The Cost of Quality, sometimes referred to as COQ, is a measurement that sums up the costs related to the prevention and subsequent detection of defects, and the costs associated with these defects. The COQ defines the total costs of quality activities. This is money spent beyond the basic production costs to ensure that the customer receives a quality product. Let's take a look at how COQ is calculated.
The COQ includes the money spent on prevention, appraisal, and correction in a production environment. COQ can be expressed as the effort in terms of time, but it is probably best served as a calculation involving money.
The calculation itself is not complicated, and it is the addition of two compound values (which makes this the most straightforward approach to COQ):
The Cost of Control and Cost of Failure of Control each require a calculation based on their components.
Cost of Control
The Cost of Control can be defined as follows:
The Prevention Cost is the amount of money spent to prevent defects incurred during the manufacturing process. All Quality Assurance programs and efforts are included in this number, including any preventive measures taken.
The Appraisal Cost is the cost associated with all efforts focused on the detection of defects. The cost associated with Quality Control efforts are included here, including final testing and other forms of quality control.
Cost of Failure of Control
The Cost of Failure of Control is sometimes known as the Cost of Non-Conformance. This is the total cost of failure within the manufacturing process. It is broken up into Internal Failures and External Failures.
Internal Failure Cost is the direct cost associated with internally recognized defects and the costs associated with correcting them. For example, this would be the expense of fixing the discovered defects and retesting them, also known as Cost of Rework.
External Failure Cost is the cost associated with defects discovered by the customer and their correction. This Cost of Rework for external failures can include such items as product service, liability issues, and recalls.
Getting the COQ to a minimum requires careful balancing between the Cost of Control and the Cost of Failure of Control. The prevailing thought is that an increased Cost of Control will keep the Cost of Failure of Control to a minimum.
However, in most practical applications an increased Cost of Control can rapidly approach a diminishing return on investment when it is raised beyond a certain degree of effectiveness. The key is to keep the costs balanced as needed.
Quality has a price that can be calculated and studied. But the importance of maintaining the business image has many returns in repeat business and word of mouth.
For more information on how Accupoint can help your organization monitor and reduce your COQ, please contact us today.
Regardless of the industry you work in, calibration is one of those things you simply cannot overlook. Inspection equipment needs to function reliably and accurately. Calibration ensures consistency and is a requirement of quality management standards across the globe. In this week’s blog will examine four key steps to ensure that your organization is ready for your next audit.
The Calibration process does not have to be time consuming. With the right systems in place, you will be prepared for any audit, as well as have the peace of mind that comes with protecting yourself from liability. For more information on how Accupoint Software can help simplify the calibration process, contact us today.
The Net Promoter Score (NPS) can be a great tool to improve the customer satisfaction of your business. It can also help to expand your customer base. NPS is a simple process, but the effects can have a significant impact on your business. Let's look at the advantages of NPS.
1. The NPS Process Is Customer Friendly
How likely is it you would recommend us to a friend or colleague? Determining the NPS requires only asking the single question above. When you ask it, the customer responds with a range from 0 (not at all) to 10 (extremely likely.) It requires minimal effort on their part. By asking only a single question, the customer is more likely to take the time to give an answer. The last thing you want to do is to burden your customers with an exhaustive survey. Since they are not, the customer will provide accurate information and still leave in a good mood.
2. NPS Provides a Target for Focusing Customer Relations Efforts
NPS gives a clear picture of how customers view your products and services. People tend to be conservative when it comes to making a recommendation. By asking this question, you can get a good measure of the customer's satisfaction. Once you have the measurement in place, it gives you a clear goal to focus on while you try to raise it. The goal should be to move all the detractors (those with a score of 0 to 6) to a passive level (7 or 8.) And you should, in turn, move all the passives you can to promoters (9 or 10.) Promoters can do incredible things for your business when it comes to getting the word out.
3. NPS Can Reduce the Cost of Customer Acquisition
The best way of increasing a customer base is by word of mouth. Since the NPS is a direct measure of how likely this is to happen, it gives you a very focused metric on which to improve. You will want to nurture low scoring customers. Doing this will increase the likelihood of future product and service recommendations. Taking care of low scoring customers will also help to keep them coming back for more business. Every saved customer relationship is one you don't have to pay to replace later. This can have a positive impact your bottom line. The NPS can be a simple yet powerful tool in customer relations for your business.
Contact us today for more information on how Accupoint Software can help streamline your customer bench-marking process.
With the changing landscape of the oil and gas industry, companies are under increasing pressure to improve operational efficiencies as prices continue to remain low and margins are narrowed. In order to reduce costs and increase efficiency, many service supply organizations are implementing API Spec Q2.
Accupoint’s SAM™ solution ensures compliance and the correct documentation to meet the API Q2 requirements. It defines strategies, goals and best practices and the means to secure them. Our system provides industry best practices for all components including: service quality, risk assessment, employee training, document control, MOC, corrective actions and preventive maintenance. A comprehensive solution may seem difficult for an industry with such vast core areas to cover; however, incorporating common standards of practice is essential to realizing integrated process management and operational excellence simultaneously.
The bottom line: API Spec Q2 tells your customers that you are at the top of your class and aiming for the best in quality and delivery of services, ultimately ensuring customer loyalty, operational efficiency and growth.
Please contact us today for more information on our family of quality management systems specific to the petroleum industry.
As the oil and gas industry is in the midst of evaluating and improving business practices in order to competitively deliver products and services, the underlying drive is to find ways to improve processes and provide operational efficiency. Further, the pressure to deliver at an optimum level while maintaining cost effectiveness is greater than ever.
One of the growing trends for balancing reduced resources is the integration of technology, such as cloud computing, into operations. Simply put, a business subscribes to an application and accesses it over the internet. There are many advantages to using cloud-based technology especially when your talent pool has been downsized:
Due to changes in the industry and the demand to remain competitive in the global market, many businesses are adopting technology solutions to fill the void of talent and the mandate to do more with less. As a result, many businesses discover better business practices as they learn to operate according to a leaner, more efficient model.
For more information on how Accupoint’s solutions can help improve operational efficiency, contact us today.
Sound communications management must be a top priority for any company in the petroleum industry. Not only is performance impacted by communication, but in our industry the health and safety of employees is directly affected by a company's ability to communicate clearly. That is why it's so important to understand the best practices in communications management.
Your company must design and implement procedures to communicate internally and externally. It is important to make sure that documents, both internal and from stakeholders, be processed correctly. While input from all departments is necessary in determining effective distribution of information, for example using direct emails or physical message boards, communications management procedures and implementation should be handled by top management. This will help avoid doubt and confusion. There are several methods of communication that allow information to reach people effectively including:
These methods of communication will help you meet Health and Safety requirements. Proper communication also helps improve performance and decrease mistakes. Most importantly, it will help to ensure that employees are well-informed. In the petroleum industry there is a lot of important information, including legislative changes, internal processes, fire muster points, performance metrics and first aid kit locations, just to name a few. All of this information must be communicated clearly and quickly, and following these guidelines will help ensure effective communication for employees and stakeholders.
For more information on how Accupoint can help with communications management, compliance or business practices, contact us today.
You have probably heard the term The Great Crew Change. It has been floating around the last few years as companies begin to recognize the generational change in the workforce. While this is a challenge (and opportunity) that every industry will face very soon, it will have a particularly profound impact on Oil and Gas. According to estimates the average age of employees in the petroleum industry is 60. The nearly 50% of workers over 55 will be retiring in the next 5-7 years. This is going to leave a huge gap in the knowledge and experience base of companies. With recent and ongoing downsizing due to lower oil prices, and the impending effects of The Great Crew Change, companies have to consider what it means for them and how they will prepare for the changes.
Several key steps should be taken to set your company up for success.
While The Great Crew Change does mean new challenges, it also presents opportunity. Companies need to find a balance between experience and embracing the inevitable changes. Investments must be made in both employee retention, and utilizing new technology. Companies need to focus on efficiency, accuracy and spending in areas that may not have been the main focus 10 years ago. Those companies that are able to operate at optimal performance will be in the best position for success no matter which direction the market turns. For more information on how Accupoint can help you navigate The Great Crew Change and optimizing business practices, contact us today.
Companies handling potentially dangerous or sensitive materials, like chemical treatment plants and oil refinement corporations, put a premium on safety. Implementing safety protocols and verifying them during operations is essential. The following are a few safety management ideas and tools for cultivating a safety-oriented atmosphere.
1. Constant and Dedicated Safety Training
A workforce requires precipitous safety training reminders, no matter how much extensive training they have had in the past. This may seem like an obstacle to productivity; however, each worker having a comprehensive understanding of safety standards and protocols saves time and money in the long run. Conducting dedicated safety training courses helps employees realize their active roles in maintaining safe operational standards.
2. Use Safety Management Technology
Technology can play a vital role when it comes to increasing safety at places like oil processing plants where standards and process are strictly documented. Programs like the OpX Process Safety Management system helps by creating a safe working environment by operating intuitively to delegate critical tasks systematically to essential personnel. Any management software should easily scale, have a simplistic roll-out and implementation procedure and reduce the need for burdensome training. With this software, you can address and eliminate compliance gaps as they are discovered.
3. Develop an effective Safety Program
Every processing or refinement plant should have in place or be developing, a safety and health program with policies, a budget, and procedures tailored to their location. This shows an appreciation for the workforce and will help to ensure the security of your resources and their adherence to OSHA standards and guidelines, reinforcing your company’s bottom line. In fact, modeling your intra-company safety guidelines after strict governmental standards, while tailoring them to suit the dynamic of an oil processing firm better, will keep employees hard a work help to avoid daily hazards.
4. Be Active and Pro-active
Taking charge and actively applying safety protocols conveys the fact that you take safety management seriously. You should develop safety initiatives that require the participation of executives, you, and your bosses to take part. Part of implementing your safety program must include the cultivation of a culture focused on safety, which can only be accomplished with the involvement of leadership. Work closely with the team utilizing training sessions, applying technology and work site analyses whenever possible.
To find out more about how Accupoint Software can help you reach a new standard in production and safety, contact us today.
With the changing landscape of the oil and gas industry, companies are under increasing pressure to improve operational efficiencies as prices continue to remain low and margins are narrowed. In order to reduce costs and improve efficiency, many organizations are adopting a structured quality management system (QMS).
Health & Safety
Due to the hazardous environment that many oil and gas companies operate in, the federal government along with the International Organization for Standardization developed a standard for Process Safety Management procedures and protocols. While this addresses the procedures to prevent major chemical accidents and occupational safety hazards, it is limited in encompassing the operational aspects of the industry.
The goal, is to develop an oil and gas compliance solution that includes industry best practices for all systems such as service quality, risk assessment, employee training, document control, corrective actions and preventive maintenance. A comprehensive solution may seem difficult for our complex industry; however, incorporating common standards of practice is essential to realizing integrated operational excellence.
Clients and Stakeholders
Both clients and stakeholders, are becoming increasingly demanding regarding the standardization and regulations that those companies they do business with must comply with. As an example, many customers are now requiring that their service supply organizations comply with the API Spec Q2 requirement. Using a system designed specifically for this standard streamlines the administration and reporting of said requirements.
A quality management system increases efficiency and collaboration. It ensures compliance and provides metrics reporting to prove such compliance. It defines strategies, goals and best practices and the means to secure them. A good quality management system is, however, only as good as the team behind it. Ensure that policies and procedures are in place that clearly communicate expectations and requirements.
The Bottom Line
Planning and control of critical tasks is required to minimize risks and improve operational efficiency. A comprehensive management solution can connect multiple locations with secure, real-time communications, thus providing instantaneous performance feedback. Furthermore, deployment of an effective quality management system tells your customers that you are at the top of your class and aiming for the best in products and services, ultimately ensuring customer loyalty through operational efficiency
For more information on how Accupoint Software can help you implement a quality management system specific to your needs, please contact us today.
Managing critical suppliers allows you to evaluate your most important sources of products and services. Depending on the size of your company and number of suppliers, you will use either a standard classification or a more complex system. The first step is to classify all of your suppliers based on their weight in your production process. You can place suppliers in one of four categories based on their performance and role. These categories include:
Evaluation of suppliers should be conducted on a yearly basis, at a minimum. You should thoroughly document evaluation criteria including: Price, Performance, Service, Reliability, Quality performance, Risk potential and Complaint information.
Key criteria in choosing critical suppliers relationships include:
The weight of each criterion may vary depending on the product or service. For example, is it more important for the supplier to provide high quality or low price? Is innovation potential more important than process monitoring? Points should be given for each criterion. Once this process in complete you will have a clear overview of your production chain and suppliers. You can then share your evaluation with the suppliers and identify areas where improvements can be made. In addition, the results can be used to strengthen the most important relationships.
An effective supplier relationship management system, will provide digital documentation of all suppliers, data, documentation and evaluations in one place. This is especially useful when working with a large number of suppliers. The system should be standardized and allow for easy access and evaluation.
Critical suppliers are the most important piece of the supply chain. You rely on them for the most crucial parts and services. You must maintain a strong relationship with these suppliers and maintain open communication. In today’s global marketplace competitors can spring up at a moment's notice, challenging product quality and prices. You likely buy components, ingredients and services from all over the world to source quality at the best price. Control of your supply chain allows you to protect your business. Clear documentation, scheduled re-evaluation and the support of managers are necessary for successful supplier management, which will give you a tangible competitive advantage.
For more information on how Accupoint can help you with critical supplier management, contact us today.