Congratulations on your COPQ metric. I can comment your your post in several ways:
- You are correct: DPPM is not a good engagement metric for top leaders. cost of quality is better, as all strategy is ultimately measured in dollars.
- Not having a cost of good quality component in your metric handicaps you. Are you spending enough on investments (improvement or prevention) relative to the areas of major COPQ? Using only COPQ limits your strategic planning.
- With rapid growth, you DO need to divide your cost of quality by some measure of volume. COGS is convenient but suffers from the problem of timing. Cost of quality changes with production cost cycles, not with sales. Cost of quality needs a 'leveling' divisor that cycles with production. How about cost of production?
Finally, I try to promote language that fits today's business. Prevention could be called 'Investments', Appraisal could be 'Monitoring', Internal Failure is really just 'Waste', and External Failure might be called 'Downstream Consequences' to allow for supply chain details.
Douglas C. Wood
ASQ CQE, SSBB, CMQ/OE, CQA
5507 Mission Road, Fairway, KS 66205
Office Cell: (913) 669-4173
Linked in: www.linkedin.com/in/douglascwood/
Any thoughts on a target? In terms of what % should we shoot for ("best in class").
I believe a better approach might simply be to target a certain % reduction each year.