Quality Tools
COQ Optimization
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Synonyms & Related Terms
CNQ (Cost of Non-Quality)
Losses
Non-Value Added
Waste Measurement
Muda (Japanese for waste) |
Overview
COQ (Cost of Quality) is a measurement used for assessing the waste or
losses from some defined process (eg. machine, production line, plant,
department, company, etc.).
The COQ measurement can track changes over time for one particular
process, or be used as a benchmark for comparison of two or more different
processes (eg. two machines, different production lines, sister plants,
two competitor companies, etc.).
Usually, COQ is measured in currency (eg. $), requiring all losses and
wastes to be converted to their liquidated cost equivalent (ie. man-hrs
lost or spent are converted to $ by multiplying by the hourly rate, $/hr).
Most COG systems are defined by 4 categories of costs:
| COG Category |
Description |
Examples |
| Internal |
Costs associated with internal losses (ie. within the process
being analyzed) |
off-cuts, equipment breakdowns, spills, scrap, yield,
productivity |
| External |
Costs associated with, or occur outside the process being
analyzed. These costs are usually discovered by, or affect
third parties (eg. customers). External costs may have
originated from within, or caused, created by, or made worse by
the process being analyzed. |
customer complaints, latent defects found by the customer, |
| Preventive |
Costs associated with the prevention of future losses:
(eg. unplanned or undesired problems, losses, lost opportunities,
breakdowns, work stoppages, waste, etc.) |
planning, mistake-proofing, scheduled maintenance, quality
assurance |
| Assessment |
Costs associated with measurement and assessment of the process. |
KPI's, inspection, quality check, dock audits, third party
audits, measuring devices, reporting systems, data collection
systems, forms |
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Why is COQ Important?
COQ can be used to identify the global optimum for a process, and
monitor that process' progress towards its global optimum. Global
optimum is defined as the best possible outcome from all physically
possible operating modes, combinations, and permutations of the current
process.
Maximum process results for today can only be achieved through optimum
use of currently available process resources.
In addition, organizations need to rapidly improve on a continuous
basis. An organization's improvement is achieved through improvement
of its business process, and the more effective interaction between
sub-processes (eg. marketing, sales, administration, manufacturing,
suppliers, etc.). Achieving the most rapid improvement requires
choosing the best course and speed for reaching an even better future
position for the process.
The current position of a process may be a local optimum (ie. better
than all adjacent positions), or non-optimum (there is an alternative mode
of operating the process that can be immediately achieved by the current
process).
The course and speed taken today (for modifying the process, or the
resources made available to the process) may maximize current results, or
maximize the rate of improvement on an instantaneous basis, but can still
result in long term process failure or non-optimum performance.
The choice of course and speed if it leads the process into a
cul-de-sac (ie. a dead end position from which there is only one exit:
going back from where you came).
In addition, one or more sub-processes can be operating at their global
optimums, but the choices made in these sub-processes preclude the global
optimum for the process from occurring.
Therefore, management of a process must balance their immediate results
with the long term results, as well |
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