The ROI of Quality by Design: How DFSS Boosts Efficiency

In my 20-year career in managing operations and quality in a manufacturing service, I have seen a great number of businesses undergo the painstaking process of retracing their steps just to understand the warranty and money losing deep quality issues that arise when a product has just begun root production or even after it has been distributed to a customer. The old and still practiced method of formulating a product, then trying to slab some form of quality inspection through testing, hoping it will somehow work, has been truly proven to be a fruitless attempt, woefully expensive in the process. This painful and unnecessary method brought me to Design for Six Sigma (DFSS) and the subsequent transformation in organizational performance was something totally different to what I was used to. The ease with which organizational performance transformed completely changed the line of work I was used to, product development to say the least. Engaging in a product development cycle where such approaches are implemented, it is safe to say that the ROI is not only satisfactory but is in fact comprehensive. A quality approach design will always yield innovative outputs. It is needless to say that from a more deflated perspective, a DFSS approach will only reduce the cycle time, development cost and most importantly customer satisfaction. 

Understanding Financial Losses From the Continued Presence of Quality Gaps

When I was first starting my career as a quality manager, I understood the visible costs of quality problems were only a fraction of the total impact. Defects that arise during the production of an item have the costs of scrap and rework, which are clear and easy to calculate. However, I have since learned that ignored costs are often larger than these direct costs. There are delays in production schedules, and these delays, which are accompanied by a multitude of product lines and customer obligations, are often the most damaging. Engineering time is lost for the advancement of new products. Customer Complaint Management Systems need to be enhanced to manage the time-consuming processes of complaint and return of the products. Reputation is among the most difficult assets to manage, and in the case of products that are not up to standard, market perception is lagging. Brand perception is likely the additional segment that suffers more than anything else. A complete set of quality costs that span many organizations prove that a lack of quality design frameworks results in the loss of around 15 to 25% of the total revenue.

In my experience, the price of the most expensive failures of quality occurs when the defects escape into the field. Warranty claims, product recalls, and liability issues generate costs which, in some cases, exceed the original product value by a factor of ten or more. One of the most painful learning experiences in my previous company was when a design flaw in a component triggered a product recall for more than fifty thousand units. The direct costs of the recall were more than three million dollars, but the indirect costs in the form of lost sales, fallen dealer relations, and weakened brand image turned out to be more crucial and enduring.

How DFSS transforms the economics of quality

The most intriguing aspect of DFSS in product development is the recognition that quality is something which has to be designed into the products. It can no longer be an attribute which is just inspected or tested after the fact. This change in thinking has enormous economic consequences which I have witnessed across different industries. Companies that focus on problem prevention by systematically identifying and eliminating potential failure modes during the design phase engage in far more productive activities than those which only rely on problem detection and problem correction. The differential in costs is staggering: attending to a design problem before the commencement of production is more expensive on the average, by a factor of 1:10, to 1:100. Should the issue be left unattended and only emerge when the product has reached the customer, that problem can be 1,000 times more expensive.

I have used DFSS methodologies in a number of different organizations and the financial outcomes and benefits always appear, time after time, across numerous dimensions. The development cycle times are lower because engineering resources are no longer spending the majority of their time being reactive to problem solving. They are able to focus on productive design work. Production yields go up because of the design in quality which provides a dramatic reduction in defects and variation. The costs associated with warranties drop the more field failures there are. However, most importantly, the improvements in product performance and the reliability improvements which are the most significant, create competitive advantages which the improvements in product performance translate directly into, increased market share and pricing opportunities.

The Role of Systematic Design Tools and Methods

Design for Six Sigma (DFSS) includes clearly defined strategic frameworks that assist design teams in methodically analyzing customer necessities, functional performance criteria, and possible malfunction modes. These tools assure that crucial quality aspects are considered—and more importantly, systematically addressed—rather than left to the hope that some designer will remember to think of them.  It is a beautiful thing to have a design focus that addresses functional performance alongside customer-focused outcomes. Maintaining the original intent definition, functional performance requirement precision is entwined with clear customer outcome specification definition. The Use of standardized communication techniques in Design for Six Sigma, Specification/Data Submission, and Design, enables the bond between a designer and a manufacturing team to eliminate the guesswork that plagues manufacturing tolerance visions. Whatever the designer intends is what the manufacturer is supposed to communicate; lack of generous variation in values assures in silos. Ambiguous and incompletely defined design specifications are quality issues that the siloed approach to discipline and design achieves.Utilizing templates for tolerance analysis and other predictive capabilities linked with tolerance designing is another important aspect of DFSS and engineering. I specifically remember employing these methods on a complicated assembly for which the design alone including quality engineering had persistent quality escapes. It was only after cooling the design and deciding on the key ratios that we distinguished the trifecta of unbearable defects that were plaguing the system. We manufactured a rigid design that had serviceable adjustments in the production processes. This design had resolved a production issue that had once become a thorn in the sides of the company.

Measuring and Demonstrating ROI

In my experience, the application of quality design methodologies requires the ROI to be transparent in order to maintain the organizational effort on the approaches. This makes it more complicated due to the benefits that cross multiple organizational time horizons and functions. This approach enables me to offer unit economic assessments driven by of lagging indicators that follow the product launch alongside leading indicators measured in the development phase.

Results of performance measurement most easily observable are often found within the firm’s development metrics. The number of engineering change orders tends to drop because more rigorous tests are performed before the design release. The development time tends to go down because the team spends less time working to resolve issues. Cost of prototyping tends to diminish because more first builds achieve the designs’ criteria. I have often observed that development time and costs can drop by 30 to 50 percent when DFSS techniques are compared to more traditional methods.

The next layer of Return on Investments takes the production launch metrics. The first production pass yield improves, on average, within a few weeks, compared to several months, towards the target levels. The costs associated with scrap and rework from the initial production are low. The capability of the manufacturing process meets the needed requirements without much tuning and adjusting. Typical bottom line impacts from these improvements can be several hundreds of thousands to millions of dollars, depending on production volume.

The final layer and the most impactful on the ROI, within the context of the field, is the long term performance metrics. Compared to products that predate the adoption of DFSS, company warranty costs can drop between 50 to 75 percent. Customer satisfaction ratings increase, service calls and product returns decrease. Investments made into a quality design DFSS product give far greater returns because the benefits are sustained throughout the product life cycle.

The Competitive Advantage of Quality Excellence

As I analyze the competitive landscape of today’s manufacturers, it is clear that the way businesses perceive quality has shifted. Quality used to be a neglected cost, but it is now the only real differentiating factor.  Reliable manufacturers that produce quality products make more profit. They are able to charge premium prices, command customer loyalty that competitors fail to replicate, and experience reduced marketing and sales costs. The latter is because customers become advocates. The market rewards quality leaders and punishes the laggards. This makes the DFSS business case even more persuasive. 

As I have said, the focus of our concern now is quality. The investment needed to focus on the quality aspect in designing the said products have hefty returns. In a mid-sized manufacturing firm, the quality methodologies become apparent how the costs of training, developing new processes and acquiring new tools adds up. The benefits however, materialize almost  immediately  and grow exponentially  after the organizational capability grows.  Based on experience, break even is achieved after 12 to 18 months and benefits are to be gained endlessly after this period. As organizations begin to realize the measurable financial and operational impact of DFSS, effectively communicating these achievements becomes just as important as achieving them. Partnering with a Digital PR service can help businesses showcase their innovation in quality design, promote case studies of improved ROI, and build credibility as industry leaders driving operational excellence.

Conclusion 

Having spent 20 years in the field of quality and efficiency improvement in manufacturing, I am now highly- convinced that Design for Six Sigma and proprietary quality-by-design strategies are some of the best investments a company that focuses on products could make. The value proposition of lowered development costs, better production costs, diminished warranty costs, and improved competitive position is compelling and is validated across industries and company sizes. The question for any organization that is focused on operational and market leadership is no longer whether results- focused design methods will bring value, rather, it is about how soon the methods can be implemented in order to reap the benefits.