A Cost of Quality Program for a Systems House


Horwitz, Henry B.   (1990, ASQC)   Tadiran Ltd., Holon, Isreal

Annual Quality Congress, San Francisco, CA    Vol. 44    No. 0
QICID: 9510    May 1990    pp. 555-560
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Article Abstract

Cost of Quality (COQ) systems are in use in many industries and have proven themselves as both effective drivers of cost reduction and as a method of monitoring the effectiveness of quality assurance activities. However, most of the systems currently in use, and certainly almost all the reports concerning such systems, deal with companies whose main quality costs are accumulated during the manufacturing phase. A company whose only product is complex military systems, primarily one-of-a-kind systems, must develop a COQ program that concentrates on the development and engineering phases. This is so not only because most of its manpower and costs are concentrated in these areas, but also because ignoring them opens up the whole program to a charge of irrelevance. In the Electronics Systems Group of Tadiran, Ltd., we attacked this problem by tailoring program to systems projects and consulting with all involved groups at each stage before we continued to the next. The program applies to both hardware and software development. The first step was to set general criteria for which types of activity would be considered COQ contributors and which would not. We then carefully analyzed the development, engineering and manufacturing processes and listed all activities which were totally or partially concerned with the quality costs. These activities were then characterized as to whether they were primarily prevention, appraisal, internal failures or external failures. Finally, we determined how each activity's costs would be collected. This was especially problematic for the design and engineering phases because at Tadiran engineers charge their time to a project without designating the type of activity performed. Through a sometimes painful process of trial and error we designed a system that is acceptable to management, accounting and the engineering divisions. In order to insure the widespread acceptance of the data, we decided to only consider those costs that everyone agreed should be considered. Even though this meant ignoring some costs that fit the theory, it enabled us to obtain the cooperation of several engineering managers who had previously been very antagonistic. Once the system was designed, a program was set up to ensure that the data generated would be used to bring down costs while maintaining or improving quality.


Cost of quality (COQ),Short runs,Case study

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