搜索
SYSTEMSQualityConsulting1CostofQualityasaDriverforContinuousImprovementPresentedbyRogerEOlsonPartnerSYSTEMSQualityConsulting2Agenda1.LinkingQualityImprovementtoProfits2.CostofQualityDefinitionsandTypes3.UnderstandingCauseandEffectinCOQMeasurements4.EstablishingCOQBaseline5.CostDriverAnalysisSYSTEMSQualityConsulting31.LinkingQualityImprovementtoProfits2.CostofQualityDefinitionsandTypes3.UnderstandingCauseandEffectinCOQMeasurements4.EstablishingCOQBaseline5.CostDriverAnalysisSYSTEMSQualityConsulting4History/BackgroundofCOQ•JosephJuranfirstdiscussedcostofqualityanalysisin1951inthefirsteditionofQualityControlHandbook•ArmandFeigenbaumidentifiedthefourcostcategoriesin1956in“TotalQualityControl”intheHarvardBusinessReview,Vol.34,No6SYSTEMSQualityConsulting5History/BackgroundofCOQArmandFeigenbaum’soriginalcategories•CostofControl–Preventioncosts–Appraisal(i.e.,inspection)costs•CostsofFailureofControl–Internaldefectcosts–ExternaldefectcostsSYSTEMSQualityConsulting6History/BackgroundofCOQ•TheQualityCostCommitteewasestablishedbythethenASQCin1961•PhilipCrosby,aformerCEO,popularizedtheconceptofCOQwithhisbookQualityisFreein1979•ThecurrentrevisionsofISO9000,QS-9000andAS9100referencetheuseofCOQinqualityimprovementSYSTEMSQualityConsulting7History/BackgroundofCOQCrosby’scategories•PriceofConformance(POC/COC)–Preventioncosts–Appraisalcosts•PriceofNonconformance(PONC/CONC)–Internaldefectcosts–ExternaldefectcostsSYSTEMSQualityConsulting8Deming,Juran,CrosbyonCOQ•Deming–thecostofnonconformance,andtheresultinglossofgoodwill,issohighthatmeasuringitisnotnecessary•Juran–asdefectpreventionincreases,thecostofscrap/reworkdecreasesfaster.Needtoknowwheretolook•Crosby–moneyisthelanguageofmanagement,youneedtoshowthemthenumbers(Philosophy)SYSTEMSQualityConsulting9JuranandCrosbyonCOPQThecostofpoorquality(COPQ=PONC):•“COPQisthesumofallcoststhatwoulddisappeariftherewerenoqualityproblems.”-Juran•“Youcaneasilyspend15-30%ofyoursalesdollarsonPONC.”-Crosby•“Inmostcompaniesthecostsofpoorqualityrunsat20-30%ofsales.”-JuranSYSTEMSQualityConsulting10SomethingtoThinkAbout…•Netprofitsformanycompaniesislessthan5%ofsales•COPQontheaverageis17%ofsales•TotalCOQontheaverageis25%ofsales•COPQissomecompaniesisashighas40%ofsales•COPQistypically3to6TIMESaslargeasprofitsSYSTEMSQualityConsulting11Example1PaperMill–April2004ReporttoNewCEO•Sales:$220,000,000(460employees)•POC:$7,600,000•PONC:$35,300,000•COQ:$42,900,000•EBITDA:$12,678,000•NetProfit:$3,150,000SYSTEMSQualityConsulting12Example1PaperMill–April2004ReporttoNewCEO•Sales:$220,000,000•POC:$7,600,000(90%appraisal)•PONC:$35,300,000•COQ:$42,900,000•EBITDA:$12,678,000•NetProfit:$3,150,000•NetProfit/Sales=1.43%3X11XSYSTEMSQualityConsulting13Example1PaperMill–April2004ReporttoNewCEO•Sales:$220,000,000•POC:$7,600,000•PONC:$35,300,000•COQ:$42,900,000•EBITDA:$12,678,000•NetProfit:$3,150,000•NetProfit/Sales=1.43%~5XSYSTEMSQualityConsulting14Example2aTransportationIndustrySupplier(1998)•Sales:$130,000,000•COC:$4,400,000(92%appraisal)•COPQ:$18,500,000•COQ:$22,900,000•EBITDA:$6,531,000•NetProfit:$2,050,0003X9X•NetProfit/Sales=1.57%SYSTEMSQualityConsulting15Example2bTransportationIndustrySupplier(2003)•Sales:$185,000,000•COC:$8,600,000(45%appraisal)•COPQ:$8,100,000•COQ:$16,700,000•EBITDA:$19,900,000•NetProfit:$6,650,0000.5X1.2X•NetProfit/Sales=3.6%SYSTEMSQualityConsulting16Don’tLetPoorQualityCostsEatYourProfits!COPQProfitsSYSTEMSQualityConsulting171.LinkingQualityImprovementtoProfits•BackgroundofQualityCosts•EvolutionofQuality•TraditionalvsValueDrivenQualityStrategySYSTEMSQualityConsulting18WhatisQuality?Qualityis“fitnessforuse”(JosephJuran)Qualityis“conformancetorequirements”(PhilipB.Crosby)QualityofaproductorserviceisitsabilitytosatisfytheneedsandexpectationsofthecustomerSYSTEMSQualityConsulting19““InspectionwiththeaimoffindingthebadonesInspectionwiththeaimoffindingthebadonesandthrowingthemoutistoolate,ineffectiveandandthrowingthemoutistoolate,ineffectiveandcostly.Qualitycomesnotfrominspectionbutcostly.Qualitycomesnotfrominspectionbutimprovementoftheprocess.improvementoftheprocess.””Dr.W.EdwardsDemingDr.W.EdwardsDemingFounderoftheQualityEvolutionFounderoftheQualityEvolutionSYSTEMSQualityConsulting20Allqualityimprovementofalastingnatureoccursastheresultofaproject.JosephJuranSYSTEMSQualityConsulting21Traditional“Strategy”•Historically,organizationstendtotreatstrategicplanningandqualityimprovementplanningastwoseparateandunrelatedactivities•Strategicplanningtendstoberegularandscheduled,butwithnofollowup•Continuousimprovementisnotaprocess,ithappensrandomly,withnoconnectiontothe“bigpicture”SYSTEMSQualityConsulting22ValueDrivenQualityStrategy•Startswithafocusonthecustomer•Organizationstreatstrategicplanningandqualityimprovementplanningasanintegratedactivity•Strategicplanningisafunctionofneed,notthecalendar•Continuousimprovementisaprocess,ithappensregularly,withaconnectiontothe“bigpicture”SYSTEMSQualityConsulting231.LinkingQualityImprovementtoProfits2.CostofQualityDefinitionsandTypes3.UnderstandingCauseandEffectinCOQMeasurements4.Es