Dive Deep to find the savings in your Cost of Quality (CoQ) System

When discussing a CoQ system, so often the rhetoric is around statistics that have nothing to do with your day-to-day experience with your quality system.

Rework costs are 7 times production costs

  • Cost of poor quality varies from 5-35% of sales for a manufacturer
  • Cost of poor quality varies from 25-40% of operating expenses for a service organization

Let’s be frank, it’s easy to toss out numbers that have so many factors in them, they may have meaning for the group, but are of little value to the individual. The numbers that have value for your company are the ones you find diving deep into your own processes and CoQ system. Stay focused on the four areas of quality control:

  • Prevention: processes dedicated to eliminating nonconforming products, e.g., training, Design FMEA, Process FMEA, capability studies
  • Appraisal: processes dedicated to ensuring quality levels are met, e.g., inspecting and testing equipment
  • Internal Failure: inspection processes that identify products that do not meet specifications, e.g., design changes, scrap/rework, excessive inventory
  • External Failure: dissatisfaction from the customer identifies products that do not meet specifications, e.g., recalls, returns, warranty work, customer complaint levels

Identify the parts of your organization that affect these four areas of quality costs and ensure costs are being captured accurately by working with your accounting department to track the costs associated with the activities within your organization.

Now looking at these areas of quality costs, what is real world? The last two areas fall within the later stages of your product’s value chain, the stages where failures requiring changes tend to require higher costs. Of course there are those who question whether these failures will ever happen, but if they do they usually result in fires and the fires get the attention, but like fires, there is little left in the area of savings among the ashes. Identify the cost of a recall or warranty work and compare that with the number of products your company must sell to make up that cost. Make sure you take into consideration only the profit on that product, not its sales price. Is it worth the risk?

So where are the savings? It’s those first two areas of quality control where you can really dive for the savings:

  • Plan for success by getting a clear understanding of your quality processes by using Lean Operations, Continuous Improvement Methods or Advanced Quality Planning
  • Team Problem Solving – learn methods to effectively identify the root cause of an issue

then really begin diving for savings

  • Failure Mode and Effects Analysis (FMEA) – provides a structured approach to identifying and prioritizing potential failure modes, taking action to detect and prevent failure modes and making sure mechanisms are in place to ensure ongoing process control
  • Layered Process Audits – the most powerful shop floor tool proven to improve first-time quality and reduce waste, and drive process change that reduces scrap and potential costly second party sorting

then dive even deeper….the savings are there

  • Measurement System Assessment – concepts and techniques used to assess the accuracy, precision, linearity and stability of your measurement system with the inclusion of the Range and ANOVA methods of Gage Repeatability and Reproducibility
  • Statistical Process Control – monitor processes to pro-actively drive quality improvement
  • Statistical Analysis for Process Improvement – use statistical tools utilized by process improvement experts to drive enhancements to quality and productivity

and when you thought you captured all the savings you could, dive one more time

  • Six Sigma – take your quality process to the point of experiencing only 3.4 defects per million and experience the ultimate in savings

And when you’ve gone this far, take a step back and look at how your CoQ system has enhanced your organization that is now running in the most effective and efficient means possible.


  
   


Eastern Michigan University
Center for Quality
103 Boone Hall
Ypsilanti, MI 48197
Barbara Hopkins, Director


Phone: (734) 487-2259
Toll Free: (800) 932-8689
Fax: (734) 481-0509

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