Measuring the Cost of Quality

Theme of article: A discussion of different cost analysis frameworks for management commitment to total quality.

Four Main Schools of Quality Management Thought
	Joseph Juran	Edwards Deming	Philip Crosby	Japanese Approach
Definition	Conformance	Conformance	Conformance	Uniformity
Goal of program	Decrease COQ	Competitive improvement	Decrease costs	Continual improvement
Quality Goal	Minimize COQ	Zero defects*	Zero defects	Zero defects
Management's Role	Leadership, participation	Leadership	Stress participation improvements	Breakthroughs and zero defects
Worker role	Moderate	Maintenance and improvement	Moderate	Maintenance and improvement
COQ emphasis	High	None	Moderate	Low
Statistical analysis	For lower mgmt	High use	Mixed	High use

Traditional View versus TQM Perspective
Traditional	TQM
Responsibility
Worker responsible for defects	Everyone responsible for defects
Problems start in operations	Problems start before operations
Inspect quality in	Build quality in
Inspect after production	Quality at the source
Large quality control staff	Small quality control staff
Workers serve managers and engineers	Managers and engineers serve workers
Linkages with Suppliers
Multiple suppliers	Single supplier
Inspect incoming goods	No incoming inspections
New Product Design
Designers separate from operators	Teamwork with operations, marketing, design
Design for performance; don’t consider production	Design for performance and ease of production
Quality Goal
Zero defects impractical	Goal is zero defects* (* See the note above.)
Mistakes inevitable	Mistakes learning opportunities
Key is reasonable tradeoff	Key is perfection
Cost Management
Allowance for scrap, waste, rework	No allowance for scrap, waste, rework
Only financial performance measures	Emphasis on non-financial performance measures
No COQ analysis	COQ as diagnostic and management control tool
Control Philosophy
Goal is top of reference group	Goal is kaizen
Meet, not exceed standards	Target is to exceed previous year’s performance

Costing Methodology - 4 categories: prevention costs, appraisal costs, internal failure costs, external failure costs

Deming did not like the term zero defects. It would be better to use the term "robust quality" when applied to Deming because he advocated continuously seeking perfection. Read the summary of Chapter 10 of Deming's New Economics and the Taguchi & Clausing and Roth & Albright summaries to find out why.

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