Cost of Poor Quality Reports

[JQuality]

The original question wasn't "what is the best way to measure the cost of poor quality." It was "is it mandatory to measure it with $." The answer to that question is no, it isn't mandatory, and that's my whole point. Indicating a requirement is there when it isn't does a disservice to the questioner.

 

[Bev D]

The original question wasn't "what is the best way to measure the cost of poor quality." It was "is it mandatory to measure it with $." The answer to that question is no, it isn't mandatory, and that's my whole point. Indicating a requirement is there when it isn't does a disservice to the questioner.

true enough and we must do what works for us while still meeting the intent of any applicable standard. COPQ as a percentage of sales (while this has it's own problems) is aviabel approach that doesn't use the $ sign.

As a diversionary response I might suggest that we also recognize that cost of poor quality doesnt' necessarrily need to be highly accurate as we are probably better served in understanding the variation.

 

[Citizen Kane]

If you have displayed only value chart, then use $; otherwise, if, for example you have % of something (sales, scrap, etc.) - use %

 

[sathishthantri]

If you have displayed only value chart, then use $; otherwise, if, for example you have % of something (sales, scrap, etc.) - use %

Real values will definitely highlight the problems and the gravity as it can be perceived easily.
But if there is a need to compare (between time periods, between companies,....) % to sales would be an ideal indicator.
As cost of poor quality will generally increase / decrease as per the sales figures, it is better to present both $ and %. It is better to always remember that zero sales does not necessarily mean zero cost of poor quality for that period.
Sathish

 

[Rascal]

Our business reports it as a % as part of our Management Review. However, you can report it as $ as well. There is no mandate how it is reported.

 

[AYDOSE]

Firstly you have to define the factors of poor quality such as internal nonconformances & external non conformances; such as rejects, scraps, reclamation cost etc. Then you can calculate the cost depending on the cost of total production and you can compare yearly basis whether it was increased or decreased.