TOTAL QUALITY

MANAGEMENT
By
Fatima Gull Muhammad
WEEK # 4
 Week 4 Topics

Cost of
Zero Learning
Poor
Defect Outcomes
Quality

• Zero Quality • Evolution of COPQ • Will be able to

Control • Traditional COPQ apply the TQM
Model concepts/tools in
• Limitation of COPQ business
Zero Defects

■ Zero Defects – a term coined by Mr. Philip Crosby in his book

“Absolutes of Quality Management” has emerged as a trending
concept in quality management

■ Six Sigma adopting it as one of the major theories.

■ It means ensuring quality standards and reducing defects to

the level of ZERO in projects
The Concept of Zero Defects in Quality Management
The Concept of Zero Defects in Quality Management
■ The concept has also faced a lot of criticism.
■ Many say that there cannot be a state of zero defects while others have been trying to
prove them wrong. Zero defects in quality management don’t mean so in its literary
term but it refers to a state where waste is eliminated and defects are reduced.
Zero Defects is not possible; why?
■ As mentioned above, zero defects cannot be taken in literary terms because in reality,
zero defects are not possible.
■ Suppose you are developing a product and want to ensure zero defects in terms of
quality. The product might be very good today but tomorrow it will lack feature that the
newest development will have. Therefore, you cannot state anything as absolute ‘zero
defects’.
■ Zero defects concept is a concept of quest for perfection in order to improve quality.
Though perfection might not be achievable but at least the quest will lead towards
improvement in quality.
 Cost of Poor Quality

■ Cost of poor quality (COPQ) or poor quality costs (PQC), are

costs that would disappear if systems, processes, and products
were perfect. 

■ COPQ was popularized by IBM quality expert H. James

Harrington in his 1987 book Poor Quality Costs.
COPQ
 Class Activity

Group Exercise to achieve

ZERO DEFECT
IDENTIFY POOR QUALITY AREAS
in any organization
 Cost of Poor Quality
■ The cost of poor quality (COPQ) refers to the costs that are
linked to offering poor quality services and products.
■ The cost of poor quality can be divided into four different
categories:
– the internal failure costs,
– the external failure costs,
– the appraisal costs,
– and the prevention costs.
COPQ: Internal Failure Costs

The internal failure costs are usually associated with the defects that are found
on the products and services before they reach the customers.

■ These costs are incurred when you discover some defect on your services and
products before you hand them to your customers.
■ This cost of quality usually includes:
– Scrap (which is the material that has a defect that can not be repaired or sold)
– Waste (when an unnecessary action exists that is due to poor communication,
errors, or poor organization)
– Rectification / Rework (that include the correction of the materials that have
defect)
– Failure Analysis (which you need to perform to understand the cause of the
internal failure and be able to solve it)
COPQ: External Failure Costs
The external failure costs are related to the costs that your company has
when the product or service reaches the customer with a defect. 

■ These can include:

– Complaints (with all the costs related to the handling and servicing the
complaints)
– Warranty Claims (when you need to replace the product or service that
is still under a guarantee)
– Servicing & Repairs (not only of the ones that are returned by
customers but of the ones that are still in your hands)
– Returns (which include the investigation and handling of all the rejected
products and services, including the costs of transportation)
COPQ: Appraisal Costs

The appraisal costs are the costs that your business incurs in order to
check the actual quality of the product or service according to some pre-
specified degree. 

■ The appraisal costs are mainly related to the monitoring and measuring of
the activities related to the quality of the services and products.
■ This category of the cost of poor quality can include:
– Verification (like checking the process setup or the incoming material)
– Supplier Rating (when you rely on your suppliers to assess and
approve the quality of the products and services)
– Quality Audits (that is a way to guarantee that the quality system is
working well)
COPQ: Prevention Costs
The prevention costs are the costs are the costs that you need to have to
prevent both appraisal and failure costs to a minimum acceptable.

■ These are the costs that you need to incur to make sure that you avoid or
prevent any quality problems.
■ This cost of quality is usually associated with the implementation, design,
and even the maintenance of the quality management system.
■ You usually have these costs even before you start the real operation. 
Sample Spreadsheet Worksheets
LABOR RATES
Defect Costs (External and Internal)
1. Estimate the number of defects
2. Estimate the hours to address each defect
3. Estimate the cost per defect including various labor rates
4. Estimate any additional costs that may be incurred for defects
5. Estimate the total cost per defect category
6. Estimate the total cost for all defects for a year period
Appraisal Costs
7. Estimate appraisal labor costs
8. Estimate appraisal capital costs
9. Estimate appraisal total costs
Preventive Action Costs
10. Estimate total preventive action costs
Total COPQ
Conclusion

 Use COPQ as a tool to identify improvement areas (Prevention or

Appraisal) in order to eliminate internal and external failures.

Source: Quality Convention 2015 by Descon

 Assignment # 2

1. Identify a quality related problem in EDUCATION SECTOR

2. Highlight the factors that incur COPQ
3. Calculate all FOUR costs (using COPQ model)
4. Impact in terms of savings (money)

No assignment will be accepted after the deadline and marked ZERO

Submission Type: Online (only)