ARTICOL QIEM martie 2011 - Critical analysis of quality costs

8/7/2019 ARTICOL QIEM martie 2011 - Critical analysis of quality costs

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Dan, Hedesiu1, Vasile, Bugnari2 and Andreea, Petru 3

Technical University of Cluj Napoca1, [email protected]

Technical University of Cluj Napoca2

, vasile.bugnari@ muri.utcluj.ro2

Technical University of Cluj Napoca3, [email protected]


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Evolution of gross domestic product of E.U., for 2009, Conferina INSSE, Bucureti, march 2010

In this economic context it is opportune to change the strategies, to innovate and to

create products better moulded on consumers requirements, to reduce unnecessary

costs, and to reduce quality related costs.


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Quality related cost coincide with unequal elements, some of them immeasurable,

because beside the physical product there are external factors which are influencingthe products quality.

Product Lifecycle Management (PLM) becomes a strategic component within

companys top managment, which is converging with Quality Management. The

actual PLM limits have been extended, so it is clear that the product limits are

extended too.

In this article authors analyze the connections between: PLM, extended product and

ua ty anagement, t ese t ree concepts av ng n act s m ar o ect ves; to

optimise from all points of view, the product, to obtain a better customer

satisfaction, and to reduce the products impact on the society and the entire

environment.

Authors propose a model of identifying and classifying quality costs based on: PAF

(Prevention, Appraisal, Failure) quality costs model, Extended Product Concept, and

PLM stages, in order to meet a companys needs.


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Producer and User view on PLM


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Life cycle costing is traditionally understood as the process of economic

analysis to assess the total cost for conception, design and development,production, installation, operation and support for a useful life, updating

modes and retirement of a product.

According to Emblemsvag in Life cycle costing Using Activity-Based

Costing, manufacturer will focus on product conception, design, product

and process development, production, logistics and customer thinks more

about urchase installation o eratin su ort maintenance and dis osal.

The literature on extended product lifecycle concept suggest a common

understanding between producers and users as a premis for maximizing the

benefits of both parties. These benefits arise throughout the product

life cycle and finally will fulfill both the economic and

environmental conditions.


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Specialized literature use the concept of total product as seen in next figure

adapted after T.Levitts and Ph. Kotlers work and views

Extended product model adapted after T. Levitt and Ph. Kotler


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As specific literature and research describes, there are a various views

on how to extend a product like: Extended product responsibility,

Extended Product Life, Extended Product Support, Extended Product

Information.

However the EXPIDE project (Extended Products in DynamicEnterprises) of the European Information Society Technologies ) has

elaborated an Extended Product Concept specific to manufacturing

A combination of physical product and associated services/ enhancements that

improve marketability;

Intelligent, highly customized, user-friendly tangible products assets;

Intangible product assets (information and knowledge);

Customer focus is on value-added service or guaranteed success.


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The authors propose a new approach based on T. Levitts, Ph. Kotlers and

EXPIDE projects visions on extended products. The product concept shouldstart with the client's expectations and desires as well as the market's

requirements. Then, when we refer to extended product it is necessary to

consider as the most important part, the concepts of continuous

improvement, sustainable development and environmental protection.

A new approach on extended product concept


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According to G. Taguchi "The quality of a product is the (minimum) loss imparted bythe product to the society from the time product is shipped". The loss includesbesides producers direct and indirect costs, due to non-quality, the other costimposed to customers because of low product quality or low service quality.

In general, this cost refers to any costs that would not occur if within companies all

processes would have perfect quality. All companies departments are creating and

are responsible for quality costs . This kind of costs may occur within any process

and activity, form the top managements area to the production line.

Within empirical studies of companies form mature and developed markets and in

specialised literature average weights of the total cost of quality assurance are:

Prevention costs 3-12%, Evaluation costs 15-32%, Internal failure cost 22-50%,

External failure costs 20%. Also, these researches revealed that the total quality cost

is an approximate 15% of sum of total sales


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G.W. Parker defines the main quality costs classes:

Ce = external cost of failures (customer complaints and refusals)

Ci = internal costs of failure (quality evaluating activities before product products

transmission: touches, reshuffles, internal transport, re-evaluations, new inspections)

CE= evaluation costs (measurings, testings and controls of products to ensure

compliance with the quality standards and with costumers requirements )

CP= prevention costs (marketing cost, design control, staff tranings, quality plannings,

research on deliver s erformance .

This approach on Quality Cost is known in the specialized literature as the PAF model

(Prevention, Appraisal, Failure)

The specific studies reveals the fact that beside these 4 classes of quality costs

there is another class, Hidden costs, which are almost impossible to identity

form papers or accounting system.


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The majority of the studies in this field reveal the fact that in addition to any

model, in order to find data about quality cost, it is necessary to integrate a team

within the company that can provide information about all the activities and

quality costs.

In this context, the authors of this paper propose a model to facilitate datacollecting of costs related to quality as seen in next Table.

This model is based on Product Life Cycle stages, as a technical view for a

common c assi ication o p aces w ere qua ity cost can e generate , intersecte

with the Extended Product Concept stages, which represent an economical view

for a classification of commercial activities, where quality cost can occur.

The quality cost proposed in this general model of identifying quality costs are

based on G. Parkers and J.M. Jurans research, but they may vary from industry to

industry.


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Table 1.Extended Product component intersected with PLM stages for identification and classification ofquality costs as based on the work of G. Parker and J.M. Juran


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Next, authors propose a detailed presentation of a cost element afferent to each

intersection, for a better representation of quality costs, basically realizing a

specific cost sheet. This cost sheet contains data about the quality cost, class of

quality cost, the amount of the cost, the department where it occurs and the

principal responsible. Also, it contains an observations section where statistics can

be registered, as well possible causes, and future improvements, as seen in Table

2, intersection A.1

Table 2.


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Identification of quality cost will highlight the possible profit lost by anorganization. In this manner, managers can realize the importance of Quality

Management and Cost Management. For organizations, is important to highlight

the quality or non-quality costs, to identify their source and ultimately, to correct

or to eliminate them.

PLM, Quality Management and Marketing are concepts that constantly intersect

and, actually, they have the same objectives, to maximize the added value, to

obtain performance, efficiency, productivity, flexibility, cost savings and

sus a na y, recyc ng an env ronmen a pro ec on.

In highlighting the costs related to quality of the extended product, PLM represent

steps and stages within which these costs usually occur.

The model proposed by the authors is theoretical framework based on the PAF

model, which allows for an easier and better way to indentify quality related costs. Future research within a company will respond to our concern of validating this

model and prove its practical value.


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This paper was supported by the project "Doctoral studies in engineering

sciences for developing the knowledge based society - SIDOC contract no.

POSDRU/88/1.5/S/60078, project co-funded from European Social Fund

through Sectorial Operational Program Human Resources 2007-2013.


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