Cost of Quality Archives -

Creating a Culture of Quality

Question

I was introduced to Quality Management (& ISO 9001:2015) recently. The culture of the organization that I am concerned with has not embraced Quality Management, and it is often the subject of outright and unprofessional antagonism. I seek direction in order to arm myself with greater knowledge or qualifications as well as change attitudes toward Quality Management at all levels within the organization. I thought that ASQ would be a good resource. Since there are so many channels, a plethora of literature, and various certifications and conferences, I am a bit overwhelmed. I need to focus my efforts, and I hope to be able to do so with some direction from a professional who can relate to such growing pains. Thank you.

Answer 1

Thank you for your question. I can certainly to relate to you and your plight – I was in a similar circumstance early in my career. If you were introduced to ISO 9001 this year, I have to assume that your company is not yet registered. Most manufacturing companies are required by their customers to have registration, but if you are not in that situation, you have to sell Quality Management on its own merit. The bad news is, that if your senior management doesn’t want a Quality Management System, there is nothing you can do about that. Now, that being said, you can begin by examining some of the “pain points” in your organization and showing how quality tools can help to solve them. Management will never embrace quality until they see what is in it for them. You can start with an analysis of the Cost of Poor Quality. When your leadership sees the cost of nonconformance, they will be keen to bring those costs down. COPQ typically includes the cost of external customer complaints, replacing products, late deliveries, and internal costs such as scrap, rework, re-makes etc. If there has ever been a problem that traces back to not properly understanding a customer’s needs, that is a text-book example of how Quality Management can help. Start with that. Look at the costs of poor quality, and sell the idea of using quality tools to bring those costs down. You will have no chance of selling your management on quality until they can see what’s in it for them. Good Luck!

Denis J. Devos, P.Eng
A Fellow of the American Society for Quality
Devos Associates Inc.
(519) 476-8951
www.DevosAssociates.com

Answer 2

It sounds like this company needs a culture change. This change can happen only at the direction of the company’s leadership.
Here’s some suggestions:

Each department head has to establish three (3) measurable goals on how his/her department is improving on the quality of their department’s output/work. These are to be reported at each executive monthly meeting. Department manager’s must be held accountable for lack of quality improvements.

Every individual’s performance review must include “quality performance.” This also needs to be measurable (less than last year, improved customer satisfaction from surveys, reduced ‘cost-of-quality’, reduced audit nonconformance observations, etc.)

If the company has a bonus program, individuals/departments bonus is tied into quality performance. ISO observation means 10% or more cut in bonus.

Have top executives hold meetings on the need for quality and it’s everyone’s responsibility – not just the QA department. If employees don’t like it they are welcomed to find employment elsewhere.

Jim

Jim Werner
Voting member to the U.S. TAG to ISO TC 176 Quality Management and Quality Assurance
Medical Device Quality Compliance (MDQC), LLC.
ASQ Senior Member
ASQ CQE, CQA, RABQSA Lead QMS Assessor

Fore more on this topic, please visit ASQ’s website.

ISO 9001 Cost of Implementation

Question:

What are the estimated costs of implementing ISO 9001?

We are a company of five divisions, Contract Manufacturing, Structural Fabrication (AISC & ASME cert), Steel Service Ctr, Rebar (CRSI vert) & Metal Castings. We employ approximately 200 people and operate out of two facilities. Our Metal Casting division is a separate location from our other operations. I am trying to generate an ROI and a time frame of implementation.

Answer:

The effect of ISO 9000 certification on financial perfomance

Thank you for contacting ASQ’s Ask the Experts program. This is an excellent question and one that is often asked by companies that are considering ISO 9001:2008 certification. In order to accurately estimate those costs that will be associated with obtaining ISO 9001 certification, the following approach should be considered:

The first step should include contacting a Registrar to identify the following:

Cost of application fee.
Cost associated with conducting required stage 1 and stage 2 audits for ISO 9001 certification.
Hourly and per day rates charged for offsite and onsite audit activities.
Administrative fees, if any.
Travel time costs (minimum and maximum daily charges).
Other associated costs for airfare, hotel, meals and car rental.
Frequency and cost for surveillance audits to maintain certification.
Cost for quality management system re-certification.

Discuss your company’s plans and timeline with the Registrar to obtain QMS certifications at separate locations. There may be an opportunity to share or save costs. As an example, consider establishing a single corporate quality manual and QMS procedures that will be common to both facilities. Also discuss the availability and location of potential Auditors that the Registrar may assign to your facilities, usually the closer they are, the better.

In addition to determining the Registrar’s costs, it is equally important to determine the Registrar’s certification requirements. Some require that at least four (4) months of records be available to provide evidence of conformance and implementation of the QMS. Consider contacting a couple of Registrars, and compare their costs and requirements. Another important point is to select a Registrar that is familiar with your industry or business sector. Be picky and ensure that the Registrar can assign an Auditor that has past experience that relates to your QMS processes or product line.

Step number two is to determine the availability of in-house expertise that will be required to develop and implement a quality management system for certification. If these activities are going to be outsourced, contact an experienced QMS consultant and request that a quote for a gap analysis be provided. Do your homework before selecting a QMS Consultant! Contact a few QMS Consultants, compare their rates and request contact information for past clients, or other references, to verify their experience and reliability. Again, select a Consultant who has past experience with your industry, processes and/or product line.

Confirm that the results of the gap analysis will document all areas that meet certification requirements as well as those that do not, preferably by clause number. The results of this gap analysis will be used by the Consultant to estimate the number of the man-hours that will be required to develop and assist with the implementation of the QMS for certification.

The bottom line is that the cost to obtain ISO 9001 QMS certification cannot be effectively estimated without knowing these four (4) items:

The Registrar’s cost for ISO 9001 registration.
The company’s current level of conformance with ISO 9001 requirements.
The amount of resources that the company will dedicate to this project for development and implementation.
The amount of support that will be required from a Consultant and the associated costs.

The following link to a flow chart provides a general overview of the ISO 9001:2008 QMS certification process.

ISO9001.2008.Cert.Process

I hope this helps.

Best regards,

Bill Aston, Managing Director
Aston Technical Consulting Services,
Kingwood, TX
Website: http://www.astontechconsult.com
email: quality@astontechconsult.com

For more on this topic, please visit ASQ’s website.

Cost of Quality (COQ)

Manufacturing, inspection, exclusions

Q: Hello, I am having trouble locating basic summary information about the “cost of quality” for various industries. In brief: what is the cost of NOT having good quality in specific industries, such as automotive. Put another way, what is it worth to a “typical” company or industry to enact good or better quality practices? I realize this is an abstract question with many underlying variables, and looked at some old (1999) work on this, but am seeking any summary information you might know of. Thanks so much.

A: Thank you for contacting ASQ and the Quality Information Center. I received your request for some information regarding cost of quality.

Donald L. Siebels, in his book The Quality Improvement Glossary, defines quality costs as “a measure of the cost specifically associated with the achievement or nonachievement of product or service quality, including all product or service requirements established by the company and its contracts with customers and society. More specifically, quality costs are the total of the cost incurred by (1) investing in the prevention of nonconformances to requirements; (2) appraising a product or service for conformance to requirements; and (3) failure to meet requirements. These can then be categorized as prevention, appraisal, and failure”. Additionally, Siebels defines the cost of poor quality (COPQ) as “costs associated with providing poor quality products or services”.

For more information on this topic, please visit ASQ’s website.