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Cost Of Quality

A product is said to be of good quality if the customer is happy and satisfied with it. He will buy a product and recommend it to others if it fulfills his needs and expectations. The customer usually is ready to pay more for the good quality product as it proves to be a good investment in the long run. The customer or the buyer’s satisfaction is the driving force behind the manufacturer’s perusal of quality. They try to achieve excellence in the manufacture of their product. The product or the service must have the properties and attributes which make it of superior quality. These properties and attributes could be either expressed in quantitative terms as they can be measured. For example, speed, weight or size of a product can be quantified. Certain attributes are subjective such as appearance or finish of a product. Subjective attributes are more common in service industries such as hotels, airlines and restaurants. Here the customer rates the quality of service as excellent, good, average or bad.

There are two aspects of quality:

Quality of design: It refers to the specifics and effort put in the design of the product at the development stage. To give the customer a good quality product or service, quality of design is the most fundamental and mandatory requisite.

Quality of conformance: It refers to whether the finished product or delivered service conforms to the quality of design or whether it is able to meet the customer’s expectations.

Cost of quality:

While improving the quality of a product or service, we tend to increase the manufacturing cost. But the value is not added in direct proportion to the cost, it increases much slowly. Quality costs can be both negative and positive. Positive costs include the cost of formulation of policies for total quality, research and development to create the flawless prototype, inspections, and quality checks. It prevents delays and other problems and provides solutions. Training personnel and addressing their issues is also a positive cost as it works towards achieving the goal of total quality. Negative costs are those arising fro the sale of defective or poor quality products. It also adds because of the after sale service expenses. Rejection of a product by consumers or retailers also amounts to negative costs. Costs are divided in three categories:
  • Prevention costs: It means to prevent flaws and defects, creating consistent work designs and maintain the manufacturing facility.
  • Appraisal costs: It means evaluation and analysis of quality by testing and sampling.
  • To prepare route sheets
  • Failure costs: It means the costs arising from machinery breakdowns, worker down time etc.

A manufacturer of a quality product enjoys a large market share, wins the customer confidence, gains respect and earns profit. Poor quality products can prove to be disastrous for the manufacturer because it results in the reduction of sales and decrease in profits. The manufacturer’s reputation or standing in the market suffers too in addition to cost of loss in sales which may eventually result in the closure of the unit.

Quality management:

Quality control starts with quality evaluation and analysis and steps which are taken to improve in lacking area. This is done by regular periodic inspections, feedback of quality inspectors, action taken in necessary direction. Total quality control (TQC) refers to a total commitment to quality in all aspects from personnel training to zero defect products. It is a technique which is developed to improve the company’s operational effectiveness (QE). TQC can elevate the company’s operation to the optimum level. TQM includes resource management, worker ethics, group dynamics, customer understanding and innovation. The manufacturer decides the quality of the product based on the market research. He takes into account the customer’s needs and wants and directs the design team to come up with a product which fulfills them. Technical specifications state the properties desired in the product. Performance specifications describe the use of the product or the advantages it has over the other products in the market.

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