Focusing Quality Costs Using the Basics


Winchell, William O.   (1986, ASQC)   General Motors Corporation, Warren, MI

40th Annual Quality Congress, May 1986, Anaheim, CA    Vol. 40    No. 0
QICID: 3212    May 1986    pp. 401-405
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Article Abstract

We are currently witnessing an increasing interest in quality costs and for good reason. Quality costs may represent the last frontier of quantum productivity improvements. For many years, industry has concentrated on reducing productive labor which currently is under ten percent of factory cost for many companies. In contrast, quality costs may represent 25 percent or more of factory cost. This is largely in scrap, rework and warranty caused by products or services not conforming to customer needs. A smaller amount is used for inspection efforts and, typically, the smallest portion is devoted to preventing problems from occurring. Over the years many cost of quality reports were started with varying degrees of success. Many of the difficulties in the past were out of the control of those initiating the reports but centered on the "culture" within the company. For example, quality cost efforts in a highly structured company with many "fiefdoms" were of limited usefulness when improvements were suggested that changed power bases. Today, we find the "culture" of companies changing to compete in today's market place. Improvement teams and a cross functional approach allow improvements that are not possible without common goals among different functions. The environment for implementing quality cost concepts has never been better. But, we certainly must learn from what was done previously in order to improve our efforts. To achieve success with quality cost reporting, the most important thing you can do is to concentrate on building a strong foundation up-front, prior to starting the program. To do this, like in most anything else, you must address the basics. These basics are:- Why do you want quality cost reporting.- Where are you going to do the reporting.- When do you do the report.- How do you make it happen.- Who do you get to do the report.- What are you going to call quality cost.A thorough analysis of the basics will lead you to the best strategy for your company.

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