Quality is a very important part of business and very important to maintain accurately. To increase customer satisfaction quality is the most important parameter for excellence. The old myth of many people is improving quality is costly but now a day’s in a competitive environment improving product quality with the help of the latest technology and meanwhile reducing cost. In this article, we are trying to understand Quality KPIs for measuring quality performance.

There are several parameters available in the market to monitor quality performance, basically, in this article, KPIs are divided into two categories as per mention below.

Operational Quality KPIs

First pass yield (FPY)

First-time yield is basically indicating the ratio of total good product produced versus total product produced. If the operational parameters are within control, there are fewer chances to defect detection in when the process or equipment startup stage or running stage. For good products, counting excludes the rework and rejected products.

First pass yield = (Numbers of good products pass in process / Numbers of total products produced) * 100

Rolled throughput yield (RTY)

Rolled throughput yield is basically one product that safely passes all interlink workstations without any defects and the outcome will be the final product. Review below-attached formula for a better understanding.

Rolled throughput yield = n1 * n2 * n3 * n4

Whereas,n1-4 is individual workstation first pass yield in percentage.

Process Rework

Process rework is a trend of the number of defective quantities capture during the inspection and all the quantities must be repaired with the help of an operational process. The organization is focused on reducing the trend of rework with the help of training operators & staff for improving processes with the help of root cause analysis.

Process rework = (Numbers of rework quantities / Numbers of total quantity produced) * 100

Process Rejection

Process rejection is a trend of a number of defective quantities capture during the inspection and all the quantities must be not possible to repair with the help of operational process or any other efforts. Process rejection quantities largely impact financially. To minimize process rejection organization is to focus on installing defect prevention devices (poka-yoke) on processes & modified processes with the help of root cause analysis.

Process rejection = (Numbers of rejected quantities / Numbers of total quantity produced) * 100

Internal customer defect trend

Basically, two types of defective products are found at the internal customer stage, one if rework and another is rejection products. Internal customer defect trend means due to human, system, or machine error defective product is transferred to the next workstation, and during operation defective product is identified & transferred to the previous workstation for rework or rejection. From an improvement point of view, ensure zero defect transfer from the last workstation to the customer.

Internal customer defect = (Numbers of defects identified at internal customer stage / Numbers of total quantity produced) *100

External customer defect trend

The external customer defect trend is similar to the internal customer defect trend but the only difference is product defects found on the customer side. There are two possibilities for defective products found at the customer site, rework, and rejection. External customer defect trend measurement is very important & it correctly replicates customer satisfaction. If we improve customer satisfaction at all levels, ensure zero external customer complaints.

External customer defect = (Numbers of defects identified at external customer stage / Numbers of total quantity produced) * 100

Numbers of Nonconformance identified during QMS audit

The best organization is generally performing periodic quality management system audits and regularly improves the process based on audit nonconformance points. It is very important to measure this parameter because if the internal quality management system is maintained perfectly, there are no chances to increase the number of non-conformance.

Incoming quality trend

It is very important to measure the quality of incoming material because if the initial stage of the operation process starts with defective material there is no value addition for further upcoming processes. Measure the trend of incoming defective materials.

Incoming quality trend = (Numbers of incoming quantity rejected / Number of total incoming quantity received) * 100

Customer satisfaction

Measuring customer satisfaction is a very important parameter in a competitive environment. Professional relationship with customers is very much important. Regularly conduct the survey of customer satisfaction with the help of a customer feedback form. Measure customer satisfaction with the help of the below-attached formula.

Customer satisfaction = (Numbers of positive responses / Numbers of total responses received) * 100

Financial Quality KPIs

Cost of Quality

The cost of quality is one of the financial quality measurement parameters. It includes appraisal costs, prevention costs, internal failure, and external failure costs. When an organization starts measuring quality performance financially, very easy to analyze the contribution of cost of quality in all over expenditure.

COQ = cost of good quality + cost of poor quality

Cost of good quality

The cost of good quality is part of COQ. It includes the cost of quality measurement, quality assurance, and maintaining a quality management system. Based on cost analysis organization is able to identify the scope for improvements such as technology upgradation, internal measurement system improvement, and cost reduction in quality planning.

COGQ = Appraisal cost + Prevention cost

Cost of Poor Quality

The cost of poor quality is one of the parts of COQ. To calculate COPQ 2 parameters are required to be measured such as the cost of rework & rejection. COPQ is one of the wastes in operational processes. If the process parameters are going out of control, there is a higher possibility to generate defective products. On a daily, weekly, and monthly basis measure the cost of poor-quality parameters.

COPQ = internal failure cost + external failure cost

Cost of high quality

The cost of high quality is basically the cost consumed to achieve quality excellence. Every improvement required a certain amount initially, but the organization is also reviewing its impact on operational performance.

Cost of high quality = Investment for improving quality – reduction in the cost of poor quality

Conclusion

The quality management system is one of the very important parts of the organization. Management is ensuring product or service quality with the help of key performance indicators. To improve processes internally, KPIs identification is a very important aspect. KPI identification related to the quality management system varies from industry to industry. In the above article, we learn quality measurement KPIs operationally as well as financially, and for measurement purposes, both parameters are very important.