The following is a description of Juran’s offering for conducting and completing a COPQ study for a client. The analysis is based on a combination of Juran and ASQ publications (Juran QCH and ASQ “Principles of Quality Costs”).
We define the COPQ as the difference between those costs that would disappear if everything was done perfectly in a process, the first time and every time, versus the actual costs. Juran’s approach outlined in this proposal has the following significant benefits:
- A tested and validated COPQ Assessment and design tools and methods that have been used successfully with other clients.
- An adaptation of the methods used successfully by Juran with other clients to achieve significant savings and performance improvements through re-engineering.
Juran will help identify the activities and costs associated with this absence of perfection. These are the costs that can be saved when processes are improved. Examples include:
- External Failures: Credits, allowances, recall, liability, complaint investigation, accounts receivables, etc.
- Internal Failures: Forecasting errors, invoice errors, new product development impacts, engineering changes, excess final inventory, excess inventory in process, discarded raw material of finished product, less than 100% yield, reprocessing, repeats of tests, cleaning up contamination, etc.
- Excess Appraisal: Testing and assessment are required to provide CLIENT with the needed assurance that processes continue to run at acceptable levels. Testing is also, in and of itself, required by the Regulatory Agencies and others. Most inspections are often conducted because of past evidence that processes were not capable of meeting their targets. Continuing inspection is then added to detect when the process is off-target. Such activities are sometimes viewed as prevention, but they are really only early warnings of deficiencies actually occurring. Excess inspections apply not only to the production process, but are also likely to occur in the Quality Assurance processes as well. In effect, they are inspections of the inspections.
These sources of COPQ will be identified through in-depth interviews with key executive, operations, administrative, financial, and quality management individuals; reviews of work flow diagrams (some are already in existence, others will be developed by the Product and Process Control System workshops); analysis of existing financial and operational data; analysis of data collected in the course of other CLIENT projects, studies and reviews; and other methods that are identified in the initial reviews.
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