Quality, Cost and Delivery, which is usually abbreviated to QCD is nothing new and has been around as the foundations of performance management for some time. QCD is usually used to measure business activity which can be further distilled into Key Performance Indicators (KPI’s).
Utilizing QCD is a good starting point when it comes to developing business measures. However when thinking about QCD, care should be taken to ensure that it is not just generically about 3 measures more the focus on the particular performance being reviewed and how QCD can be applied.
Quality:
Quality is typically used to measure performance in terms of when things are not right the first time. This measure can be placed at various positions in the supply chain such as for example
• The number of customer returns
• Manufacturing scrap
• Supplier rejects (i.e. goods not accepted due to quality issues)
Costs:
Costs can be critical to any company, so it is vital that they are kept to a minimum. However, costs are about more than simply how much an individual screw cost. You should also look at the cost and value of stock levels, the cost of transporting stock, the cost of storing the stock and so on. Ensure that any hidden costs, such as administration costs, heating and lighting and so on are all taken into account. Each and every cost must be identified and then accounted for.
Delivery:
The delivery standards are often referred to as Delivery Schedule Adherence, (DSA) this can refer to both how often suppliers adhere to the delivery schedule and how well you supply to your customer.
Delivery can be measured quite scientifically. You need to look at your overall DSA i.e. how many times your suppliers meet your schedule and then you measure each individual supplier against this. So if your overall DSA is 89%, then you would measure each individual supplier against the ranking of 89% and see who performs better and who performs worst.
The Benefits of QCD
QCD can bring a lot of benefits to an organisation simply because it is a very straightforward and relatively easy method of actively measuring processes but it is also applicable to processes that are simple or extremely complex. So it can be used in any part of the supply chain and for any business process.
It also serves as an excellent starting point for ensuring that some really functional and useful Key Performance Indicators can be established and the use of QCD should not be seen in isolation but rather as the starting point for the establishment of Key Performance Indicators
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