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Quality - Coggle Diagram
Quality
Six Sigma teams must always be aware that quality comes at a cost. When talking about quality costs, many organizations consider what is known as the cost of poor quality, or CoPQ. The cost of poor quality is defined as the costs or expenses associated with defects created by a process. Quality actually has a broader cost – avoiding poor quality comes at an expense as well.
In some ways, the cost of poor quality is easier to measure than the cost associated with overall quality. CoPQ is usually broken into two major categories: costs associated with external failures and costs associated with internal failures
External Failures
External failures usually occur after products or services have been delivered, which means they are directly associated with customer dissatisfaction. External failures might include revenue losses associated with a reduction in sales because of the quality of products, services, systems, or information.
Internal Failures
Internal failures occur when products, services, or processes don’t conform to the requirements set by the company, and the product or service is provided to the customer in an unsatisfactory fashion. Internal failures are usually handled by scrapping the work, redoing the work, or repairing the work.
Calculating the Cost of Poor Quality
Understanding the cost of poor quality is critical to Six Sigma organizations because it lets leaders understand how financial needs are related to the need for quality improvements. The higher the cost of poor quality, the more likely an organization will work toward improvement.
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cost of poor quality
true of the cost of poor quality, and hidden costs might include:
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• Higher risks of compliance issues, including fines
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• Unpredictable revenue, sales, or production
example
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When a customer purchases a pair of pants, he or she is usually concerned with how the pants fit and look. Are they comfortable, is the size correct, and does the clothing match the customer’s personal style?
It’s hard to create a measurement for whether pants are comfortable, but a manufacturer can take customer feedback on various types of pants and learn that a certain fabric with a certain cut is most comfortable for the target audience. The manufacturer can also determine appropriate measurements for each size. During the manufacturing process, these critical-to-quality factors are applied: only fabric that meets the specifications identified is used.
Critical to quality characteristics, or CTQs, are the factors or parameters that are the major drivers of quality within an organization or process.
CTQs are key characteristics that can be measured; where the performance of said metric provides information about whether or not the customer is going to be satisfied.
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When creating a CTQ tree, you don’t have to follow an equal pattern for drivers and requirements. Some customer needs will have more drivers than others; some drivers will have more requirements.
Identify Critical-to-Customer Needs
Begin the CTQ tree process by creating a list of needs that are critical to the customer. A bank working on processes dealing with online checking access might identify accessibility, user-friendly interfaces, and security of information as the major critical-to-customer needs, for example. Define needs in broad terms to help catch all drivers and requirements later in the diagramming process.
Identify Drivers of Quality
Once you have a list of critical needs, work with one need at a time to create a tree similar to the diagram above. Identify quality drivers that must be present or met for the customer need to be fulfilled.
List Requirements for Each Driver
Requirements are the most detailed breakdown regarding critical to quality characteristics. These are the things that you can measure that lead you to understand whether drivers are performing appropriately so customer needs are met.
The Cost of Quality
The cost of quality, or CoQ, includes the cost of poor quality and the cost of good quality. In addition to internal and external failure costs, CoQ includes prevention and appraisal costs.
Prevention Costs
The costs of prevention are the expenses that are related to any activity meant to stop an error or defect from occurring.
Appraisal Costs
Appraisal costs are those associated with any activity meant to ensure high levels of quality across a process or organization.
In some cases, those expenses might also be considered prevention costs, but they would not be counted twice when calculating CoQ.
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Managing Cost of Quality
Six Sigma is one of the best methodologies for managing the cost of quality because it works to build quality into every process.