Module+24000+III+Explanation+and+Examples

III. Module 24000 Explanation and Examples sw

Products that fail and/or fail to meet intended specifications incur quality costs. Costs of quality can be significant, and on the other hand, could be a source of considerable savings. Adequate reporting and measurement of quality performance is crucial to the success of a continuous quality improvement program. American industry has taken the necessary steps to improving quality.
 * I. Costs of Quality **

Total Quality Management (TQM) is an approach to improve quality and performance which will meet or exceed customer expectations. This can be achieved by combining all quality-related functions and processes throughout the corporation. TQM looks at the overall quality measures including managing quality design and development, quality control and maintenance, quality improvement, and quality assurance. TQM takes into account all quality measures taken at all levels and involving all corporate employees.

 A quality cost reporting system is vital to an organization that is making strides toward improving and controlling quality costs. Initially, an assement of the current actual quality costs is required. A detailed breakdown of actual quality costs by category can provide two important insights. First, it reveals the magnitude of the quality costs in each category, allowing managers to assess their financial impact. Second, it shows the distribution of quality costs by category, allowing managers to assess the relative importance of each category.
 * II. Reporting Quality Costs **

The reporting of quality costs and enhance the overall improvement, planning, control, and decision making. For example, programs such as ISO 9000 are also important to outside parties in their assessment of corporate quality.
 * III. Quality Cost Information and Decision Making **

 Good quality cost management requires that quality costs be managed, reported, and controlled. This control helps managers compare actual outcomes against standard outcomes in performance and take any corrective actions necessary to achieve performance standards.
 * IV. Controlling Quality Costs **

Performance reporting is necessary for a successful quality improvement program. Identification of the quality standard is a key element in a quality performance report. Cost reduction opportunities should be emphasized in the quality standard.