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cost of quality

Six Sigma – iSixSigma Forums Old Forums General cost of quality

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  • #35658

    A.S.
    Participant

    What is the global bench mark for cost of quality.
    Some text books says that 7% of sales revenue.
    Whether its correct in this present condition.
    Some one can share the details pl
     

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    #100760

    Ron
    Member

    One of the classic misuses of a metric is COQ. It is especially wrong to utilize COQ as a percent of sales.
    Finance folks generally lump many many items which have no relationship to quality in this number so as a benchmark unless you have a standardized equation to calculate this metric it is meaningless.
    A more accurate and useful measure is COPQ as apercent of direct labor hours in a manufacturing site.
    COQ often has all the budgetary numbers associated with a qualityt department including the cost of building space allocations, retirement benefits of quality department personnel, travel expenses etc. the end result if you want to report a low COQ layoff the quality department and you will show a huge improvement.
    The metric drives the action! Find a metric that is meaningful and drives the right behavior
    Ron

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    #100816

    A.S.
    Participant

    Only COPQ is being named as COQ by most of the people.
    Even in Juran’s QC handbook,it was declared that COQ refers to COPQ consisting of failure cost,appraisal cost and prevention cost.
    Assets like QC/QA dept buildings need not be considered.
    In my view COQ measurement interms of sales revenue is more useful instead % of manhrs.It is required to show the commercial importance and trigger the corrective action with the management support.
    Interpretation of COQ is more important.An increase in  prevention cost along with the reduction in failure is more useful to the company in a long term.Continuos monitoring of the trend will help to decide the business strategy.
     

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