ppt

1. 4.3. Benefits and Costs of Quality
Benefits of Quality

2. Benefits…
• Less waste and increased productivity
• Lower unit costs and improved productivity
• Reduced warranty costs
• Elimination of procedures for correcting defects
• Reduced administrations for dealing with customer
complaints
• Reduced liability for defects
• Competitive advantage coming from enhanced reputation
• Large market share with less effort in marketing
• Enhanced motivation and morale of employees
• Removal of hassle and irritants for managers

3. Costs of Quality
• can be divided in to three major categories: cost of
prevention, cost of detection/Inspection, and cost of failure.
• The total quality cost is the sum of costs in the three
categories.
i) Cost of prevention
• These are costs associated with the development of programs
to prevent defectives from occurring in the first place.
• The quality of product is set at the design stage, so the best
way to guaranteeing quality is by designing, a good product in
the first phase.
• Prevention costs cover all aspects of quality that are
designed in to product, together with costs incurred to
ease production and reduce a chance of making a defect.

4. Cost of prevention...
• They include direct costs for the product itself, such as using
the use of better materials, investment in machinery,
inclusion of features to ensure quality, while indirect costs
include employee training, pilot runs, testing prototypes,
improvement projects.
ii) Appraisal costs
 These are costs of making sure the designed quality is actually
achieved.
 As units move through their processes, they are inspected to
make sure they actually reach the quality specified in the
design.
 Related costs include sampling, inspecting, testing machinery
for maintenance.

5. Appraisal costs...
• The appraisal costs also cover administration and audits for
quality programmes.
• Generally the more effort that is put in to quality control, the
higher is the quality of the product, and the higher are the
costs needed to achieve this.
iii) Cost of Failure
• These are costs associated with the failure of a defective part.
It pertains to non-conformance and nonperforming products.
Failure costs are of two types:
a) Internal failure costs – Costs associated with producing
defective products that are identified prior to shipping,
which are traced somewhere in the process.

6. Cost of Failure...
• As product passes goes through various operations, it may be
inspected and those do not meet the specified quality are
scrapped, returned to an earlier point in the process, or
repaired.
• Internal failure cost could be direct including loss of material,
wasted labour, wasted machine time, extra testing, duplicated
efforts while indirect costs include higher stock levels, longer
lead time, extra capacity needed to allow for scrap and
rejections, loss of confidence, etc.
b) External failure costs
 These are total cost of making defective units that are not
detected within the process, but are recognized by customers
that the product is faulty.
 These are costs that the organization incurs after delivering
the product to the customer.

7. External failure costs...
• These are often the highest cost of quality management and
are the ones that should be avoided.
These costs include:
• Customer complaint costs
 costs of investigating and satisfactorily responding to a
customer complaint resulting from a poor-quality product
• Product return costs
 costs of handling and replacing poor-quality products
returned by customer
• Warranty claims costs
 costs of complying with product warranties
• Product liability costs
 litigation costs resulting from product liability and customer
injury

8. External failure costs...
• Lost sales costs
 costs incurred because customers are dissatisfied with poor
quality products and do not make additional purchases.
4.4. Total Quality Management (TQM)
• Total Quality management is defined as a continuous effort by
the management as well as employees of a particular
organization to ensure long term customer loyalty and
customer satisfaction.
• Total quality management is a structured effort by employees
to continuously improve the quality of their products and
services through proper feedbacks and research.
• Ensuring superior quality of a product or service is not the
responsibility of a single member.

9. Total Quality Management (TQM)
• Every individual who receives his /her paycheck from the
organization has to contribute equally to design foolproof
processes and systems which would eventually ensure
superior quality of products and services.
• Total Quality management is indeed a joint effort of
management, staff members, workforce, and suppliers in
order to meet and exceed customer satisfaction level.
• You can’t just blame one person for not adhering to quality
measures.
• The responsibility lies on the shoulder of everyone who is
even remotely associated with the organization.
• In general, it is a philosophy that involves everyone in an
organization in a continual effort to improve quality and
achieve customer satisfaction.

10. TQM ….
• Encompasses entire organization, from supplier to customer.
• Stresses a commitment by management to have a continuing,
company-wide, drive toward excellence in all aspects of
products and services that are important to the customer.
Total Quality management can be divided into four phases:
plan, do, check and act (also called PDCA) cycle.
Planning Phase- planning is the most crucial phase of total
quality management.
 In this phase employees have to come up with their problems
and queries which need to be addressed.
 They need to come up with the various challenges they face in
their day to day operations and also analyze the problem’s
root cause.

11. Planning Phase…
• Employees are required to do necessary research and collect
relevant data which would help them find solutions to all the
problems.
Doing Phase- in the doing phase, employees develop a
solution for the problems defined in planning phase.
• Strategies are devised and implemented to overcome the
challenges faced by employees.
• The effectiveness of solutions and strategies is also measured
in this stage.
Checking Phase- checking phase is the stage where people
actually do a comparison analysis of before and after data to
confirm the effectiveness of the processes and measure the
results.

12. Acting Phase
• in this phase employees document their results and prepare
themselves to address other problems.
 Total quality management can be summarized as a
management system for a customer-focused organization that
involves all employees in continual improvement.
 It uses strategy, data, and effective communications to
integrate the quality discipline into the culture and activities
of the organization.
Here are some essentials of total quality management: