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Blog, Quality

Measuring the Cost of Quality For Management

Posted: October 4, 2017 at 10:41 pm   /   by   /   comments (0)

G U E S T  A R T I C L E

T
he quality movement has used the term cost of quality (COQ) for decades. But few organizations have actually adopted a reliable and repeatable method for measuring and reporting COQ and applied it to improve operations.

Is the administrative effort just not worth the benefits, or is there a deeper problem with the methodology for measuring COQ?

What COQ Should Do

At an operational level, quality management techniques effectively identify waste and accelerate problem solving for tactical issues related to process improvement. For many organizations, quality management initiatives have prevented financial losses from customer defections caused by quality problems or from waste and inefficiencies.
 
At a more strategic level, however, has quality management reached an adequate level of support from senior executives? Unfortunately, the avoidance of reduced profits from quality initiatives is
not widely measured or reported by organizational financial accounting systems.
 
As a result, organizations cannot easily quantify the magnitude of benefits in financial terms—and the language of money is how most organizations operate. In short, there has been a disconnect
between quality initiatives and bottom-line profits to validate any favorable impact on profitability and costs.

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Other articles from the author:

(1) Why Is Solitude the Secret to Enterprise Performance Management (EPM)?
(2) When Implementing a New Program, Start Small, but Think Big
(3) Christmas Gift Letter to Santa Claus

About the author:

Gary Cokins, CPIM

Gary Cokins (Cornell University BS industrial engineering/operations research) 1971; Northwestern University Kellogg MBA 1974) is an internationally recognized expert, speaker, and author in enterprise and corporate performance management (EPM/CPM) systems. He is the founder of Analytics-Based Performance Management LLC www.garycokins.com.  He began his career in industry with a Fortune 100 company in CFO and operations roles. Then 15 years in consulting with Deloitte, KPMG, and EDS (now part of HP). From 1997 until 2013 Gary was a Principal Consultant with SAS, a business analytics software vendor. His most recent books are Performance Management: Integrating Strategy Execution, Methodologies, Risk, and Analytics and Predictive Business Analytics

An article “Why Is Solitude the Secret to Enterprise Performance Management (EPM)? by Gary Cokins was published on our website in September 5, 2016.

You can contact him at gcokins@garycokins.com. For more of Cokins’ unique look at the world, visit his website at www.garycokins.com. View Gary’s full profile at Linkedin.

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Performance Management by Gary Cokins – IMA Strategic Finance Book Review

This article has been reproduced here with permission from the author. Title picture is not associated with the original writing.

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