1. TThroughhrough
Garment Manufacturing Technology Department
National Institute of Fashion Technology
PProfitabilityrofitability
QQualityuality
by
Rajesh BhedaRajesh Bheda
Presents
‘Doorsamvad’
2. QualityQuality
• Why this theme?
• What is Quality?
• How to measure Quality ?
• Can Quality be achieved at low cost?
• What is Cost of Quality?
• Quality Maturity Grid.
• Inter-relationship of Quality Costs.
3. Why Profitability?Why Profitability?
• That is the main reason
we in business
• Because we are not in
the business of Charity
• Profitability is an illusive
word for today’s apparel
industry
6. Quality:Quality:
Why Does Buyer’s Dil Mange More?Why Does Buyer’s Dil Mange More?
• Consumers’ Quality Expectations have gone up
• Consumer is too busy to come back to complain
• Not Interested in Taking Special Care of the
Product
• Reduced Consumer Spending on Apparel
• Stringent consumer protection laws
• Stores Can’t Afford a Dissatisfied Customer
• Working With Non-quality Vendors Costly
7. This is what US Congress saysThis is what US Congress says
about importance of Qualityabout importance of Quality
• Even the U.S. Congress has recognized national
importance of quality in a 1988 report [8],
“Quality as a Means to Improve Our Nation’s
Competitiveness,” which opens with a statement,
• It is important we recognize a significant portion
of our trade deficit is due to the ability of foreign
competitors to deliver higher quality products that
are either novel, less costly to produce, promise
better service or some combination of the above.
8. This is what US Congress saysThis is what US Congress says
about importance of Qualityabout importance of Quality
• What finally sank into US industry is the
tremendous cost of ignoring quality. In most
traditional factories that cost is probably the
biggest item on their list of expenses, and it is
always bigger than gross profit. But because
the cost of quality is rarely broken out in gory
detail, management has no idea of its true
dimensions. When quality audits are performed,
they invariably uncover huge “hidden plants”
staffed and equipped just to find and fix
defective products.
9. This is what US Congress saysThis is what US Congress says
about importance of Qualityabout importance of Quality
• The typical factory invests a staggering 20% to
25% of its operating budget in findings and
fixing mistakes. As many as one-quarter of all
factory hands don’t produce anything - they just
rework things that were not done right the first
time. Add in the expense of repairing or
replacing the flawed products that slip out of the
factory and into the market, and the total burden
of “unquality” can mount to a punishing 30% or
more of production costs.
10. The ASQC Quality Cost Committee (5)The ASQC Quality Cost Committee (5)
recommends breaking down quality costsrecommends breaking down quality costs
into the following four areasinto the following four areas
1. Prevention Cost
The cost associated
with personnel
engaged in designing,
implementing and
maintaining the quality
system. Maintaining
the quality system
includes auditing the
system.
Cont...
2. Appraisal Costs
The costs associated
with the measuring,
evaluating or auditing
of products,
components and
purchased materials to
assure conformance
with quality standards
and performance
requirements.
11. The ASQC Quality Cost Committee (5)The ASQC Quality Cost Committee (5)
recommends breaking down quality costsrecommends breaking down quality costs
into the following four areasinto the following four areas
3. Internal Failure Cost
The costs associated
with defective
products, components
and materials that fail
to meet quality
requirements and
result in
manufacturing losses.
Conclude
4. External Failure Costs
The costs generated
when defective
products are shipped to
customers.
16. Non Quality Levels in Apparel IndustryNon Quality Levels in Apparel Industry
(As per a US study by Jonathan Cope Assoc.)(As per a US study by Jonathan Cope Assoc.)
• Fabric vendor defective level of 2 to 5 %.
• Work-in-process delays due to 20% in line
re-work.
• Average plant labour includes 10% non
value adding checkers.
• Contractor defect level is 8%.
• Finished product quality audit level is 10%.
• 30% late deliveries, 30% under-shipments.
• 1% customer returns but about 10%
dissatisfied customers.
17. Quality Failure CostQuality Failure Cost
12
10
16
36
14
12
Human Error
Bad Inspection
Bad Specification
Design*Fault
Poor Planning
Others
CAUSE
% OF TOTAL
Cause
* New Design or Unproven New Materials
52% 66%
18. Interrelationship of Quality CostsInterrelationship of Quality Costs
Distribution of
Quality Costs
Maturity of the Quality System
QualityCosts
% of Sales
20
18
16
14
12
10
8
6
4
2
0
Total
Internal Failure
Appraisal Prevention
External Failure
19. MEASUREMENTMEASUREMENT
CATEGORIESCATEGORIES
• ManagementManagement
Understanding andUnderstanding and
AttitudeAttitude
• Quality OrganizationQuality Organization
StatusStatus
• Cost of Quality asCost of Quality as
percentage of Salespercentage of Sales
• Quality ImprovementQuality Improvement
ActionsActions
• Summation ofSummation of
Company QualityCompany Quality
PosturePosture
Stage-IStage-I
UNCERTAINTYUNCERTAINTY
Stage-IIStage-II
AWAKENINGAWAKENING
Stage-IIIStage-III
ENLIGHTENMENTENLIGHTENMENT
Stage-IVStage-IV
WISDOMWISDOM
Stage-VStage-V
CERTAINTYCERTAINTY
Source: Quality is Free by Philip B. Crosby
Cost of Quality: The objective IndicatorCost of Quality: The objective Indicator
of the Quality Maturity of Organisationsof the Quality Maturity of Organisations
20. Stage-IStage-I
UNCERTAINTYUNCERTAINTY
ManagementManagement
AttitudeAttitude
Quality Org.Quality Org.
StatusStatus
Cost Of Quality%Cost Of Quality%
Quality Imp.Quality Imp.
ActionsActions
Co.’s QualityCo.’s Quality
PosturePosture
•No comprehension
of quality as a
management tool.
•Tend to blame
quality department
for “quality
problems.
•Quality is hidden
in manufacturing
or engineering
department.
•Inspection
probably not part
of organisation.
•Emphasis on
appraisal and
sorting
Reported
Unknown
Actual
20%
“We don’t know why
we have problems
with quality?”
No organized
activities. No
understanding of
such activities.
Source: Quality is Free by Philip B. Crosby
Quality Maturity GridQuality Maturity Grid
21. Stage-IIStage-II
AWAKENINGAWAKENING
ManagementManagement
AttitudeAttitude
Quality Org.Quality Org.
StatusStatus
Cost Of Quality%Cost Of Quality%
Quality Imp.Quality Imp.
ActionsActions
Co.’s QualityCo.’s Quality
PosturePosture
•Recognizing that
quality management
may be of value but
not willing to provide
money or time to
make it all happen.
Reported
3%
Actual
18%
“It is absolutely
necessary to always
have problems with
quality?”
Trying obvious
“motivational”
short-range
efforts.
•A stronger
quality leader is
appointed but
main emphasis
is still on
appraisal and
moving the
product. Still
part of
manufacturing
or other
Source: Quality is Free by Philip B. Crosby
Quality Maturity GridQuality Maturity Grid
22. Stage-IIIStage-III
ENLIGHTENMENTENLIGHTENMENT
ManagementManagement
AttitudeAttitude
Quality Org.Quality Org.
StatusStatus
Cost Of Quality%Cost Of Quality%
Quality Imp.Quality Imp.
ActionsActions
Co.’s Quality PostureCo.’s Quality Posture
While going through
quality improvement
program learn more
about quality
management;
becoming
supportive and
helpful.
Reported
8%
Actual
12%
“Through management commitment
and quality improvement we are
identifying and resolving our
problems.”
Implementation of
the 14-step
program with
thorough
understanding
and establishment
of each seep.
Quality department
reports to top
management, all
appraisal is
incorporated and
manager has role
in management of
company.
Source: Quality is Free by Philip B. Crosby
Quality Maturity GridQuality Maturity Grid
23. Stage-IVStage-IV
WISDOMWISDOM
ManagementManagement
AttitudeAttitude
Quality Org.Quality Org.
StatusStatus
Cost Of Quality%Cost Of Quality%
Quality Imp.Quality Imp.
ActionsActions
Co.’s QualityCo.’s Quality
PosturePosture
•Participating.
•Understand
absolutes of quality
management.
•Recognize their
personal role in
continuing
emphasis.
Reported
6.5%
Actual
8%
“Defect prevention
is a routine part of
our operation.”
Continuing the
14-step program
and starting Make
Certain.
Quality manager
is an officer of
company;
effective status
reporting and
preventive action.
Involved with
consumer affairs
and special
assignments.
Source: Quality is Free by Philip B. Crosby
Quality Maturity GridQuality Maturity Grid
24. Stage-VStage-V
CERTAINTYCERTAINTY
ManagementManagement
AttitudeAttitude
Quality Org.Quality Org.
StatusStatus
Cost Of Quality%Cost Of Quality%
Quality Imp.Quality Imp.
ActionsActions
Co.’s QualityCo.’s Quality
PosturePosture
Consider quality
management an
essential part of
company system.
Reported
2.5%
Actual
2.5%
“We know why we
do not have
problems with
quality.”
Quality
improvement is a
normal and
continued
activity.
Quality manager
on board of
directors.
Prevention is
main concern.
Quality is a
thought leader.
Source: Quality is Free by Philip B. Crosby
Quality Maturity GridQuality Maturity Grid
26. Why Quality?Why Quality?
• Quality related costs can be as high as 25%
of sales.
• One forth of the people employed do not
produce but re-do and re-inspect & re-re-do.
• Quality costs are greater than gross profit.
• In world class companies these costs can be
brought down to 2.5%.
27. How can profitabilityHow can profitability
go up by up to 20-25%go up by up to 20-25%
• Even if you pass on 5% as
discount to your buyer, the net
profitability in the new situation
remains 24.21%. This is greater
than 20% gain.
• How does it sound?
• Just Do It
28. Quality : DefinitionQuality : Definition
Offering product or services that a
customer has never dreamt of, forget
alone specifying the need for it. But
having received the product the
customer feels that he always needed it
30. Quality and Low CostQuality and Low Cost
Can Go TogetherCan Go Together
• Japan has proved it
• Koreans are also demonstrating it
• Indians are doing it in other industries
• Then Why Not Apparel Industry
31. How can profitability go upHow can profitability go up
by up to 20-25%by up to 20-25%
• Assume a current profitability of 20%
• i.e. Total costs 80% Profit 20%
• Cost of Quality could be 25% of the 80%
• If through a quality assurance program you
could reduce Cost of Quality to 15%
• Then the profitability will go up by 40% to
28% level
