Pray for things to get worse. Leaders will ultimately understand COPQ.
Our sales are not happening. Sad.
And we are making a loss. Even more sad.
People are losing jobs. Now, that is a crisis.
Five decades back, I was taught by eminent economists that the backbone of the Indian economy is manufacture for defence and the auto industry (including ancillaries).
We are aware that the auto industry in India is currently facing a tsunami. Earthmoving equipment, construction equipment, trucks, cars, and two-wheelers.
So how can we survive in this tough economic climate? I have an answer.
Let us diagnose a hypothetical organization:
- Sales = Rs 1000 cr
- Investment = Rs 500 cr
- Profit = Rs 150 cr
- Cost Of Poor Quality (COPQ) = Rs 300 cr
Mission: Double the profit.
Double the sales. Double the investment. Double the profit.
Is that easy?
Halve the COPQ. No capital investment. Double the profit. EUREKA!!!
That is easy.
Estimating COPQ is not rocket science. Any Qimpro Certified Qualitist could help an organization mine their COPQ treasure.
But, sadly, leaders do not have COPQ on their radar.
Three decades back, when we had a similar economic downturn, I asked Dr J M Juran for a prescription to this leadership myopia. He whispered: Pray for things to get worse. Leaders will ultimately understand.
- In 1989, Tata Steel estimated their COPQ was 35% of sales. They set a vision to become the lowest cost steel producer in the world. Tata Steel accomplished this vision in 2000.
- COPQ reduction is a by-product of Continual Quality Improvement.
- I wonder what is the COPQ of our Department for Potholes?