The Cost of Poor Quality

Transcription

1 Energy Upgrade California The Cost of Poor Quality John Tooley, Advanced Energy June 24,

2 Energy Upgrade California Home Upgrade Energy Upgrade California offers rebates for saving energy and making homes more comfortable Tiered incentives drive comprehensive upgrades while allowing entry level installations Points based Home Upgrade offers up to $3,500 Modeled savings based Advanced Home Upgrade offers up to $6,500 Bay Area Regional Energy Network (BayREN) is the contact for Home Upgrade projects within 9 Bay Area counties Contact Information PG&E Home Upgrade Build It Green, , info@builditgreenutility.org BayREN Home Upgrade Home Upgrade Advisor,

3 PG&E s AC Quality Care Rebate Program AC Quality Care is a rebate program aimed at improving the maintenance and operation of heating/air conditioning in homes. Homeowners can get up to $700 in incentives for quality care of their HVAC systems. Contact Information AC Quality Care Build It Green, (ACQC), acqualitycare@builditgreen.org The program is based on Air Conditioning Contractors of America s (ACCA) quality maintenance standard: ACCA 4 Quality Maintenance 3

4 Home Performance Sales Training with Mike Rogers July 15, 2014 / 9:00 a.m. to 5:00 p.m. PG&E Energy Training Center 1129 Enterprise Street, Stockton, California This full day session, with home performance expert Mike Rogers, provides an introduction and overview of key sales skills, tools, and approaches for residential contractors, especially those delivering comprehensive energy efficiency and performance upgrades. For more information on conference registration, visit performance sales training tickets

5 PG&E Regional Forum Home Upgrade/AC Quality Care August 12, 2014 / 8:00 a.m. to 2:00 p.m. San Ramon Valley Conference Center 3301 Crow Canyon Rd., San Ramon, CA You are invited to the PG&E Regional Forum for Energy Upgrade Home Upgrade and AC Quality Care Participating Contractors. Featuring updates on program improvements, marketing, training, and education, as well as networking and feedback sessions. EUC Home Upgrade AC Quality Care ACQC (2272) info@builditgreenutility.org acqualitycare@builditgreen.org 5

6 Upcoming Summer Series Webinars July 22, 2014 / 9:00 a.m. to 10:30 a.m. With Peter Troast, Energy Circle The Rise of Third Party Reviews: How to Make Them Work for You August 14, 2014 / 9:00 a.m. to 10:30 a.m. With John Tooley, Advanced Energy The First Step of Quality Management: 5S Methodology and tracking problems. 6

7 Our Presenter: John Tooley John Tooley, Senior Building Science Consultant, Advanced Energy. John is a national leader in building science technologies. He has diagnosed and repaired more than 5,000 homes and participated in the weatherization of more than 10,000 homes. In addition, John is recognized for his contributions to many of the largest utility and building programs in the nation. Before joining Advanced Energy in 1996, he led a number of companies dedicated to preserving the state of Florida through quality building practices. Today, John is responsible for business development with the Advanced Energy s Applied Building Science team. Regarded as a pioneer in the world of energy efficiency, he trains builders and contractors throughout the United States and frequently gives keynote addresses at national conferences. 7

8 Attendee Guide Questions may be submitted through the Questions Pane on your control panel, at any time during the Webinar. A Question/Answer session will follow the presentation. A recording of the Webinar will be available after the event, along with a PDF of the presentation slides. You can expand or collapse the control panel at any time by clicking on the red/white arrow in the top left corner of the panel. Please feel free to submit questions. Enter text in Question Pane 8

9 The Cost of Poor Quality John Tooley

10 Pyramid of Power 10

11 4 Fundamental Quality Truths 1. We need a common language 2. A clear set of standards, policies, procedures and protocols that everyone follows 3. Our performance standard must be zero defects 4. Our measurement of quality must be the cost of poor quality and waste 11

12 Common Language What is quality? 12

13 Common Language What is quality? Quality is doing agreed upon requirements and standards Not high quality, not low quality, not good quality, not bad quality Either you did or your did not 13

14 ATTENTION! All work is a Process Process fails more than people Blame should fall on the process not people All defects are caused, all causes can be prevented 14

15 4 Acts of Futility 4. To inspect a process without the objective being prevention of defects 1. Blame workers for process problems that are beyond their control 3. To inspect a flawed process expecting quality 2. To try to improve a process That produces the wrong outcome All work is a process. 15

16 The workplace must be free of blame 16

17 We must drive fear out of the workplace. Quality is impossible if people are afraid to tell the truth. W. Edwards Deming - Fourteen Obligations of Management, Point 8 17

18 Our Quality Focus 1. People Employees (internal) Customers (external) Suppliers (external) Funders (external) 2. Waste reduction Defects (mistakes, intentional) Process (lack of, insufficient, etc.) Wait (on people or materials) Transportation (time and expense) Not using the intellect of our employees 18

19 Quality Improvement Path to The Bottom Line Improve Quality (Effective Work) Improve Productivity (Efficient Work) Increase Market Share Stay In Business Provide Employment E.W. Deming Return on Investment 19

20 Quality is Free No one has lost money doing the job right the first time 20

21 Quality is Free No one has lost money doing the job right the first time Quality is free it is not a gift, but it is free 21

22 Quality is Free No one has lost money doing the job right the first time Quality is free it is not a gift, but it is free We lose money by actions that involve not doing jobs right the first time It costs us: Loyal and satisfied customers Market share Profit 22

23 Cost Components of Quality 23

24 Cost Components of Quality 24

25 Prevention Cost Also known as Quality Control that is contractor centric. Control is directed at variation from requirements and standards Self Inspection Mistake proofing PDCA 25

26 Cost Components of Quality 26

27 Poor Quality Cost Waste: Anything that consumes resources and does not add value to the end product 1. Rework 2. Waiting (on material or people) 3. Transportation (to and from work) 4. Motion (back and forth to the truck, cycle time) 5. Process (poor, to much, to little) 6. Inventory (to much, to little) 7. Failing to use the intellect of employees Cost of poor quality is actually the cost of doing things wrong 27

28 Poor Quality Loss Percentage of Operating Budget Loss Opperating Budget 75% 25% Loss 60% 40% Loss We don t lose money doing work right 28

29 Our Target Should Be Through Good Quality Management 3% Loss Opperating Budget 5% 97% 95% We don t lose money doing work right 29

30 Operating Budget vs Loss by Percentage Operating Budget 40% Loss 25% Loss 10% Loss 5% Loss 3% Loss $1k $400 $250 $100 $50 $30 $5k $2000 $1250 $1500 $250 $150 $25k $10,000 $6,250 $2500 $1,250 $750 $50K $20,000 $12,500 $5000 $2,500 $1,500 $100K $40,000 $25,000 $10,000 $5,000 $3,000 $200K $80,000 $50,000 $20,000 $10,000 $6,000 $500K $200,000 $125,000 $50,000 $25,000 $15,000 $1 million $400,000 $250,000 $100,000 $50,000 $30,000 30

31 Quality That Equals Success 2 Views Product features that meet customer needs Increased satisfaction Product more sellable Increased market share Secure premium prices Major Effect is On SALES Usually, higher quality costs MORE Source: The Meanings of Quality 1990, Juran 31

32 Quality That Equals Success 2 Views Product features that meet customer needs Increased satisfaction Product more sellable Increased market share Secure premium prices Freedom from deficiencies Reduce error rates Reduce rework, waste Reduce warranty charges Reduces cycle time Reduce service call rate Major Effect is On SALES Usually, higher quality costs MORE Major Effect is On COST Usually, higher quality costs LESS Source: The Meanings of Quality 1990, Juran 32

33 You say.. Show Me the Money! 33

34 Cost of Poor Quality The obvious and visible costs are a small portion of the overall cost Delays/Increased Cycle Time Inspection/Re-inspection Testing Rework Waste 34

35 The obvious and visible costs are a small portion of the overall cost Delays/Increased Cycle Time Inspection/Re-inspection Testing Rework Waste Late Paperwork Employee Unhappiness The bottom of the iceberg represents the majority of the cost and are not easily identified and measured. Variation Safety Issues Customer Dissatisfaction Excessive Overtime Employee Turnover High Risk Pricing or Billing Errors Lost Market Share Lack of follow-up 35

36 $1.00 Spent on Prevention Saves Prevention Cost Installer Correction Cost Work Quality Assurance Failure Cost Homeowner Source: Total Quality Management, Joel E. Ross 36

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39 Process must PREVENT mistakes from becoming defects 39

40 What is the level of our quality? The level of quality in any company is its acceptance to non-conformance to requirements and standards. What is the Cost of Poor Quality (COPQ)? 40

41 Cost of Poor Quality Cost of nonconformities Cost of ineffective and inefficient processes Cost of lost opportunities for sales revenue

42 Cost of Poor Quality INEFFECTIVE PROCESS Does not achieve desired results Cost of nonconformities Cost of ineffective and inefficient processes Cost of lost opportunities for sales revenue

43 Cost of Poor Quality INEFFECTIVE PROCESS Does not achieve desired results Cost of nonconformities Cost of ineffective and inefficient processes Cost of lost opportunities for sales revenue INEFFICIENCY OF PROCESS Resources used exceed ROI 43

44 Quality Improvement Path to The Bottom Line Improve Quality (Effective Work) Improve Productivity (Efficient Work) Increase Market Share Stay In Business Provide Employment E.W. Deming Return on Investment 44

45 Path to Greater Profit QUALITY PROFIT COST 45

46 Show Me the Money 46

47 STEP 1 Identifying Loss List Cost Areas of Doing Business 47

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49 What does it cost to weather-strip an attic hatch? What does it cost to go back and fix an attic hatch? 49

50 STEP2 Identifying Loss Calculating the Cost Of Poor Quality (COPQ) 50

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54 $485 54

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56 $21,340 56

57 $47,415 57

58 Cost of Poor Quality Number of Homes Number of houses done wrong Cost of Poor quality per house Total loss Wall cavities $3,161 $47,415 Attic Hatch $415 $7,245 CO Monitors $415 $22,825 TOTAL ANNUAL LOSS $77,482 Loss per house Total Number of Houses (350) Loss Per Houses Done wrong 58

59 We Must Build Quality Into Our Processes Do Not Bolt It On Maximizing Waste Reduction 59

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61 Attendee Guide Questions may be submitted through the Questions Pane on your control panel, at any time during the Webinar. A Question/Answer session will follow the presentation. A recording of the Webinar will be available after the event, along with a PDF of the presentation slides. You can expand or collapse the control panel at any time by clicking on the red/white arrow in the top left corner of the panel. Please feel free to submit questions. Enter text in Question Pane 61

62 Upcoming Summer Series Webinars July 22, 2014 / 9:00 a.m. to 10:30 a.m. With Peter Troast, Energy Circle The Rise of Third Party Reviews: How to Make Them Work for You August 14, 2014 / 9:00 a.m. to 10:30 a.m. With John Tooley, Advanced Energy The First Step of Quality Management: 5S Methodology and tracking problems. 62

63 Home Performance Sales Training with Mike Rogers July 15, 2014 / 9:00 a.m. to 5:00 p.m. PG&E Energy Training Center 1129 Enterprise Street, Stockton, California This full day session, with home performance expert Mike Rogers, provides an introduction and overview of key sales skills, tools, and approaches for residential contractors, especially those delivering comprehensive energy efficiency and performance upgrades. For more information on conference registration, visit performance sales training tickets

64 PG&E Regional Forum Home Upgrade/AC Quality Care August 12, 2014 / 8:00 a.m. to 2:00 p.m. San Ramon Valley Conference Center 3301 Crow Canyon Rd., San Ramon, CA You are invited to the PG&E Regional Forum for Energy Upgrade Home Upgrade and AC Quality Care Participating Contractors. Featuring updates on program improvements, marketing, training, and education, as well as networking and feedback sessions. EUC Home Upgrade AC Quality Care ACQC (2272) info@builditgreenutility.org acqualitycare@builditgreen.org 64

65 Contractor Survey CPUC Guidance Decision for Energy Efficiency (D ), approved in May 2012, directs that during the portfolio, Energy Upgrade California will transition to serve as the primary statewide campaign to educate residential and small business customers... On July 10, 2013 name of the whole house retrofit program was officially changed to Home Upgrade (Energy Upgrade California Home Upgrade). CPUC Decision D , approved on December 27, 2013, adopts the statewide marketing, education, and outreach plan to establish the Energy Upgrade California brand as an energy management service for California citizens. 65

66 Contractor Survey The logo for Home Upgrade will change to: Participating Contractors will need to begin using the new logo in the near future. Build It Green is asking for your input on several questions regarding the logo change: 1. Where do you currently feature the EUC logo in your marketing and Web materials? 2. How long will it be before you need to re print or replace EUC branded marketing materials? 3. What is your estimated costs to reprint or replace EUC branded marketing materials? Please answer these poll questions now. 66