QUALITY COSTS

In business, cost is usually a monetary valuation of

(1) Effort
(2) Material
(3) Resources
(4) Time and utilities consumed
(5) Risks incurred
(6) Opportunity forgone in production and delivery of a good
or service.
 QUALITY COSTS
Costs of quality or quality costs does not mean
the use of  expensive or very highly quality
materials to manufacture a product.

The term refers to the costs that are incurred to

prevent, detect and remove defects from
products. Quality costs are categorized into four
main types. Theses are:
 Cost of Quality

• Broken down into two classifications and

four categories
– Conformance – confirming standards
• Prevention costs
• Appraisal costs
– Non conformance – Non conforming standards
• Internal failure costs
• External failure costs

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Prevention costs
 Appraisal costs
 Internal failure costs
 External failure costs
Prevention cost:

It is much better to prevent defects rather than finding and removing them from
products.

The costs incurred to avoid or minimize the number of defects at first place are
known as prevention costs.

Some examples of prevention costs are improvement of manufacturing processes,

workers training, quality engineering, statistical process control etc.
  Appraisal costs:
appraisal costs also known as inspection costs are
those cost that are incurred to identify defective
products before they are shipped to customers.
 

All costs associated with the activities that are

performed during manufacturing processes to ensure
required quality standards are also included in this
category.
Example:
 Test and inspection of incoming materials
 Final product testing and inspection
 Supplies used in testing and inspection
Internal failure costs :

internal failure costs are those costs that are incurred

to remove defects from the products before shipping
them to customers.

Examples of internal failure cost:

 Net cost of scrap

 Net cost of spoilage
 Rework labour and overhead
 Re-inspection of reworked products
External failure costs: costs associated with defects
found after the customer receives the product or
service
External failure costs include warranties,
replacements, lost sales because of bad reputation,
payment for damages arising from the use of
defective products etc.

The shipment of defective products can dissatisfy

customers, damage goodwill and reduce sales and
profits.
 Quality
Function Deployment
(QFD)
• Background
– Quality professionals refer to QFD by many names,
including matrix product planning, decision matrices, and
customer-driven engineering.
– QFD is a focused methodology for carefully listening to the
voice of the customer and then effectively responding to
those needs and expectations.
– First developed in Japan in the late 1960s as a form of
cause-and-effect analysis, QFD was brought to the United
States in the early 1980s. It gained its early popularity as a
result of numerous successes in the automotive industry.
 Why to select QFD
• In the world of business and industry, every
organization has customers. Some have only internal
customers, some just external customers, and some
have both. When you are working to determine what
you need to accomplish to satisfy or even delight
your customers, then the tool of choice is quality
function deployment or QFD.
• https://quality-one.com/qfd/
 Benefits Of QFD

• Customer Driven
• Reduces Implementation Time
• Promotes Teamwork
• Provides Documentation
 Customer Driven:
• Creates Focus On Customer Requirements
• Uses Competitive Information Effectively
• Prioritizes Resources
• Identifies Items That Can Be Acted On
Reduces Implementation Time:
• Decreases Midstream Design Change
• Limits Post Introduction Problems
• Avoids Future Development planning
• Identifies Future Application Opportunities
Promotes Teamwork:

• Based on agreement
• Creates Communication at Interfaces
• Identifies Actions at Interfaces
• Creates Global View-Out of Details
Provides Documentation:

• Documents Rationale for Design

• Is Easy To Understand
• Add Structure to the Information
• Adapts to Changes (Living Document)
• Provides Framework for Sensitivity Analysis
• https://www.youtube.com/watch?
v=UfWhA6QeUyE
 Voice of the Customer
• Voice of the Customer (VoC) is a term that
describes your customer’s feedback about
their experiences with and expectations for
your products or services.
• Voice of the Customer is a multi-source insight
platform that focuses on customer needs,
expectations and product improvement
 Voice of the Customer
• Driving Force Behind QFD
– Customer Dictates Attributes of Product
• Customer Satisfaction
– Meeting or Exceeding Customer Expectations
– Customer Expectations Can be Vague & General In
Nature
– Customer Expectations Must be Taken Literally, Not
Translated into What the Organization Desires
 Collecting Customer
Information

• What Does Customer Really Want ?

• What Are Customer’s Expectations ?
• Are Customer’s Expectations Used to Drive
Design Process ?
• What Can Design Team do to Achieve
Customer Satisfaction?
 House of Quality

Interrelationship
between
Technical Descriptors

Technical Descriptors
(Voice of the organization)

Requirements
Requirements
(Voice of the

Prioritized
Customer)

Customer
Customer

Relationship between
Requirements and
Descriptors

Prioritized Technical
Descriptors