"Please give me an overview of a formal Quality
Assurance Department and, is there a meaningful way to determine its true total cost and
effectiveness? T.D., Minnesota "Please give me an overview of a formal Quality
Assurance Department and, is there a meaningful way to determine its true total cost and
effectiveness? T.D., Minnesota
THE INDUSTRY ADVISOR
COST EFFECTIVE QUALITY ASSURANCE
By Gene Levine - www.genelevine.com
In a previous article, I addressed and gave the
formula for determining the precise point of Consumer Acceptability. Knowing that
point is the first step in any Quality Assurance (Q.A.) program. That article also delved
into the necessary ingredients to a successful Quality Assurance Program. This article's
main thrust will lean more towards cost-identification.
Developing, communicating and ensuring the precise Consumer Acceptability point throughout the organization are the next steps. Regarding quality costs, there are two. Giving customers more quality then they are willing to pay for (which is an added expense to you) and not giving your customers what they paid for (which results in a lost sales cost).
Simply stated, the mission of Quality Assurance is to develop and maintain consumer acceptability of manufactured products. Q.A. is also concerned with the selection and training of inspectors and the calibration and maintenance of inspection equipment. Above all, Q.A. must guarantee that continuous, accurate measures of quality exist at critical points in production. Q.A. must analyze its inspection findings and provide management with current, factual data relative to quality so that authority may act on the information. Q.A. is not designed to weaken production's authority, but, instead, to be a service to it.
Before embarking on a Quality Assurance Program, information must be gathered on the present effectiveness of the existing Q.A. system. This includes both its present costs and results. This base information will be used to measure progress made after changes in any new system have been made.
Careful analysis of newly incurred costs is always necessary; to avoid spending more money than improvements might be worth.
Improving quality is initially expected to cost money. Profitable results may be largely intangible. If, for example, a necessary inspection operation is presently understaffed for the job, a net increase in total personnel may be required permanently. Careful analysis of newly incurred costs is always necessary; to avoid spending more money than improvements might be worth. A business’s goal remains that of making the best product with minimum expenditure.
Q.A. procedures are tailored to specific needs. No "package" system or set of procedures can be prescribed in advance that will be exactly right for every factory. That is why you must tailor your Q.A. program to your customer's needs. Even though we can only cover the basics in this article, we publish an in-depth Quality Assurance Policy and Procedure Manual that provides complete information. Let's now discuss my suggestions further.
Quality reports are kept and maintained by the Corporate Q.A. Manager. This data, which includes cost data, is complied and analyzed on a monthly basis and reported quarterly to higher management. The reports include actual performance and costs of Q.A. plus the costs of not having effective assurance (or estimates where specific costs are not immediately available).
These quality costs are classified into categories. Prevention Costs include those expenditures incurred by personnel engaged in planning and maintaining a quality system that makes products right in the first place. A second cost category (discussed below) would be would be Appraisal Costs. Then, there are Internal Failure Costs, which usually include losses incurred, associated with defective products or fabrics that fail to meet quality standards. Finally, we have External Failure Costs, which cover the losses incurred from the people, and systems required to handle returns of defective product shipped to customers.
Each of these categories is further sub-divided by elements. I will use the above "Appraisal" category to make my point.
Appraisal includes the expenditures incurred in measuring and evaluating degree of conformance to quality standards for purchased materials, findings and finished products. So, its cost subdivisions would therefore be . . .
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