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Measuring metrics is an integral part of any continual improvement effort. One of the most important measurements is likely to be your organization's cost of quality (CoQ) performance. In today's post we will present a infographic that outlines the various components that should be included in your CoQ calculations. 
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During times like these, companies find themselves looking for ways to maintain productivity and revenue while limiting exposure to the markets and unnecessary costs. Operational excellence lies at the heart of these efforts.
If your organization is reeling from the market shifts and looking for ways to survive, then now is the perfect time to re-examine your operational expenditures, project management, and other critical processes. It can be hard for companies to step back from the current situation and see the big picture, but gaining a high-level view of the company, markets, and industry is essential to long-term success. Doing this now will help you spot opportunities for cost reduction and reinvestment while the market is down, and it will position you for growth into the future. Remember, the ability to look at your current situation through the lenses of operations, compliance, and quality management is a strategic strength. It provides a perspective that balances data, business goals, and risk management. Organizations that use this approach will discover ways to do more with less and re-establish growth. Companies that commit to improving their operations and/or maintaining their already high standards will see their fortunes improve much faster than firms that ignore issues during the downturn. Firms practicing operational excellence, or working towards it, will be more agile and responsive to market changes during this cycle and future ones. For more information on how Accupoint can help you improve your operational excellence, please contact us today.
1. Maintenance of equipment and machines It is a fact that equipment will wear out at some point. It is of great importance to maintain equipment at standard levels. It the responsibility of the company to ensure proper safety measures are in place rather than waiting for regulatory agencies to spot-check their compliance. 2. Training and certification Employees of should be trained on safety the safety management system. It is of no importance, for example, to have fire extinguishers on the rig if employees don't know how to use them. 3. Use of experts When making operational decisions, experts can help the management by advising it on both short term and long term consequences. Safety engineers should be involved in decisions such as developing new operational workflows and documentation. 4. Observing industrial standards Implementing and maintaining global quality, environmental and safety standard will provide a framework to identify and mitigate risks at the point of operation. 5. Change management Risks are inherent whenever there is change. Changes that have safety implications should be to thoroughly evaluated, and have a comprehensive hazard analysis performed. It is also of great importance to document the management of change process so that a gap analysis can be performed subsequent to implementation. In short, managing risk requires proactive and preventive measures to protect your organization’s and customer’s interests. Detection and mitigation of risk potential should be at the core of your total risk assessment strategy.
For more information on how Accupoint Software can help you manage your risk mitigation efforts, please email or call us at (800) 563-6250. 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 Formula 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. Balancing Costs 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. |
