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What You Don’t Measure Will Cost You

In this Article:

  • A 2026 Lumafield survey of 210 North American manufacturing quality leaders found that 58% believe at least 25% of their true cost of quality goes unaccounted for, despite 42% estimating quality-related costs already exceed 5% of revenue.
  • Only 35% of manufacturers surveyed use a comprehensive Cost of Quality model, and fewer than 25% formally track prevention costs, limiting their ability to make the ROI case for upstream quality investment.
  • Supplier-related quality issues ranked as the top operational concern across every industry surveyed, with 54% of respondents reporting that suppliers have downgraded materials to offset tariff costs, compounding existing measurement gaps.
5.25.2026

When Lumafield commissioned a survey on the Cost of Quality earlier this year, I went in with a rough hypothesis: manufacturers know quality costs money, they probably undercount it, and they're working to close the gap. A year of writing Recall Radar will do that to you. The evidence of quality failures reaching consumers is consistent enough that you start to assume the organizations upstream are at least aware of the problem.

The survey results confirmed some of what I expected, but the scale of what's missing surprised me.

We surveyed 210 quality decision-makers across the US and Canada through independent research firm NewtonX, spanning aerospace and defense, automotive, consumer electronics, CPG, and medical devices. While the methodology was straightforward, the results were not.

Unmeasured costs

Let’s start with a figure to contextualize what follows: 42% of respondents estimate that quality-related costs exceed 5% of their revenue. Another 40% place that figure between 2% and 5%. These are substantial numbers on their own, and the academic literature has long suggested the true cost lands even higher, somewhere between 5% and 15% of revenue for most manufacturers. But the finding that gave me pause was this: 58% of respondents believe at least a quarter of their true quality costs go unaccounted for. They're spending a lot, and they think they're still missing most of the picture.

The Cost of Quality framework has been around since the 1950s, when Joseph Juran and Armand Feigenbaum formalized it as a way to give executives a dollar-denominated view of what quality is actually worth. It includes prevention, appraisal, and failure costs. The idea is hardly new, and yet only 35% of the organizations we surveyed said they use a comprehensive COQ model. The majority track some components, mostly failures like scrap and warranty, but prevention and appraisal costs are substantially underanalyzed. Just 24% of organizations formally consider prevention costs at all.

Upstream leverage

This matters because prevention and appraisal are where the leverage is. Costs incurred after a defect has left the factory are categorically more expensive than costs incurred to prevent it from forming in the first place. Every recall I cover in the Recall Radar column is a failure cost. Most of them trace to a process or design issue that was knowable earlier. The survey data suggests that most organizations aren't actively measuring the value of upstream interventions, which makes it nearly impossible to make the ROI case for investing in tools for closing the gap.

The barriers are real and well-understood by the people living with them. Two-thirds of respondents cite data scattered across teams and systems as the primary obstacle. Nearly as many point to difficulty quantifying certain quality costs. These aren't organizational failures so much as structural ones. Quality-related data flows through almost every function, across quality, operations, manufacturing, supply chain, engineering, customer support, and finance, but the responsibility for consolidating it typically falls to the quality team alone. What doesn't get consolidated doesn't get counted.

Tariffs are making it worse

I found the tariff data unexpectedly telling. Sixty-two percent of respondents say recent trade changes have made quality management harder. The mechanism matters here: 54% report that suppliers have downgraded materials to offset tariff costs, and 27% say suppliers have misrepresented country of origin. These aren't abstract supply chain risks. They are substitutions and misrepresentations that introduce variability into products, often without the buyer's knowledge. In a measurement environment already characterized by significant blind spots, that's a compounding problem.

Pressure on suppliers

The supplier finding ran through every industry we surveyed. Forty-one percent of respondents identified supplier-related quality issues as the single category where a 25% reduction would have the greatest operational impact. That was the top answer across aerospace, automotive, CPG, consumer electronics, and medical devices, without exception. The VP of Procurement from one of the CPG companies we interviewed put it plainly: "I always say if we buy cheap, we buy expensive. Because nobody wants to deal with a recall or with quality incidents."

If there's a finding in this report that I think deserves more attention than it's likely to get, it's the inspection labor picture. Seventy-seven percent of organizations still rely on manual visual inspection as part of their process. In aerospace and defense, 30% of respondents spend more than 40 hours per month on inspection and verification activities alone, nearly double the study average. That's an enormous resource commitment concentrated in a method that is inherently variable, fatigue-dependent, and difficult to scale. AI adoption is growing, 80% of respondents claim to be using AI-based tools in some form, but the in-depth interviews painted a more nuanced picture. Most of that activity is early-stage. The barrier to deeper utilization is not in the technology so much as in the organizational change required to make it work.

One quote from a consumer electronics engineering program manager stayed with me: "The cost to implement the technology is not that big. The major expense is training and changing mindsets and behavior." That struck me as honest in a way that most technology adoption narratives are not. The bottleneck isn't access to tools, but rather the human and organizational infrastructure that determines whether or not manufacturers end up using them.

The bottleneck isn't the technology

The broader conclusion I take from this data is that the COQ measurement gap is not primarily a technical problem. The data exists in most organizations. What's missing is the architecture to pull it together, the organizational will to count things that don't make anyone look good in the short term, and the time to do the work when teams are already managing active quality issues. The Director of Quality from one of the aerospace companies we interviewed offered the clearest framing I found in the whole dataset: "There are so many things that quality can do up front that are value-added. They're the cost of quality. Versus after you're in production and starting to make mistakes, then that's the cost of poor quality. Focus on the cost of quality, because it pays off in the end. The cost of poor quality is just taking away from your margin."

What you don't measure, you can't manage. And while it might not kill your business, it will cost you. The only question is how much. Our survey suggests that most manufacturers already know this. The gap is between knowing it and doing something about it.

The full Lumafield Cost of Quality Report is available here. You can also take the survey for yourself to see how your organization stacks up against industry benchmarks.

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