QCD / Quality, Cost, Delivery (+ 5-Page Lean PDF)
Thinking in terms of QCD helps keep organizations focused, and helps them prioritize their improvement efforts. In most short-term planning, quality and delivery thresholds are set based on the market and the voice of the customer, and then remaining resources are committed to reducing costs. In long term planning, quality should have zero defects as the ultimate target.
Without having strong quality and delivery goals in place, cost reductions can go too deep, and impact how the customer perceives the value of a product or service.
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Many companies using Lean categorize their improvement efforts using QCD. There is a growing trend to use QCDSM, which includes safety and morale. Some omit it, feeling that safety and morale are a given, and do not need to be specifically addressed. Regardless of whether safety and moral have their own categories of metrics, though, they should still be managed, as they play a major role in successfully reaching QCD goals.
QCD is popular because people operate better when they can take a big thing and break it down into smaller things. It lets people organize and prioritize their efforts, and has the psychological effect of keeping people from feeling overwhelmed.
Quality is nearly always listed first, presumably because most are in agreement that poor quality will result in bad business. But on occasion, you will see the three letters sequenced as QDC. In fact, I prefer it that way. Delivery is more visible to customers than cost, which is why I like it listed first. Cost is internal, and therefore transparent to the customer, so it has much less importance. What matters to them is price. Customers tend not to be terribly concerned with how much profit you are making. Of course, this sequence presumes…
Make sure your efforts towards improving QCD make sense. While quality is generally the most important, don’t immediately assume that since Q comes first, that Q always trumps the other categories. Your efforts in each of these areas have to match your company strategy. If you are a low cost provider, for example, the expectation of quality on your company is generally lower than a quality front-runner. As a result, the bar you have to achieve is lower for you than for them. Costs will likely have more emphasis, as margins will be slim. (Note: It is rare that quality is not going to be the most important metric! Adjust the sequence at your own risk.)
In Lean organizations, lots of things get measured. It can be hard to get used to, if you are unaccustomed to the scrutiny. There are two main strategies to use when trying to fit into a culture of metrics. First, metrics should measure processes, not individual people. Try to get a voice in selecting the metrics to be used. That will make them more likely to be both relevant, and something that you can control.
Secondly, don’t look at misses on QCD goals as failures. Think of the metrics as a way to highlight the need for resources to get better. Be persistent (without crossing the line over to obnoxious) with your leadership team about…
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