Quality costing is an important measurement tool for assessing the quality of product and service. Quality costing help to detect prevention, appraisal and internal & external failure cost of the product and service.

1. Quality Costing and Reporting of Garments
and Textile Industry in Bangladesh:
An Important Measurement Tool

2. One Question

3. In Which Sector, We are the
2nd Largest
Exporter in the World?

4. Ready Made Garments(RMG)

6. RMG Industry of Bangladesh
Bangladesh's
Earned USD
31.2b
In FY 14-15
GARMENT FACTORIES
4328
in 2015-16
Growth in
RMG Export
7.76 %
in 2015-16
95%of textile factories are
owned by local investor
5%
by foreign investors
knitwear sector leads
39.83%
of total exports with
USD 12.43b
82%of which is made up by
ready-made garments

7. Quality Costing and Reporting of Garments
and Textile Industry in Bangladesh:
An Important Measurement Tool

8. Panacea
Name ID Serial No.
Md. Shahid Patowary 18-116 37
Md. Riaz Mahmud 18-146 44
Tarek Mahmud 18-147 45
Md. Mamunur Rashid 18-184 51
Md. Shahparan 18-188 53

9. What is Quality and Quality Costs?
Quality is a measure of excellence or a state of being
free from defects, deficiencies and significant
variations.
Cost of quality is a methodology that allows to
determine the extent to which the resources are used
for preventing poor quality, that increase the quality
of the organization’s products or services, and that
result from internal and external failures.

10. Methodology
Collected data
form secondary
sources like
annual reports,
research
papers, articles
in the
newspaper,
quality report
of Garments
Company.
We selected 7
garments and
Textile
Company for
our
observation
and analysis.
This is a
descriptive
and
analytical
study

11. Measurement of Quality Costing
Appraisal
(Detection)
Costs
Prevention
Costs
Internal
Failure
Costs
External
Failure
Costs

12. Prevention Costs
• Quality engineering
• Quality training & Recruiting
• Quality audits & Quality circles
• Design reviews
• Market research
• Prototype inspection
• Vendor certification

13. Appraisal (Detection) Costs
• Inspection of materials
• Packaging inspection
• Product acceptance
• Process acceptance
• Field testing
• Continuing supplier verification

14. Internal Failure Costs
• Scrap
• Rework
• Downtime (defect-related)
• Reinsertion
• Retesting
• Design changes
• Repairs

15. External Failure Costs
• Lost sales (performance-related)
• Returns/allowances
• Warranties
• Discounts due to defects
• Product liability
• Complaint adjustment
• Recalls

16. How to Measurement of Quality Costing
The Multiplier Method: the total failure cost is simply some multiple of
measured failure costs.
Total external failure cost = k (Measured external failure costs)
Where k is the multiplier effect.
For example: Westinghouse Electric reports a value of k between 3 and 4.6
Thus, if the measured external failure costs are $3 million, the actual
external failure costs are between $9 million and $12 million.

17. How to Measurement of Quality Costing
The Market Research Method
• This method is used to assess the effect of poor quality on sales and
market share.
• Customer surveys and interviews with members of a company’s sales
force can provide significant insights into the magnitude of a
company’s hidden costs.

18. How to Measurement of Quality Costing
The Taguchi Quality Loss Function : The Taguchi loss function
assumes that any variation from the target value of a quality
characteristic causes hidden quality costs.
L(y) = k(y - T)
Where
• k = A constant dependent upon the organization’s external failure
cost structure
• y = Actual value of quality characteristic
• T = Target value of quality characteristic
• L = Quality loss

19. Quality in Relation to Competition & Power
Production and
cost
Quality and
appropriateness
to standards
Skilled
workforce
Production
technology and
R&D activities
Market share
Intra-company
factors
Extra-company
factors

20. Garments company costing process
Elements of
Costs
• Direct Materials
• Direct Labor
• Overhead
Division of Costs
• Prime cost
• Factory Cost
• Cost of Production
• Total Cost / Cost of
Sales
Methods of
Costing
• Job Costing
• Contract costing
• Batch costing
• Process costing
• Unit costing
• Operating costing
• Multiple costing

21. Composition of Cost of Garments
Fabric Trims Threads Labels
Zipper Buttons Polybags Cartons
Hand Tags
Shanks &
Rivets
Hangers
Tags &
Velcro

22. Quality related problems in garments
Sewing
defects
Color
defects
Sizing
defects
Finished
garment
defects

23. Sewing defects
• Open seams,
• Wrong stitching techniques,
• Nonmatching threads,
• Missing stitches,
• Improper creasing of the garment,
• Improper thread tension etc.

24. Color defects
•Variation of color between the sample and the
final garments.
•Wrong color combinations and mismatching
dyes.

25. Sizing defects
Wrong gradation of sizes, difference in
measurement of various parts of a garment like
sleeves of XL size for body of L size garment can
deteriorate the garments beyond repair.

26. Finished garment defects
• Broken or defective buttons
• different shades within the same garment,
• fabric defect
• faulty zippers
• misaligned buttons and holes
• missing buttons
• needle cuts
• unfinished buttonhole
• short zippers

27. Methods of quality control
Piece goods
quality control
Cutting quality
control
In process
quality control
(Sewing)
Washing
section
Quality control
of finishing
sections
Testing (Lab
test)

28. 1. Piece goods quality control
Fabrics in the ware house, at least 10% are inspection as per “4
Points” system/10 Points system/2.5 Point system/6.0 Point
system. The most commonly used 4 Points system as per below:
Size of defect penalty
• 3 Inches or less 1 Point
• Over 3, under 6 Inches 2 Point
• Over 6, under 9 Inches 3 Point
• Over 9 Inches 4 Point

29. 2. Cutting quality control
a) Spreading quality control: Following the point are checked
during spreading – Table marking, Ends, Tension, Leaning, Narrow
Goods, Counts, Ply height, Remnants, Fabric flaws, Market placing.
b) After cutting quality control: After each cutting blocks and
bundles are checks on the following points - Miss-cut, ragged
cutting, Pattern checks, Matching Plies, Notches.

30. 3. In process quality control (Sewing): In process
quality control is done by the line QC’s through 7
pcs inspection system. For critical operations 100%
process inspection are carried out.
4. Washing section
a) Garments handling
b) Wash standard.
c) After wash thoroughly inspection.

31. 5. Quality control of finishing sections: Garments are
checked process wise in the finishing section to identify
defects and pass only the passed garments.
6. Testing (Lab test):
a) Shrinkage test
b) Color fastness test
c) Azo-free test.

32. TQM (Total Quality Management)
5- Standards (5-S)
•Sort
•set in order
•Shine
•Standardize
•Sustain
Daily Work
Management (DWM)
•Total Productive
maintenance (TPM)
•Measurement system
Analysis (MSA)

33. TQM (Total Quality Management)
Six Sigma
• Six sigma is business management strategy developed
by Motorola, USA in 1981.
• It seeks to improve the quality of process outputs by
identifying and removing the causes of defects (errors)
and minimizing variability in manufacturing and
business processes.
• It uses a set of quality management methods, including
statistical methods, and creates a special infrastructure
of people within the organization (“Black Belts”, “Green
Belts”, etc.)

34. Distribution of Quality Costs
The Acceptable Quality View
Zero-Defects View
Robust Quality View

35. The Acceptable Quality View
According to the acceptable quality
view, there is an optimal tradeoff
between failure and control costs.
As control costs increase, failure
costs should decrease. As long as
the decrease in failure costs is
greater than the corresponding
increase in control costs, a company
should continue increasing its
efforts to prevent or detect
nonconforming units.

36. Zero-Defects View
The zero-defects model understates the
quality costs and, thus, the potential for
savings from even greater efforts to
improve quality.

37. Robust Quality View
The robust quality model tightened the definition of a defective unit
and intensify the quality race. Firms operating in an intensely
competitive environment, improving quality is a competitive
necessity. If RQV is correct, then firms can capitalize on it,
decreasing the number of defective units while simultaneously
decreasing their total quality costs.

38. Company analysis
Tasneem
Corporation
Ltd.
PN
knitwear
Ltd.

39. Sl.
No
Name of Garments
company
Piece
goods
quality
control
Cutting
quality
control
Sewing Two hourly
audit
Day’s
final
audit
Lot final audit
1 Standard Group 4-point
system
Done 7 Pcs inspection
randomly
Done to
Attain AQL 2.5
Yes Done in presence of
buyers‘ representatives
2 Sanchita
Garments
4-point
system
Done 7 Pcs inspection
randomly
Done to
Attain AQL 2.5
Yes Done in presence of
buyers‘ representatives
3 M.K. Fahion 4-point
system
Done x Done to
Attain AQL 2.5
Yes Done in presence of
buyers‘ representatives
4 Tasneem
Corporation Ltd.
4-point
system
Done x Done to
Attain AQL 2.5
Yes Done in presence of
buyers‘ representatives
5 Anlima Textiles
Ltd.
4-point
system
Done 7 Pcs inspection
randomly
Done to
Attain AQL 2.5
Yes Done in presence of
buyers‘ representatives
6 PN knitwear Ltd. 4-point
system
Done 7 Pcs inspection
randomly
Done to
Attain AQL 2.5
Yes Done in presence of
buyers‘ representatives
7 Opex Group 4-point
system
Done 7 Pcs inspection
randomly
Done to
Attain AQL 2.5
Yes Done in presence of
buyers‘ representatives

40. Lab test
Sl. No. Name of Garments
company
Shrinkage
test
Colour
fastness
Azo-free
1 Standard Group Yes Yes Yes
2 Sanchita Garments Yes Yes Yes
3 M.K. Fahion Yes Yes Yes
4 Tasneem Corporation
Ltd.
Yes Yes Yes
5 Anlima Textiles Ltd Yes Yes Yes
6 PN knitwear Ltd. Yes Yes Yes
7 Opex Group Yes Yes Yes

41. Table 3. Quality Management followed by different garment factories
Sl. No. Name of Garments Quality Management System (QMS)
5’S Six Sigma Daily work management
(DWM)
1 Standard Group Yes Not done Yes
2 Sanchita Garments Not done Not done Yes
3 M.K. Fahion Not done Not done Yes
4 Tasneem
Corporation Ltd.
Not done Not done Yes
5 Anlima Textiles Ltd Yes Not done Yes
6 PN knitwear Ltd. Not done Not done Yes
7 Opex Group Yes Not done Yes

42. Findings
Garments company of Bangladesh use less quality costing tools and they
disclose less information in the quality report.
In Bangladesh most of the garments factories use 4-point system for
inspecting fabrics of garments.
Most of the buyers are importing garments from Bangladesh with AQL
(acceptable level) 2.5.
Most of the garments manufacturers are doing inspection during the
manufacturing process of garments.
Other tests such as shrinkage tests, color fastness tests, azo free tests are
done according to the buyer’s requirement.

43. Recommendations
Every garment factory should implement different tools like 5’S, 6 Sigma
etc for perfect quality management.
As inspection is always visual, sometimes machine can be used for
inspection of garments.
The 4-point system has some limitations so that this system should be
used with proper care.
Garments Company should use world standard quality techniques and tolls
to develop their product quality.

44. Prepared by: Tarek Mahmud
Dept. of Accounting and Information Systems
University of Dhaka