cof qpresentation1
DESCRIPTION
TRANSCRIPT
Cost of Quality
An overview of non-value
added costs and what to do with them
Cost of Quality
Understand the cost of quality concepts
Learn how to implement a cost of quality process
Cost of Quality ConceptsAs the concept of measuring quality costs evolved and practiced, several findings
became evident. The most notable are as follows:
Quality Costs canrange from 20 to
40% of sales.
These costs areburied in the
standards andprice estimates.
The costs includeapparent and
hidden categories.
The responsibilityfor identifying and
eliminating thewaste is rarely
defined.
Key COQFindings
Quality Cost Categories
• Internal Failure Costs
• External Failure Costs
• Appraisal Costs
• Prevention Costs
Internal Failure Costs
• All work performed to contain and correct the results of the problem.
• Scrap: Material, labor and overhead wasted on services that cannot be repaired or reworked.
• Reinspection: Reinspection and retest of reworked service.
• Rework: Work performed such that the resulting service will meet the customers specification.
• Concessions: Selling to the customer at a reduced cost when services do not meet specification but are still functional.
• This can include recasting a break, additional testing, discounting TV, phones, etc., to provide service recovery.
External Failure Costs:
• All costs required to perform corrective actions on the symptoms of the problem which include: Phone calls, meetings, expediting replacement parts, warehouse searches, travel to the customer, extra testing, etc.
• Product Liability Costs: Costs incurred in responding to legal challenges brought on by defective services.
• Loss of Customer Goodwill: Non-visible costs associated with the loss of potential sales due to customer dissatisfaction over poor quality services.
• This can include misdiagnosis, wrong medications, readmissions, etc.
Appraisal Costs
• Inspection and Test Activities: Costs associated with planned (not reactive) inspection, testing and surveillance activities used to determine the conformance of product.
• Quality Auditing: Costs associated with the evaluation of the quality system including ISO activities.
• Laboratory Testing: Costs associated with planned (not reactive) internal or external laboratory confirmation testing.
• Installation Testing: Costs associated with the verification of installation activities.
Prevention Costs
• Costs associated with activities performed to ensure the service is delivered defect-free.
• Develop the specifications for purchased product.
• Select subcontractors (approved vendors.) who can supply product which meets specified requirements.
• Training: Costs associated with equipping personnel with the knowledge and tools to produce a quality service.
• Costs associated with evaluating and selecting suppliers based on their quality capability.
• Reviewing sources of information then taking action to prevent future problems
The Quality-Productivity Model
Quality and productivity are connected as described in the following relationship that was presented by W. Edwards Deming
ImproveQuality Costs decrease because
of reduced rework,mistakes, delays
ProductivityImproves
Capture themarket with betterquality and lower
prices
Stay inbusiness Provide jobs
and more jobs
Value Added Analysis
• Process control: Making product or producing service
• Inventory control: Receiving, stock-keeping, material handling
• Purchasing: Costs of subcontracting product
• Training: Producing competency in employees
• Design control: Developing designs which satisfy customer's needs
WORKSHOPValue Added (VA) or Non-Value Added (N)
VA?Y/N Description
1 Planning a new process.
2 Answering customer complaints.
3 Inspecting goods prior to delivery.
4 Process improvement activities.
5 Auditing suppliers.
6 Receiving goods inspection activities.
7 Building an inventory.
8 Reworking goods.
9 Maintenance.
10 Training.
11 100% inspection.
12 Returned goods evaluation.
13 Finding the needs of the customer.
14 Waiting for upstream goods to arrive.
15 Minor stoppage of the process.
16 Running at reduced speeds.
C o st o f Q u a litya n d Q u a lity Im p ro v em en t O p p o rtu n ity
Im p lem entation P lan
C O Q -1
C O Q -2
C O Q -3
C O Q -4
C O Q -5
C O Q -6
C O Q -7
E ng ag e m an ag em ent com m itm ent an d su pp ort.
D evelop a m an ag em en t d riven , qu ality cost an a ly sis team .
B rain storm and estab lishth e org an ization 's qu ality costs, cost cod es.
Id entify w here th e q u ality cost in form ationcan b e g athered an d develop an d carry ou t
an in form ation g ath ering strateg y .
D evelop th e q uality cost rep orts.
E stab lish a p eriod ic m an ag em ent rev iewof th e cost im provem en t team s efforts.
Id entify the im provem en t op portun ities and g oals,and lau nch the cost im p rovem ent team s.
S how the cost versus location of fa ilure re lationsh ip
E ng a g e m a na g e m e nt c o m m itm e nt a nd s uppo rt.
D e ve lo p a m a na g e m e nt drive n qua lity c o s t a na lys is te a m .
B ra ins to rm a nd e s ta blis h the o pe ra tio ns qua lity c o s ts , c o s tc o de s , a nd ide ntify w he re the info rm a tio n c a n be g a the re d.
Ide ntify w he re the qua lity c o s t info rm a tio n c a n be g a the re da nd de ve lo p a nd c a rry-o ut a n info rm a tio n g a the ring
s tra te g y.
D e ve lo p the qua lity c o s t re po rts .
E s ta blis h a pe rio dic m a na g e m e nt re vie w o f the c o s tim pro ve m e nt te a m s e ffo rts .
Ide ntify the im pro ve m e nt o ppo rtunitie s , g o a ls , a nd la unc hthe c o s t im pro ve m e nt te a m s .
C ost o f Q u ality an d Q u alityIm p rovem en t O p p ortu n ity
Im p lem en tation P lan
E n g a g e m a n a g em en tco m m itm en t a n d su p p o rt
U nderstand the quality and productiv ity re la tionsh ip
Identify the effects o f quality costson the return on investm ent
S tudy the sources o f cost reduction and N V A activ ities
Investig ate the idea of h idden costs
R eview the com ponents o f the C O Q m odel
C O Q -1
COQ-1 Quality and ProductivityThe Three Sources of Cost Reduction Opportunities
Process
Errors(Incorrect Actions and
Omissions of Required Actions)
NVA Activities
NVATime Delays
Results:High Costs,
Slow Processes,Poor Quality
Inputs
FewerCustomers
1.
2.
3.
D ire c t L a b o r C o s tsIn d ire c t L a b o r C o s ts
D ire c t M a te ria ls C o s tsIn d ire c t M a te r ia l C o s tsF ix e d A s s e ts O v e rh e a d
V a ria b le O v e rh e a dG e n e ra l O ffic e
S a le s C o s ts
N o n -V a lu e A d d e d T im e C o s tsE rro r R e c o v e ry C o s ts
N o n -V a lu e A d d e d W o rk C o s ts
C o n tro l C o s ts
P ro fit
M a te r ia l L o s s C o s ts
M a rk etP r ice
C o st o f P o o rQ u a lity
Develop a management driven quality cost analysis team
Ron, Rob, Corey and Andria COQ leadership group
E ngage manage me nt commitme nt and support .
D e ve lop a manage me nt drive n qua lity cos t analysis te am.
B ra instorm and e s tablish the ope rations qua lity costs , costcode s, and ide ntify w he re the information can be gathe re d.
Ide ntify w he re the quality cost information can be gathe re dand de ve lop and carry-out an information gathe ring
strate gy .
D e ve lop the quality cost re ports.
E stablish a pe riodic manage me nt re v ie w of the costimprove me nt te ams e fforts.
Ide ntify the improve me nt opportunit ie s , goa ls , and launchthe cost improve me nt te ams.
C o st o f Q u a lity a n d Q u a lityIm p ro v em en t O p p o rtu n ity
Im p le m e n ta tio n P la n
The leadership group develops a mission statementon how they will support the COQ efforts
Train the leadership group in the principles of COQ 12/4/08
The leadership group identifies the scope which the COQ will cover (including the general office)
The leadership group identifies and schedules cross- functional focus groups that will represent
the organization in establishing the COQ cost structure
COQ-2
Prev
entiv
e Act
iviti
es
Goo
ds a
nd S
ervi
ce P
lann
ing
Proc
ess P
lann
ing
Pre-
oper
atio
ns P
lann
ing
Vend
or P
lann
ing
PlanningAppraisal
Prev
entiv
e Act
iviti
es
ProcessAppraisal
Prev
entiv
e Act
iviti
es
IntermediateCustomerAppraisal
Prev
entiv
e Act
iviti
es
ConsumerAppraisal
Plan
ning
Fai
lure
s
Proc
ess
Inte
rmed
iate
Cus
tom
er
Con
sum
er
$
$$ $
Proc
ess F
ailu
res
Inte
rmed
iate
Cus
tom
erFa
ilure
s
Con
sum
er F
ailu
res
C o st o f Q ua litya n d Q u a lity Im pr o ve m e n t O p p o r tu n ity
Im ple m en ta tion P lan
C O Q -1
C O Q -2
C O Q -3
C O Q -4
C O Q -5
C O Q -6
C O Q -7
E n gage m an age m e n t c om m itm en t an d su pport.
D eve lop a m an age m e n t driven , qu al ity cost an a lysis team .
B rain storm an d e stablishth e organ iza tion 's qu a li ty costs, c ost c ode s.
Ide n tify wh ere th e qu a l i ty c ost in form ationc an be gath ered an d de ve lop an d c arry-ou t
an in form ation gath e rin g strate gy .
D eve lop th e qu a l i ty c ost re ports.
E stabl ish a pe riodic m an agem e n t re v ie wof th e c ost im prove m e n t te am s e fforts.
Ide n tify th e im prove m en t opportu n itie s, goals,an d lau n c h th e c ost im prove m e n t te am s.
B ra in sto rm a n d esta b lish th e o rg a n iza tio n 'sq u a lity co sts a n d co st co d es
C O Q -3
E ach focus g rou p b ra instorm s th e q uality costs an d w astew h ich th ey see in th e targ eted op eration /org an ization
E ach focus g rou p id en tifies th e im p ortant costs that m ig h t beinclud ed in th e structure o f the org an ization 's C O Q
T he lead ersh ip g rou p conso lid ates th e su g g estion s o f eachg rou p in to on e set o f q u ality cost descrip tion s
E ach focus g rou p rev iew s the conso lid ated C O Q d escrip tionsand sug g ests ch an g es (ad d ition s/deletion s)
T he lead ersh ip g rou p consen su s on th e fin a l C O Qd escrip tion s and estab lish es a cost code stru ctu re
T he focu s g rou p iden tifies each cost as preven tive , ap pra isa l,in tern a l fa ilu re an d ex ternal fa ilu re an d p rovid es ex am p les
Brainstorming with Cross-Functional Teams“Silent” Brainstorming
Brainstorm the preventive, appraisal, and sources ofwaste in the organization (NVA activities, time delays,
error recovery and failures of the operations).
Enhanced slip methodTeam members each record all of their ideas
directly to cards (one per each card).
Round Robin BrainstormingEach member exhausts their own ideas then passes
their pile to the team member to the left.
Continue the Round Robin until each teammember is back at their original pile of ideas.
Read each of your team members cards.Record new ideas, one per card. Add them to the
pile on which you are working (team member's pile).
Cross-functional team selectionsmade by COQ leadership team.
Group heading
Preventive costs Appraisal costsInternal failure
costsExternal failure
costs
Group heading Group heading Group heading
Group headingGroup heading
Typ
e of
exp
ense
Non
-val
ue a
dded
tim
e de
lays
Non
-val
ue a
dded
wor
k
Ext
erna
l vis
ibili
ty
Poo
r pe
rfor
man
ce g
oods
/ser
vice
Sta
ndby
was
te
Scr
ap o
r re
wor
k
Set
up w
aste
Mot
ion
was
te
Han
dlin
g w
aste
Los
s of
fut
ure
sale
s
Tot
al:
Pot
entia
l cos
t con
trib
utio
n
Weighting Factor x 2 x 3
Total quality score
9: Large contribution3: Some contribution1: Small or no contribution
Cost description - failure costs
Poor quality found beforedelivery (goods/service)?
Qualityappraisal
cost
Failureprevention
cost
Internalfailure
costs
Externalfailure
costs
Costexpenditure
Is the cost spentto prevent
failures in goodsor services?
Is the cost spentto evaluate the
quality of goodsand services to
quality standards(first time look)?
Cost spent toreact to poor
quality goods orservice?
Cost not related to qualityof goods or service
Yes
No
No
No
Yes
Yes
Yes
No
Yes
Activity-Based Costing
Traditional cost systems use a two-stage process to allocate costs.
Units Bus 1
Units Car 2Units Car 1
Assignment toCost Pools
Resources
Allocation toProducts Based
on Volume
Activity-Based Costing
ActivityDriver 2
ActivityDriver 3
ActivityDriver 1
Classified byActivity
Resources
Allocation toProducts Basedon Cost Driver
Model
A ctiv ity -B ased C ostin gA ll E xp end itures of the C om p a ny
C osts o f P oor Q u alityF a ilure /E rror R ecov ery C osts
N V A A ctiv ity a nd T im eP rob lem P rev ention C ostsP rob lem A p p ra isa l C osts
V a lue A d d ed A ctiv itie s
Developing an Activity-Based Cost System
Link the Activity Coststo the Outputs Using the
Cost Drivers
Identify the ActivitiesPerformed to Produce
Output
Assign Resource Usageto These Activities
Identify the OutputsProduced
C o st o f Q ua litya nd Q u a lity Im pr o ve m e n t O p po r tun ity
Im ple m en ta tion P lan
C O Q -1
C O Q -2
C O Q -3
C O Q -4
C O Q -5
C O Q -6
C O Q -7
E n gage m an age m e n t c om m itm en t an d su pport.
D eve lop a m an age m e n t driven , qu al ity cost an a lysis team .
B rain storm an d e stablishth e organ iza tion 's qu a li ty costs, c ost c ode s.
Ide n tify wh ere th e qu al i ty c ost in form ationc an be gath ered an d de ve lop an d c arry-ou t
an in form ation gath e rin g strate gy .
D eve lop th e qu al i ty c ost re ports.
E stabl ish a pe riodic m an agem e n t re v ie wof th e c ost im prove m e n t te am s e fforts.
Ide n tify th e im prove m en t opportu n itie s, goals,an d lau n c h th e c ost im prove m e n t te am s.
Id en tify w h ere th e q u a lity co st in fo rm a tio nca n b e g a th ered a n d d ev e lo p a n d ca rry -o u t
a n in fo rm a tio n g a th er in g stra teg y
F or each cost cod e, id en tify w h ere in form ation is cu rren tlyb ein g record ed , p artia lly record ed , or n ot record ed
E stab lish an in form ation g ath erin g strateg y
D evelop cost record in g form s for in form ationth at is n ot cu rren tly b ein g record ed
D evelop an d carry -ou t a p lan to im p rove th e in form ationg ath erin g w h ere in form ation is on ly p artia lly record ed
E stab lish an d carry -ou t a q u ality costcon so lid ation strateg y
C O Q -4
Sal
es a
nd M
arke
ting
Ope
ratio
ns
Fin
ance
and
Acc
ount
ing
Hum
an R
esou
rces
Qua
lity
Dep
artm
ent
Res
earc
h an
d D
esig
n
Info
rmat
ion
Sys
tem
s
Fie
ld A
gent
s
Pur
chas
ing
Cus
tom
er S
ervi
ce
p100 Failure Prevention Costsp110 SPC/Process control training N N P P Np120 Quality performance reporting R Np130 Quality improvements R R Rp140 Supplier quality planning N Pp150 Supplier development R N N Na100 Appraisal Costsa110 Supplied product qualification N P N Na120 Appraisal device depreciation R Ra130 Miscellaneous quality evaluations Na140 Incoming audits P Na150 Measurement equipment expenses R Ri100 Internal Failure Costsi110 Troubleshooting costs N P N N R N Pi120 Supplier rejection disposition costs P N Ni130 Operation rework and repair costs P P Pi140 Supplier failure costs P P P P P Pi150 Internal failure labor losses R P Pe100 External Failure Costse110 Lost sales P Pe120 Complaint investigation/customer/user P R R R Re130 Customer/user goodwille140 Returned goods P P P Re150 Liability costs R R
N: Not recordedP: Partially recordedR: Recorded
Name:Department:Position:
7:00 - 7:157:15 - 7:307:30 - 7:457:45 - 8:008:00 - 9:009:00 - 9:159:15 - 9:309:30 - 9:459:45 - 10:00
Log major activities in the blocks provided. A summary of the purpose of the activity should also be included. An interview will be conducted to summarize the results of your activities at the end of the survey period.
Daily Activity Log
FileServer
Information Entry
Information Entry Information Entry
Information Entry
MinicomputerOrganization Relational Databases
and Analytical Programs
Data
Plotter orPrinter
Formalize the Information Gathering Strategy
Central Information System:
C ost o f Q ua lityan d Q u ality Im p rove m e n t O p p ortu n ity
I m p le m e n ta tio n P la n
C O Q - 1
C O Q - 2
C O Q - 3
C O Q - 4
C O Q - 5
C O Q - 6
C O Q - 7
E n g a g e m a n a g e m e n t c o m m itm e n t a n d s u p p o rt.
D e v e lo p a m a n a g e m e n t d riv en , q u a lity c o s t a n a lys is tea m .
B ra in s to rm a n d e s ta b lis hth e o rg a n iza tio n 's q u a lity c o s ts , co s t c o d es .
I d e n tify w h e re th e q u a lity c o s t in fo rm a tio nc a n b e g a th e re d a n d d ev e lo p a n d c a rry-o u t
a n in fo rm a tio n g a th e rin g s tra te g y.
D e v e lo p th e q u a lity c o s t re p o rts .
E s ta b lis h a p erio d ic m a n a g e m e n t re v iewo f th e c o s t im p ro v e m e n t te a m s e ffo rts .
I d e n tify th e im p ro v e m en t o p p o rtu n itie s , g o a ls ,a n d la u n c h th e c o s t im p ro v e m e n t te a m s .
D ev e lo p th e q u a lity co st rep o rts
E stab lish a d ecision m aking strateg y based on fa ilure costs
D evelop a conversion strateg y to assig n costs to each sou rceof w aste (N V A w ork, N V A tim e delay an d error recovery )
Id entify the form at o f th e C O Q rep orts
E stab lish th e m eth od of rep ort g eneration and d istr ibu tion
Id entify the costs th at m ig ht b e g rou p ed in to a w aste cen ter su m m ary
C O Q -5
The COQ Report Current Month Year to Date
Quality Costs
Percent of Sales
Percent of ____
Quality Costs
Percent of Sales
Percent of ____
p100 Failure Prevention Costsp110 SPC/Process control trainingp120 Quality performance reportingp130 Quality improvementsp140 Supplier quality planningp150 Supplier development
Total Prevention CostsPrevention Goals
a100 Appraisal Costsa110 Supplied product qualificationa120 Appraisal device depreciationa130 Miscellaneous quality evaluationsa140 Incoming auditsa150 Measurement equipment expenses
Total Appraisal CostsAppraisal Goals
i100 Internal Failure Costsi110 Troubleshooting costsi120 Supplier rejection disposition costsi130 Operation rework and repair costsi140 Supplier failure costsi150 Internal failure labor losses
Total Internal Failure CostsInternal Failure Goals
e100 External Failure Costse110 Lost salese120 Complaint investigation/customer/usere130 Customer/user goodwille140 Returned goodse150 Liability costs
Total External Failure CostsExternal Failure Goals
Total Quality CostsQuality Cost Goals
C o st o f Q ua lityan d Q u ality Im p rovem e n t O p p ortu n ity
I m p le m en ta tio n P la n
C O Q - 1
C O Q - 2
C O Q - 3
C O Q - 4
C O Q - 5
C O Q - 6
C O Q - 7
E n g a g e m a n a g em e n t c o m m itm e n t a n d s u p p o rt.
D e v e lo p a m a n a g e m e n t d riv e n , q u a lity c o s t a n a lys is te a m .
B ra in s to rm a n d e s ta b lis hth e o rg a n iza tio n 's q u a lity c o s ts , c o s t c o d e s .
I d e n tify w h e re th e q u a lity c o s t in fo rm a tio nc a n b e g a th e re d a n d d e v e lo p a n d c a rry-o u t
a n in fo rm a tio n g a th e rin g s tra te g y.
D e v e lo p th e q u a lity c o s t re p o rts .
E s ta b lis h a p e rio d ic m a n a g e m e n t re v ie wo f th e c o s t im p ro v e m e n t te a m s e ffo rts .
I d e n tify th e im p ro v e m e n t o p p o rtu n itie s , g o a ls ,a n d la u n c h th e c o s t im p ro v e m e n t te a m s .
Id en tify th e im p ro v em en t o p p o rtu n ities a n d g o a ls , a n d la u n ch th e co st
im p ro v em en t tea m s
T he C O Q lead ersh ip g rou p iden tifies thesig n ifican t im p rovem en t opp ortun ities
T he lead ersh ip team assesses p oten tia l teamm em b ers an d team tra in in g req u irem en ts
G oals an d team s are estab lish ed for th e cost areasth at o ffer th e m ost sig n ifican t cost sav ing s
T he lead ersh ip g rou p d evelops a laun ch p lanfor each cost im p rovem ent team
O verv iew of team p rob lem so lv in g strateg ies
C O Q -6
Improvement OpportunitiesPareto charts or pie charts are excellent tools for identifying the most
important improvement opportunities.September Quality Costs
$- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600
Secondary Quality Reviews
Machine room Damage
Contaminated filters
Dropped Elements
Poor resistance
Low wafer yield
No Customer Filters
Stock Out
Poor Bond
Derbies
Too much glue
Cracked Cans
Bad filters
Step-2: Problem Definition
Short-TermSolution Required?
Step-3: Selectand Verify
Short-TermSolution
Step-4: Root Cause Identificationand Verification
Step-7: Standardize theManagement Process
Step-6: Plan and Carry Out theLong-Term Solution
Step-5: Select and VerifyLong-Term Solution
Step-8: Share the Success with theTeam and Select the Next Problem
Step-0: Management Planning and Support --Selecting the Problem and Preparing the Team
Flow DiagramsData Gathering and Analysis
Flow DiagramsBrainstormingProcess FMEAsRoot Cause Verification
Process Design ChangesMistake ProofingLTS Decision Matrix
Project PlansQOS Reviews
Update Procedures, FMEAs,all Reference Sheets.
BrainstormingSTS Matrix
Pareto ChartsInternal Process DataExternal Customer DataStep-1: First Team Meeting
Continue
Organization Culture
Effective Teams
Problem Solving Process
EffectiveMeetings
ManagementSupport
TeamBuilding
COQ-6: Problem Solving Strategies
C o st o f Q ua litya nd Q ua lity Im p ro vem ent O p p o rtunity
Im p lem en ta tio n P la n
C O Q -1
C O Q -2
C O Q -3
C O Q -4
C O Q -5
C O Q -6
C O Q -7
E n ga ge m a n a gem en t co m m itm en t a n d su p p o rt.
D ev elo p a m a n a gem en t d riv en , q u a lity co s t a n a lys is tea m .
B ra in s to rm a n d es ta b lishth e o rga n iza tio n 's q u a lity co s ts , co s t co d es .
Id en tify w h ere th e q u a lity co s t in fo rm a tio nca n b e ga th ered a n d d ev e lo p a n d ca rry-o u t
a n in fo rm a tio n ga th er in g s tra tegy.
D ev elo p th e q u a lity co s t rep o rts .
E s ta b lish a p er io d ic m a n a gem en t rev iewo f th e co s t im p ro v em en t tea m s e ffo r ts .
Id en tify th e im p ro v em en t o p p o rtu n ities , go a ls ,a n d la u n ch th e co s t im p ro v em en t tea m s .
E sta b lish a p er io d ic m a n a g em en t rev iew o fth e co st im p ro v em en t tea m 's e ffo rts
T h e p u rp ose o f th e m on th ly rev iew
T h e stru ctu re o f th e cost im p rovem en tteam d ocu m en tation
T h e stru ctu re o f th e m on th ly rev iew
T eam resp on se to sig n a ls on th e cost tren d w ith g oa l ch art
T h e cost P areto ch art
V erifica tion over tim e o f action taken
C ost im p rovem en t team action su m m ary
C O Q -7
Summaries for each Individual Measurement
Trend chart with goal: (To track team effectiveness)Pareto chart: (To focus efforts)8D summary: (Activity summaries)Verification-over-time chart: (Short- and long-term action
verification)
Number of Parts Involved in CustomerComplaints
0
5
10
15
20
25
Jul Aug
Sep OctNovDec
Jan Feb MarApr
MayJun Jul
Customercomplaints
Goal
Formal Customer Returns For AllCustomers
0
0.5
1
1.5
2
2.5
3
Jul AugSep OctNovDecJan Feb MarAprMayJun Jul
FormalCustomerReturns ForAll Customers
Average Customer Quality Rating(All Ratings Scaled to 100 Max)
86
87
88
89
90
91
92
Jul Aug
Sep Oct
NovDec
Jan Feb Mar
Apr
May
Jun Jul
CustomerQualityRating
Goal
On-Time Delivery Performance
0
10
20
30
40
50
60
70
80
90
100
Jul AugSep OctNovDecJan Feb MarAprMayJun Jul
Committed toDate
CustomerRequestedDate
Goal forCommitted
Process CapabilityDistribution of Cpk Performance
0
20
40
60
80
100
Jul AugSepOctNovDecJan FebMarAprMayJun Jul
Cpk < 1.00
1.00 < Cpk < 1.33
Cpk > 1.33
Goal: Cpk > 1.33 = 100%
Cost of Scrap as a Percent of Sales
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
Jul Aug
Sep Oct
Nov
Dec
Jan Feb Mar
Apr
May
Jun Jul
Scrap
Goal
Process % Throughput (Widget Line)
0
10
20
30
40
50
60
70
80
90
100
Jul AugSep OctNovDecJan Feb MarAprMayJun Jul
Throughput
Goal
Cost of Quality as a Percentage ofProduction Sales
0%
5%
10%
15%
20%
25%
30%
Jul AugSepOctNovDecJan FebMarAprMayJun Jul
CustomerFailure
InternalFailure
Preventionand Appraisal
Goal
Total Costs
Supplier Quality PerformanceRejected Material as Percent of Total
0%
5%
10%
15%
20%
25%
Jul AugSep OctNovDecJan Feb MarAprMayJun Jul
IncommingQuality
Goal
Sub-Supplier SPC, %Significant andCritical Characteristics Covered by SPC
0%10%20%30%40%50%60%70%80%90%
100%
Jul AugSep OctNovDecJan Feb MarAprMayJun Jul
Supplier SPCSubmitted
Goal
% Gage R&R's < 10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Jul AugSep OctNovDecJan Feb MarAprMayJun Jul
Gage R&R <10%
Target
Product LaunchesMilestones Completed on Time
Target Days Late = 0
0
5
10
15
20
25
30
35
Jul Aug
Sep Oct
Nov
DecJan Feb MarApr
May
Jun Jul
MilestoneDays Late
Individual Measurements
The Objectives of the Cost of Quality ProgramA Cost of Quality Program identifies, measures and monitors an organization’s quality costs. The primary objectives are:
• Quantify the quality costs in the “language of management” -money.
• Identify major opportunities for improvement and cost reduction.
• Identify opportunities to reduce customer dissatisfaction by identifying after-sales product
deficiencies.