Pray for things to get worse. Leaders will ultimately understand COPQ.

Halve the COPQ. No capital investment. Double the profit. EUREKA!!! - Qimpro

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.

Option 1:

Double the sales. Double the investment. Double the profit.

Is that easy?

Option 2:

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.

Random Thoughts:

  1. 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.
  2. COPQ reduction is a by-product of Continual Quality Improvement.
  3. I wonder what is the COPQ of our Department for Potholes?


FOLLOW ME


16 thoughts on “Pray for things to get worse. Leaders will ultimately understand COPQ.”

  • COPQ. Is like bad life karma. Only by improving daily one can improve ones karma- reflected in a healthy ,positive and growing life. This is also true of organisations business, health care ,education, etc

  • Well, Leaders are worried about of “Costs” but they have a Management challenge – their current process of analysis and decision making. The current process is to wait till the cost problem becomes a crisis so that they can take the easy way out by cutting costs based on their own perceptions! So organisations periodically have cost cutting” exercises. Why invest time and energy in proactively identifying COPQ when you have a periodic reactive process for cutting costs?

    • The mindsets of upper management must change.
      They need to learn the difference between Sporadic Problems and Chronic Problems.
      COPQ reduction is a by-product of Quality Improvement (Solving Chronic Problems).

  • While automobile industries witnessing negative growth impacting the bottom line severely it’s essential that the organisation should focus on reducing COPQ This will help improve the profitability resulting into retaining their key employees

  • Our leaders talking of COPQ😇
    Yes it will surely happen 10 years down the line. It can happen earlier as you say if we hit rock bottom
    In the mean time we need to keep shouting on roof top and you never know we may create few Iceland’s of excellence

  • Very true. We, as individuals, sometimes simply ignore the basic fundamentals unless there is an emergency or crisis.

  • It’s only when the foot bleeds that we realize we stepped on a nail!!! It’s part of the disruptive learning/ growth strategy!!! COPQ whenever and wherever identified must be addressed as the priority!!! Thanks for the post Sir!!!

    • Thanks Hormazdiyaar for your appreciation.

      Leaders must include COPQ as a Critical Success Factor in their strategic plan.

      Example: Halve the COPQ of Organization XYZ in 1000 days.

  • Simple to understand. Brilliant blog. Healthcare in India needs to evaluate and reduce COPQ across processes. A lean process driven hospital will definitely result in patient delight.
    Process is the unit of quality:. Improve processes- Quality will improve!!

Leave a Reply to Suresh Lulla Cancel reply

Your email address will not be published. Required fields are marked *