TS 16949 Clause 5.6.1.1 - Cost of "POOR" Quality vs. Cost of Quality

  • Thread starter Lynda Young - 2008
  • Start date
L

Lynda Young - 2008

#1
In the ISO/TS16949 manual (section 5.6.1.1 TS requirement) the ask for "evaluation of the cost of poor quality". From what we are hearing this is different than the "cost of quality" breakdown that has historically been use. Does anyone have a sanctioned interpution for "Cost of POOR quality".
 
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D

D.Scott

#2
The distinction between the two is simply that CoQ in a cost accounting system includes all costs attributable to quality. Salaries, overhead, and preventive costs are included. In Cost of Poor Quality, only the costs directly relating to failure need be considered. Scrap, rework, added inspection, and things of that nature are calculated. There are a number of good discussions in the Cove on the subject as well as some nice sample worksheets. Do a search to see if there is anything you can use.

Dave
 

Manoj Mathur

Quite Involved in Discussions
#3
Cost Of Quality

In My opinion The Cost of Poor Quality (COPQ) – the cost of defects in the current process. COPQ also is defined as the current cost of resolving existing failures in a process.Cost of poor quality results in millions of dollars in lost earnings every year, yet most executives can’t accurately state the COPQ from their organization. Experts have estimated that COPQ typically amounts to 5-30% of gross sales for manufacturing and service companies. Independent studies reveal that COPQ is costing companies millions of dollars each year and its reduction can transform marginally successful companies into profitable ones. Yet most executives believe that their company's COPQ is less than 5%, or just do not know what it is. In a recently published book "Success through Quality", the author estimates that COPQ for an average company is about 20% of sales, with a range as wide as under 1% for companies who have achieved "six sigma", about 15%-25% for companies who are at "four sigma" level and about 25% to 40% of revenue for companies who are at "three sigma" levels. A large fortune 500 communications company calculated its COPQ at 8.6% of sales in 2002 and has set a goal of 5.4% for 2005, which will result in a savings of a little less than $1 Billion per year !
 
D

D.Scott

#4
Excellent point Manoj -

More can be found on this in Feigenbaum's "Total Quality Control".

Dave
 
S

SteelWoman

#5
I haven't seen any official ruling or sanctioned interpretation on this, but we also got dinged on it in our last surveillance audit - with the auditor saying SHE didn't know it was being interpreted this way until she was the subject of an oversight audit herself, just prior to our audit.
 
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