Is quality free? Or does quality have a cost? What about the cost of poor quality? How much does that cost? Can you think of a time when you bought a product and it was defective? What did you do? How did it make you feel about the firm who made the product? Think about your actions in that scenario and the costs the company had to incur to “make it right.”
Cost of quality (COQ) analysis was developed in the 50s to help clarify the cost impacts of poor conformance quality. COQ identifies and assesses four major cost categories, which are prevention, appraisal, internal, and external costs.
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Supply Chain Homework
Understanding the Cost of Quality:
The new Quality Manager for XcelForce Inc. has put together a proposal for implementing a TQM Program for their business units in Canada, Mexico, the United States, and the English-speaking Caribbean. She has provided the following expected cost information to the senior management team in charge of approving the proposal:
Cost item Total for the year
Quality assurance programs $4,500,000
Equipment maintenance (regular/scheduled) $2,050,000
Product design improvements (redesign/reengineering) $3,100,000
Estimated (after-sales) product warranty service and repairs $5,500,000
Product testing and inspection (at the manufacturing facility) $3,720,000
Employee training programs $2,500,000
Process improvement/Kaizen projects $1,200,000
Material scrap (associated with defective process output) $2,300,000
Rework labor (to correct defective process output) $4,260,000
Raw materials inspection $3,230,000
After-sales customer support $1,500,000
Travel to suppliers to conduct process certification $750,000
Travel to customers to solve problems $800,000
Delta Airlines carries about 100 million passengers a year. If Delta sets a Six Sigma goal for their baggage handling process, the intended result would be that no more than _________ passengers would suffer loss, damage, or delay of their luggage per year.
A hospital is researching the incidence of non-trauma patients in the Emergency Room that wait more than 30 minutes before they are seen at the first station (triage). There have been multiple complaints. The committee in charge of the research gets together to exchange thoughts and ideas about the possible causes for such delays. According to Six Sigma, the best tool to summarize the outcome of this meeting is:
Phil Bord is a CEO for a large auto manufacturer and is interested in improving the product quality. Phil had overheard his friend mention 6 Sigma. Considering that Phil has no idea what 6 Sigma is, what are some key points to help Phil out?
As part of the TQM implementation, those responsible for the manufacturing processes at XcelForce must collect data regarding product defects and the reason for the defects. The following table is a summary obtained last month at the Sonora (Mexico) plant after pulling a total of 1000 units for inspection. A total of 33 defective parts were observed. Assume that this data is representative of the overall defect rates at this plant.
According to your reading, which quality improvement tool is most adequate to determine which type of defect should be tackled first?
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