Cost of-poor-quality - juran institute

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Cost of Poor Quality

Cost of Poor Quality

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Cost of Poor Quality

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Cost of Poor Quality 2 .PPT

Managers and workers speak the language of things but Senior leaders speak the language of money...

COPQ allows us to translate the things into money.

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Cost of Poor Quality

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Cost of Poor Quality 3 .PPTCost of Poor QualityPreventionCost of Attaining QualityAppraisal: Prediction AuditAppraisal: DetectionCost of Poor QualityFailure: Internal External

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Cost of Poor Quality

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Cost of Poor Quality 4 .PPTComponents

Non-Conformance$Conformance$

$Quality Costs

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Cost of Poor Quality

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Cost of Poor Quality 5 .PPT

I want my money back!Cost of Quality (COQ)PreventionAppraisalInternal FailureExternalFailure$Total Quality Cost

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The costs of poor quality are those that would disappear if every task were continuously performed without deficiency every time.Actual Cost Minimum Cost = COPQ.

Caution: Minimum cost is not necessarily equal to standard cost. Standard costs often include allowances for defects, spoilage, or loss.

The American Society for Quality uses four categories to stratify COQ:PreventionAppraisalInternal FailureExternal Failure

Review

Cost of Poor Quality

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Cost of Poor Quality 6 .PPTCOPQ OverviewDefinitionsAll activities and processes that do not meet agreed performance and/or expected outcomes

Costs that would disappear if every task were always performed without deficiency

Actual Cost - Minimum Cost = COPQ

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Cost of Poor Quality

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Cost of Poor Quality 7 .PPTTraditional Cost of Poor Quality(4-5% of Sales)When quality costs are initially determined, the categories included are the visible ones as depicted in the iceberg below.

WasteTesting CostsReworkCustomer ReturnsInspection CostsRejects

Recalls

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Cost of Poor Quality

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Cost of Poor Quality 8 .PPTCost of Poor QualityAs an organization gains a broader definition of poor quality,the hidden portion of the iceberg becomes apparent.

Late PaperworkHigh CostsPricing orBilling ErrorsExcessive FieldServices ExpensesIncorrectly CompletedSales OrderLack of Follow-up on Current ProgramsExcessiveEmployee TurnoverPlanning DelaysExcess InventoryExcessiveSystem CostsOverdue ReceivablesComplaintHandlingUnused CapacityTime withDissatisfied CustomerExcessive OvertimeWasteTesting CostsReworkCustomer ReturnsInspection CostsRejects

Recalls

Development Cost of Failed ProductHidden COPQ: The costs incurred to deal with these chronic problemsPremium Freight CostsCustomer AllowancesCOPQ rangesfrom 15-25% of Sales

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Cost of Poor Quality

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Cost of Poor Quality 9 .PPT

Sigma6 sigma5 sigma4 sigma3 sigma2 sigmaCost