Cost of Quality and Business Excellence

 

Increase profitability and reduce cost is the most attractive part of TQM. Organizations widely adopt TQM in 1980 to achieve benefits of increased profitability. However it is observed when try to cut cost in order to increase profitability cost of others steps involved in that process increased. For example if a manufacturing industry cut cost in procurement of raw material then usually quality of raw material decrease and during production rework rate increased, after production with low quality raw material during used product does not perform satisfactory and warranty claim increase as well.

In order to cut down price initially map the process including valued an non value steps involve process. Remove non value added process as much as possible by structural optimization to avoid repetition. Then consider each step as a sub process and optimize that process in cost and quality as well.

Crosby’s (1979) definition (Quality is conformance to requirements) is not valid in modern era of business excellence. Conformance to quality can also be achieved in the presence of non value added steps in process. The real quality can be defined as Quality should reflect maximum customer satisfaction at the minimal cost to the producer.

cost of quality

Today the previous definition of quality is not valid. In recent era quality is defined as degree of business excellence. Quality is now based on these values (initially these values where introduce Garvin 1984)  performance, features, reliability, conformance, serviceability, durability, aesthetics, process leanness and perceived quality. each value in customer and manufacturer  perspective describe in table

Sr. NoQUALITY MEASED BY FOLLOWING VALUESCUSTOMER’S APPROACH PRODUCER’S APPROACH
1PerformanceCompetitiveAs easy as possible
2FeaturesAs many as possibleAs few as possible
3ReliabilityUnlimitedJust required
4ConformanceAs written in ContractAcceptable quality level
5DurabilityUnlimitedAs per standards
6ServiceabilityEasily (little as possible )Engineered into design
7AestheticsMaximumCompetitive
8Perceived Quality Most impressiveMost Expensive
9Process LeannessDoes not matterMaximum
Acceptable PriceAcceptable Cost

 

 

 

By adopting this cost reduction approach and consider value bas quality any process can be optimize which ultimately leads to business excellence.

 

 

One Response

  1. Ali Afraz September 14, 2015

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