COQ and productivity


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COQ and productivity

  1. 1. Group Presentation on TopicCOST OF QUALITY & PROFITABILITY Group Members (Name & IDs) ABC 1234 ABC 1234 ABC 1234 Course: Total Quality Management Course leader: Miss Nadia Qureshi
  2. 2. Before going to start our It is need to presentation and define What is its explanation, it is cost ? necessary to understand What quality is?Cost of Quality Cost of Quality Abbreviated as COQ or some time simply called as Quality Cost
  3. 3. The cost can be defineunder different concept but here we will define it with business point of view.
  4. 4. Definition of costFrom the business point ofview Cost may be define as theamount of money thatexpended to acquire a thing.cost has different type thatsome are direct and some areindirect such as opportunitycost is consider as in directcost
  5. 5. Quality can be define withdifferent perspective but herewe will define quality with only with the consumer and the producer perspective.
  6. 6. Consumer based definition of QualityConsumer based definitionof quality is based on theidea that quality is anindividual matter ,andproduct that best satisfy theirpreference are consider thehighest quality.
  7. 7. Producer based definition of QualityThis definition focus onmanufacturer common practicethat is conformance torequirement.Conformance to requirementmeans to fulfill need. Amanufacturer mainlyrequirement are to decrease thecost associated with productproducing. But with out itsaffecting quality.
  8. 8. In previous slide we hade make a basic idea a bout Cost and Quality and now in upIn up coming slides….. coming slide…. Definition of quality cost Different Views of Quality cost Different Categories of Quality cost
  9. 9. Definition of Quality Cost Quality cost are defined as all thosecosts that dont add some thing with aproduct quality, but it occurs due tofulfilling the requirements establish by anorganization for its customers andsociety. OR in simple words………. Quality cost are generally any costassociated with the discovery of poorquality and its fixing.
  10. 10. Quality Cost Different Views Cost are basically View under three perspectives. No.1 Higher quality means higher cost. No.2 Cost of Improving quality is less then saving cost. No.3 The cost of not satisfying customer for its first time.
  11. 11. Continu…No.1 Higher quality means higher costHigh quality product are consider those thatare high in feature, while to put high or extrafeature to a product more resource will needand which on result will increase the cost toa product.
  12. 12. Continu… No.2 Cost of improving quality is less then saving cost Product in low quality create extra cost in form of scrap, machine break down etc A firm should improve its process and function to reduce its cost. The cost on improving process and function should consider less then saving them.
  13. 13. Continu… No.3 The cost of not satisfying customer for its first time. This cost include the cost that result from lost of customer or market share as they not satisfies with first time while customer experiencing (using) the product.
  14. 14. Categories (Type) Quality Cost Understanding these QualityQuality cost can be cost type iscategories into 3 necessary in order tobasic categories understand itsthat are: impact on a firm profitabilityNo.1 Prevention And we alsoCost: know that profitability isNo.2 Appraisal cost the main objective ofNo.3 Failure cost every firm.
  15. 15. Continu…No.1 Prevention Cost Prevention cost include those activities which remove and prevent defect from occurring in the production process.
  16. 16. Contin… No.2 Appraisal Cost Appraisal cost are those cost that incurred to identify poor quality products after they incurred .i.e. such as cost in
  17. 17. Contin… No.3 Failure cost Failure cost are consider those that incurred either during the production process (internal) or after the product is shipped (external) internal failer include such as the machine break down External failer such as return, warienty etc
  18. 18. The relationship of type of cost of quality (COQ) and profitability of a firm.Quality cost (types) and its relationship with profitability
  19. 19. Quality Cost as a Driver of ProfitabilityThere is many concept of TQM the twoare include ; 1) Satisfying the customer need by providing quality product 2) But the product must be high in quality and low in cost The main aim/objective of both these concept of TQM are to increase the profitability (return on investment)
  20. 20. Contin…A firm can increase its profitability not bySatisfying customer but can increase itsprofitability by reducing some direct and indirect cost. (That are to be describe in laterslides)
  21. 21. Prevention Cost and firmProfitability A firm that practices the continuous improvement in their process and function such a firm will have less cost of Scrap and wastage of sources. Less wastage of resource directly effect the firm profitability.
  22. 22. Appraisal cost and firmprofitability By inspection (which is also consider as cost) a firm can also to over come to some of its cost and on return it can create an accumulated profit to that firm.
  23. 23. Filer cost and the firmprofitability Some cost such as External cost can impair the goodwill of the company and thus indirectly effect a firm profitability. Due to this indirect nature of this cost it is also called Hidden cost.
  24. 24. Pictures can also be presented more dramatically in widescreen.Question & Answering Session Thanks to all