Customer ServiceA call center evaluates employee performance using call handle time. This results in declining customer satisfaction as calls are rushed or issues closed without a reasonable resolution.
IngredientsA dominant brewery decreases cost per unit by using similar commodity ingredients in all its products. This leaves the firm open to competition from craft breweries that tap demand for premium products with unique ingredients and taste.
Customer ExperienceA luxury hotel chain carefully measures and optimizes the average cost per square foot to furnish a unit. This encourages the firm's interior designers to cut costs on furnishings each year to show year-over-year efficiency improvements. With time, customer experience begins to suffer. A competitor comes along that spends twice as much on interiors and gains far better customer ratings and pricing power in key markets.
Parts & MaterialsA washing machine manufacturer pushes suppliers to cut costs on a regular basis for parts. This leads suppliers to replace metal parts with plastic resulting in declining durability and reliability.
Operational Efficiency (1)An airline seeking to reduce operational costs eliminates meal services and free snacks on flights. They also stop accepting cash on flights to reduce costs associated with handling cash. This results in customer service issues, such as young people who don't have a credit card having no access to food on flights.
Operational Efficiency (2)A delivery service has systems, equipment and processes in place that result in lower average delivery time for packages relative to the competition. They regularly introduce improvements that both cut cost and improve delivery times thereby improving both efficiency and quality.
Energy EfficiencyEnergy efficiency typically improves quality. For example, all other things being equal a solar panel with conversion efficiency of 22% may be viewed as higher quality than a solar panel with efficiency of 14%.
Labor ProductivityA design firm with high employee engagement benefits from superior levels of labor productivity that translates to superior quality as employees are creative and diligent.
|Efficiency vs Quality|
Expenses as a percentage of revenue.
The value of product and services to customers.