double your profits in a recession
TRANSCRIPT
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Cost of Poor Quality
Historically, Cost of Poor Quality has been:
Batch-moe manufacturin!: 25% of revenue
Continual process manufacturin!: 20% of revenue
"er#ice: 40% of revenue
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Example
"ummary of XY Coprofit an loss account
%e#enue & '(% )** crore
+otal Cost & '(% 2 crore
Profit & '(% crore
If 25% of !evenue is Cost of Poor "uality
Cost of Poor Quality & '(% 2 crore/ *0 on 1ailure an ppraisal & '(% 2* crore
/ 2*0 on Pre#ention & '(% crore
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Strategic Goal
Double Profit in 2 years# without $apital
investment
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Option 2
Cut 0% $osts on all a$tivities
ays a wee4 plant
%emo#e trainee an probationary technicians
ir tra#el only economy class
(o electricity after 6 pm
%euce wor4force 7ther
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Option 3
!e&u$e the Cost of 'ailure an& (ppraisal by40%
9ore achie#able than oublin! turno#er
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Best Option
7ption ): ifficult
7ption 2: 9yopic
)ption *+ ,est
/ 'ntelli!ent an sustainable
/ +ar!et )*** 0 %7'
/ 'mpro#es bottom-line without capital in#estment
/ %euces cycle time
/ %euces warranty costs
/ %euces chronic waste
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)ption *+ -.plaine&
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Categories of Quality Costs
1ailure Costs
/ 'nternal
/ ;xternal
ppraisal Costs
Pre#ention Costs
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Internal Failure Costs
/hese are $osts of &efi$ien$ies &is$overe& before
&elivery# whi$h are asso$iate& with the failure
non$onformities1 to meet e.pli$it reuirements or
impli$it nee&s of the e.ternal or internal$ustomers3
(lso in$lu&e& are avoi&able pro$ess losses an&
ineffi$ien$ies that o$$ur even when reuirementsan& nee&s are met3 /hese are $osts that woul&
&isappear if no &efi$ien$ies e.iste&3
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ppraisal Costs
/hese are the $osts in$urre& to &etermine the &eree of
$onforman$e to uality reuirements3
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Pre!ention Costs
/hese are $osts in$urre& to eep failure an& appraisal
$osts to a minimum3
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Example" Post Cost #e$uction
"ummary of XY Coprofit an loss account afterreucin! Cost of 1ailure an ppraisal by 3*0
%e#enue & '(% )** crore
+otal Cost & '(% 3 crore
ProfitDouble1 & '(% )6 crore
!e&u$e& Cost of Poor "uality
Cost of Poor Quality & '(% )8 crore
/ 1ailure an ppraisal & '(% )2 crore
/ Pre#ention & '(% crore
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Cost Benc%mar&ing 'ool
>www.bestpraxclub.com>copq?cate!ory.aspx
http://www.bestpraxclub.com/copq_category.aspxhttp://www.bestpraxclub.com/copq_category.aspx -
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'%an& (ou
1or further information contact:
mit @allianpur
,estPra. Club Pvt3 6t&3
A Qimpro Enterprise3B "inhu House, (anabhai Aane, 1ort, 9umbai 3** **)
+el: )22-66$3 8*) 1ax: )22-22*3 332)
eb: http:>>www.bestpraxclub.com
Blo!: http:>>bestpraxclub.worpress.com
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