Quality Management: Classification of Quality Costs
Quality Management: Classification of Quality Costs
What is Quality?
Quality means fit for use or purpose. It is all about meeting the needs and expectations of
customers with respect to functionality, design, reliability, durability and the price of the
product.
Edwards Deming defined quality as follows: Good quality means a predictable degree of
uniformity and dependability with a quality standard suited to the customer. The underlying
philosophy of all definitions is the same consistency of conformance and performance, and
keeping the customer in mind.
What Is Quality Management?
Quality management is the act of overseeing all activities and tasks that must be
accomplished to maintain a desired level of excellence. This includes the determination of a
quality policy, creating and implementing quality planning and assurance, and quality control
and quality improvement. It is also referred to as total quality management (TQM).
This is super important --so the X-Axis is the Quality Level which moves from 0% conformance
on the left to 100% conformance on the right. As you move from 0% conformance to 100%
conformance the Prevention & Appraisal Costs increase linearly. Similarly, the Failure Costs
(Internal + External) begin decreasing sharply.
Then, the Total CoQ (Cost of Quality), which is a sum of these two other curves also decreases
sharply.
One key conclusion that Juran is communicating with this graph is that the Total CoQ is the
lowest, when conformance is 100%. At this point, the Total CoQ simply equals the Cost of
Prevention & Appraisal.
Institute education
and self improvement Involve all workers in
the transformation.
program.
1. BENCHMARKING
Benchmarking is simply the process of measuring the performance of one's company against
the best in the same or another industry. Benchmarking is not a complex concept but it should
not be taken too lightly. Benchmarking is basically learning from others. It is using the
knowledge and the experience of others to improve the organization. It is analyzing the
performance and noting the strengths and weaknesses of the organization and assessing
what must be done to improve.
TYPES OF BENCHMARKING
• Process benchmarking –It’s where we go beyond performance measures and also
compare how business processes are performed. The initiating firm focuses its
observation and investigation of business processes with a goal of identifying and
observing the best practices from one or more benchmark firms. Activity analysis will
be required where the objective is to benchmark cost and efficiency; increasingly
applied to back-office processes where outsourcing may be a consideration.
• Financial benchmarking - performing a financial analysis and comparing the results in
an effort to assess your overall competitiveness.
• Performance benchmarking - allows the initiator firm to assess their competitive
position by comparing products and services with those of target firms.
• Product benchmarking - the process of designing new products or upgrades to current
ones. This process can sometimes involve reverse engineering which is taking apart
competitors products to find strengths and weaknesses.
• Strategic benchmarking - comparison of strategic decisions and dispositions at a
higher level. It involves observing how others compete. This type is usually not
industry specific meaning it is best to look at other industries.
• Functional benchmarking - comparison against organizations that are not necessarily
competitors, but that performs related tasks within the same technological area. In
the school analogy, this will be benchmarking against someone from another school,
but of the same type. A company will focus its benchmarking on a single function in
order to improve the operation of that particular function. Complex functions such as
Human Resources, Finance and Accounting and Information and Communication
Technology are unlikely to be directly comparable in cost and efficiency terms and
may need to be disaggregated into processes to make valid comparison.
• Internal benchmarking, comparison against the best within the same organization or
corporation, often called benchmarking within your own class.
• Competitive benchmarking, comparison against the best direct competitors, which
then can be termed benchmarking against someone in the parallel class.
2. DEMING WHEEL
Deming wheel is a basic tool that helps to continuously improve the processes in
the organisation. It is also used to solve the quality problems as well as implement new
solutions and ideas. The PDCA cycle consists of four steps which one shall go through to get
from fining and realising the problem to solve. PDCA refers to an acronym built around the
four stages of this tool. The four stages are Plan-Do-Check-Act, which is presented on the
illustration.
The PDCA Cycle is used in order to coordinate the continuous improvement in the enterprise.
It emphasizes that improvement programs must start with careful planning, result in effective
action, and must move on again to careful planning in a continuous cycle.
4. QUALITY CIRCLE
Quality Circles can be described as a small group of employees of the same work area, doing
similar work that meets voluntarily and regularly to identify, analyse and resolve work related
problems.
This small group with every member of the circle participating to the full carries on the
activities, utilising problem solving techniques to achieve control or improvement in the work
area and also help self and mutual development in the process.
FEATURES OF QUALITY CIRCLE
▪ A small group of people who do similar work
The quality circle essentially consists of people who do similar work. But it does not imply that
the circle cannot consult the specialists or others. In fact, ideas and solutions can be sought
from any corner.
▪ The members in the circle should not be many
It is argued that smaller the circle better the coordination and homogeneity. The circle should
look like a team and not a committee. It should consists of members between three and ten
depending upon the size of the department. As suggestions for removing any snag or
improving the productivity are invited from every member of the department no one would
feel neglected or side tracked.
▪ Voluntarily meeting together
People are invited to join the quality circle but they are not compelled. The members feel the
need to meet together to discuss and devise ways to improve the functioning of their areas
concerned. Hence, joining a quality circle is voluntary and not forced upon.
▪ Meeting regularly every week
The duration and frequency of meetings even vary in Japan (where this concept originated),
it is favored to have meetings at least an hour every week. But actually, the frequency and
duration of each meeting should be decided by the circle members who will take all factors
into account such as the severity of the problem, urgency of problem, number of problem
etc. The date of holding a meeting is also decided by the circle members so that their meeting
does not disturb the production schedule.
In practice, the quality circles have proved to be a boon in disguise for the industries. They
may hold the meetings during a maintenance period, a job change over or after completion
of weekly work schedule. They may meet at the beginning or end of the shift or during lunch
break.
▪ Under the leadership of their own supervisor
The quality circle is purely concerned with work-related problems. Therefore, supervisors of
the work area prove to be the best persons to lead the group, as they are thorough with the
functioning of the department. The idea of electing or selecting the leader from the quality
circle members is not encouraged as it does not work out effectively.
▪ Identification, Analysis and Solutions
The circle identify their own problems in their own work area. The circle members are not
encouraged to highlight the fault of others.
▪ Presenting Solutions to Management
After collection of data, working out new ideas in consultation with all kinds of people, the
members come to a conclusion which if implemented will deliver the goods. The final idea
(solution) should be presented to the management together by the group members (not by
the leader alone or any other member). Interestingly the circle solutions (projects) are so
meticulously thought out that their outright rejection (not favored for implementation) by
the management is rare.
▪ Self Implementation
The quality circles are made for implementation of their solutions as they deal with the
problems over the fence in the next department are completely isolated from it. Only each
department has to care for their babies.
▪ Meeting time any time
The meetings of the circle members may not be arranged essentially during their normal
working hours. As it may affect their working and thereby production. Also, if the work is done
in shifts then the circle members may come different shifts and a common free time for all
may be difficult to spare within normal working period. Hence, such meetings could be held
any time in a working day and holiday.
5. Six Sigma
Six Sigma is a set of techniques and tools for process improvement. A six sigma process is one
in which 99.99966% of all opportunities to produce some feature of a part are statistically
expected to be free of defects.
Six Sigma strategies seek to improve manufacturing quality by identifying and removing the
causes of defects and minimizing variability in manufacturing and business processes. It does
this by using empirical and statistical quality management methods and by hiring people who
serve as Six Sigma experts. Each Six Sigma project follows a defined methodology and has
specific value targets, such as reducing pollution or increasing customer satisfaction.
What are 5 steps for Six Sigma?
The Six Sigma steps for process improvement, also referred to as DMAIC, are fairly direct
and straightforward.
1. Define the problem. Craft a problem statement, goal statement, project charter,
customer requirement, and process map.
2. Measure the current process. Collect data on current performance and issues. Verify
that the data is reliable, and update the project charter as needed.
3. Analyze the cause of issues. Examine the process and data that was collected, display
the data, investigate and confirm what’s causing the issues, and continue updating the
project charter as needed.
4. Improve the process. Decide on solutions to fix issues and create process maps for
those new solutions. Take steps to implement the new fixes and continue to measure
improvement.
5. Control. Refine the new process, continue monitoring, and use findings elsewhere in
the business, if possible.
ANALYTICAL METHODS
1. CRITICAL PATH METHOD
The critical path method is a project management tool used to assist in scheduling long-term
projects. The method was developed in the late 1980s and has been used in a variety of
project types including software development, research projects, project development,
engineering, plant maintenance, and many more. In manufacturing and related industries,
the critical path method can be used to maximize efficiency.
Planning a project always includes a start point and an ending point, and the project itself is
carried out between these points. The critical path method is an algorithm that shows the
path of tasks and activities to complete the project, usually diverging and coming back
together at different points. The goal the best path for the project in order to effectively
schedule and plan for the project.
▪ ACTIVITY
An activity is a part of the project denoted by an arrow on the network. The tail of the arrow
indicates the start of the activity whereas the head indicates the end of the activity. One and
only one arrow is used to represent one activity of given duration. The arrows of the activities
are not drawn to scale. The durations of the activities are written along their arrows.
▪ DUMMY ACTIVITY
The activity which neither uses any resources nor any time for its completion is called dummy
activity. It is represented by a dotted arrow or a solid arrow with zero time duration.
▪ EVENT
Event is the stage or point where all previous jobs merging in it are completed and the jobs
bursting out are still to be completed.
▪ NETWORK
The diagrammatic representation of the activities of the entire project is called network of
flow diagram. On this diagram various jobs of the project are shown in the order in which
these are required to be performed.
▪ EARLY START TIME (E.S.T.)
The earliest possible time at which an activity may start, is called early start time.
▪ EARLY FINISH TIME (E.F.T.)
The sum of the earliest start time of an activity and the time required for its completion is
called early finish time.
▪ LATE START TIME (L.S.T.)
The latest possible time at which an activity may start without delaying the date of the project,
is called late start time.
▪ LATE FINISH TIME (L.F.T.)
The sum of the late start time of an activity and the time required for its completion is called
late finish time.
▪ TOTAL FLOAT
The difference between the maximum time allowed for an activity and its estimated duration
is called total float. It is the duration of time by which the activity can be started late, without
disturbing the project schedule. It is generally denoted by S.
▪ FREE FLOAT
The duration of time by which the completion time of an activity can be delayed without
affecting the start of succeeding activities is called free float. It is generally denoted by S.F.
▪ CRITICAL ACTIVITIES
The event which has no float, are called critical activities. The critical events are required to
be completed on schedule.
▪ CRITICAL PATH
The path in the network joining the critical events is called the critical path of the work.
You can use the Work Breakdown Structure (WBS) to identify the activities involved in the
project. This is the main input for the critical path method. In activity specification, only the
higher-level activities are selected for critical path method. When detailed activities are used,
the critical path method may become too complex to manage and maintain.
Step 2: Activity sequence establishment
In this step, the correct activity sequence is established. For that, you need to ask three
questions for each task of your list. Which tasks should take place before this task happens.
Which tasks should be completed at the same time as this task. Which tasks should happen
immediately after this task.
Step 3: Network diagram
Once the activity sequence is correctly identified, the network diagram can be drawn (refer
to the sample diagram above). Although the early diagrams were drawn on paper, there are
a number of computer softwares, such as Primavera, for this purpose nowadays.
Step 4: Estimates for each activity
This could be a direct input from the WBS based estimation sheet. Most of the companies use
3-point estimation method or COCOMO based (function points based) estimation methods
for tasks estimation.
Step 5: Identification of the critical path
For this, you need to determine four parameters of each activity of the network.
Earliest start time (ES) - The earliest time an activity can start once the previous dependent
activities are over.
Earliest finish time (EF) - ES + activity duration.
Latest finish time (LF) - The latest time an activity can finish without delaying the project.
Latest start time (LS) - LF - activity duration.
The float time for an activity is the time between the earliest (ES) and the latest (LS) start time
or between the earliest (EF) and latest (LF) finish times.
During the float time, an activity can be delayed without delaying the project finish date.
The critical path is the longest path of the network diagram. The activities in the critical path
have an effect on the deadline of the project. If an activity of this path is delayed, the project
will be delayed.
In case if the project management needs to accelerate the project, the times for critical path
activities should be reduced.
Step 6: Critical path diagram to show project progresses
Critical path diagram is a live artefact. Therefore, this diagram should be updated with actual
values once the task is completed.This gives more realistic figure for the deadline and the
project management can know whether they are on track regarding the deliverables.
• Presents the positives and negatives of a situation so they are easily comparable.
• Considers all aspects of making the desired change.
• Encourages agreement about the relative priority of factors on each side of the balance
sheet.
• Encourages honest reflection on the underlying roots of a problem and its solution.
• Failure modes means the ways, or modes, in which something might fail. Failures are
any errors or defects, especially ones that affect the customer, and can be potential
or actual.
• Effects analysis refers to studying the consequences of those failures.
Failures are prioritized according to how serious their consequences are, how frequently they
occur, and how easily they can be detected. The purpose of the FMEA is to take actions to
eliminate or reduce failures, starting with the highest-priority ones.
Failure modes and effects analysis also documents current knowledge and actions about the
risks of failures, for use in continuous improvement. FMEA is used during design to prevent
failures. Later it’s used for control, before and during ongoing operation of the process.
Ideally, FMEA begins during the earliest conceptual stages of design and continues
throughout the life of the product or service.
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