Companywide Assesment Of Quality

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Companywide Assesment Of Quality

  1. 1. Companywide Assesment of Quality By. Henmaidi, PhD. Industrial Engineering, Andalas University, Indonesia Based on Quality Planning and Analysis by Juran
  2. 2. Assesment Element <ul><li>Cost of poor quality </li></ul><ul><li>Standing in the marketplace </li></ul><ul><li>Quality culture </li></ul><ul><li>Operation of the company quality system </li></ul>
  3. 3. Cost of Poor Quality <ul><li>Definition: </li></ul><ul><ul><li>Cos of attaining quality </li></ul></ul><ul><ul><li>Extra cost incured due to poor quality </li></ul></ul>
  4. 4. Catagories of Quality cost <ul><li>Internal failure cost </li></ul><ul><ul><li>Scrap </li></ul></ul><ul><ul><li>Rework </li></ul></ul><ul><ul><li>Failure analysis </li></ul></ul><ul><ul><li>100 % sorting inspection </li></ul></ul><ul><ul><li>Reinspect/ retest </li></ul></ul><ul><ul><li>Avoidable process losses </li></ul></ul><ul><li>External failure cost </li></ul><ul><ul><li>Waranty charges </li></ul></ul><ul><ul><li>Returned material </li></ul></ul><ul><ul><li>Allowances </li></ul></ul>
  5. 5. Catagories of Quality cost <ul><li>Appraisal cost </li></ul><ul><ul><li>Incoming inspection </li></ul></ul><ul><ul><li>Final inspection and testing </li></ul></ul><ul><ul><li>Quality audit </li></ul></ul><ul><ul><li>Evaluation of stock </li></ul></ul><ul><li>Prevention cost </li></ul><ul><ul><li>Quality planning </li></ul></ul><ul><ul><li>New product review </li></ul></ul><ul><ul><li>Process control </li></ul></ul><ul><ul><li>Quality audit </li></ul></ul><ul><ul><li>Supplier quality evaluation </li></ul></ul><ul><ul><li>Training cost </li></ul></ul>
  6. 6. Example <ul><li>Example tyre manufacturer: </li></ul><ul><li>Total: $900.000 </li></ul><ul><li>71%: failure cost </li></ul><ul><li>Failure cost, 5 x appraisal cost </li></ul><ul><li>4.3 %: prevention </li></ul><ul><li>Consequences: </li></ul><ul><ul><li>Customer ill will </li></ul></ul><ul><ul><li>Customer policy adjustment </li></ul></ul>
  7. 7. Objective of Evaluation <ul><li>Quantifying the size of quality problem in term of money: improve communication </li></ul><ul><ul><li>Cost turn to be much higher than they had thought  (up to 20% sales) </li></ul></ul><ul><ul><li>It also reveals other problem areas </li></ul></ul><ul><li>Major cost reduction can be identified </li></ul><ul><li>Opportunity to reduce customer dissatisfaction </li></ul>
  8. 8. Relating the Grand Total to Bussiness measures <ul><li>Relationship which has greates inpact on upper management: </li></ul><ul><ul><li>Quality cost as % of sales </li></ul></ul><ul><ul><li>Quality cost compare to profit </li></ul></ul><ul><ul><li>Quality cost as % of COGS </li></ul></ul><ul><ul><li>Quality cost as % COGM </li></ul></ul><ul><ul><li>Effect of Quality cost on BEP </li></ul></ul><ul><li>Example: </li></ul><ul><ul><li>25% of manufacturing asset </li></ul></ul><ul><ul><li>25% of people </li></ul></ul><ul><ul><li>40% of space </li></ul></ul><ul><ul><li>70% of inventory </li></ul></ul>
  9. 9. Analysis of Quality Cost <ul><li>Relationship between internal and external cost: significant </li></ul>
  10. 10. <ul><li>To achieve significant cost reduction, failure cost must be attached first </li></ul><ul><li>An increase in prevention cost  lower failure cost </li></ul><ul><li>The largest opportunity for cost reduction is for product A. </li></ul><ul><li>Product A generate scrap and rework internally, but there are also external problem. Product B and C, the problem: internal and rework </li></ul>
  11. 11. Hidden Cost <ul><li>Potential lost sales </li></ul><ul><li>Cost of redesign </li></ul><ul><li>Cost of chaningin manufacturing process </li></ul><ul><li>Cost of software change </li></ul><ul><li>Cost includes in standard: based on history </li></ul><ul><li>Extra manufacturing cost due to defect </li></ul><ul><li>Scrap not reported </li></ul><ul><li>Excess process cost for acceptable product </li></ul>
  12. 12. Discovering the Optimum <ul><li>For manufacturing: Cost of quality is about 15% of sales income (5 – 35%) </li></ul><ul><li>For service: 30% of operating expense (25 – 40%) </li></ul>
  13. 13. Zone of Improvement
  14. 14. Company Culture on Quality <ul><li>Employees in organization have opinion, beliefs, traditions, and practices concerning quality: </li></ul><ul><li>Example: in a health care products industry: </li></ul><ul><ul><li>Use group approach </li></ul></ul><ul><ul><li>Round table of 15 individual </li></ul></ul><ul><ul><li>Series of topical graph was used </li></ul></ul><ul><ul><li>Held in 3 days </li></ul></ul><ul><li>Using questionnaire </li></ul><ul><li>Understanding quality culture is important for assesment </li></ul>
  15. 15. Assesment of current quality activities <ul><li>Have quality objective been established </li></ul><ul><li>Have quality objective been linked to bussines objectives </li></ul><ul><li>Are policies and plans  quality will be competitive </li></ul><ul><li>Is the approach led by management </li></ul><ul><li>Does it cover all process? </li></ul><ul><li>Effective system for early warning? </li></ul>
  16. 16. Systematic Approach <ul><li>MBNQA </li></ul><ul><li>ISO 9000 </li></ul>

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