Balancing the need to reduce costs with the equal requirement to delivery quality output for better performance
In this decision area, you must balance cost savings against potential rework, rejects, downtime or customer complaints.
You need to understand cost variances and their impacts. By contrasting cost differences, you can benchmark performance, identify patterns and understand the root causes of cost differences. You also need to understand and analyze the value and cost of preventative measures that ensure quality such as training, appraising incoming materials, manufacturing processes and inspections.
With the Cost and Quality Management decision area, you can set planning goals and scorecarding metrics for these elements to improve your performance management:
- Failure cost ($).
- QC reject rate (%).
- Defects (#).
- QC cost, defects fixed and units sampled ($ and #).
- Scrap cost ($ and #).
Most importantly, you can analyze these goals and metrics by a number of dimensions to find the hidden gems in the data:
- Fiscal month / year.
- Brand and product line.
- Manufacturing product component.
- QC defect issues / tolerance.
Using the Cost and Quality Management decision area
You set targets based on your goals and metrics in Cost and Quality Management. You monitor your success by looking at how you measure up against your targets. Further, you dive into your results to find out more about these elements driving performance management.
- Failure cost ($): Which processes contribute the most to over-budget variances?
- QC reject rate (%): Our biggest customer consistently returns 10 percent of total deliveries. Is this cost-effective?
- QC cost ($): What quality tests are required for this customer product order?
