Cost of quality (COQ) is defined as a methodology that allows an organization to determine the extent to which its resources are used for activities that prevent poor quality, that appraise the quality of the organization’s products or services, and that result from internal and external failures. Having such information allows an organization to determine the potential savings to be gained by implementing process improvements.

1. Traditional Coq Au Vin Recipe
2. Coq10 Benefits
3. Coquito
4. Coqui.net

What are the risks of taking CoQ10? Coenzyme Q10 (CoQ10) is a nutrient that occurs naturally in the body. CoQ10 is also in many foods we eat. CoQ10 acts as an antioxidant, which protects cells from. Definition of COQ in the Definitions.net dictionary. What does COQ mean? Information and translations of COQ in the most comprehensive dictionary definitions resource on the web.

What is Cost of Poor Quality (COPQ)?

Cost of poor quality (COPQ) is defined as the costs associated with providing poor quality products or services. There are three categories:

1. Appraisal costs are costs incurred to determine the degree of conformance to quality requirements.
2. Internal failure costs are costs associated with defects found before the customer receives the product or service.
3. External failure costs are costs associated with defects found after the customer receives the product or service.

Quality-related activities that incur costs may be divided into prevention costs, appraisal costs, and internal and external failure costs.

Appraisal costs

Appraisal costs are associated with measuring and monitoring activities related to quality. These costs are associated with the suppliers’ and customers’ evaluation of purchased materials, processes, products, and services to ensure that they conform to specifications. They could include:

• Verification: Checking of incoming material, process setup, and products against agreed specifications
• Quality audits: Confirmation that the quality system is functioning correctly
• Supplier rating: Assessment and approval of suppliers of products and services

Just like we remember God mostly in the time of crisis, Cost of Quality (COQ) also becomes important during slowdown (like these days, industrial growth in India is negative especially in Automotive Sector). It is interesting to note that when Industry was soaring, there was not much discussion about Cost and focus was on expansion & recruitment. But, with consistent slowdown and no clarity of upcoming Quarters, there is hara-kiri in Industry. New expansions have been temporarily stopped, manpower recruitment has been frozen, existing manpower is facing the heat of losing increment and job, pressure on cost cutting and improving productivity (OEE) is immense. Suddenly, Cost of quality has been in the Centre stage! But, will the ad-hoc measures will work or we need a consistent focus of Top Management on COQ?

According to Crosby, the only performance measurement is the ‘Cost of Quality’, which is the “expense” of nonconformance and “quality is free.” What costs money is the failure to do things right the first time.

As per Juran, Quality costs is “the sum of all costs that would disappear if there were no quality problems.” It is important to report quality information in Value terms to attract the attention of top management.

Cost of Quality (COQ) is a measure that quantifies the cost of control/conformance and the cost of failure of control/non-conformance.

The Cost of Quality can be represented by the sum of two factors. The Cost of Good Quality and the Cost of Poor Quality

CoQ = CoGQ + CoPQ

Cost of Good Quality (CoGQ)

1. Prevention Costs – costs incurred from activities intended to keep failures to a minimum. They are planned and incurred before the actual operation. These includes:

· Establishing Product Specifications

· Quality Planning

· New Product Development and Testing

· Development of a Quality Management System (QMS)

· Employee Training

2. Appraisal Costs – costs incurred to maintain acceptable product quality levels. It includes:

· Incoming Material Inspections

· Process Controls

· Check Fixtures

· Quality Audits

· Supplier Assessments

Cost of Poor Quality (CoPQ)

3. Internal Failures – costs associated with defects found before the product or service reaches the customer. These costs occur when the results of work fail to reach design quality standards. It includes:

· Scrap

· Re-work

· Waste due to poorly designed processes

· Machine breakdown

· Inspection Cost

4. External Failures – costs associated with defects found after the customer receives the product or service. It includes:

· Service and Repair Costs

· Warranty Claims

· Customer Complaints

Traditional Coq Au Vin Recipe

· Product or Material Returns

· Shipping Damage due to Inadequate Packaging

It should be remembered that Quality Systems, not COQ systems create improvement. But without some systematic approach to tracking COQ, it is more difficult to identify potential areas for improvement and to track improvement results.

The “Cost of Quality” isn’t the price of creating a quality product or service. It is the cost of not creating a quality product or service. If OEE is low, it has direct bearing with low COQ.

One important factor to note is that the Cost of Quality equation is non-linear. Investing in the Cost of Good Quality does not necessarily mean that the overall Cost of Quality will increase. In fact, when the resources are invested in the right areas, the Cost of Quality should decrease. When failures are prevented/detected prior to leaving the facility and reaching the customer, Cost of Poor Quality will be reduced.

Reasons for not Monitoring COQ:

1. Lack (absence) of management support/interest

2. Size of an organization (Too big or small!)

3. Lack of knowledge, how to track COQ & its benefits

4. Lack of tools to collect, organize, filter, and report quality costs

5. Did not see the benefit of COQ

How to start monitoring COQ?

Coq10 Benefits

1. Understand the Principles of Quality so that no one questions why to gather data for COQ.

Coquito

2. Understand what elements of COQ to be measured.

3. Understand that it is not the responsibility of the Accounting department to monitor.

Coqui.net

4. Identify activities related to poor quality, decide how to estimate cost, collect data & Analyze (PDCA approach).

Some question to ponder

1. I learned about COQ in the year 2000. Since then, definition and its implementation remain the same!

2. COQ is either not monitored or if monitored, is never an important parameter!

3. Why cost is important only at the time of slowdown?

This is the eleventh article of this Automotive series. Every weekend, you will find useful information which will make your Management System journey Productive.

I am extremely valuing your genuine feedback and response. Please continue sharing it and suggest topics for the coming weeks.