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Cost of Poor Quality

Six Sigma – iSixSigma Forums Old Forums General Cost of Poor Quality

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  • #45149

    AJ
    Participant

    Does anyone know how much poor quality costs for late delivery of a product as a percentage of sales?  Our Six Sigma book outlines approximately 25% of sales for poor quality.  Any comments to this?

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    #146519

    Marlon Brando
    Participant

    Between  20–25%

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    #146546

    Pipkin
    Participant

    You are wrong.
    A survey showed it is always 28.5 to 31.5 .  Mikel Harry proved this with 6 groups of 5 samples and adding the 1.5 shift = 30 +/-1.5

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    #146562

    Marlon Brando
    Participant

    aGREE

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    #147037

    Alvarez
    Participant

    I suggest you look around the company for results of the late delivery to calculate the cost of poor quality. For example if you have a call centre and customer ring to chase up the whereabouts of the goods, the cost of poor quality for late delivery is the cost of handling the calls.

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    #147038

    GiGi
    Participant

    In the last six sigma project that I did which was for a distribution company, we looked at the psat three months record and then computed the opportunity lost by looking at the number of sales orders that were booked but were not filled up on the order date due to late deliveries.  The sales order would normally have the total amounts of the orders that were booked for the customers.  These reflected actual amounts which then were not difficult to compute versus what should have been the total sales if these orders were filled on time.

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    #147042

    mand
    Member

    Any meaningful discussion of cost of quality in a six sigma context is lost in Harry’s blatant deceptions.

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    #147049

    Deanb
    Participant

    In reality, the COPQ for late delivery can theoritically range from “no appreciable cost” to a “catestrophic loss of market position and corporate value.” Too big a range for arbitrary rules of thumb I am afraid. The COPQ measure you seek is best estimated within each company based on actual company cost and market response to lateness. Your COPQ measure will depend on the actual marginal economic inpact of certain kinds of “lateness” and how your direct and indirect costs are defined and incorporated into the metric. Two big lessons of the past using COPQ is 1) to get the involvement and consensus of the CFO for credibility purposes, and 2) hold your metric method constant for comparative purposes over time. Good Luck.

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    #147054

    LJ
    Participant

    I totally agree with DeanB

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    #147435

    DANG Dinh Cung
    Participant

    Good morning,
    Calculating COPQ is very difficult and energy wasting. the issue is to avoid poor quality.
    It would be preferable to improve continuously quality. To check you are on the right track, you may survey evolution of a criteria (one single), for example the cost of extra-transportation, the cost of processing goods returned by customers,… according to your industry.
    Best regards,
    DANG Dinh [email protected]
     

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