Quality employees, processes, and products are all part of the equation when it comes to building a successful company. Quality impacts operating costs, productivity, and customer satisfaction. A focus on quality control management in every area leads to greater profitability.
The Real Cost of Poor Quality (COPQ)
The cost of quality can be 15-20% of a business’s total sales. It can run as high as 40% in some organizations, but even at 20%, that’s one full day of work that’s lost to the cost of maintaining that quality, which comes right off the bottom line. Effective quality control management can mitigate some of this. Even small increases can positively affect margins.
Measuring the Cost of Quality (COQ)
Preventing errors and fixing systems impacting your quality are crucial actions for maximizing operations.
These four components measure the cost of quality:
- Internal failure
- External failure
Prevention and appraisal are proactive quality control management practices. They prevent defects and create efficient systems to improve quality.
Internal failure and external failure costs represent reactive costs. They are examined after the fact to mitigate the damage from defective products and correct systems to avoid additional problems.
Let’s examine these four components more closely.
The best way to lower your COQ is to prevent poor quality from happening in the first place. The biggest gains can come from prevention. Fewer defective goods and more efficient systems improve customer satisfaction and reduce costs. Examples might include formal equipment maintenance and repair schedules, written procedures and training, design reviews, and prototype testing.
Appraisal costs are associated with measuring and auditing goods and services to make sure they conform with quality standards and an organization’s performance requirements. Such costs might include equipment calibration, audits, lab testing, and inspections.
Internal failure costs represent the costs incurred due to defects before products are in the hands of customers. This might include repair or rework, such as scrapped manufactured goods, design changes, equipment downtime, or excess inventory.
External failure costs occur after products have been shipped. In addition to the costs of repairing or replacing goods, external failures can damage customer relationships and impact future sales. These include direct costs, such as repairs and warranty claims, field service costs, and potential lawsuits, as well as indirect costs, such as unhappy customers, bad publicity, and loss of market share.
An Investment in Prevention and Appraisal Costs Improves Quality
Most companies spend 95% of their quality control management costs assessing failures and just 5% in prevention. However, case studies show that increasing the investment in prevention and appraisal saves money in failure costs and reduces overall COQ costs. Research also shows that taking a proactive approach to prevention can reduce the COQ by as much as 50%.
The Advantages of Improving Quality Control Management
Taking proactive steps to improve your quality control management aligns quality with your organizational goals. The right system for shop floor control has several other benefits, including:
- Creates problem priority systems to identify and address COPQ areas
- Increases effective use of resources
- Provides a centralized overview and measurement of quality
- Provides a way to manage and distribute controllable quality costs
If the benefits are obvious, why do so many service-based manufacturers fail to implement robust quality control management solutions? It may be a lack of awareness of solutions or concerns about introducing change into systems that have been in place for years. However, a critical analysis of the process and putting in place proactive controls can limit mistakes, make systems more efficient, decrease production costs, and lead to higher profits.
The Bluestreak MES + QMS Solution
Bluestreak’s Manufacturing Execution System (MES) and Quality Management System (QMS) integrates with your systems and processes. It ties quality control management and quality assurance directly to individual work centers and processing steps on the production floor. An all-in-one inclusive database means no data silos. Order entry, operations, quality management, and KPI reporting work together seamlessly.
- Advanced Specifications Manager: The management of industry specifications
- Schedule: The ability to schedule or sequence your production operations
- Advanced Quality: The ability to control quality characteristic requirements per specification standards
- Production Pathway: Real-time shop floor tracking
- Quote to Invoice: Customer and work order management system
With end-to-end process tracking, Bluestreak improves efficiency, optimizes processes, and improves your profitability with proactive monitoring.
Contact Bluestreak for a Demo
Bluestreak is designed exclusively for the service-based manufacturing industry. Our best-of-class MES and QMS solutions bring quality control management to new levels. Contact Bluestreak today for a free demo. Let us show you how we can grow your business.
If you’re ready to leave manual, time-consuming service-based manufacturing tasks in the past, drastically reduce your scrap and rework percentage, gain visibility of your production floor processes, and build better relationships with your customers, contact us for a free consultation today!