Tuesday, June 30, 2015

#PMdistilled - Cost Of Quality COQ

Sounds to me like a very old concept, I got introduced to a couple of decades back, and was coined by the great quality thought leader Philip Crosby much earlier than that. His books 'quality without tears' and 'quality is free' are best sellers and I have them both in my personal library. Like everything great, his concepts are also very simple and straight forward. Cost of quality COQ = price of conformance POC + price of non conformance PONC. The cost associated with the proactive measures we take to prevent problems from happening is price of conformance. Planning, training, process definition, staffing etc are examples for price of conformance. The cost associated with the reactive measures we take to manage a problem which has already happened falls into this category. Penalties paid, customer complaints, defective products etc falls into this category. When we invest in POC, the PONC will come down and the savings must be higher than the PONC saved  so that POC can be justified.





Now I am flying to Hyderabad from Kochi. What are the prices I pay for conformance. I need to book the ticket in advance. I must reserve the taxi in advance. I must get ready on time. I did all those and reached the airport two hours before the flight time. I reached till the check in counter of spice jet and my name is not in the list. I called the person who booked the tickets for me. He said the booking is on Indigo flight which is after four hours from now. What is the non conformance?. I did not verify my ticket correctly. It was buried in a heap of related emails. What is the price of this non conformance?. A cool four hours wait at the airport.
Remember COQ = POC + PONC

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