Quality costs

Question 1

What are the 4 types of TQM quality costs? Conformance and Non-conformance

Answer 1

Conformance:
Prevention
Appraisal

Non-conformance:
Internal failure costs
External failure costs

Question 2

What is the process for implementing six sigma?

Answer 2

(DMAIC)

Define
Measure
Analyse
Improve
Control

Question 3

What is six sigma?

Answer 3

A quality management programme which was pioneered by Motorola in the 1980’s

Sigma stands for the standard deviation, if the error rate lies beyond the sixth sigma of probability there will be fewer than 3.4 defects in every one million units produced

This is the tolerance level set, it is almost perfection since customers will have room to complain fewer than 4 times in a million

E.g. hospital wait times - the aim of the six sigma program will be to ensure that no more than 3.4 waits in every million occurrences exceed 30 minutes or are less than zero minutes
0 minutes to 15 mins = 3 sigma, 15 mins to 30 mins = 3 sigma

Question 4

How does six sigma improve the quality of performance?

Answer 4

• An increased focus on the customer
• Identifying business process improvements as key to success
• Management decision making is driven by data and facts, e.g. the number of customer complaints as KPI
• Proactive involvement of management and effective leadership to co-ordinate the six sigma projects
• Involves collaboration across functional and divisional boundaries, focusing the whole organisation on quality issues

Question 5

What are the main elements of lean production?

Answer 5

Cutting out waste and unnecessary activities including:

• Overproduction
• Holding inventory
• Waiting
• Defective units
• People/equipment who don’t add value
• Steps in production process that do not add value

Question 6

What is lean production closely related to?

Answer 6

JIT, Kaizen and TQM

Question 7

What are the advantages of using Kaizen?

Answer 7

+ Quickly adapt to nature of changing competitive environment
+ Increase staff motivation through empowerment

Question 8

What are the disadvantages of using Kaizen?

Answer 8

• May be difficult to get managers who are used to command and control structure to speak out about improvements
• Can be hard to implement a culture change

Question 9

What are the advantages of using JIT production?

Answer 9

+ Lower working capital requirements
+ More factory floor space
+ Increased flexibility in meeting customers needs (faster response times to product specification changes)

Question 10

What are the disadvantages of JIT production?

Answer 10

• Heavily reliant on supplier
• Component quality issues can’t be replaced by existing inventory, costly stoppages to production
• Can be difficult to find a supplier who can meet the required component and delivery standards to run this system with

Question 11

What are the key components of JIT production?

Answer 11

Staff will require training to work in teams and be multi skilled

Teams must be forced to work by product/component rather than the type of work being performed

Measuring the amount and effectiveness of the staff training during these changes

Measuring spare capacity and bottlenecks is critical

Question 12

What is the outcome of using six sigma?

Answer 12

Improves company’s competitive position

Improves quality of performance

Question 13

Whats the difference between standard costing and kaizen costing?

Answer 13

Standard costing -
Used to control costs
Staff are seen as the problem for variances

Kaizen costing -
Focuses on cost reduction
Staff are seen as the source of improvement solutions
Staff are more involved and empowered

Question 14

What’s the difference between internal failure and external failure cost? (Non-conformance)

Answer 14

Internal failure - before going to the customer the defect is spotted and fixed

External failure - the customer spots the defect and it has to be dealt with by customer complaints

Question 15

What is the difference between prevention and appraisal costs?

Answer 15

Prevention costs include staff training, and investment in new equipment to prevent quality issues
i.e. before the work is started

Appraisal costs include inspection of work-in-progress
i.e. during the course of manufacturing/operations

Question 16

Why is it important to identify and collect quality costs?

Answer 16

Leads to a greater management focus on the issue of quality

“What gets measured gets done”

By raising the quality of the products, the company can compete more effectively

Question 17

What is the trade off between conformance and non-conformance costs?

Answer 17

The reduction of non-conformance costs is a result of an increase in conformance costs

There becomes a point where the cost of preventing an error is greater than the benefit of preventing that error

Question 18

What is TQM?

Answer 18

Total Quality Management

A philosophy of management that is applied to the whole organisation and aims for continuous improvement and prevention of all errors

Question 19

What type of organisaiton is TQM most suitable for?

Answer 19

Manufacturing organisations

Where the impact of quality failures in the production process may be that goods are scrapped (waste)

Question 20

What is target costing?

Answer 20

A customer based approach

Focuses on the requirements of the customer for quality, price and service

Takes into account all of the costs over the period of the product life cycle

Also best for manufacturing organisations

Question 21

What are the issues with standard costing and budget variances?

Answer 21

Ok if focus is on performance but won’t drive the business forward

External factors such as deregulation can have a massive impact and fluctuation on prices and demand, which can lead to lots of wasted time on variance analysis

Constrains managers as there isn’t enough focus on ways to improve and grow the business

Short-termism approach rather than seeing the bigger picture

Question 22

What are the 5Ss of Lean?

Answer 22

Sort
Set in order
Shine
Standardize
Sustain