Quality Cost Measurement & Analysis

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VIEWS OF QUALITY

BUSINESS CRITERIA

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=
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( / .).. /

Free from
Deficiencies

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Accuracy

Performance

Timeliness

Reliability

Completeness

Durability

Friendliness

Expectation

Product
Features

Easy to Use

Service

Knowledge

Esthetics

Esthetics

Options

Reputation

Reputation

Free from Deficiencies

Product Features

Quality of Conformance

Profitability

Quality of Design

COST

REVENUE

Managing for Quality

Customer

Producer

Supplier


JURANs TRIOLOGY

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Planning Control - Improvement
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CHRONIC WASTE


QUALITY FUNCTIONS

Quality Planning

Quality Control

Quality Improvement


QUALITY GAP

GAP

QUALITY

Understanding Gap

Design Gap

Process Gap

Operation Gap

Perception Gap




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 ( )

: Juran
1951 .

A.V Feigenbaum :
.GE

Dr. Harrington :1960 Feigenbaum

IBM

PQC .

:1987 ,Dr.Harrington ( ,
:1964 .IBM PQC
, , ,) -

(.)ASQ

 BS6143

( AS 2561 )


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QUALITY COST General Overview

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( % 30-10 % 40-25 )

Poor Quality .

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" " :

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( ) .

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) Failure Prevention - Appraisal ( PAF

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(1

(2 .

(3 /

(4 :
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 -1

:
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Improvement Vs. Control

/:
( )

:
( /)

:
( ) Vital Few

Project by - Project

Business Units

)(

)(

)(

.Vital Few -

-
.

Useful Many

Pareto Analysis

Vital Few & Trivial Many

90

160

80

140

70

120

60
100
50
80
40
60

30

10

20

20

40

( % )

100

180

Cause and Effect Diagram

/ .

Vital Few

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1 31

60

120

50

100

40

80

30

60

20

40

10

20

70

140

100
90
80
70
60
50
40
30
20
10
0

80

160

100
90
80
70
60
50
40
30
20
10
0

90

180

1 31

100

200

 -2 /
Process Analysis / Re-engineering

BUSINESS PROCESS

CONCEPT OF BUSINESS PROCESS

OUTPUTS

INPUTS

PROCESS

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Business Process Management

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BUSINESS PROCESS RE-ENGINEERING

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Competition :

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Customers

Change

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-5 :
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-1 :

( %20 ).

-2 :

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.Vital Few & Trivial Many

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.3 2

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Cost of Poor Quality

Lost Sales Revenue

Inefficient Processes

Non Conformances


QUALITY COST CATEGORIES
-1 / :

Internal Failure

/ .
.

(1 ( Scrap ) .
(2 ( Rework ).
(3 ( ).
(4 ( ).
(5 .
(6 / .
(7 .
(8 .Hardware Re-design
(9 .Software Re-design
(10 / .%100
(11 .Obsolete Products
(12 .
(13 .
(14 ( Degrading ).

(15 / ( ) .Overfilling
(16 ( ).
).
(17 (
(18 .
(19 .Non Added-Value Activities

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External Failure Cost

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. Loss of Sales Opportunities

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/

(1
(2
(3
(4
(5
(6
(7

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( .)... -
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( ).

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(2
(3 .

( ).

(1

 -3 :

Appraisal Cost

(1
(2
(3
(4
(5
(6
(7
(8

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Prevention Cost

(1

(2
(3
(4
(5
(6
(7

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( ).
.Process Control
.Quality Audits
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/ .

-2
-3
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-1

( )

10
11
12

23.500
3.500
70.000
32.000
25.000
30.000
8.000
21.000
18.000
15.000
32.000
18.000

296.000

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:

.Appraisal
. Prevention
. Failure
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% ( )

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% .

( )

3.015

50
250
10
1.015

150

( )

425

2.500

525

( )
( )

1.350

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/

260

800
750

/ :

( ) %

15
25

( / / / .).. /

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 -1 :

" " Tailor made

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-2 / :

Failure Cost

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Appraisal Cost

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Data

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HIDDEN COSTS

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" Hidden Costs - :
(1 ( ).
(2
(3
(4
(5

(6

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%3 :
%5 : .

.%

: %5

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: ( )%10
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(7
(8
(9
(10
(11

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QUALITY COSTS & INTERNATIONAL STANDARDS

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3 :
-1 ""Quality Cost Approach

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-2 " " Process Cost Approach

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" " Cost of Conformance
" . " Cost of Non- Conformance

(
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-3 " " Quality Loss Approach

( ) .
" " Hidden Cost
( ).

ISO 10014
TC-176 :
" "
Guidelines for Management of Quality Economics

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-1 / :

DATA COLLECTION

Established Accounts

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-2 Analysis of Accounts Constituents :

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" Defective " ".
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" ".

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( /).
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-4 :

Initial Documents of Accounts

Estimates

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/ " Temporary Records " :
" " Repair .
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" " Work Sampling

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( ).

" " Allocation of Resources

( ).

" " Unit Cost Data

= .
/.

"" Market Research Data

: .

10.000.000

1.000

10.000

%25

250

(% )90-60
188 = %75 250

10.000 188

= 1.880.000

( )

" : " Input Output Analysis
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Notes for Data Collection

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= () ( + ).

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( %20 ).



" " COST OF POOR QUALITY & ACTIVITY-BASED COSTING

.Overhead Cost

3 :
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" " Overheads

( / ).

" " ABC - Activity Based Costing

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( : )
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% 60-50 .
% 25
%75 .

""ABC

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ROQ

RETURN ON QUALITY -

( ).

( / )


BENEFITS FOR ROQ

-1 :

Reduced Cost of Errors

% 50 5.
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-2 :

Improved Process Capability

. Non Value - Adding Activities -

( .)..

 -3 :

Reduced Customer Dissatisfaction

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-4 / :

Increase in New Customers

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REPORTING COST OF QUALITY

%....... .
%....... .
%....... .
....... ........ .
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%....... ..........................
%....... .
%....... .
%....... .


QUALITY COST & SUPPORTING CONTINUAL IMPROVEMENT

(1

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(2

(3 ( / ).
(4 (
)

(5 ( )

.Concept of Vital-Few & Trivial Many

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Example : ANALYSIS OF A QUALITY COST DRIVER

) 104.000 ( %65

)160.000( %80

) 32.000 ( %20

) 122.000 ( %65

) 24.000 ( %15

)200.000 ( %100

)20.000( %10

) 20.000 ( %100

) 45.000 ( %100

) 18.000 ( %90

)20.000( %10

) 1.000 ( %5

) 33.000 ( %100

) 1.000 ( %5

200.000

200.000

200.000

200.000



OPTIMUM COST OF QUALITY

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!

1992 :
( 72 23 - 5 - )

.1 .
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%100
( ) %

Optimum Quality Cost

. %100

%100.

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%100
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%100 :

( .).....
Automation %100.
%100
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