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COPQ (Cost of Poor Quality) - Can we add Premium Freight?

sowmya

Involved - Posts
#1
Experts,

We have discussed a lot regarding copq in detail. We have been following copq for the past 4 years. Now, there is a question / arguement internally, whether we need to add premium freight cost to copq or not.

To explain clearly, if due to failure in purchasing process, we are taking a consignment from supplier by incurring additional freight, we term it as premium freight inward. Sameway, if we are spending extra cost on shipping a consignment to customer, due to internal failures, we term it as premium freight outward. (MAY NOT BE DUE TO QUALITY REASONS / DEFECTS IN THE PRODUCT OR PROCESS)

These things we have added in copq for capturing the extra cost incurred and to get in to the action points. but now, the arguement is, since it is not due to quality reasons, why we need to add in to copq.

I have added our work sheet.

What is the industrial practice?. Is it good to add or to be removed.

Your suggestions please.

Thanks in advance.
Sowmya
 

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trainerbob

#2
Re: COPQ-can we add premium freight?

Premium freight is certainly part of your product cost out the door, but if you are breaking these costs down into categories to attack and improve I would not consider premium freight to be part of copq if the premium freight had nothing to do with quality issues. You would be hiding the premium freight under the copq instead of having it stand on its own if there is no relationship.
 
N

noboxwine

#3
Re: COPQ-can we add premium freight?

Yes you can and I think it's a great idea to add Premium Freight into COPQ. Often times the impact gets diluted in 8.2.1.1 and I think tells a better story as part of COPQ. Good Luck ! :D
 
R

ralphsulser

#4
I also agree that premium freight should be added to copq but only for quality issues, unless a regular shipment is late due to poor quality, or material is damaged due to your improper loading or your containers caused product damage.
 

Bev D

Heretical Statistician
Staff member
Super Moderator
#5
but why is the material late? it may not have been directly affected by poor process or product quality but it may have been behind a lot that was.

Also isnt' there something to be said for business process quality? bottom line, deliveries (inbound or outbound) that require premium freight to make it on time or at least not be too late are alwasy due to poor quality somewhere in some process...
 
B

Bruser

#6
but why is the material late? it may not have been directly affected by poor process or product quality but it may have been behind a lot that was.

Also isnt' there something to be said for business process quality? bottom line, deliveries (inbound or outbound) that require premium freight to make it on time or at least not be too late are alwasy due to poor quality somewhere in some process...
I agree.. look at the "whole" business and premimum freight is a cost of poor quality, could be poor materials management, poor supplier selection, establishing an expectation with the customer that was unrealistic (delivery timing), etc:notme:
 
M

Matt Swartwood

#7
I agree that it is a benefit to measure. You have the opportunity to break out premium freight for deliveries to your customer and premium freight incurred due to supplier issues. You improve on your process and provide feedback to your suppler requesting improvement from them...
 
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