Here is another great article from our friend Adam Stoehr of the National Quality Institute in Canada. The National Quality Institute, http://www.nqi.ca, are BPIR.com’s partner for Canada. Adam’s article is about the story of EbeFixer Stooge and the cost of quality.
EbeFixer Stooge and the Cost of Quality Past
Vice President, Educational Services, National Quality Institute
One of the things that he was particularly good at was counting all the money he was saving the company. Every day at 7:30 pm he would sit at his desk and calculate the money he saved the company and produce his re-ports. These daily re-ports could easily have 30 plus pages of charts and figures in them. By the end of the week the re-ports would pile up high on his desk so that he couldn’t be seen behind them. Sometimes you could walk past his office and hear him mumbling under his breath behind the huge piles, “money, money, money, money, saving all this money”.
He opened the message and it read: “EbeFixer. Don’t forget about the Cost of Quality. You will receive 3 messages before midnight, each one giving you insight into the Cost of Quality. The messages will explain how the cost of quality can be divided into three categories. Cost of prevention, cost of inspection, and the cost of failure. Don’t forget the best places to spend the money. Best Regards, Jacob Smartly (aka re-bug).”
Stooge was surprised by the email. He hadn’t heard from Smartly for months. Last time they spoke, Smartly told Stooge that he had been meaning to share some thoughts. Smartly was known as re-bug because he always bugged Stooge about his re-man ways. Stooge was thinking back to what it was like working with Smartly and thought… bah….re-bug….
He shut down his computer and reached for his coat. Just then, his BlackBerry buzzed and sure enough there was a message titled: “The Cost of Quality Past.” Stooge sat back down and read the message. The message was all about prevention costs. Prevention costs are things like training costs, planning costs, process improvement costs, and continuous improvement activity costs. Prevention costs are sometimes referred to as controllable costs, meaning that we have control over how much we spend on them. Prevention costs are things that organizations spend or spent money on to reduce exposure to future failure costs. Great organizations spend most of their quality dollars on these “good” prevention costs. A dollar spent in the past will prevent a bunch of dollars being spent in the future.
His BlackBerry buzzed again. The second message was titled: “The Cost of Quality Present.” This message built on the theme of prevention from the first message. It went on to talk about the cost of inspection and appraisal. Inspection costs are things like auditing, checking, proof-reading, and testing. It is the cost of checking for deficiencies before they affect customers. These costs are also controllable. They don’t happen in the past; they happen after the fact or in the present. These costs are important things to spend money on, but world-class organizations try to avoid these inspection costs over the long term. Inspection costs are the last chance to catch problems before the customer sees them. They are necessary, but the best organizations in the world try to figure out ways to prevent problems before they become something that can be inspected in the present.
“It’s not too late! I can change! I can shift the focus of our spending from expensive resultant costs to cheaper controllable costs!” shouted Stooge as he stood up and in one fell swoop knocked all the re-ports into the recycling bin.
Stooge decided to take a week off for Christmas. Then on January 3rd he was back at work, a new man. No more re-man. He was Pre-Man (short for prevention man). That morning he lifted the freeze on training dollars. He reinstated travel for planning meetings. He planned out a pathway for organization-wide continuous improvement activities. He built a cost of quality communication plan to share his new-found knowledge with the rest of the organization. He even had a new nameplate printed for his office door and desk with the new nickname of Pre(vention)-Man.
As the year went by, the organization started performing better. They were failing less. Stooge was always in a good mood. His job was now to find problems and prevent them. He was an expert at preventing things from going wrong. He would work with his colleagues to find ways to prevent mistakes. He was known around the office as the Pre-Man. His specialties were training, planning, and continuous improvement. Stooge was really good at what he did.
Stooge was even rewarded for his efforts with the De-Stress Award that was highly regarded around the office. After receiving the award Stooge read the inscription out loud. It read: The De-Stress Award, presented to EbeFixer Pre-Man Stooge.
De-Stress Us… Every One…
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