ISO certifications are not cheap, and everything we have seen so far may have left you with a nagging doubt: is it really worth going to such lengths to achieve quality? After all:How much does it cost to invest in quality?How much money does my company lose because of poor quality?What should be the limit for investing in quality?What kinds of costs can poor quality bring?How do I measure the costs involved with quality?These and other questions are answered by the structured study of quality costs.To make the study easier, quality costs are divided into categories. Armand Feigenbaum, who popularized the concept in the 1950s, separated them into two broad categories: costs of control and costs of failure of control.Next, we will see what characterizes each category, with examples of each one.The four categories of quality costsFollowing the classification adopted by ASQ (American Society for Quality, called ASQC until 1997), known as the PAF model (prevention, appraisal and failure), quality costs are divided into four categories, as shown in the figure below:Quality costsNote that the figure groups the four categories into two blocks: the costs of quality and the costs of poor quality. The costs of quality proper (prevention and appraisal) are the expenses incurred to pursue and ensure product conformity; they are Feigenbaum's costs of control. The costs of poor quality (internal and external failures) are the consequences of producing defective items; they are the costs of failure of control.Prevention costsPrevention costs are all expenses incurred to prevent errors from happening in processes. Some examples:quality planning;design and new product reviews (quality from the design stage);quality training for staff;process control;quality reports;planning and administration of the quality management system;calibration of instruments and control of measuring equipment;quality administration costs;process studies;purchase of technical standards;quality circles;development of methods to improve quality;preventive maintenance of equipment;preparation of procedures and work instructions.Appraisal costsAppraisal costs are those we incur to measure the quality of the product or system, detecting failures before the product reaches the market. Examples include:inspection of incoming raw materials;in-process and final product inspection and testing;equipment testing;material consumed or destroyed in tests;evaluation of finished goods and raw material inventories;setting up for inspection and testing;laboratory operations;product and process quality audits.Internal failure costsInternal failure costs are those caused by some error in the production process, whether human or mechanical, detected before the product reaches the consumer. Some examples:scrap and waste;product rework;re-inspection of reworked products;line stoppages;losses caused by supplier failures;selling rejected material as second-grade product or for other purposes;corrective actions on materials and processes;time to record, analyze and define actions for anomalies;corrective maintenance;overtime to make up for delays.External failure costsExternal failures are those that appear when the product is already in the consumer's hands. These costs are often hard to measure because they are intangible, such as the damage to the company's image caused by defective products. Some examples:complaint handling and after-sales service;time to analyze complaints and define corrective actions;returned products;scrap and rework of returned products;re-inspection of reworked replacement products;warranty and recall costs;concessions and discounts given to customers;fines, compensation and lawsuits;loss of customers and future sales.A furniture factory spent during the year: 20 thousand on training and preventive maintenance, 30 thousand on raw material and final product inspection, 60 thousand on rework and scrap, and 90 thousand on warranty and returns. What share of the total cost of quality is due to failures?Answer: 75% — the total cost is 20 + 30 + 60 + 90 = 200 thousand; internal (60) and external (90) failures add up to 150 thousand, or 75% of the total. The 25% is prevention and appraisal (50 thousand). A structure like this indicates that it pays to invest more in prevention.A batch of yogurt fails final inspection at the plant because the expiry date was printed incorrectly, and it is repackaged before shipping. Which category does the cost of repackaging belong to?Answer: Internal failure — the defect was detected before the product reached the customer, and repackaging is rework. The cost of the inspection that found the error is an appraisal cost; if the batch had reached the stores and been recalled, it would be an external failure.Optimizing your costs: the minimum total cost of qualityPrevention and appraisal costs are considered unavoidable, and this makes sense: you cannot achieve quality without investing. But unavoidable does not mean unlimited. So what is the limit for investing in prevention and appraisal? In the classic model, these costs grow faster and faster as the company approaches a "100% good", or "100% conforming", product.The costs of poor quality (internal and external failures), on the other hand, are considered avoidable. But how much would it cost to eliminate them completely? Would it be worth it?The answer depends on the line of business and on each one's cost structure. It is a cost-benefit relationship, in which the cost (investment in quality) should not exceed the benefit (reduction of internal and external failures).Compare the external failure costs of a batch of ballpoint pens that do not write with those of a commercial airliner crash. The proportions are incomparable. That is why it is reasonable for an airline to invest much more in quality than a pen manufacturer.Thus, in seeking a balance between the costs of quality and the costs of poor quality, we look for the point where total cost is lowest: the optimum quality point, shown in the chart below.Optimum quality pointLet's see this in numbers. Look at the following table, with a company's costs over eight years (in thousands):YearCost of quality (x1000)Cost of poor quality (x1000)Total cost (x1000)20101002503502011120210330201214017531520131701202902014220119339201524512036520163001174172017350118468Up to 2013, each additional unit invested in quality reduced the cost of poor quality even further, and total cost fell from 350 to 290 thousand. From 2013 onwards, the costs of quality kept rising, but the costs of poor quality remained stable, at around 120 thousand: the extra investment no longer paid off, and total cost started to grow again. Assuming the quality measures adopted were correct (and that they could no longer reduce the costs of poor quality), 2013 was the year in which the optimum point was reached, with the lowest total cost in the series. It is exactly the bottom of the total cost curve in the chart above.One caveat: this classic model assumes that getting close to "zero defects" is always very expensive. Authors such as Deming and Crosby ("quality is free") argued that, with well-done prevention and continuous improvement, the optimum point shifts towards fewer and fewer defects. So today's optimum point is not a permanent ceiling: new technologies and methods can lower the prevention cost curve and change the balance.A company spent 80 thousand on prevention and appraisal and had 200 thousand in failures. The following year, it spent 130 thousand and failures fell to 120 thousand. In the third year, it spent 200 thousand and failures fell to 100 thousand. In which year was total cost lowest?Answer: In the second year, at 250 thousand — the totals are 80 + 200 = 280, 130 + 120 = 250 and 200 + 100 = 300. In the third year failures fell, but the extra investment (70 thousand) was greater than the savings (20 thousand). Reducing failures is not enough: what we seek is the lowest total cost.ExercisesIn this article's 2010 to 2017 table, what would happen to total cost if the company went back to its 2012 level of investment, assuming the costs of poor quality returned to 175 thousand?Answer: It would rise to 315 thousand, above the 2013 optimum — 140 + 175 = 315 thousand, against 290 thousand in 2013. Investing less than the optimum is also expensive, because failures grow again. The 140 thousand option forgets to add the failure costs. Regarding the definition of quality costs, select the correct alternative Select the correct statement about quality costs Select the statement that contains explanations about quality costs related to external failures Select the alternative that contains the definition of prevention (or compliance) costs: Select the alternative that contains the definition of evaluation (or detection) costs Select the alternative that contains the definition of costs for internal failures Select the alternative that contains the definition of costs for external failures Select the alternative that contains an example of an evaluation cost in a company's purchasing department Select the alternative that contains an example of prevention costs in a company's purchasing department Rework cost is considered which type of cost
ردود الفعل
0
0 تعليقات
كن أول من يعلق
لا شيء هنا بعد.