I’m trying to study for my Management course and I need some help to understand this question.
Veronica, thanks for your post and great comments related to quality and failures. Studies usually indicate that cost of quality for is typically 35% or higher as a percent of total sales. Many companies found quality as an area that they can research and resolve with big benefits and, not so big an investment. External failure costs represent some of the largest and most hidden costs of poor quality, and on top, are the lost customers and corresponding lost revenues from poor quality. There is another concept, prevention costs, which are the investments a company makes to deliver higher quality. Good investments yield good results, and poor investments yield poor results. After investing in good people and process improvements, the next high yielding investment is typically a good quality management system (QMS) that works together as a high-speed problem identification system, a fast problem resolution system, and a complete process documentation system. Investments in prevention costs are usually minor when compared to the magnitude of the failure costs. How would you correct deficiencies, increase efficiency and maintain a good reputation? Will this help to correct failures in your organization? What is an estimation of your COPQ?