Classical model based analysis of cost of poor quality in a manufacturing organization

Abstract

In today’s world of manufacturing competitiveness, quality is a prerequisite and it is no longer a differentiator. Although people in developing countries have started understanding the importance of quality in any sector but this fact is still not very much clear to decision makers that a substantial amount is lost in terms of cost of poor quality (COPQ). This is a case study focusing on COPQ in a heavy manufacturing organization of Pakistan keeping in view the literatures of economical designing of quality and quality costing. Approach of studied organization was checked out against COPQ keeping in view all kind of quality costs including prevention cost, appraisal cost, internal failure cost and external failure cost. SWOT and PAF costing analysis were performed. It was observed that statistical process control (SPC) and statistical quality control (SQC) techniques are completely being neglected and even the ISO certified departments are not implementing ISO recommendations and total quality management (TQM) guidelines in this organization. This public sector organization is still governed by the myth that quality is just a buzz word and it should just be limited to paper work far away from actual implementation. Quality is being compromised on basis of material, scrap, trainings, human resource management, product robust design, products tolerances, and Cp and product performance all leading to COPQ. This study suggests a quality cost model based upon some charting techniques devised to measure the actual and the planned activities. Furthermore a sound methodology of measuring internal and external failure cost is also provided. Key words: Cost of poor quality, statistical process control, statistical quality control, total quality management, quality control.