7.3.1. Analysis
If we analyze the data for the 5th and 6th periods given in, we can find that the internal defect losses on the “Y” line, as well as the external defect losses on the “Z” line, are extremely high.
The shop manager certainly took certain steps in this regard. After the 6th period, he introduced preventive measures on line “Y” and this had a significant effect in reducing internal losses due to defects by the end of the 7th period.
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Tab. 2. Fragment of a report on quality costs to middle management |
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LINE “X” |
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Warning |
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To control |
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On internal losses |
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On external losses |
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Total quality costs |
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LINE “Y” |
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Warning |
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To control |
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On internal losses |
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On external losses |
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Total quality costs |
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Total quality costs allocated to sales volume |
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Total quality costs allocated to labor intensity |
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LINE “Z” |
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Warning |
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To control |
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On internal losses |
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On external losses |
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Total quality costs |
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Total quality costs allocated to sales volume |
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Total quality costs allocated to labor intensity |
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He also increased the preventive activity on line “Z” after the 6th period, and after the 7th period there was also a decrease in external defect costs. Although the actions taken on this line did not have the same quick results as on the “Y” line, costs were nevertheless reduced, and by the end of the 8th period - even more so.
7.3.2. Diagnostics
However, before introducing any improvement measures, questions arise: Where should I start? What is the reason for what is happening?... The manager needs much more information than that presented in the summarizing table. The manager knows that he has problems, but does not know what caused them. It needs a more detailed breakdown of quality cost elements. Only in this way will he be able to identify the reasons for what is happening.
So, at the end of period 6, the shop manager received the following information representing the internal cost of a defect on line “Y”:
Table 3. Components of costs for internal losses
These data show that waste (C1) is the most significant area for improvement. More detailed information shows the stages at which production waste arises in the process of various types of activities:
Table 4. Stages at which waste costs arise
7.3.3. Pareto analysis
Fig.6. Pareto chart.
Modern managers are already fluent in Pareto analysis, which ranks individual areas by significance or importance. Thus, first of all, preventive measures should be aimed at solving problems of mechanical processing, and secondly - storage, etc. This is shown in Fig. 6.
7.3.4. Dig deeper
However, our shop manager continues to analyze. He knows that things are not always what they seem. Therefore, before spending money on preventative measures in the machining field, he takes a detailed and thorough look at possible reasons occurrence of losses, for example, such as:
As it turned out in our example, none of the listed reasons accounts for more than 8% of the total losses in the period under review. However, the costs of minimizing these losses will vary significantly depending on the problem being solved: the least in the case of preventing the use of unsuitable tools and, possibly, very significant in the transition to equipment with higher capabilities.
7.3.5. Solution
All identified causes of loss merit corrective action, however, the manager looks for those areas that will give the greatest return on effort. That's why he may decide to consider the next most important area of his costs, called “Warehouse,” as a priority for improvement.
Careful analysis may lead a manager to the conclusion that it is more effective to begin preventive measures not with the first column on the Pareto chart.
Without detailed information available, dealing with defects will be tantamount to fighting “fire” instead of “preventing fires.”
So we must note that:
Quality costs should be reduced to a large extent by identifying specific causes of losses and proposing corrective action programs. All recommendations for improvements must include data on the cost of implementing the proposed programs. Corrective actions should pursue the following goal: to obtain the best results at the lowest cost.
8. IMPLEMENTATION OF THE SYSTEM
All of the above probably seems quite dauntingly complex and time-consuming to implement. This is probably why relatively few organizations have implemented a system for collecting and analyzing quality costs.
Management must be convinced of the utility before it begins to build a system for collecting and analyzing quality costs in the company. So you need to convince him. Below are some “secrets” to successfully implementing the system.
TAKE THE SIMPLE
If your costs are determined to within ±5%, you've done a good job. Your Director and you yourself now have a more accurate picture of quality costs than before you took on this matter.
Start small and build up.
Create a sample to show how this can be done.
Document the value of quality cost analysis.
Only in this way will you achieve understanding and cooperation.
To analyze the cost of maintaining product quality, various information is used.
The purpose of collecting data during a cost-quality analysis process may be to:
1. reduction in costs per unit of production while maintaining the same quality;
2. reducing costs for products while improving their properties;
3. increasing unit costs, allowing to achieve a high level of quality, giving advantages over competitors;
4. determining the amount of costs by type to change their structure, but maintaining the same amount of costs for products, which allows maintaining the current price level in order to outstrip competitors in terms of quality;
5. increasing production volume without reducing the quality of products from the previous volume of resources by reducing and eliminating waste;
6. analysis of deviations from established requirements;
7. product control;
8. setting prices for products.
Data for analyzing quality costs can be primary, as a rule, these are technical and other parameters of products contained in technical specifications, GOSTs, certificates and other documents confirming product quality, and secondary, resulting from processing the primary ones. In this case, secondary, transformed ones are usually called information.
Information should be recorded in tables that facilitate and speed up the calculation of statistical indicators used in making operational decisions. management decisions and for further data analysis.
3. Methods for analyzing costs for product quality.
Depending on the goals, objectives of quality analysis and the possibility of obtaining the data necessary for its implementation analytical methods differ significantly. This difference is also influenced by the passage of a product through a certain stage of the enterprise’s activity, its place in the cost formation chain at a particular moment.
At the stages of design, technological planning, preparation and development of production, it is advisable to use functional cost analysis (FCA). This is a method of systematic study of the functions of an individual product or technological, production, economic process, structure, focused on increasing the efficiency of resource use by optimizing the relationship between the consumer properties of an object and the costs of its development, production and operation. The main principles of application of the FSA are:
Functional approach to the object of study;
A systematic approach to the analysis of an object and the functions it performs;
Study of the functions of an object and their material carriers in situations life cycle products;
Compliance of the quality and usefulness of product functions with their costs;
Collective creativity.
The functions performed by the product and its components can be grouped according to a number of characteristics. Based on their manifestation, functions are divided into external and internal.
External are functions performed by an object during its interaction with the external environment.
Internal – functions that are performed by any elements of an object and their connections within the object.
Based on their role in satisfying needs, external functions are distinguished between primary and secondary.
Main function reflects main goal creating an object, and the secondary one is a secondary one.
Based on their role in the work process, internal functions can be divided into main and auxiliary.
The main function is subordinate to the main one and determines the operability of the object. With the help of auxiliary ones, the main, secondary and main functions are realized.
According to the nature of their appearance, all listed functions are divided into nominal, potential and actual.
Nominal values are specified during the formation and creation of an object and are mandatory for execution. Potential reflects the ability of an object to perform any functions when its operating conditions change. Real ones are the functions that the object actually performs.
All functions of an object can be useful and useless, and the latter neutral and harmful.
The goal of functional cost analysis is to develop the useful functions of an object with an optimal ratio between their significance for the consumer and the costs of their implementation, i.e. in choosing the most favorable option for the consumer and manufacturer, if we are talking about the production of products, for solving the problem of product quality and its cost.
Interrelation of functions.
Main Nominal Useful
Minor Potential
Basic
Internal Useless
Auxiliary Valid
Neutral Harmful
Mathematically, the goals of the FSA can be written as follows:
where: PS is the consumer value of the analyzed object, expressed by the totality of its consumer properties. PS = n*
Z - costs for achieving consumer properties.
STATE COMMITTEE OF THE RUSSIAN FEDERATION
IN HIGHER EDUCATION
KALININGRAD STATE UNIVERSITY
Department of Economics and
farm management
Product quality cost analysis
(in the discipline “Quality Management”)
4th year student
Group ILukyanova K. L.
INTRODUCTION........................................................ ........................................................ ........................... 3
1. Stages of formation and types of costs for product quality........ 4
2. Information base for cost analysis of product quality. 9
3. Methods for analyzing quality costs.................................................... ............... 14
3.1. Functional cost analysis method.................................................... ...... 14
3.2. Methods of technical standardization................................................................... ................... 19
3.3. Some other methods of quality cost analysis.................................................... 21
4. Analysis of defects and losses from defects.................................................... ........................... 25
Conclusion................................................. ........................................................ ........................... 29
List of sources used........................................................ .................... 30
The production of products and services is accompanied by production and service costs. Misconception that production high quality determined by significant increases in costs, has in the past been one of the main obstacles to the creation of more advanced quality management systems.
In a general sense, quality costs are costs associated with establishing the level of quality, its achievement in the production process, control, evaluation and information on product compliance with the requirements of quality, reliability and safety, as well as costs associated with identifying failures of products not at the enterprise or under the conditions of its operation by the consumer.
Product quality must guarantee consumer satisfaction, product reliability and cost savings. These properties are formed during the entire process of reproduction. production activities enterprise, at all its stages and in all links. Together with it, the cost value of the product is formed, which characterizes these properties from planning product development to its implementation and after-sales service. In Fig. Figure 1 shows the chain of formation of costs and value of goods and services.
It allows you to specify the principle of quality assurance and see When, i.e. at what stage of activity, and Where, in which department it is implemented. Since the manager is responsible for each stage and department, it becomes clear Who is responsible for product quality. What is meant by guarantees are technical, technological, environmental, ergonomic, economic and other quality indicators that ensure satisfaction of consumer demands.
Quality costs are associated not only directly with the production of products, but also with the management of this production.
The aggregated costs associated with product quality can be divided into scientific, technical, management and production. Scientific, technical and management prepare, provide and control the conditions for the production of quality products, i.e. as if predetermining the presence and size production costs.
If the development and design of new products is carried out by external organizations, then the costs ensuring quality at a given enterprise will include only implementation costs. In some cases, especially in the production of new products, control over their preparation and development is carried out by design departments.
In general, management costs associated with product quality assurance include:
· transport – external and internal transportation of raw materials, components and finished products;
· supply – purchase of raw materials and components planned by type, quantity and quality;
· costs for departments that control production;
· costs associated with the work of economic services, on whose activities the quality of products depends: planning department, financial department, accounting, etc.;
· costs for the activities of other services of the enterprise management apparatus, which are to varying degrees related to and influence the provision of product quality, especially personnel management, the functions of which include recruiting personnel, improving their qualifications and checking compliance with the required level and conditions.
Production costs, in turn, can be divided into material, technical and labor. Moreover, all of them are directly related to the cost of production. And if the amount of management costs in quality costs can be determined only conditionally, indirectly, then the amount of material production costs can be determined direct counting. It is much easier than management costs to calculate the amount of technical production costs - through depreciation charges, and labor costs - through wages(payment for standard hours).
In order to manage costs associated with ensuring product quality, it is necessary to distinguish between basic costs that are formed in the process of development, mastery and production of new products and are their carrier until they are discontinued, and additional costs associated with its improvement and restoration lost (less than planned) level of quality.
The main part of the base costs reflects the value of production factors, as well as general and general production expenses attributed to the manufacture of a specific product through a cost estimate.
Incremental costs include assessment costs and prevention costs. The first includes the costs incurred by the enterprise in order to determine whether the product meets the planned technical, environmental, ergonomic and other conditions. The second includes the costs of refining and improving products that do not meet the standards, the best world standards, the requirements of the buyer, inspection, repair, improvement of tools, equipment, equipment and technology, and in some cases, stopping production.
There is another group of costs that, when they arise, should be classified as either basic or additional, depending on the novelty of the product. These are the costs of marriage and its correction. Their value can fluctuate significantly and consist of both the costs of producing subsequently rejected products if there is an irreparable defect or, in addition, the costs of correcting it if the defect is not final, and may also include payment for moral and/or physical damage caused to the consumer by low-quality products .
According to A. Feigenbaum’s classification, quality costs are divided into:
1. Expenses for carrying out preventive measures
A) quality planning(organizational quality assurance, product design, reliability research, etc.);
b) process control(study and analysis of technological processes, control over the production process, etc.);
V) design of equipment used to obtain quality information(design of equipment used to determine the quality of products and technological processes, data collection, processing, etc.);
G) training in quality assurance methods and working with personnel(development of training programs aimed at the correct application of quality management methods by employees);
d) product design verification(pre-production assessment of products);
IN market conditions management, improving the quality and increasing the competitiveness of manufactured products while reducing the costs of their production is one of the urgent tasks economic analysis. Depending on the goals of quality cost analysis and the possibilities of obtaining the data necessary for its implementation, the following analysis methods are often used: functional-cost analysis, technical standardization methods, index method, scoring method, unit price method, etc.
Functional cost analysis is a method of systematic study of the functions of an object (product, process, structure), aimed at minimizing costs in the areas of design, production and operation of the object while maintaining (increasing) its quality and usefulness. IN foreign practice FSA is used under the name "cost analysis" and "engineering cost analysis". The first term is used when it comes to analyzing existing products, the second when designing new ones. However, both types of analysis are designed to provide equivalent product performance at lower cost.
The essence of this approach is to consider an object not in its specific form, but as a set of functions that it must perform. Each of them is analyzed from the perspective possible principles and methods of execution using a set of special techniques. The purpose of the FSA is to develop the useful functions of an object with an optimal balance between their significance for the consumer and the costs of their implementation. Mathematically, the goal of the FSA can be written as follows:
3/PS → min or 3/PS → max, where
PS – a set of consumer properties of an object
C – costs to achieve the necessary consumer properties
FSA is carried out in several stages:
1. Clarification of the object of analysis (cost carrier)
2. Collection of data about the object under study and its constituent blocks and parts
3. Study of product functions
4. Evaluation of proposed options for the developed product
5. The most appropriate options for developing and improving the product for a given production are selected
Methods of technical standardization. Based on the calculation of detailed standards and standards for material resources, calculation of labor intensity and other costs. To calculate them, microelement standardization methods and reference materials are used.
Index method. One of the methods that allows you to analyze changes in costs associated with changes in product quality. Costs and quality have quantitative characteristics.
Scoring method. To assess the quality and competitiveness of the product. Each product parameter is given a score taking into account the significance of this parameter. After this, the average score of the product is determined, characterizing the level of its quality in points.
Unit price method. Determining the price based on the cost per unit of the main quality parameter: power, productivity, etc.
An important economic aspect of product quality management in an organization is planning and calculating quality costs. In today's highly competitive environment, any quality decision must be backed up economic justification. Concept economic assessment quality costs, adopted in the international standard ISO 9000 series, can be considered as a tool that allows you to determine the economic consequences of decisions made in the field of quality management, estimate losses from the occurrence of defects and nonconformities, and carry out a full analysis of quality costs.
Analysis and assessment of quality costs is an integral part of the company's financial strategy in the field of quality.
Quality cost analysis- activities to study the costs of quality, carried out to justify from a scientific point of view the decisions and actions of the organization in the field of quality and facilitating the selection of the best options for action.
Estimation of quality costs- activities related to determining the relationship and impact of quality costs on economic indicators activities of the organization.
The main goals of analyzing and assessing quality costs:
■ detection of relationships between quality costs and the results of the enterprise’s economic activities;
■ determination and assessment of the size of necessary investments in quality improvement;
■ provision required quality manufactured products while minimizing the total costs of their production and operation;
■ finding critical areas of production activity that require measures to improve the organization of production.
Organization of accounting, analysis and assessment of quality costs is required for management in the following areas:
■ creation and production of new goods;
■ investments in quality improvement;
■ development production process;
■ improvement of production technology;
■ ensuring the interests of suppliers and consumers.
Modern conditions require the introduction into practice of international rules of accounting, analysis of economic activities and reporting. Such information can be external and internal.
Internal analysis or management analysis is subjective, confidential, and it is he who bears the burden of ensuring decision-making in the field of quality at the enterprise. All costs associated with quality are calculated within the organization according to its own criteria. As a rule, these include costs incurred in ensuring and guaranteeing satisfactory quality, including when improving quality, as well as those associated with losses when satisfactory quality is not achieved. It must be borne in mind that some losses can be difficult to quantify, but they can cause significant damage, for example, loss of prestige of the company.
In such conditions, an effective quality system can have an extremely important impact on the profitability of the organization, especially through the improvement of business activities, which leads not only to a reduction in defects and production costs, but also to a reduction in the costs associated with the use and operation of products.
International standards For comparability and generalization of economic information, they give recommendations only on some methods for calculating quality costs:
A) Method for determining losses due to poor quality. This method focuses on internal and external losses due to poor quality and determines tangible and intangible losses. External intangible losses include a reduction in future sales due to consumer dissatisfaction. Internal intangible losses are the result of a decrease in labor productivity due to rework, unused opportunities, etc. In general, material losses are internal and external costs resulting from defects.
B) Quality costing method. This method concerns the determination of quality costs, which are broadly divided into costs resulting from internal business activities and external activities.
Components of costs associated with internal economic activity, are analyzed based on the AML costing model (prevention (P), assessment (E), defects (D)). Prevention and evaluation costs are considered profitable investments, while defect costs are considered losses.
The cost components are:
■ prevention: activities to prevent defects (for example, personnel training, etc.);
■ assessment: testing, monitoring and inspection to assess compliance with quality requirements; Internal costs are a consequence of defects and arise before the delivery of products due to the fact that the product does not meet quality requirements (re-provision of services, secondary processing, rework, defects).
External costs are a consequence of defects. Typically, these are costs incurred after delivery of a product when it is discovered that the product does not meet quality requirements (e.g. maintenance and product repair; guarantees and returns; direct costs and discounts; related to the seizure of products; costs associated with bearing legal responsibility for product quality).
B) Method of calculating costs associated with processes. This method uses the concepts of compliance and non-conformance costs of any process, both of which can be a source of cost savings. In this case:
Cost of Compliance- these are the costs incurred in order to satisfy all existing consumer requests with the reliability of the existing process;
Cost of non-compliance are costs incurred due to disruption of an existing process.
