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Cost of Quality

The cost of poor quality are Failure cost Appraisal cost Prevention Cost

Hidden Cost

Failure Cost
These Cost are associated with the manufacturing
and usage of products, which fail on Quality Requirements. Failure Cost : Internal failure Cost & External Failure Cost

Internal Failure cost : cost associated with the

manufacture of products which fail on quality requirements These comprise losses arising out of

Cost of labour, materials, machines hours etc, lost in scrapped items Cost of rework/ reassembly at subsequent stages Cost of failing to meet contracted schedules

External failure cost: Cost associated with the

usage of products which fail on quality requirements

These comprises imputed costs of shipping

defective products to customers such as:
Cost of attending to consumer complaints and repairs (repair cost) Cost of replacement Cost of legal liabilities arising out of guarantee or product liability Cost of loss of consumer goodwill Cost of loss of sales due to the publicity of failures Downgrading

Appraisal Cost
Costs associated with routine quality control and
information systems designed to provide managerial control through measurement, evaluation and auditing of existing level of Quality Cost of Quality data acquisition and analysis consist of: Cost of inwards, in process and final inspection Cost of destructive test losses, if any Cost of preparation of reports and audits Cost of maintenance and calibration of test instrumentations and facilities Cost of administrative machinery and organization for inspection, testing and appraisal Product review cost Process control cost Quality engineering cost Field evaluation cost

Prevention Costs

These costs are incurred to ensure that bad

quality does not occur in manufactured goods. These are:

Cost of quality data acquisition and analysis for prevention Cost of Pilot production and scientific product development Cost of engineering quality at design state Cost of quality planning and organization Product review analysis Cost of process control Research and testing costs aimed at quality assurance and quality enhancement Cost of training for quality Trouble shooting and failure analysis Administrative costs of systems and staff

Hidden Costs
Potential Lost sales Cost of redesign due to quality reasons Cost of software changes due to quality reasons Extra manufacturing costs due to defects Scrap not reported Excess process costs of acceptable products

The masters of quality

W Edward Deming First American quality expert to teach Japanese managers methodically about quality

Deming propounded the following

The PLAN-DO-CHECK-ACT-CYCLE Quality Through Constancy of purpose No inspection Continuous improvement Barrier less communication Pride of workmanship Continuous training

Demings Famous 14 point methodology

Constancy of purpose The new philosophy Cease dependence on Inspection End awarding lowest tender contracts Improve every Process Institute training on the Job Institute Leadership Drive out Fear Break down barriers Eliminate exhortations Eliminate arbitrary numerical targets Permit pride in workmanship Encourage education Commitment of the top management

Joseph M Juran

Jurans Quality Triology Quality Planning

Identify the customers Determine their needs Translate those needs into our language Develop a product that can respond to those needs Optimise the product features to meet our and
customer needs

Quality Improvement Quality Control

product Optimize the Process

Develop a process, which is able to produce the

Prove that the process can produce the product the

product under operating conditions Transfer the process to operations

Juran propounded the following

message on quality

Jurans Formula
Build an awareness of the need and give an opportunity for improvement Set goals for improvement Organize to reach the goals ( establish a quality council, identify problems, select projects, appoint teams, designate facilitators) Provide training Carry out projects to solve problems Report progress Give recognition Communicate results Keep score Maintain momentum by making annual improvement part of the regular systems and processes of the company.

Philip B Crosby

The Definition: Quality is conformity to

requirements, not goodness

The System: Prevention not appraisal The Performance standards: Zero Defects

The Measurement: The price of non-conformity to

requirements, not quality indices

Based on these premises, Crosby developed a 14 step methodology

Crosbys 14 steps: Management commitment Quality Improvement team Quality measurement Cost of quality Quality awareness Corrective action Zero defect planning Supervisor training ZD day Goal setting Error cause removal Recognition Quality council Do it over again

The best known TQM Models are:

Deming Award Criteria

Malcolm Baldridge Award Criteria European Foundation for Quality Management (EFQA) Award Criteria Australian Quality Award Criteria Confederation of Indian Industries (CIl) Award Criteria

Japanese 5 S practice The 5 S practice is a technique used to establish and maintain quality environment in an organization. The 5 S stand for five Japanese words Seiri Seiton Seiso Seiketsu Shitsuke

Japanese Seiri Seiton Seiso


Meaning Organization Neatness

Typical examples Throw away rubbish 30-second retrieval of a document Cleaning Individual cleaning responsibility Standardization Transparency of storage discipline Do 5 S daily


Step1 Seiri (Straighten up) Its about separating the things which necessary for the job from those that are Differentiate between the necessary and unnecessary and discard the latter in following areas: Work in Process Unnecessary tools Unused machinery Defective products Paper and documents

are not. the the

This can be achieved by;

Stratification Management Differentiate between needs and wants One is best

Step 2 Seiton (Put things in order) Things must be kept in order so that they are ready for use when needed. It is all about neatness. There are 4 ways to achieve neatness
Analyse the status quo Decide where things belong Decide how things should be put back Obey the put-away rules (Putting things back where they belong)

Step 3 Seiso (Clean up) Keep the workplace clean. Everyone in the organization from the managing director to the cleaner should undertake this job.

Step 4 Seiketsu (Personal cleanliness)

Make it a habit to be clean and tidy starting with your own person. The emphasis is on visual management (put appropriate labels) and standardization.

Step 5 Shitsuke (Discipline)

Discipline means instilling the ability of doing things the way they are supposed to be done. The emphasis here is creating a workforce with good habits.

How to implement 5 S in the organization

Step 1 Get the commitment of the top management and be prepared Step 2 Draw up a promotional campaign Step 3 Keep records Step 4 5 S training Step 5 Evaluation