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    CH 2

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    This document provides an overview of conducting a companywide quality assessment. It discusses assessing quality in several areas: the cost of quality, standing in the marketplace, quality culture in the organization, and operation of the quality system. It describes the different costs of quality including internal failure costs, external failure costs, appraisal costs, and prevention costs. It emphasizes the importance of quantifying quality costs to identify areas for improvement and reduce customer dissatisfaction. The document also discusses assessing quality culture through employee surveys and benchmarking quality against competitors to understand customer priorities.

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    CH 2

    Uploaded by

    suresh84123
    93 views18 pages
    This document provides an overview of conducting a companywide quality assessment. It discusses assessing quality in several areas: the cost of quality, standing in the marketplace, quality culture in the organization, and operation of the quality system. It describes the different costs of quality including internal failure costs, external failure costs, appraisal costs, and prevention costs. It emphasizes the importance of quantifying quality costs to identify areas for improvement and reduce customer dissatisfaction. The document also discusses assessing quality culture through employee surveys and benchmarking quality against competitors to understand customer priorities.

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    This document provides an overview of conducting a companywide quality assessment. It discusses assessing quality in several areas: the cost of quality, standing in the marketplace, quality culture in the organization, and operation of the quality system. It describes the different costs of quality including internal failure costs, external failure costs, appraisal costs, and prevention costs. It emphasizes the importance of quantifying quality costs to identify areas for improvement and reduce customer dissatisfaction. The document also discusses assessing quality culture through employee surveys and benchmarking quality against competitors to understand customer priorities.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    93 views18 pages

    CH 2

    Uploaded by

    suresh84123
    This document provides an overview of conducting a companywide quality assessment. It discusses assessing quality in several areas: the cost of quality, standing in the marketplace, quality culture in the organization, and operation of the quality system. It describes the different costs of quality including internal failure costs, external failure costs, appraisal costs, and prevention costs. It emphasizes the importance of quantifying quality costs to identify areas for improvement and reduce customer dissatisfaction. The document also discusses assessing quality culture through employee surveys and benchmarking quality against competitors to understand customer priorities.

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    of 18

    Companywide Assessment Of Quality

    Agenda
    What is Quality Assessment? Necessity of Quality Assessment Elements of Quality Assessment

    Cost

    of Quality Standing in the Marketplace Quality Culture in the Organization Operation of the Company Quality System

    Quality Assessment
    Describes the organization-wide review of the status of quality Provides an understanding of

    Cost of Quality

    Standing in the Marketplace

    Size of the quality issue Areas Demanding attention

    Quality Assessment

    Formal assessment of quality helps in strategy formulation to meet the quality challenges

    Quality Culture in the Organization

    Operation of the Organization Quality System

    Cost Of Quality
    Cost of Quality

    Nonconformance Cost

    Conformance Cost

    Internal Failure Cost

    External Failure Cost

    Appraisal Cost

    Prevention Cost

    Internal Failure Costs


    Costs of rework and repair before delivery to a customer These costs would fall to zero if there were no defects in the product

    Obsolescen ce Avoidable process losses Failure Analysis Downgradin g Scrap/Rewor k Supplies Accidents

    Scrap 100% Inspection

    Rework Retesting and reinspection

    External Failure Costs

    Cost of defects found by customer after transfer of the product These costs would also fall to zero if there were no defects in the product Usually external failure costs are much higher than internal failure costs Ranbaxy vs USFDA, GM vs Johnston, Nokia battery recall
    Warranty charges Complaint adjustmen t Returned products Concessi on Loss of goodwill and sales Product recall

    Appraisal Costs
    Incurred in determining the degree of conformance Include the cost of verification and control performed at any stage of the quality loop Costs related to finding out errors

    Supplier inspection and testing Maintenance of testing equipment In process inspection and testing Resources and Services used in testing Final Inspection and testing Periodic Evaluation of stock Product quality audits Field testing

    Prevention Costs
    Cost related to the activity of any hindrance in production or process approaches, quality planning, quality function deployment, and/or complete quality enhancement issues falling into a category of value adding activities Costs of activities designed to ensure that nonconformances are not generated Result in relatively low internal- and externalfailure costs

    Quality Planning Quality Audits New Product Review Supplier Quality Evaluation Process Control Training

    Reasons For Estimating Quality Costs

    Helps quantifying the quality problem in terms of money. This can be reported directly to the upper management Helps identify areas which have high costs of quality which can be reduced. High cost areas would directly correspond to a weak area in quality e.g. high internal failure costs point to problems in processes Helps identify opportunities for reducing customer dissatisfaction and threats to product salability. It makes the company aware of any costs of quality burden being put on the customer

    Hidden Costs Of Quality

    Not all costs of quality are quantifiable, reported and obvious. Obvious costs of quality discussed previously form only a small portion of the actual total costs while hidden costs are much more than that stated
    Potential

    loss of sales Cost of redesign Cost of changing manufacturing processes Scrap not reported Excess process cost for acceptable product

    Economic Models Of Quality Conformance

    Traditional Process

    Emerging Process

    Appraisal carried out by humans Total cost was infinite at 100 % conformance since humans cannot work at 100% efficiency while appraising

    Use of machines for appraisal Total cost is finite for 100% conformance as technology is used for appraisal-robotics New technology has reduced inherent failure of materials, products etc.

    Total Quality Curve

    100% Defective

    100% Good

    Zone of improvement

    Zone of Indifference

    Zone of High Appraisal Costs


    Failure Costs < 40% Prevention Costs > 50%

    Failure Costs > 70% Failure Costs ~ 50% Prevention Costs < 10% Prevention Costs ~ 50%

    Improvements needed in quality of conformance to reduce the total costs

    Optimum has been reached in terms of quality improvement

    Reviewing the quality Standards and reducing inspection

    Standing in the Marketplace

    Apart from the CoQ, the company needs to study the market to assess its positioning relative to the competitors The objective of the study is to identify quality attributes that the customer values most medical equipment vs designer watch, courier service vs. bank teller service After the product attributes are identified, the company should benchmark its products relative to the competitions products in a weighted manner relative to each attribute The inputs from the benchmarking should come from the Voice of the Customer who uses the products and not internal opinions The customer itself can be further differentiated into

    Approver of the Purchase Influencer of the Purchase Decision Buyer (who signs the purchase order) End-User who uses the system

    Company Culture On Quality


    Formal Approaches to assess the quality are still evolving Focused discussions with groups of employees. ( Health Care Products Industry) Areas addressed: Attitudes , Perceptions and Activities within a company. Perceived User Attitudes about quality of products. Tools of Quality. Process Control Concepts, SQC tools & Product Sampling. Written Questionnaires. ( Ryan & Wong,1984) Pointed and Direct Questions Areas addressed: Managements Attitude toward quality Go-Ahead with Defective jobs Areas which cause most of the defects

    Malcom Baldrige National Quality Award

    Provides criteria to identify organizations which have achieved highest levels of quality Award presented annually in US Maximum of two organizations in three categories ( Manufacturing, Service & Small Business) Exhaustive Evaluation Based on submitted written materials followed by on site visits. Heavy emphasis on quality and Customer Satisfaction

    TBEM 2007 Scoring System

    Thank You

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