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Dan, Hedesiu1, Vasile, Bugnari2 and Andreea, Petruş 3

Technical University of Cluj Napoca1, dan.hedesiu@muri.utcluj.ro1


Technical University of Cluj Napoca2, vasile.bugnari@ muri.utcluj.ro2
Technical University of Cluj Napoca3, adriana.Petrus@muri.utcluj.ro3
Evolution of gross domestic product of E.U., for 2009, Conferinţa INSSE, Bucureşti, march 2010

 In this economic context it is opportune to change the strategies, to innovate and to


create products better moulded on consumers’ requirements, to reduce unnecessary
costs, and to reduce quality related costs.
 Quality related cost coincide with unequal elements, some of them immeasurable,
because beside the physical product there are external factors which are influencing
the product’s quality.

 Product Lifecycle Management (PLM) becomes a strategic component within


company’s top managment, which is converging with Quality Management. The
actual PLM limits have been extended, so it is clear that the product limits are
extended too.

 In this article authors analyze the connections between: PLM, extended product and
Quality Management, these three concepts having in fact similar objectives; to
optimise from all points of view, the product, to obtain a better customer
satisfaction, and to reduce the products impact on the society and the entire
environment.

 Authors propose a model of identifying and classifying quality costs based on: PAF
(Prevention, Appraisal, Failure) quality costs model, Extended Product Concept, and
PLM stages, in order to meet a company’s needs.
Producer and User view on PLM
 Life cycle costing is traditionally understood as the process of economic
analysis to assess the total cost for conception, design and development,
production, installation, operation and support for a useful life, updating
modes and retirement of a product.

 According to Emblemsvag in “Life cycle costing – Using Activity-Based


Costing”, manufacturer will focus on product conception, design, product
and process development, production, logistics and customer thinks more
about purchase, installation, operating, support, maintenance and disposal.

 The literature on extended product lifecycle concept suggest a common


understanding between producers and users as a premis for maximizing the
benefits of both parties. These benefits arise throughout the product
life cycle and finally will fulfill both the economic and
environmental conditions.
 Specialized literature use the concept of total product as seen in next figure
adapted after T.Levitt’s and Ph. Kotler’s work and views

Extended product model adapted after T. Levitt and Ph. Kotler


 As specific literature and research describes, there are a various views
on how to “extend a product” like: Extended product responsibility,
Extended Product Life, Extended Product Support, Extended Product
Information.

 However the EXPIDE project (Extended Products in Dynamic


Enterprises) of the European Information Society Technologies ) has
elaborated an Extended Product Concept specific to manufacturing
industry that includes the following elements:
◦ A combination of physical product and associated services/ enhancements that
improve marketability;
◦ Intelligent, highly customized, user-friendly tangible products assets;

◦ Intangible product assets (information and knowledge);


◦ Customer focus is on value-added service or guaranteed success.
 The authors propose a new approach based on T. Levitt’s, Ph. Kotler’s and
EXPIDE project’s visions on extended products. The product concept should
start with the client's expectations and desires as well as the market's
requirements. Then, when we refer to extended product it is necessary to
consider as the most important part, the concepts of continuous
improvement, sustainable development and environmental protection.

A new approach on extended product concept


 According to G. Taguchi "The quality of a product is the (minimum) loss imparted by
the product to the society from the time product is shipped". The loss includes
besides producer’s direct and indirect costs, due to non-quality, the other cost
imposed to customers because of low product quality or low service quality.

 In general, this cost refers to any costs that would not occur if within companies all
processes would have perfect quality. All companies’ departments are creating and
are responsible for quality costs . This kind of costs may occur within any process
and activity, form the top management’s area to the production line.

 Within empirical studies of companies form mature and developed markets and in
specialised literature average weights of the total cost of quality assurance are:
Prevention costs 3-12%, Evaluation costs 15-32%, Internal failure cost 22-50%,
External failure costs 20%. Also, these researches revealed that the total quality cost
is an approximate 15% of sum of total sales
 G.W. Parker defines the main quality costs classes:
◦ Ce = external cost of failures (customer complaints and refusals)

◦ Ci = internal costs of failure (quality evaluating activities before product product’s


transmission: touches, reshuffles, internal transport, re-evaluations, new inspections)

◦ CE= evaluation costs (measurings, testings and controls of products to ensure


compliance with the quality standards and with costumers requirements )

◦ CP= prevention costs (marketing cost, design control, staff tranings, quality plannings,
research on delivery’s performance).

◦ This approach on Quality Cost is known in the specialized literature as the PAF model
(Prevention, Appraisal, Failure)

 The specific studies reveals the fact that beside these 4 classes of quality costs
there is another class, Hidden costs, which are almost impossible to identity
form papers or accounting system.
 The majority of the studies in this field reveal the fact that in addition to any
model, in order to find data about quality cost, it is necessary to integrate a team
within the company that can provide information about all the activities and
quality costs.

 In this context, the authors of this paper propose a model to facilitate data
collecting of costs related to quality as seen in next Table.

 This model is based on Product Life Cycle stages, as a technical view for a
common classification of places where quality cost can be generated, intersected
with the Extended Product Concept stages, which represent an economical view
for a classification of commercial activities, where quality cost can occur.

 The quality cost proposed in this general model of identifying quality costs are
based on G. Parker’s and J.M. Juran’s research, but they may vary from industry to
industry.
Table 1.Extended Product component intersected with PLM stages for identification and classification of
quality costs as based on the work of G. Parker and J.M. Juran
 Next, authors propose a detailed presentation of a cost element afferent to each
intersection, for a better representation of quality costs, basically realizing a
specific cost sheet. This cost sheet contains data about the quality cost, class of
quality cost, the amount of the cost, the department where it occurs and the
principal responsible. Also, it contains an observations section where statistics can
be registered, as well possible causes, and future improvements, as seen in Table
2, intersection A.1

Table 2.
 Identification of quality cost will highlight the possible profit lost by an
organization. In this manner, managers can realize the importance of Quality
Management and Cost Management. For organizations, is important to highlight
the quality or non-quality costs, to identify their source and ultimately, to correct
or to eliminate them.
 PLM, Quality Management and Marketing are concepts that constantly intersect
and, actually, they have the same objectives, to maximize the added value, to
obtain performance, efficiency, productivity, flexibility, cost savings and
sustainability, recycling and environmental protection.
 In highlighting the costs related to quality of the extended product, PLM represent
steps and stages within which these costs usually occur.
 The model proposed by the authors is theoretical framework based on the PAF
model, which allows for an easier and better way to indentify quality related costs.
 Future research within a company will respond to our concern of validating this
model and prove its practical value.
This paper was supported by the project "Doctoral studies in engineering
sciences for developing the knowledge based society - SIDOC” contract no.
POSDRU/88/1.5/S/60078, project co-funded from European Social Fund
through Sectorial Operational Program Human Resources 2007-2013.