Cost of Quality 1

[pso311]

My objective for 2005 is to define plant wide costs of quality. (appraisal, prevention, internal/external failure)

I am looking for resources or company benchmarks that I can imitate to get a hold of some of these figures.

As my core discipline is Mechanical Engineering, I'm venturing into new waters, and any help would be greatly appreciated.

-Scott

 

[PSE]

Here is a starting point.

http://www.asq.org/portal/page?_pageid=33,32429,33_32554&_dad=portal&_schema=PORTAL

There are numerous factors that you could use to define your plant wide costs of quality. You would need to identify and use factors specific to your operations. Here are a few to start with, some obvious, some less so.

Material scrap rates (raw material, components, finished product)
Material rework if applicable.
Unplanned downtime
Warranty and service costs
Reject rates (incoming, production, finished product)
Customer satisfaction/retention

Most places where I have worked have had this information available only scattered amongst various departments and never brought into a cohesive study. You may find during your work, that you will encounter resistance as some departments may feel that a cost of quality study will put them in a bad light with higher management.

Good luck,

 

[tomwalz]

Over twenty plus years I have tried lots of measurements. While resistance to reporting performance is not universal it is extremely common.

3 things.
Start with accounting and get costs for materials vs. sales. Accounting has a formalized system.

1. What gets measured gets improved. It will be hard to get good numbers but just trying to get good numbers will improve the process. If your career depends on this (and it does) try to get an accurate base line metric because they will start improving whatever it is you start talking about. Productivity willgo up as soon as yous trt to observe the process. (Look up the GE Hawthorne study)

2. Let the operators look good. Start out by repeatedly emphasizing that you know you have good people who are doing a good job and you are looking for tools and techniques to help them do the job better. Everybody knows that this is only partly true but it really helps the process when you say that this is how you are approaching it.

3. Quality doesn’t cost it pays. This is an act of faith. I read Dr. Deming for years and never really understood him then I just made an act of faith and decided to buy the best materials and equipment I could, pay my people as well as I could, invest in training and put money into R&D to get ever better. The problem with this is that you don’t see the benefits until afterwards.

Get two books
1. Dr. Deming : The American Who Taught the Japanese About Quality by Rafael Aguayo
2. The Goal by Eliyahu M. Goldratt, Jeff Cox

4. Go for the biggest, crudest measurement you can get.
I really like dollars out vs. dollars in for materials.
Every day we track dollars shipped and divide it by total hours. Total hours include every person in the plant and all the break, lunch, setup, cleanup and everything else.
In other words only the dollars we actually made that day and no work in progress.
And every penny we had to spend on labor for any reason.

There are several hundred reasons why this is not accurate and several hundred ways to make it more accurate. Ignore all those and just do it in the simplest manner possible. This also really helps identify work stretching in slow times and rework.

5. Get all procedures in writing.

6. Use printed documents, not hand written.

7. Get a digital camera and use it to show pictures of good and bad.

Tom

 

[BillPSU]

Quality must pervade a company to be successful. You can build the most quality product in the world but if you customer service sucks so does your product. If your sales person cannot communicate your quality because of lack or training or understanding again your product sucks. If your field service rep mistreats a customer your product sucks. If the customer is unhappy your product sucks. Not having product when the customer wants it, your product sucks.

Within manufacturing quality is usually broken down into two areas; the cost of non-conformance and the cost of conformance. Buying and using inspection equipment inside the manufacturing process is cost of conformance. Inspecting parts after the fact, scrapping parts, reworking parts, repairing a machine in the field, adding parts to a unit after it has completed the assembly process because of lack of parts are all costs of non-conformance.

Quality is different from customer to customer. Try to anticipate and exceed the customer's desires. Customers are both the end user as well as the next person in line to manufacture the product.

Don't anticipate you will fix all your quality problems. Quality is a journey with no ending. A quality car of the 1980's is a poor car of the 2000's. You will always have to improve.

 

[PVRV]

Please be specific:

At any rate;

This should provide a broad view of the cost of not having quality.

1.

http://www.ogp.org.uk/

2.

http://www.hse.gov.uk/statistics/index.htm

3. Past Incidents (Search for)

3.1 Bhopal
3.2 Flixborough
3.3 Mexico City (LPG Plant)
3.4 Seveso
3.5 Piper Alpha
3.6 Hickson & Welch
3.7 CSG
3.8 Toulouse

4. htp://

http://www.nace.org

Cheers,