Total Quality Management

Cost of Quality

• There are four categories of quality costs: Prevention Costs, Appraisal Costs, Internal Failure Costs, and External Failure Costs.

Prevention Costs

• Costs incurred in the process of preventing poor quality from occurring.
• Examples include:
  • Training Costs: costs of developing and putting on quality training programs for employees and management.
  • Information Cost: costs of acquiring and maintaining data related to quality and development of reports on quality performances.

Appraisal Costs

• Costs incurred in the process of uncovering defects.
• Examples include:
  • Inspection and Testing: costs of testing and inspecting materials, parts, and product at various stages and at the end of a process.
  • Test Equipment Costs: costs of maintaining equipment used in testing quality characteristics of products.
  • Operator Costs: costs of time spent by operators to gather data for testing product quality, to make equipment adjustments to maintain quality, and to stop work to assess quality.

Internal Failure Costs

• Costs associated with discovering poor quality before the product reaches the customers.
• Examples include:
  • Scrap Costs: costs of poor-quality products that must be discarded, including labor, material, and indirect costs.
  • Rework Costs: costs of fixing defective products to conform to quality specifications.

Total Quality Management (TQM)

• A philosophy of management for continuously improving the quality of products and processes.
• The idea is that the quality of products and processes is the responsibility of everyone who is involved with the development and/or use of the products or services.

Dimensions of Quality

• Product Quality:
  • Functionality: core features and characteristics of a product.
  • Reliability: indicator of the durability of the products.
  • Usability: ease of use of a product.
  • Maintainability: ease with which a product can be maintained in the original condition.
  • Consistency, Accessibility, Convenience, Accuracy, and Responsiveness.
• Service Quality:
  • Reliability: ability to perform the promised service with dependable and accurate results.
  • Assurance: knowledge and courtesy of employees and their ability to inspire trust and confidence.
  • Tangibles: physical facilities, equipment, and appearance of personnel.
  • Empathy: caring, individualized attention provided by the firm to its customers.
  • Responsiveness: willingness to help customers and provide prompt service.

Why Quality is Important

• Increases productivity and competitiveness.
• Creates a standard of meeting customer expectations.
• Enhances business reputation.
• Builds customer loyalty.
• Clients and users expect quality.
• Poor quality results in "rework" at additional cost.
• Poor quality results in problems that can be difficult to diagnose and solve.
• Poor quality can cost lives.

Definitions of Quality

• Conformance to requirements.
• A degree of excellence.
• The totality of characteristics which act to satisfy a need.
• Fitness for use.
• Fitness for purpose.
• Freedom from defects.
• Delighting customers.