Do You Report On The Cost of Non Conformance As A Finance Business Partner?

Many organisations are facing really challenging times right now.

And it looks like this will be the way it is for quite a while.

When faced with tough times, the use of resources becomes even more important.

I remember back in the early 90’s getting trained in quality when working in a credit card company.

At that time it was a hot topic.

Like many of these initiatives it dropped off the radar.

However, given the current challenges facing many organisations, could it be the right time to revisit some of these old but still relevant ideas?

One the ideas that has always stuck in my mind was something called the Price of Non Conformance (commonly referred to as PONC).

The idea behind it was that every time someone doesn’t follow process and errors result, there’s a cost attached to that in terms of rework.

Now you might be thinking that surely that only applies to manufacturing or making a product.

But let’s think about it more widely.

If contracts need to be re-done several times because someone doesn’t follow process, there’s a direct time cost of re-doing the contract.  There’s also an opportunity cost in terms of other things that might be of more value.

If that piece of software doesn’t do what it should there could be time spent of fixing, increases in customer complaints and even in some cases lost business.  Especially if your business is providing software as a solution.

In Finance and indeed more widely in business, we focus on measuring performance.

Of course we want to be measuring what matters.

Part of that might well be measuring non conformance.

Once measured you can put a value on it.

Is this something that you do as Finance Business Partner?

If not it might be a really simple but effective way of adding more value, making best use of resources and improving performance.

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About the Author Duncan Brodie

Since 2006 I’ve worked with in excess of 7,000 accountants and professionals in workshops, seminars and one to one helping them land their next jobs and become better leaders, presenters and business partners. Before that I spent 25 years in accountancy climbing the career ladder from Payments Clerk to FD. I’m a CIMA Fellow, Certified Professional Coach and Team Coach Facilitator.

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