There are several factors that contribute to the Cost of Poor Quality (CoPQ) within an organization. Direct costs can involve non-value-added appraisal and prevention, internal error costs such as scrap and rework, or external error costs due to warranty issues. Indirect costs that contribute to the Cost of Poor Quality can include things such as poor customer service or damage to company reputation. In any of these cases, costs can usually be controlled using an effective electronic quality management system (EQMS).
An electronic quality management system measures standards and automates processes that contribute to an overall lower Cost of Poor Quality. An EQMS provides real-time visibility into quality and manufacturing data through seamless ERP integration. Complete traceability and product genealogy of every part, subassembly and final assembly ensures operational excellence throughout the product lifecycle. With this insight, manufacturers can identify areas for process improvement, resolve nonconformances and implement corrective actions.
The following initiatives illustrate how an effective EQMS can be used to help reduce the Cost of Poor Quality:
Create a Closed Loop Corrective Action Process
Corrective actions that are generated either internally or from a supplier may be electronically tracked within an EQMS. Detailed task plans ensure all relevant steps to completing the corrective action have been completed prior to closure. This closed loop corrective action process eliminates the possibility of lost paperwork, improves accuracy by validating data entry against master records, and speeds the identification and processing of corrective actions. The history of corrective actions from request through follow-up and closure are all electronically documented for easy reference, saving valuable time.
Streamline the Inspection Process
A streamlined quality inspection process eliminates paper documents, standardizes quality, and increases efficiencies on the shop floor. The successful completion of the quality inspection process relies on a technologically advanced solution that enables the automation of critical processes and ensures compliance objectives are met. Automated scheduling, routings, work instructions, and escalations significantly increase productivity. With an effective electronic quality management system, quality data can be integrated with MES and ERP systems for a complete view of the inspection process.
Practice Supplier Quality Management
Suppliers can have a significant effect on the cost of quality. Many of the factors that contribute to the Cost of Poor Quality stem from supplier-related activities. An effective EQMS can help manufacturers understand supplier-related costs and hold suppliers accountable for poor performance. Companies can track Key Performance Indicators (or KPIs) for display in dashboard format within the solution to effectively track performance. Manufacturers can choose to end a poor performing supplier relationship or pursue a supplier charge-back to fully recover the cost of poor supplier quality. This institutes a discipline that forces the supplier to quickly improve the products its ships and reduces the instance of product recalls.
Automate Quality Audits
Compliance with industry standards and regulations can be automatically tracked and measured within an electronic quality management system. Several different types of audits, both internal and external, can be defined within the solution. Proactive management of audit-related activities ensures compliance by identifying nonconformances early in the process.
Set Up Quality Metrics
An advanced system that supports business analytics can provide users with an interactive dashboard containing key quality metrics. An electronic quality management system can integrate quality data with cost data from a company’s ERP to provide metrics that directly support CoPQ analysis and trends. This transparent view of the Cost of Poor Quality allows for better business decisions.
ASQ has a great web page with several resources for more information on the Cost of Poor Quality. Visit http://asq.org/cost-of-quality/index.html to better understand how quality costs are measured, and what you can do to improve quality within your organization.