cost of poor quality

Materials info consultancy private limitedwww.materials-info.com

Cost of Poor Quality and how to address the same

Materials info consultancy private limited 2

Improving process Quality of your suppliers

Terminolgy

Cost of poor quality (COPQ): The costs associated with providing poor quality products or services.

There are four categories: internal failure costs (costs associated with defects found before the

customer receives the product or service), external failure costs (costs associated with defects found after the

customer receives the product or service), appraisal costs (costs incurred to determine the degree of conformance

to quality requirements) prevention costs (costs incurred to keep failure and appraisal costs to a

minimum).



Ever Changing customer requirement

In this competitive scenario the customer requirements keep changing in terms of defects acceptance standard.

Gone are the days of the catagorization of defects in IPTV i.e incidence per thousand vehicle. Now it is ppm i.e parts per million.

Again the need for this ever changing customer requirements lies in competition, environment and other regulations, Government policies, end user requirement/preferences



Consequences of this change

The Manufacturer needs to maintain the required ppm level demanded by end customer.

Any higher level of ppm occurring in the company due to various reasons including in coming supplies, manufacturing issues etc need to be absorbed by the Manufacturer.

Increase the cost of inspection in terms of resources to avoid the defects being passed on to the customer

Increase in the cost of production



Consequences of this change

Still there are chances of defects being passed on to the end customer , thus attracting penalty clauses and possible loss of business.

Resultant less focus by Manufacturer in continuous improvement programs, technology and intellectual property right generation programs.

Chances of competitor getting more share of business Loss of Morale in working staff.



What is being Practiced in Industry

Taking up the issues with suppliers for their material/process problems

Demanding 8D and other reports of root cause analysis of the problem.

Vendor development/STA team of the manufacturer interacting with suppliers for the closing of the issue

Submission of action plan and root cause analysis by the suppliers



What is Missing

Root cause analysis shall really be effective to find out the real reason of the problem which in many cases is not done properly

This can happen due to timeline , project and other internal pressures at manufacturer’s end due to which the thrust is to close the problem in minimum time.

The problem can repeat again either in the same product, some other similar project/product

The idea shall be to simulate the defect creation and then closure of the same which in many cases does not happenin true sense.



Manufacturer’s expectations

Maintaining the ppm of running projects as per the end customer requirement to avoid incurring rejection inhouse.

Since any of such rejections can even become a field/warranty issue a proper root cause analysis in really critical to decide the design changes as required.

Launch of new projects in a timely manner and meeting end customer expectations.

The new project shall be launched within stipulated Quality i.e ppm and cost targets.



Vendor/supplier’s point of view

Ever changing manufacturer requirement during the project Excess pressure for closing the issue related to

material/manufacturing during development/subsequenty without allowing required time and analysis.

Requirements which are not feasible and can not be met for which manufacturer is too fussy..

Vendor not having a feeling to be part of the whole project and not involved completely and only changes being told to them and that also at last moments with minimum time to react.



What we in Materials Info can do Taking up such specific material/manufacturing process issues with the

suppliers Conducting awareness sessions at supplier end to make them realise

the criticality of the material/process in the end product performance and making them feel their role and importance in the same.

Working with suppliers at their premises throughout the process flow sequence.

Identifying , understanding and solving the issues along with suppliers for both reported and known issues and for potential issues which may be faced in future.

Conducting a detailed root cause analysis to make sure the simulation of the issue and proper corrective action and closing documentation to avoid recurrence of the problems.

cost of poor quality

Automotive