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Author Topic:   Cost of Quality
dewie
Forum Contributor

Posts: 44
From:BKK
Registered: Sep 1999

posted 05 February 2001 10:49 PM     Click Here to See the Profile for dewie   Click Here to Email dewie     Edit/Delete Message   Reply w/Quote
Could anyone pleaseeeee tell me where to get the information of COQ? Could it be find in any web site or pdf?

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Marc Smith
Cheech Wizard

Posts: 4119
From:West Chester, OH, USA
Registered:

posted 05 February 2001 11:55 PM     Click Here to See the Profile for Marc Smith   Click Here to Email Marc Smith     Edit/Delete Message   Reply w/Quote
Here's a quick snippet from misc.industry.quality:

Subject: Re: Cost of quality info needed
From: "Joseph Ludford" jludford@radix.net
Newsgroups: misc.industry.quality
Date: Tue, 30 Jan 2001 12:25:35 -0500

fidel12@my-deja.com wrote in message news:94vnd0$kb2$1@nnrp1.deja.com...
> Does anyone know the stats on what a typical company spends on the four
> costs of quality and what the breakdown is for a worldclass company?
>
> I am doing a presentation and I am tyring to influence sr. management on
> where we should be with prevention costs.
>
> thanks
> Linda

This is a follow-up to my previous note. In Quality Progress, May 1998, paper Six Sigma: A Breakthrough Strategy for Profitability, there is Table 1. Practical Impact of Process Capability with the following information:

6 sigma 3.4 defects per million <10% of sales (World class)
5 sigma 233 parts per million 10-15% of sales
4 sigma 6,210 parts per million 15-20% of sales (Industry average)
3 sigma 66,807 parts per million 20-30% of sales
2 sigma 308,537 parts per million 30-40% of sales (Noncompetitive)

There is an article in Quality Digest, October 1994 that has information on
quality cost as a percentage of sales for aircraft and automotive
manufacturing industries.

There is data from the 1980's or earlier for a tire manufacturer in Juran's
Quality Control Handbook, Fourth Edition, Chapter 4.

I have seen the following conclusions about quality costs stated by Juran
and Gryna either in the Quality Control Handbook or the text Quality
Planning and Analysis:

1) Total quality costs are hgiher for complex industries
2) Failure costs are the largest percentage of total quality costs
3) Preventive costs are a small percentage of total quality costs
4) For manufacturing organizations, cost of poor quality varies from 5-35%
of sales depending on product complexity
5) For service organizations, cost of poor quality varies from 25-40% of
operating expenses depending on service complexity

I have also seen the following rules for taking action stated by Juran and
Gryna:

1) Zone of Improvement - failure costs > 70% or prevention costs < 10% of
total quality costs - identify and pursue improvement projects

2) Zone of Indifference - failure costs ~ 50% and prevention costs ~ 10% of
total quality costs - if there are no profitable projects shift to control

3) Zone of High Appraisal Costs - failure costs < 40% or prevention costs >
50% of total quality costs - find ways to reduce appraisal costs

If you are a member of ASQ, you could ask the ASQ Quality Information Center
to search their database for articles on the subject. Call 1-800-248-1946
to reach the QIC. They would provide abstracts of the articles at no charge
but would charge for copies of the articles.

Joe Ludford

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Marc Smith
Cheech Wizard

Posts: 4119
From:West Chester, OH, USA
Registered:

posted 06 February 2001 12:03 AM     Click Here to See the Profile for Marc Smith   Click Here to Email Marc Smith     Edit/Delete Message   Reply w/Quote
Wayne and Duane gave you a range of 5% to 50% of sales. I agree that
these are the min and max extreme values. My personal experience is
something like 15% to 30% of your P&L in terms of scrap, error, rework
cost and all types of muda (inventory, moving items, ...).

The six sigma apostles have published the following table :

+( Cost of quality - six sigma

cost subject to error, scrap and rework

code:

--------------------------------------------------
- Sigma Level defects per cost of -
- million quality -
- opportunities [% of sales] -
--------------------------------------------------
- -
- 2 308.537 not -
- noncompetitive applicable -
- companies -
- -
- 3 66.807 25%-40% -
- -
- 4 6.210 15%-25% -
- industry avg -
- -
- 5 233 5%-15% -
- -
- 6 3.4 < 1% -
--------------------------------------------------


Harry M., Schroeder R. : Six Sigma
Random House Inc., 2000

HP Staber/Salzburg

[This message has been edited by Marc Smith (edited 23 March 2001).]

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Marc Smith
Cheech Wizard

Posts: 4119
From:West Chester, OH, USA
Registered:

posted 23 March 2001 08:41 AM     Click Here to See the Profile for Marc Smith   Click Here to Email Marc Smith     Edit/Delete Message   Reply w/Quote
Also see:
https://elsmar.com/ubb/Forum27/HTML/000002.html and http://https://elsmar.com/ubb/Forum5/HTML/000001.html

[This message has been edited by Marc Smith (edited 23 March 2001).]

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