A large, fast-growing manufacturer and supplier of windows and doors had a siloed quality management system that was unable to keep pace with its growth. Specifically, the existing QMS was unable to prevent nonconformance issues ahead of time, thus eroding the company’s brand and reputation in some cases.
Ideally, nonconformance issues must be identified and acted upon before it leaves the four walls of the company, and the only way to do this is to build a robust nonconformance management system. It requires quality leaders to work closely with the manufacturing team to identify the root cause of the issue and take swift corrective action. And, that’s not enough. It also requires a set of preventive measures to ensure the same nonconformance issues are avoided in the future.
Overall, forward-thinking quality leaders are going with a next-generation EQMS solution, one that drives data visibility, accountability, collaboration and ease of communication with all key stakeholders. This allows quality teams to not only build a world-class quality management system but also keep the cost of quality low.
While producing quality products is a necessity for any industry, it comes with investment in processes that prevent defects, errors, and compliance failures. The technique of defining and measuring the use of a company’s resources to prevent poor quality caused by internal and/or external failures is called the Cost of Quality (or COQ).
The manufacturer mentioned above implemented the ComplianceQuest solution for integrating all its quality processes and create a single source of truth for all quality data.
It implemented various modules including Nonconformance, CAPA, and document management, which enabled it to identify errors and take corrective and preventive actions, thereby reducing the cost of quality.
CoQ is an important measure that helps the manufacturer to assess the consequences of not meeting the quality parameters and focus on continuous improvement.
Determining the cost of quality helps the organization in many ways such as –
- Identify ways to reduce CoQ and boost ROI
- Reduce the cost of waste, scrap, and rework
- Increase profitability by eliminating defects
- Build brand equity and gain a competitive advantage by proactively fixing quality issues ahead of time
The Cost of Poor Quality
From engineering to production, any process that is not optimized for quality will lead to defective products, making the business incur a cost of poor quality (CoPQ). Broadly, there are four areas where costs add up — prevention cost, appraisal cost, internal failure cost, and external failure cost.
- Prevention costs refer to the cost incurred while focusing on establishing preventive measures such as the development of QMS, implementing employee quality awareness to avoid defects, building a quality culture, and so on
- Appraisal costs are the costs incurred on inspections and tests to ensure quality requirements are met
- Internal failure costs are the cost associated with rectifying nonconformities before the product reaches the recipient
- External failure costs represent the cost associated with correcting nonconformities after the product reaches the recipient
While these are some of the obvious costs, businesses also incur several hidden costs such as the loss of time while determining the root cause for nonconformance, product retesting upon revision, or escalation to a CAPA.
An optic technology company with branches across different geographies found standardizing quality processes a challenge. By opting for the ComplianceQuest EQMS, a cloud-based solution, it was able to bring in traceability and accountability, which helped reduce CoQ.
How to Calculate CoQ?
CoQ is calculated by the summation of two factors – Cost of Good Quality (CoGQ) and CoPQ. CoGQ includes the cost of quality conformance, including any associated costs with both appraisal and prevention. In contrast, CoPQ involves all the nonconformance costs, both internal and external, to the company.
COQ = CoGQ + CoPQ
The efficient utilization and implementation of the CoQ technique enables an organization to:
- Improve product quality while reducing cost
- Evaluate the effectiveness of the quality systems
- Identify and address critical areas
- Leverage opportunities for better growth
How can ComplianceQuest’s EQMS help reduce CoQ?
To reduce CoQ, manufacturers must invest in the right quality management system. By implementing a robust QMS solution with a collaborative approach to nonconformance management, manufacturers can prevent any variance to process, parts, or equipment and ensure periodic training of shop floor workers to align with the ever-changing quality parameters.
Many companies using paper-based QMS focus on migrating to an automated quality management system to improve teamwork and collaboration. More importantly, this move is associated with reducing CoPQ.
Built on Salesforce.com, ComplianceQuest’s Enterprise Quality Management System (EQMS) is a flexible, secure, and scalable solution that helps improve collaboration, risk detection and mitigation, and compliance management. Our solution is simple and easy to use and provides data-driven insights to help management make informed decisions and prevent nonconformances. This can help prevent a defective product from reaching the market and reduce CoQ significantly. Access to enterprise-wide data also provides visibility into the various processes and ensures continuous improvement to constantly reduce CoQ.
Aside from meeting the regulatory requirement of ISO 9001, ComplianceQuest EQMS will help organizations in the following ways —
- Automate CAPA from review to root cause of quality management
- Prioritize issues based on risks to prevent costly delays
- Better visibility within the organization helps identify issues or areas of concern faster
- Standardize processes within the organizations through automated workflows
- Improve supplier quality by creating a benchmark for performance and product quality
To find out how ComplianceQuest’s EQMS can help you with bringing your CoQ down, contact us now: https://www.compliancequest.com/contact-us