CoQ can be defined as “the total cost of quality-related work and effort needed to fix quality issues”. The term “Cost of Quality” was first used by Armand V. Feigenbaum, an American quality control expert, in a 1956 Harvard Business Review article. Today, the average total cost of quality is estimated to be as high as 25% of overall COGS in certain sectors, especially in process industries.
Businesses are trying to cut costs and improve efficiency in a bid to increase competitive advantage and grow. There is also increasing awareness about the need for identifying, monitoring, and prioritizing quality improvements to lower the cost of quality, that’ll eventually improve both top-line and bottom-line performance.
Business leaders believe that by reducing the CoQ, enterprises can certainly improve profit margins by 1-3%. To be able to achieve this effectively, a CoQ Model can transform the abstract concept into something more tangible. By having a CoQ model built for your organization’s specific context, quality leaders can communicate this to all relevant stakeholders, decide on metrics that impact CoQ and setup processes to improve CoQ efforts.
In this whitepaper, we share a few best practices for building a CoQ model, improving overall cost of quality metrics and how you can implement a modern EQMS solution to automate and streamline quality processes.
Key takeaways from this whitepaper:
- What is cost of quality
- The need for lowering cost of quality (CoQ)
- Best practices to lower CoQ within your enterprise
- And more