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Sample Cost of Quality Calculations

Calculating the cost of quality is a tricky task. This article offers example calculations and perspectives from other organizations attempting to quantify the value of quality within their businesses.

Type: Benchmarks and Metrics  Topics: Quality Control, Business Excellence, Quality, Measurement, Measurement, Quality Assessment, Quality Measurement  Processes: 1.1.3.2 Create baselines for current processes, 1.1 Define the business concept and long-term vision, 1.1.3 Perform internal analysis, 1.1.3.3 Analyze systems and technology, 1.3.4 Establish high-level measures, 1.0 Develop Vision and Strategy, 1.3 Manage strategic initiatives, 12.1.1.1 Establish performance measures, 12.1 Create and manage organizational performance strategy, 12.1.1 Create enterprise measurement systems model, 12.1.1.2 Establish performance monitoring frequency, 12.1.1.3 Set performance targets, 12.2.1 Conduct performance assessments, 12.0 Manage Knowledge, Improvement, and Change, 12.2 Benchmark performance, 4.1.9 Develop quality standards and procedures, 4.0 Deliver Products and Services, 4.1 Plan for and acquire necessary resources (Supply Chain Planning), 4.2.4.4 Monitor quality of product delivered, 4.2 Procure materials and services, 4.2.4 Appraise and develop suppliers, 4.4.4 Ensure quality of service, 4.4 Deliver service to customer  Industry: Aerospace, Computers, Construction, Electronics, Machinery, Machinery Equipment, Mining, Non-Profit, Research Organization, Semiconductors, Service (General) 
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Use Measures to Promote a Culture of Quality

Measures can be motivators. This article describes how organizations can implement measures as part of an effort to develop a culture of quality within the enterprise.

Type: Best Practices and Business Drivers  Topics: Quality Control, Business Excellence, Quality, Change Management, Organization and Management, Measurement, Measurement, Quality Assessment, Quality Measurement, Culture  Processes: 1.1.3.2 Create baselines for current processes, 1.1 Define the business concept and long-term vision, 1.1.3 Perform internal analysis, 1.1.3.3 Analyze systems and technology, 12.1.1.1 Establish performance measures, 12.1 Create and manage organizational performance strategy, 12.1.1 Create enterprise measurement systems model, 12.1.1.2 Establish performance monitoring frequency, 12.1.1.3 Set performance targets, 12.2.1 Conduct performance assessments, 12.0 Manage Knowledge, Improvement, and Change, 12.2 Benchmark performance  Industry: Computers, Construction, Electronics, Machinery, Machinery Equipment, Mining, Non-Profit, Research Organization, Semiconductors 
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Focus Quality Measures on Value-Added Activities and Core Strategic Objectives

Organizations can measure everything under the sun, but if those measures aren't focused on value-added activities and strategic objectives, the organization may not get the return on investment it desires.

Type: Best Practices and Business Drivers  Topics: Quality Control, Business Excellence, Quality, Strategic Planning, Organization and Management, Measurement, Measurement, Quality Assessment, Quality Measurement  Processes: 1.1.3.2 Create baselines for current processes, 1.1 Define the business concept and long-term vision, 1.1.3 Perform internal analysis, 1.1.3.3 Analyze systems and technology, 1.1.4.1 Align stakeholders around strategic vision, 1.1.4 Establish strategic vision, 1.2.4 Coordinate and align functional and process strategies, 1.0 Develop Vision and Strategy, 1.2 Develop business strategy, 1.3.4 Establish high-level measures, 1.3 Manage strategic initiatives, 12.1.1.1 Establish performance measures, 12.1 Create and manage organizational performance strategy, 12.1.1 Create enterprise measurement systems model, 12.1.1.2 Establish performance monitoring frequency, 12.1.1.3 Set performance targets, 12.2.1 Conduct performance assessments, 12.0 Manage Knowledge, Improvement, and Change, 12.2 Benchmark performance, 12.4.2.6 Establish metrics, 12.4 Manage change, 12.4.2 Design the change, 12.4.3.4 Monitor change, 12.4.3 Implement change, 12.4.4.1 Monitor improved process performance, 12.4.4 Sustain improvement  Industry: Computers, Construction, Electronics, Machinery, Machinery Equipment, Mining, Non-Profit, Research Organization, Semiconductors 
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Report Quality Measures at Least Quarterly and Other Keys to Effective Reporting

Organizations need to report quality measures at least quarterly to executives and even more often to management and other roles within the business.

Type: Best Practices and Business Drivers  Topics: Quality Control, Business Excellence, Quality, Measurement, Measurement, Quality Assessment, Quality Measurement  Processes: 1.1.3.2 Create baselines for current processes, 1.1 Define the business concept and long-term vision, 1.1.3 Perform internal analysis, 1.1.3.3 Analyze systems and technology, 12.1.1.1 Establish performance measures, 12.1 Create and manage organizational performance strategy, 12.1.1 Create enterprise measurement systems model, 12.1.1.2 Establish performance monitoring frequency, 12.1.1.3 Set performance targets, 12.2.1 Conduct performance assessments, 12.0 Manage Knowledge, Improvement, and Change, 12.2 Benchmark performance  Industry: Computers, Construction, Electronics, Machinery, Machinery Equipment, Mining, Non-Profit, Research Organization, Semiconductors 
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Allow Business Units to Establish Customized Targets for Enterprise Quality Measures

Although enterprise quality measurement programs are best managed from the top of an organization, business units should be given some autonomy to choose their own measurement targets and other details about how each ...

Type: Best Practices and Business Drivers  Topics: Quality Control, Business Excellence, Quality, Measurement, Measurement, Quality Assessment, Quality Measurement  Processes: 1.1.3.2 Create baselines for current processes, 1.1 Define the business concept and long-term vision, 1.1.3 Perform internal analysis, 1.1.3.3 Analyze systems and technology, 12.1.1.1 Establish performance measures, 12.1 Create and manage organizational performance strategy, 12.1.1 Create enterprise measurement systems model, 12.1.1.2 Establish performance monitoring frequency, 12.1.1.3 Set performance targets, 12.2.1 Conduct performance assessments, 12.0 Manage Knowledge, Improvement, and Change, 12.2 Benchmark performance, 12.4.2.6 Establish metrics, 12.4 Manage change, 12.4.2 Design the change  Industry: Computers, Construction, Electronics, Machinery, Machinery Equipment, Mining, Non-Profit, Research Organization, Semiconductors 
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Select, Define, and Standardize Quality Measures Across the Enterprise

Effective quality programs depend on carefully selected, practical measures. This article explains how to design measures and deploy them as standards throughout an enterprise.

Type: Best Practices and Business Drivers  Topics: Quality Control, Business Excellence, Quality, Measurement, Measurement, Quality Assessment, Quality Measurement  Processes: 1.1.3.2 Create baselines for current processes, 1.1 Define the business concept and long-term vision, 1.1.3 Perform internal analysis, 1.1.3.3 Analyze systems and technology, 12.1.1.1 Establish performance measures, 12.1 Create and manage organizational performance strategy, 12.1.1 Create enterprise measurement systems model, 12.1.1.2 Establish performance monitoring frequency, 12.1.1.3 Set performance targets, 12.2.1 Conduct performance assessments, 12.0 Manage Knowledge, Improvement, and Change, 12.2 Benchmark performance, 12.4.2.6 Establish metrics, 12.4 Manage change, 12.4.2 Design the change  Industry: Computers, Construction, Electronics, Machinery, Machinery Equipment, Mining, Non-Profit, Research Organization, Semiconductors 
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Create Supporting Policies, Procedures, and Tools-Not Mandates-to Support Quality

It can be tempting to create elaborate templates, guidelines, and directives when building an enterprise-wide quality measurement program.

Type: Best Practices and Business Drivers  Topics: Quality Control, Business Excellence, Quality, Measurement, Measurement, Quality Assessment, Quality Measurement, Organization and Management  Processes: 1.1.3.2 Create baselines for current processes, 1.1 Define the business concept and long-term vision, 1.1.3 Perform internal analysis, 1.1.3.3 Analyze systems and technology, 1.2.6 Develop and set organizational goals, 1.0 Develop Vision and Strategy, 1.2 Develop business strategy, 1.2.7 Formulate business unit strategies, 12.1.1.1 Establish performance measures, 12.1 Create and manage organizational performance strategy, 12.1.1 Create enterprise measurement systems model, 12.1.1.2 Establish performance monitoring frequency, 12.1.1.3 Set performance targets, 12.2.1 Conduct performance assessments, 12.0 Manage Knowledge, Improvement, and Change, 12.2 Benchmark performance  Industry: Computers, Construction, Electronics, Machinery, Machinery Equipment, Mining, Non-Profit, Research Organization, Semiconductors 
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Establish Structures and Resources to Reach Your Quality Goals

Quality measurement programs need strong governance to make a lasting contribution to the organization.

Type: Best Practices and Business Drivers  Topics: Quality Control, Business Excellence, Quality, Measurement, Measurement, Quality Assessment, Quality Measurement, Organization Structures, Organization and Management  Processes: 1.1.3.2 Create baselines for current processes, 1.1 Define the business concept and long-term vision, 1.1.3 Perform internal analysis, 1.1.3.3 Analyze systems and technology, 12.1.1.1 Establish performance measures, 12.1 Create and manage organizational performance strategy, 12.1.1 Create enterprise measurement systems model, 12.1.1.2 Establish performance monitoring frequency, 12.1.1.3 Set performance targets, 12.2.1 Conduct performance assessments, 12.0 Manage Knowledge, Improvement, and Change, 12.2 Benchmark performance, 12.4.1.14 Identify resources and develop measures, 12.4 Manage change, 12.4.1 Plan for change  Industry: Computers, Construction, Electronics, Machinery, Machinery Equipment, Mining, Non-Profit, Research Organization, Semiconductors 
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Align Enterprise Quality with Strategic Goals and Initiatives

An organization can take time, effort, and countless resources to create an intricate quality measurement system, but it will never help the business reach its goals unless that measurement system aligns with the ...

Type: Best Practices and Business Drivers  Topics: Quality Control, Business Excellence, Quality, Strategic Planning, Organization and Management, Measurement, Measurement, Quality Assessment, Quality Measurement  Processes: 1.1.3.2 Create baselines for current processes, 1.1 Define the business concept and long-term vision, 1.1.3 Perform internal analysis, 1.1.3.3 Analyze systems and technology, 1.1.4.1 Align stakeholders around strategic vision, 1.1.4 Establish strategic vision, 1.2.4 Coordinate and align functional and process strategies, 1.0 Develop Vision and Strategy, 1.2 Develop business strategy, 12.1.1.1 Establish performance measures, 12.1 Create and manage organizational performance strategy, 12.1.1 Create enterprise measurement systems model, 12.1.1.2 Establish performance monitoring frequency, 12.1.1.3 Set performance targets, 12.2.1 Conduct performance assessments, 12.0 Manage Knowledge, Improvement, and Change, 12.2 Benchmark performance  Industry: Computers, Construction, Electronics, Machinery, Machinery Equipment, Mining, Non-Profit, Research Organization, Semiconductors 
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Foundational and Emerging Practices in Quality Measurement

Measuring quality throughout an organization is a challenging endeavor, but many organization are beginning to develop programs to measure quality in every area of the organization, not just in manufacturing or ...

Type: Best Practices and Business Drivers  Topics: Quality Control, Business Excellence, Quality, Measurement, Measurement, Quality Assessment, Quality Measurement  Processes: 1.1.3.2 Create baselines for current processes, 1.1 Define the business concept and long-term vision, 1.1.3 Perform internal analysis, 1.1.3.3 Analyze systems and technology, 12.1.1.1 Establish performance measures, 12.1 Create and manage organizational performance strategy, 12.1.1 Create enterprise measurement systems model, 12.1.1.2 Establish performance monitoring frequency, 12.1.1.3 Set performance targets, 12.2.1 Conduct performance assessments, 12.0 Manage Knowledge, Improvement, and Change, 12.2 Benchmark performance  Industry: Computers, Construction, Electronics, Machinery, Machinery Equipment, Mining, Non-Profit, Research Organization, Semiconductors 
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