Cost of Total Quality

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Samra Tariq 073605-115Hamnah Butt 073605-117

 Amber Naeem 073605-128Kanwal Nawaz 073605-130Uswa Shahid 073605-131

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Quality is fitness for use. (Juran)

Quality is conformance to requirements.(C rosby)

Quality is correcting and preventing loss, notliving with loss. (H oshin)

Quality is a predictable degree of uniformityand dependability, at low cost and suited to the

market. (Deming)

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The totality of features and characteristics of a

product, service or process, which bear on its abilityto satisfy a given need from the customer's viewpoint.

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Major challenge for any organization is to

improve product and service quality andenhance innovation.

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Globalization is a key trend in the business world

today.

Increase in operating costs increases the

competitive price due to intense internationalcompetition.

Cost competitiveness should be maintained with

the assurance of quality of products and services

according to the requirements of the customers.

COQ measures the Return of Quality in an

organization as it can help to reduce business

cost and increase the competitiveness.

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1. Understanding quality

2. Commitment and leadership

3. Design for Quality4. Planning for Quality

5. Systems for Quality

6. Measurement

7. Cost of Quality8. Tools & Techniques for Improvement

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9. Capability & Control

10. Organizations for Quality11. Communication for Quality

12. Team work for Culture Change

13. Training for quality

14. Implementation for TQM

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Prevention Cost

Appraisal Cost

Internal Failure Cost

External Failure Cost

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Cost of Conformance COC

Both preventive and Appraisal costs are known as COC

The cost of doing things right the first time.

Cost of Non-Conformance CONC

Both internal and external costs are known as CONC

The cost incurred as a result of things not been done

right the first time.

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Internal Failure External Failure

Rework

Scrap

Obsolescence Downtime

Sub-contractor Faults

Replacement

Defect/Failure Analysis

Re-inspection and re-testing Downgradings

Accidents

Improper Invoicing

Complaints

Warranty Claim

Bad Debts

Returned Products

Concessions

Loss of Sale

Product Liability

Extended Warranty Product Recall

Overdue Accounts

Receivables

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Step1: Source of COC and CONC data

Production records

QC records Operation record

Accounting record

Step2: Develop and formulate accounting basis

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It is necessary to document the required

changes of quality activities in a recognizedmodel (Quality Assurance Model) with a view to

train and communicate with all relative

personnel in implementing the changes

effectively.

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Step1: Outline the Business process and

identify appropriate Performance

Indicators

Step2: Establish and Define the proposed

Performance Indicators

Step3: Collect the necessary Data to evaluate

the Performance Indicators

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The goal of using COQ is to increase the

prevention activities in order to eliminate the

CONC and to reduce appraisal activities

Reduction of COQ must be a part of a sustained

quality improvement process in an organization

headed by top management through a TQM

Program