How many times have you heard the phrase, “good quality is expensive”? In some cases, it’s definitely true. Who ever heard of a poor-quality yacht, mansion, or luxury car? Those items are expensive, true, but what makes them expensive? Exotic materials and advanced technology, for sure, but also part of the cost of making them perfectly is craftsmanship; very talented people make things “the best that money can buy”. There are also many people checking and double-checking to make sure these things are perfect, too.
Maybe, your company doesn’t make luxury items though. Perhaps, you have competition or you have to pay attention to costs. Can you afford the finest of craftsmen? Here and there, you probably should; there are specific critical areas of your business where you need genuine and rare talent, but not everywhere.
So, you must make do paying competitive wages in a skills-starved labor market for most of your manufacturing team. Hiring less-talented, lower-skilled workers is a way to save costs, but that strategy comes with a great risk: they’re human, and humans make errors, regardless of how conscientious they are.
Quality Engineering: Is Good Quality More Expensive?
Quality Engineers have a process called Cost of Quality (or Cost of Poor Quality) that helps determine if your quality is “expensive” or not, and if you’re spending your money in the right places to get the best cost/quality benefit ratio.
Types of Quality Costs
There are four basic types of quality costs: prevention, appraisal, internal failure, and external failure.
- Prevention costs are as they suggest: actions you take to prevent errors such as maintenance, design reviews, planning, procedure writing, and training.
- Appraisal costs include audits, product inspection, calibration, lab-testing, and receiving inspection among others.
- Internal failure costs are the costs of the errors when found internal to the business, such as scrap, product re-inspection, rework, higher inventories, and premium freight.
- External failure costs are the expensive ones: service calls and training, warranty expenses, liability suits, recalls, and chargebacks. These lead to loss of market share, bad reviews, poor reputation and less future business, consequences that are harder to quantify in dollar amounts, but should still be feared and avoided.
Most of the failure costs, both internal and external, can be attributed to human error. Appraisal helps you find the internal failures, which you can contain (the external failures slip out the door – by definition, unfortunately). Prevention actions minimize all other costs; some estimate a dollar spent on prevention saves seven dollars in failures. Overall, cost of quality ranges from 5% to 35% of the total costs for a manufacturing business. This could be a significant portion your company’s costs, much of it due to human error or confusion.
You could hire more humans to check the work of the other humans, but how much are you saving then? You’ve added to the appraisal costs and detected some failures; your scrap and rework will go up, but that’s better than the customer finding it, right? Your overall costs should go down. It’s a good idea if you have big customer problems. Is there something better than throwing more people at it?
Robots & Automation
“Buy robots!”, you say? Good idea. They’re expensive, though. Robots don’t make too many errors, they don’t take vacations, call in sick, or have bad days. So, yes, for certain functions, robots are a good idea, but remember, one of those genuine rare talents I mentioned above needs to program and look after your robots.
And robots can’t do everything. Neither can other pieces of equipment, such as stamping, molding and casting presses, conveyors, ovens, furnaces, welding machines, etc. Each of those technologies was a breakthrough for their particular industry at the time (and continue to be improved), but they’re still specific and they still need people to set them up, adjust, run, and maintain them. To be most effective, the robot strategy must be narrowly targeted.
The same goes for other types of automation. Small-scale automation should definitely be incorporated where it can. It’s usually inflexible, but is steady, and reliable – much more suited to repetitive tasks than humans. Automation can be quite cost-effective, too.
After plugging in some robots and introducing some targeted automation, we still have a (smaller) workforce of error-prone humans to deal with. What to do then? As we see above, adding mechanization helps avoid the human-induced errors: we’ve taken the work out of the person’s hands, so they can’t make mistakes. So what if we approach the entire problem from this angle?
Can we design a process – involving a person – that doesn’t allow them to make a mistake? Can we “mistake-proof” the process? Can we define “only one way to do it” and then devise the process that does it?
Yes. It’s done every day around the world, particularly in mass production industries, like the automotive industry. They use a prevention tool to help them find failure modes during the planning and design process. It’s called Process Failure Modes and Effects Analysis (PFMEA). The problem is that PFMEA is not always used effectively. A poor PFMEA can lead to poor results and expensive failures, but not nearly as expensive as doing nothing at all.
We’ll talk more about PFMEA, its origin, and structure, in the next part of our Quality Engineering blog series. Thanks for reading.