e. 95% to 97%) reduces the cost of production by 1.6% of sales (80% times .02 = .016).   This increases the before tax profit from 5% to 6.6% of sales.  This is a whopping increase of profits by 32%!!! (1.6 / 5 = .32) Without increasing sales or laying anyone off, you were able to increase profits by 32%!!  If yield is increased by 3 percentage points (as our earlier example) profits are increased by 48%!!