Introduction

Taxes instrument :Cost of

quality
• Texas Instrument’s Materials & Controls (M&C)
Group was founded in 1916 as General Plate
• Company, a manufacturer of clad and solid gold
alloys for the jewelry industry .
• Following steady growth in the1920's ,general
Plate merged in 1931 with Spenser Thermostat
Company, a research and the experimental
company, to form Metals and Controls
Incorporated.
• In 1959, serious management problems forced a
merger with Texas Instruments (TI).
 TI added M&C’s materials and device level
strengths to its existing component.
 system level capabilities,
 brought management leadership
 that would shape the future growth of the group.
 Then in 1987, the Materials & Controls Group ,was
the third largest of seven major businesses within
Texas Instruments.
• M&C was currently the world’s leading designer
• and manufacturer of industrial and thermostatic clad
metals. Clad metals consisted of two or more
wrought metal layers that were metallurgically
bonded together to offer properties not available in
conventional metals.
• MC group activities centered by two primary
technologies.
• 1.....METALLURGICAL MATERIALS
• 2...CONTROL PRODUCTS
Ayesha Arshad
BAFM-18-18
 Organization
• Product Customer Center (PCC), a building block of Il comprising
its own marketing, engineering, finance and manufacturing
functions
• Fabrication Customer Centers (FCC) manufactured components
and sub-assemblles common to all PCC.
• Four staff support activities existed at the group level.
1. Research and Development
2. Finance
3. People and Asset Effectiveness (responsible for quality
assurance, training, purchasing and materials management),
4. Personnel/Group Services (responsible for facilities, tool making,
automation and human resources)
 Quality at TI

• TI values: Productivity, Teamwork and problem-

solving.
• TI's important client, HP. publicized a study
comparing the best American suppliers to be
inferior to Japan's worst suppliers.
• As a result, Tl implemented "Total Quality Thrust"
in 1980.
Principles of Total Quality Thrust
(TQT)
• Management and all organizations is responsible
for Quality and Reliability issues.
• Manager Performance on Quality and Reliability
Outcomes of Quality and Reliability are important
and manager's commitment is not.
• The goal and slogan competitors in the world
Constantly surpass TI's best.
Eisha Iqbal
Roll No: 07
Cost of Quality
• Cost of quality (COQ) was one of the performance measures
that had to be included in every business unit’s Quality Blue
Book. COQ represented expenditures that arose because
poor quality had occurred or to prevent poor quality from
occurring in the future. The COQ measures was designed to
highlight the cost of poor quality, the cost of doing things
wrong.
• Implementation of COQ system began in the fourth quarter
of 1981 when the quality department undertook a quick
top-down exercise to determine quality costs.
• The initial list of COQ variables included 77 items, a number
that had since been reduced to 19 through the elimination
of semantic overlaps between divisions and the merger of
insignificant categories into other cost elements.
• The variables were grouped into four broad categories :
1. Prevention Costs
2. Appraisal Costs
3. Internal failure Costs
4. External failure Costs
Uses of COQ Data
• Reducing the cost of poor quality is one of the best ways to
increase a company’s profit.
• Provides manageable entity and a single overview of quality.
• Aligns quality & goals.
• Prioritizes problems and provides a means to measure
change/improvement.
• Provides a mean to correctly distribute controllable quality
cost for maximum profits.
• Promotes the effective use of resources.
• provides incentives for doing the job right every time.
KHIZRA ABBAS
 COQ projects
• Quality Improvement Teams, consisting of
department managers, their staff, and
representatives of support organizations met to
establish Cost of Quality improvement projects,
using COQ system numbers as priority setting
mechanisms
COQ projects
• YIELD IMPROVEMENT
• UPGRADE ASSY MACHINE
• REDESIGN MOLDED PART
• NON-DESTRUCT TESTING
• LASER CODING
• FLASH REDUCTION
Two organizational mechanisms that
support cost of quality improvement process

• The Quality Improvement Teams (QIT)

• The People & Asset Effectiveness (P&AE)
reviews
Quality improvement team
• The QITs, which are in place at the group, division,
and department levels of the business.
• Quality Improvement Team (QIT) is a team taking
lead to implement quality improvement activities.
• Group of multi skilled employee charged with
responsibilities of improving processes or services.
• The team include top and middle management
members to coordinate initial planning and
implementation.
People & Asset Effectiveness
(P&AE) reviews.
• The quality (P&AE) reviews,which are held
quarterly.
• Which is high-level management reviews.
• In which business managers review progress
against their short- and long term quality goals.
 System results;
• Between the following inception of the COQ system
in 1982 and the end of 1987, Cost of Quality as a
percent of net sales billed had fallen from 10.7% to
7.8%.
• The COQ system has proven to be a good attention
getter, has forced priority setting and has
stimulated quality improvement activities.