Cost of Quality INTERG ON Cost of quality

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Cost of Quality INTERG ON “Cost of quality is … the expense of noncomformance

Cost of Quality INTERG ON “Cost of quality is … the expense of noncomformance – the cost of doing things wrong. ” Dr Lionel Boxer Intergon 2004 Cost of Quality Page 1 http: //intergon. net 24 Sep 2004

Cost of Quality Opportunity to Reduce Real Costs INTERG ON • Understand quality costs

Cost of Quality Opportunity to Reduce Real Costs INTERG ON • Understand quality costs enables you to – Understand hidden costs – Reduce and eliminate unnecessary cost • Prevent problems from happening • Management responsibility to enable this Dr Lionel Boxer Intergon 2004 Cost of Quality Page 2 http: //intergon. net 24 Sep 2004

Cost of Quality INTERG ON Understand Quality Costs • Quality costs are real and

Cost of Quality INTERG ON Understand Quality Costs • Quality costs are real and estimated at: – 25% of costs in manufacturing – 35% of costs in service industry • Quality costs can be categorised to enable better understanding Dr Lionel Boxer Intergon 2004 Cost of Quality Page 3 http: //intergon. net 24 Sep 2004

Cost of Quality INTERG ON Categories of Quality Costs • • Failure Costs Repair

Cost of Quality INTERG ON Categories of Quality Costs • • Failure Costs Repair Costs Appraisal Costs Prevention Costs Dr Lionel Boxer Intergon 2004 Cost of Quality Page 4 http: //intergon. net 24 Sep 2004

Cost of Quality INTERG ON Failure Costs • Those costs incurred because poor quality

Cost of Quality INTERG ON Failure Costs • Those costs incurred because poor quality products do exist • Can be further divided into subcategories of: – Internal failure costs – External failure costs Dr Lionel Boxer Intergon 2004 Cost of Quality Page 5 http: //intergon. net 24 Sep 2004

Cost of Quality INTERG ON Repair Costs • Those costs incurred if poor quality

Cost of Quality INTERG ON Repair Costs • Those costs incurred if poor quality products receive further processing • If this occurs then the previous processing is wasted cost • Why would you do this? Dr Lionel Boxer Intergon 2004 Cost of Quality Page 6 http: //intergon. net 24 Sep 2004

Cost of Quality INTERG ON Appraisal Costs • Those costs incurred because poor quality

Cost of Quality INTERG ON Appraisal Costs • Those costs incurred because poor quality products might exist • If these costs are necessary then the process is flawed and management is guilty • Why would you permit this? Dr Lionel Boxer Intergon 2004 Cost of Quality Page 7 http: //intergon. net 24 Sep 2004

Cost of Quality INTERG ON Prevention Costs • Those costs incurred because poor quality

Cost of Quality INTERG ON Prevention Costs • Those costs incurred because poor quality products can exist and • Those costs incurred because management is committed to prevent poor quality products from happening • Why would you not do this? Dr Lionel Boxer Intergon 2004 Cost of Quality Page 8 http: //intergon. net 24 Sep 2004

INTERG ON Cost of Quality Preventing Poor Quality Pays Prevention Costs Benefit Appraisal Costs

INTERG ON Cost of Quality Preventing Poor Quality Pays Prevention Costs Benefit Appraisal Costs $ Dr Lionel Boxer Intergon 2004 Repair Costs Prevention Costs Failure Costs • Internal • External Appraisal Costs Repair Costs Failure Costs Before Quality Cost Alignment After Quality Cost Alignment Cost of Quality Page 9 http: //intergon. net 24 Sep 2004

INTERG ON Cost of Quality Preventing Poor Quality Pays • Would it not make

INTERG ON Cost of Quality Preventing Poor Quality Pays • Would it not make sense to prevent poor quality products from happening? • How can this be done? • Whose responsibility is this? Dr Lionel Boxer Intergon 2004 Cost of Quality Page 10 http: //intergon. net 24 Sep 2004

Cost of Quality INTERG ON How to Prevent Poor Quality • Prepare to measure

Cost of Quality INTERG ON How to Prevent Poor Quality • Prepare to measure costs of quality – Determine categories of quality costs – Create measurement system that captures categories of quality costs • Assign responsibility to collect data Dr Lionel Boxer Intergon 2004 Cost of Quality Page 11 http: //intergon. net 24 Sep 2004

Cost of Quality Determine Quality Cost Categories INTERG ON • • • Understand your

Cost of Quality Determine Quality Cost Categories INTERG ON • • • Understand your product Understand your process Understand where problems occur Determine precisely what goes wrong Determine what costs represents each problem Dr Lionel Boxer Intergon 2004 Cost of Quality Page 12 http: //intergon. net 24 Sep 2004

INTERG ON Cost of Quality Creating Data Collection System • Create measurement system –

INTERG ON Cost of Quality Creating Data Collection System • Create measurement system – Attempt to harness existing financial accounting system – Manipulate existing financial data – Collect costs as they occur • Whatever you do ensure costs are accurate Dr Lionel Boxer Intergon 2004 Cost of Quality Page 13 http: //intergon. net 24 Sep 2004

Cost of Quality INTERG ON Assign Responsibility • Make individuals at all levels responsible

Cost of Quality INTERG ON Assign Responsibility • Make individuals at all levels responsible for collecting quality cost data: – If quality cost data is required then make it the responsibility of the person who creates the cost to collect the data • If no one is responsible no one will Dr Lionel Boxer Intergon 2004 Cost of Quality Page 14 http: //intergon. net 24 Sep 2004

Cost of Quality INTERG ON Analyse Collected Data • Data on its own is

Cost of Quality INTERG ON Analyse Collected Data • Data on its own is useless • You must have it analysed to be able to extract meaning • Determine what knowledge you require • Develop an analysis system that provides the knowledge you require Dr Lionel Boxer Intergon 2004 Cost of Quality Page 15 http: //intergon. net 24 Sep 2004

Cost of Quality Useful Quality Cost Knowledge INTERG ON • What you need to

Cost of Quality Useful Quality Cost Knowledge INTERG ON • What you need to know is useful • What you do not need to know is useless • Only ask for knowledge you need to know • Demand that knowledge is presented so that it can be understood easily Dr Lionel Boxer Intergon 2004 Cost of Quality Page 16 http: //intergon. net 24 Sep 2004

Cost of Quality INTERG ON Management is Responsible • Management decides what to produce

Cost of Quality INTERG ON Management is Responsible • Management decides what to produce in terms of Products (goods and / or services) • Management assigns responsibilities to produce products • Management is accountable for effectively using resources to produce products Dr Lionel Boxer Intergon 2004 Cost of Quality Page 17 http: //intergon. net 24 Sep 2004

Cost of Quality INTERG ON “Cost of quality is … the expense of noncomformance

Cost of Quality INTERG ON “Cost of quality is … the expense of noncomformance – the cost of doing things wrong. ” Dr Lionel Boxer Intergon 2004 Cost of Quality Page 18 http: //intergon. net 24 Sep 2004