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Cost of Poor Quality


cost of poor Quality and ways to address the same to redue product development time and ensure reliability – PowerPoint PPT presentation

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Title: Cost of Poor Quality

Materials info consultancy private
  • Cost of Poor Quality and how to address the same

Improving process Quality of your suppliers
  • Terminolgy
  • Cost of poor quality (COPQ) The costs
    associated with providing poor quality products
    or services.
  • There are four categories
  • internal failure costs (costs associated with
    defects found before the customer receives the
    product or service),
  • external failure costs (costs associated with
    defects found after the customer receives the
    product or service),
  • appraisal costs (costs incurred to determine the
    degree of conformance to quality requirements)
  • prevention costs (costs incurred to keep failure
    and appraisal costs to a minimum).

Improving process Quality of your suppliers
  • Ever Changing customer requirement 
  • In this competitive scenario the customer
    requirements keep changing in terms of defects
    acceptance standard.
  • Gone are the days of the catagorization of
    defects in IPTV i.e incidence per thousand
    vehicle. Now it is ppm i.e parts per million.
  • Again the need for this ever changing customer
    requirements lies in competition, environment and
    other regulations, Government policies, end user

Improving process Quality of your suppliers
  • Consequences of this change
  • The Manufacturer needs to maintain the required
    ppm level demanded by end customer.
  • Any higher level of ppm occurring in the company
    due to various reasons including in coming
    supplies, manufacturing issues etc need to be
    absorbed by the Manufacturer.
  • Increase the cost of inspection in terms of
    resources to avoid the defects being passed on to
    the customer
  • Increase in the cost of production

Improving process Quality of your suppliers
  • Consequences of this change
  • Still there are chances of defects being passed
    on to the end customer , thus attracting penalty
    clauses and possible loss of business.
  • Resultant less focus by Manufacturer in
    continuous improvement programs, technology and
    intellectual property right generation programs.
  • Chances of competitor getting more share of
  • Loss of Morale in working staff.

Improving process Quality of your suppliers
  • What is being Practiced in Industry
  • Taking up the issues with suppliers for their
    material/process problems
  • Demanding 8D and other reports of root cause
    analysis of the problem.
  • Vendor development/STA team of the manufacturer
    interacting with suppliers for the closing of the
  • Submission of action plan and root cause analysis
    by the suppliers

Improving process Quality of your suppliers
  • What is Missing
  • Root cause analysis shall really be effective to
    find out the real reason of the problem which in
    many cases is not done properly
  • This can happen due to timeline , project and
    other internal pressures at manufacturers end
    due to which the thrust is to close the problem
    in minimum time.
  • The problem can repeat again either in the same
    product, some other similar project/product
  • The idea shall be to simulate the defect creation
    and then closure of the same which in many cases
    does not happenin true sense.

Improving process Quality of your suppliers
  • Manufacturers expectations
  • Maintaining the ppm of running projects as per
    the end customer requirement to avoid incurring
    rejection inhouse.
  • Since any of such rejections can even become a
    field/warranty issue a proper root cause analysis
    in really critical to decide the design changes
    as required.
  • Launch of new projects in a timely manner and
    meeting end customer expectations.
  • The new project shall be launched within
    stipulated Quality i.e ppm and cost targets.

Improving process Quality of your suppliers
  • Vendor/suppliers point of view
  • Ever changing manufacturer requirement during
    the project
  • Excess pressure for closing the issue related to
    material/manufacturing during development/subseque
    nty without allowing required time and analysis.
  • Requirements which are not feasible and can not
    be met for which manufacturer is too fussy..
  • Vendor not having a feeling to be part of the
    whole project and not involved completely and
    only changes being told to them and that also at
    last moments with minimum time to react.

Improving process Quality of your suppliers
  • What we in Materials Info can do
  • Taking up such specific material/manufacturing
    process issues with the suppliers
  • Conducting awareness sessions at supplier end to
    make them realise the criticality of the
    material/process in the end product performance
    and making them feel their role and importance in
    the same.
  • Working with suppliers at their premises
    throughout the process flow sequence.
  • Identifying , understanding and solving the
    issues along with suppliers for both reported and
    known issues and for potential issues which may
    be faced in future.
  • Conducting a detailed root cause analysis to make
    sure the simulation of the issue and proper
    corrective action and closing documentation to
    avoid recurrence of the problems.