Halve Your COPQ. Double Your Profit

<p>The Chairman of a large steel plant, in the 1980s, resisted any formal quality intervention on the grounds that even 3 percent seconds (read &ndash; rejects) of steel from his plant had a pent-up demand.</p>

<p>Is seconds an opportunity or a threat?</p>

<p>By translating the 3 percent seconds into the language of top management, the legacy opportunity converted to a threat. What was this language? MONEY.</p>

<p>The Cost Of Poor Quality (COPQ) for 3 percent seconds, was 30 percent of total cost!</p>

<p>The Chairman compared this figure with his profit. He was first embarrassed. And within minutes he paced his cabin in rage. He called for his Managing Director to his cabin.</p>

<p>The Chairman asked: How have we allowed this to happen? Is this true for our competitors too?</p>

<p>The Managing Director smiled: Mr Chairman, if this is the case, I see an opportunity.</p>

<p>Not amused, the Chairman screamed: Are you being funny?</p>

<p>A calm Managing Director articulated a Vision: I see us becoming the lowest cost steel producer in the world!</p>

<p>How?</p>

<p>Elementary, Mr Chairman. By halving the COPQ. It will also double our profit&hellip;.(pause) &hellip;..and with no capital investment.</p>

<p>Ten years later, the same steel plant became the lowest cost, steel producer in the world, by making a habit of Continuous Quality Improvement.</p>

<p>THINK</p>

<ul>
<li>What are the Best Practices you have harvested?</li>
<li>What should the Chairman do next?</li>
</ul>