“Maximize the benefits of QMS & …..implement strategies for reducing COPQ”

Yakub Aliyu, PhD(Wales), MBA(Lond.)

Principle 1 – Customer focus 2 – Leadership 3 – Involvement of people 4 – Process approach 5 – System approach to management 6 – Continual improvement 7 – Factual approach to decision making 8 – Mutually beneficial supplier relationships

QMS Framework for improving organizations performance

Customer Focus ………….

Ensure objectives of the organization are linked to customer needs and expectations

Communicating customer needs and expectations throughout the organization . Measuring customer satisfaction and acting on the results

Ensuring a balanced approach of managing customer / stakeholder relationships to achieve a win - win objectives

Increased revenue & market Share !

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Phases/ Time

Level I Quality System: Procedures established

Level 0 Quality System: Ad hoc processes

Level II Quality System:Measures implemented to

track effectiveness

Level III Quality System:Continuous improvement

emphasis

Level III Quality System:Continuous improvement

emphasis

QMS process Improvement Evolution

The Cost of Poor Quality (COPQ)

Represents the difference between The actual cost of production or service

What the cost would be if the process were effective in manufacturing products that

met customer needs/expectation .. and were defect free.

COPQ increase as the detection point moves further up the production and distribution chain.

The lowest cost is generally obtained when non-conformances are prevented in the first place.

Most expensive costs are from non-conformances detected by customers. In addition to the replacement or repair loss, a company loses customer goodwill and their reputation is damaged

Example: Framework for Calculating COPQ for fortune 500 companies

agupta@metricstream.com

Strategies for Reducing COPQQMS Framework (8 principles) must be tied improving

organizations performance in measurable manner

Systematic reductions in the Cost of Poor quality can be attained by implementing Quality Management System (QMS) that provides an integrated and closed loop corrective action process

Review log corrective and preventive actions. and analyze what percentage of past improvement activities addressed individual products rather than processes or systems.

Focus on Preventive incidents

COPQ must be tied to ROI in quality operation Quality must be measurable, must relate to financial results.

………….."Quality is never an accident, it is always the result of an intelligent effort"

Quality is more than compliance or cost avoidance !

Innovative & incremental continuous improvement

MUST be systematically infused at ALL levels of

organization.

Require to measure COPQ and reduce it to improve

organizations bottom line –Performances

Management's team leadership commitment to QMS

principles determines quality system's return on

investment(ROI)

“The continuous pursuit of reduced Variation (…& Waste)

even beyond seeming economic justifications will always pay “

- DEMING.

Summary/Conclusion

Thank you

Question & Answer

BackupExamples

For example: An PZT Composite molding company

 I. Restructure production by linking three processes that

had run independently for years.

II. The average production time was 1.5 days per part from receipt of the order to shipment.

III. Between each process, the company required a components inventory to ensure a short production time, as requested by its customers.

IV. After physically linking these processes, the average production time dropped to three minutes per part. At the same time, the total inventory was reduced by more than $1 million.

Demonstrates how performance improvement and a reduction of working capital were achieved through process improvement.

Example : COPQ as percentage of SalesAnnual sales of $250 million. Aggregated cost, called Cost of Poor Quality (COPQ), amounted

to 20% of their annual sales COPQ( Total cost of repair, rework, scrap, service calls, warranty claims and write-offs from obsolete finished goods)

A 20% COPQ implied a loss of approximately $ 100,000 per day.

Experts have estimated that Cost of Poor Quality typically amounts to 5-30% of gross sales for manufacturing and service companies

COPQ for an average company is about 20% of sales, with a range as wide as under 1% for companies who have achieved "six sigma", about 15%-25% for companies who are at "four sigma" level and about 25% to 40% of revenue for companies who are at "three sigma" levels