1 COQ approach

 

1.1 History

Quality definitions, cost of obtaining quality, cost iceberg

history

There are many definitions of the word quality. Some examples:

True story 

In the code of King Hammurabi of Babylon (1730 BC), we find one of the oldest written traces of quality requirements:

  • if an architect builds a house and one of the walls falls, this architect will consolidate this wall at his own expense
  • if an architect builds a house and the house collapses and the master of the house is killed, that architect is liable to death

To be a step ahead of your competitors, managing quality is not always enough. However knowing your quality-related costs and succeeding in reducing them is often a great advantage.

Cost control and quality control are two sides of the same coin. Kaoru Ishikawa

Quality control involves the evaluation of costs and waste. The simplest way to measure quality (an abstract notion for some) is to find out how much non-quality costs us.

If you can't measure it, you can't control it. Peter Drucker

One of the first to use the expression "Total Quality Control" and to classify the costs of quality was Armand Feigenbaum in the 1950s. He successfully tackled the myth that getting better quality comes with very high costs. He developed the concept of the phantom (hidden) factory that corrects the errors of the official factory (up to 40% of production). Feigenbaum divided the operational costs of quality into two main areas, each with  two segments:

One of the founding fathers of quality, Joseph Juran, speaks of the cost of poor quality or costs attributable to poor quality. He thinks these costs are "gold in the mine" and just waiting to be extracted. Juran classifies costs into four categories:

Another founding father of quality, Philip Crosby, in his best-known book "Quality is Free", devotes a chapter to the cost of quality (Cost of quality, or COQcosts of obtaining quality). He divides the COQcosts of obtaining quality into costs of:

In 1986, AFNOR published a documentation booklet ("FD X50-126 - Guide to the evaluation of costs resulting from non-quality") in which the classification of these costs is as follows:

According to James Harrington, direct poor-quality costs are divided into three elements:

Harrington includes in the controllable costs the costs of prevention and evaluation, while the costs of internal error and external error are part of the resulting costs. The result is an impressive list of 364 cost types!

Later, in 1999, AFNOR published the documentation booklet FD X50-180 "Contribution defaults - Defaults connected to non-quality of work in the creation and use of add-value". The logic of this approach is based on the path shown in figure 1-1:

1-1

Figure 1-1. Contribution defaults

Clause 4 bears the revealing title: "How to improve the performance of the organization?". One of the answers is in the efforts to reduce the 20 contribution defaults identified and classified in three categories:

Another representation is to divide the costs of obtaining quality into visible and hidden costs (cf. figure 1-2).

1-2

Figure 1-2. The cost iceberg

Authors speak of direct costs and indirect costs, of productive and unproductive costs and also of costs relating to quality and non-quality. Some costs are sometimes difficult to categorize such as:

Our preference is to refer to the costs of obtaining quality using the acronym COQcosts of obtaining quality and classification in four categories:

Top of the page

 

1.2 Benefits

Benefits of the COQ approach, cost versus product life 

1.2

It is not by chance that the COQcosts of obtaining quality is named a strategic tool. Controlling the costs of obtaining quality allows us to:

One of the requirementsexplicit or implicit need or expectation (see also ISO 9000, 3.1.2) of participants in the automotive industry chain is the regular evaluation of the costs of non-quality (ISO/TS 16 949, 5.6.1.1).

However the COQcosts of obtaining quality is not:

As shown in figure 1-3, the costs of nonconformities increase on a logarithmic scale with respect to the stage of their discovery. Controlling costs means anticipating problems as early as possible (managing upstream).

1-3
Figure 1-3. The cost of nonconformities versus product life

Top of the page

 

1.3 Steps

Prerequisites, steps 

1.3

The prerequisites for the COQcosts of obtaining quality approach are:

The implementation of the approach to controlling the costs of obtaining quality (COQcosts of obtaining quality) goes through a few stages (cf. figure 1-4).

1-4

Figure 1-4. COQ steps

Step 1 is the (firm) commitment of top management who is fully involved in the COQcosts of obtaining quality processactivities which transform inputs into outputs (see also ISO 9000, 3.4.1). Top management is the main client of the results of the COQcosts of obtaining quality and its active and regular participation in meetings is absolutely essential. The field of application (entire company, subsidiary, workshop, department, process), the COQcosts of obtaining quality procedure and the cost calculation method are established. The COQcosts of obtaining quality owner is appointed. Objectives are set.

Step 2, data gathering, happens during the COQcosts of obtaining quality meeting. The costs of all departments are established before and are now presented, commented on and recorded.

Step 3 is the time to analyze the data, to seek the optimum of the COQcosts of obtaining quality, and classify the costs by priority (Pareto chart).

Step 4 is the activity of identifying the root causes of the most significant costs (5 W method, Ishikawa diagram).

Step 5 consists of planning actions to reduce costs, appointing those responsible and setting deadlines.

Step 6 is updating the COQcosts of obtaining quality indicators in the dashboard.

Top of the page

 

1.4 PDCA cycle

PDCA, Deming cycle 

1.4

The PDCAplan, do, check, act cycle, also called the Deming cycle, applies to the control of any processactivities which transform inputs into outputs (see also ISO 9000, 3.4.1). PDCAplan, do, check, act (Plan, Do, Check, Act) cycles are a universal basis for continual improvementpermanent process allowing the improvement of the global performance of the organization (see also ISO 9000, 3.2.13 and ISO 14 001, 3.2) (cf. figure 1-5).

1-5

Figure 1-5. The Deming cycle

Top of the page

 

1.5 Top management role

Top management commitment, apply the COQ, COQ approach 

1.5

When you sweep the stairs, you start at the top. Romanian proverb

The total commitment of top management to the success of the cost control processactivities which transform inputs into outputs (see also ISO 9000, 3.4.1) is essential.

For this, top management does not divide its responsibilities because divided responsibility means that no one is responsible.

Responsibility cannot be shared. Robert Heinlein

Top management is the essential facilitator of the COQcosts of obtaining quality processactivities which transform inputs into outputs (see also ISO 9000, 3.4.1) (cf. figure 1-6). process

1-6

Figure 1-6. The process Apply the COQ

To obtain the success of the COQcosts of obtaining quality approach, top management ensures the necessary conditions:

The language of top management is dollars. Joseph Juran

To be understood by top management, the best way is to speak their language: in euros!

The COQcosts of obtaining quality approach aims to improve quality. This improvement generates a reduction in costs, which causes a drop in prices, which leads to an increase in market share, which ensures a high return on investment, which allows a reduction in costs, and so on (cf. figure 1- 7):

1-7

Figure 1-7. The COQ approach

Some examples of objectives of the COQcosts of obtaining quality approach:

Do not forget that some damage (sometimes, alas, very significant) cannot be quantified directly. For example:

Minute of relaxation. Cf. joke “Lack of communication”

Top of the page