Today, the Cost of Quality in the manufacturing industry represents all the expenses incurred to improve quality. This includes, prevention costs, appraisal costs and both internal and external failure costs.
At Scortex we are focused not only on achieving our customers specifications, but also on helping them reduce dramatically their total Cost of Quality, all the while having live access to quality data on their manufacturing lines.
Therefore we met Bill Black, Former Group Quality Director of ABB and previously Airbus, to understand the Cost of Quality of that multinational and the ways they found to manage it.
How was the Cost of quality measured in ABB, and was it really quantifiable ?
“In ABB we developed an effective ‘Cost of Quality’ model which, although focused purely on the Internal Failure elements, still amounted to a waste of around 10% of Cost of Goods Sold that could be avoided if we could only identify and solve the associated root causes. Note that scrap and rework represents only 10% of this total waste, and many other factors (excess inventory, design errors, supplier quality failures etc.) are even more important. These were hard figures, and we ignored less tangible costs such as loss of customer loyalty or brand value damage. This huge potential saving was used to focus our quality initiatives to the benefit of our bottom line.”
Can you give an example of a ‘tough to solve’ quality issue, and how you solved it?
“A good example comes from the aerospace industry in which aircraft must be inspected and accepted by the client before delivery can take place. Sometimes when airlines wished to defer delivery, they would focus on highly subjective issues, such as minor dents or surface scratches, and use these as a reason to delay acceptance of the aircraft.
To fix this problem we had to develop a means to quantify strict acceptance limits for dents and scratches, agree these limits with all customers, and then apply it firmly. In this case it involved a painstakingly developed manual defining clearly the limits of acceptability for dents and scratches throughout the aircraft exterior. Once this had been agreed with the customer community, and then rigidly adhered to on each delivery, and became the reference for both concession payments and maximum delay periods. It’s a perfect example of the old rule that if you can’t measure it, you can’t fix it.”