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Quality,cost,deliveryWikipedia,thefreeencyclopedia

Quality,cost,delivery
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Quality,cost,delivery(QCD),sometimesexpandedtoQCDMS(Quality,Cost,Delivery,Morale,Safety),[1]is
amanagementapproachoriginallydevelopedtohelpcompanieswithintheBritishautomobilesector.QCD
analysisisusedtoassessdifferentcomponentsoftheproductionprocess.Italsoprovidesaccuratefeedback
intheformoffactsandfiguresthathelpseniormanagersmakelogicalandbeneficialdecisions.Whatismore
isthatbyusingthegathereddataitismucheasierfororganizationstoprioritizetheirfuturegoals.[2]
ThereasonwhyQCDissuchapopularapproachisbecauseitallowspeopletobreakdownonebigthinginto
manysmallerones,whichhelpsorganizeandprioritizetheireffortsand,psychologically,preventsthefeelingof
beingoverwhelmed.[3]
ItisimportanttorememberthatQCDisathreedimensionalapproach.Ifthereisaproblemwithevenone
dimension,theotherswillinevitablysufferaswell.Onedimensioncannotbesacrificedforthesakeoftheother
two.[4]
Contents[hide]
1 BenefitsofQCD
2 QCDF
3 Quality
3.1 Qualitybasis
3.2 Productcomponents
3.3 Consequencesofpoorquality
4 Costs
4.1 Costreduction
5 Delivery
6 IncreasingprofitabilitywithQCD
7 Externallinks
8 References

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Quality,cost,deliveryWikipedia,thefreeencyclopedia

BenefitsofQCD

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QCDoffersastraightforwardmethodofmeasuringprocesseswhilebeingapplicabletobothsimpleand
complicatedbusinessprocesses.Italsorepresentsabasisforcomparingbusinesses.Forexample,a
businessmeasuringsupplierdeliveryperformancemayeasilycompareitsfindingsagainstotherbusinesses'
performance.

QCDF

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FlexibilityisoftenincludedasameasuretoQCDresultinginQuality,Cost,DeliveryandFlexibility(QCDF).
Flexibilityrelatestothecapacitytoadapttochanges/modifications.Themodificationscouldbeina)input
qualityb)outputqualityc)productspecificationsd)deliveryschedules.

Quality

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Qualityistheabilityofaproductorservicetomeetandexceedcustomerexpectations.Customers'
requirementsdeterminethequalitygoals.Itisalmostalwayslistedfirst,presumablybecausepoorqualityoften
resultsinbadbusiness.Qualityistheresultoftheefficiencyoftheentireproductionprocessformedofmen,
material,andmachinery.
Eventhoughqualityisnowseenasacompetitiveadvantage,USbusinessorganizationsinthe1970stended
tofocusmoreoncostandproductivity.ThatapproachledtoamajorshareoftheUSmarketbeingcapturedby
Japanesebusinessorganizations,whichoncesagainprovesthatinordertobesuccessfulanorganizationhas
tofocusonallthreeQCDdimensionstogether.[5]
Itwasnotuntilthelate1970sandthebeginningofthe1980sthatthefactorqualitydrasticallyshiftedand
becameastrategicapproachcreatedbyHarvardprofessorDavidGarvin .[6]Thisapproachfocuseson
preventinganymistakesand,also,putsagreatemphasisoncustomersatisfaction.[7]

Qualitybasis

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Gavinlistseightdimensionsofquality:[8][9]
Performance
Performanceisaproductsprimaryoperatingcharacteristics.Forexample,forastereothosecharacteristics
wouldincludesoundquality,surroundsound,andwificonnectivity.
Conformance
Conformancereferstothedegreetowhichacertainproductmeetsthecustomersexpectations.
Specialfeatures
Thoseareanyadditionalfeaturesofaproductorservice.Inotherwords,extras.Anexampleofanextracould
befreemealsonanairplane,orfreedrinksatamuseumvisit.AndforaTV,forexample,itcanbesplitscreen,
internetaccess,embeddedappsetc.
Aesthetics
Aestheticsrefertoaproductslooks,sound,feel,smell,ortaste.Whenitcomestoaesthetics,complete
customersatisfactionissimplyimpossibleasitisverysubjective.Forexample,onegroupofcustomersmay
likethesmellofacertainperfumewhileothermayfinditcompletelyrepelling.
Durability
Thedurabilityofaproductishowlongtheproductlastsbeforeithastobereplaced.Durabilitycanbe
improvedbytheusageoflonglifematerialsorimprovedtechnologyprocessesinmanufacturing.Some

8/1/2016

Quality,cost,deliveryWikipedia,thefreeencyclopedia

productsareexpectedtobemoredurablethanothers.Thoseoftenincludehomeappliancesandautomobiles
forwhichdurabilityisaprimarycharacteristicofquality.
Reliability
Reliabilityreferstothetimeuntilaproductbreaksdownandhastoberepaired,butnotreplaced.Thisfeature
isveryimportantforproductsthathaveexpensivemaintenance.
Serviceability
"Serviceabilityisdefinedbyspeed,courtesy,competenceandeaseofrepair."[8]Customersusuallywant
productsthatarerelativelyquicklyandeasilyserviceable.[10]
Perceivedquality
Theperceivedqualitymaybeaffectedbythehighpriceorthegoodaestheticsofaproduct.

Productcomponents

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Thequalityofaproductdependsalmostentirelyonthequalityofthesuppliedmaterials.Onecannotproduce
ahighqualityendproductfromlowqualitycomponents.Suppliersandmanufacturersmustbewillingtowork
togetherinordertoreduceandeliminateerrorsanddefects,andachievehigherqualityendproducts.SMEs
shoulddiscusswiththeirsuppliershowqualityimprovementscanaffecttheoverallperformanceofthesupply
chain.Aproperlyimplementedqualityprocedurecanreducetesting,scrap,rework,etc.Thiscouldresultina
reductionofproductioncosts.[11]

Consequencesofpoorquality

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Businessloss
Poorqualityoftenresultsinunsatisfiedcustomerswhichleadstobusinessloss.Inanenvironmentwherethe
customercaneasilyswitchtoacompetitor,producingpoorqualityproductscanbefataltoanorganization.
Productivity
Poorqualityproductsmustoftenbereworkedorscrappedentirely,whichreducestheamountofusable
output.
Costs[7][12]

Costs

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Thebiggestcostinmostbusinessorganizationsisthemanufacturingcost.Productionhasadirect
responsibilitywhenitcomestocontrollingandreducingmanufacturingcost.[4]
Therearefourbasictypesofmanufacturingcosts:[13]
Rawmaterials
Directlabour
Variableoverheadproductioncoststhatincreaseordecreasedependingonthequantityproduced.For
example,electricityisavariableoverhead.Ifacompanyincreasesproduction,itwillalsoincreasethe
usageofequipment,whichwillresultinahigherelectricitybill.
Fixedoverhead
Thosearetheproductioncostthatstaythesameevenifthequantityproducedincreasesordecreases.Those
costsinclude:
1.Salariesforemployeesthatdonotworkdirectlyontheproductionline(e.g.securityguards,safety
inspectors,etc.).

8/1/2016

Quality,cost,deliveryWikipedia,thefreeencyclopedia

2.Depreciationcosts
3.Occupancycostspropertytaxes,buildinginsurance,etc.

Costreduction

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Businesseshavebeenunderthepressuretodrivedowncostsinordertobemorecompetitiveformanyyears.
Therearemanybooksandarticlesnowadaysthatsuggestdifferentwaysofreducingcosts,someofwhichare
asfollows:
Minimizingsuppliercosts[14]
Adoptingleanmanufacturing[15]
Eliminatingwaste[16]

Delivery

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Logisticsareanessentialpartinprovidinggoodcustomerservice:[17][18]
Logisticscustomerservicecanbeseparatedintothreeelements(before,duringandafterdeliveryofthe
product):
Pretransactionelements
Transactionelements
Posttransactionelements

IncreasingprofitabilitywithQCD

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Therearesevenmeasuresusedtoincreaseprofitability:[19]
Notrightfirsttime(NRFT)[20]
Notgettingthingsrightthefirsttimemeanswastedresources,effortandtime.Thisallleadstoexcessivecosts
forthecompanyandpoorquality,highpricedproductsforthecustomer.NRFTmeasuresthequalityofa
productandisexpressedinnumberofdefectivepartspermillion.Thenumberofdefectiveproductsis
dividedbythetotalquantityoffinishedproducts.Thisfigureisthenmultipliedby10^6togetthenumberof
defectivepartspermillion.[2]
NRFTcanbemeasuredinternally(defectivepartsidentifiedwithintheproductionprocess)orexternally
(defectivepartsidentifiedoutsidetheproductionprocess(e.g.bythesupplierorthecustomer).[21]

Deliveryscheduleachievement(DSA)
DSAanalyseshowwellasupplierdeliverswhatthecustomerwantsandwhentheywantit.Thegoalisto
achieve100%ontimedeliverywithoutanyspecialdeliveriesorovertimepayments,whichonlyincreasethe
deliverycost.DSAmeasurestheactualdeliveryperformanceagainsttheplanneddeliveryschedule.[2]Failed
deliveriesinclude:
1."Notontime"deliveriesbothlateandearly.
2."Incorrectquantitydeliveries".
3.Both"notontime"and"incorrectquantitydeliveries".[21]

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Quality,cost,deliveryWikipedia,thefreeencyclopedia

Peopleproductivity(PP)
PPismeasuredbythetimeittakes(instaffhours)toproduceagoodqualityproduct.ObtaininghighPPis
onlypossiblewhen:
1.Mostemployees'workaddsvaluetotheprocess.
2.Nonvalueaddedworkisreducedasmuchaspossible.
3.Wasteiscompletelyeliminated.[21]

Stockturns(ST)
TheSTratioshowshowquicklyacompanyturnsrawmaterialsintofinished,readytobesoldproducts.The
quickerthebetter.AlowSTmeansthatthemoneyistiedupinstock,andthecompanyhasfewerfundsto
investinotherpartsofitsbusiness.[2]

Overallequipmenteffectiveness(OEE)
TheOEEshowshowwellacompanyusesitsequipmentandstaff.
OEEiscalculatedonthebaseofthreeelements:
1.Availabilitycomparestheplannedandtheactualtimeoftheprocessrun.Forexample,ifamachineis
plannedtorun100hoursaweek,butinrealityrunsonly50,thentheavailabilityis50%.[2]
2.Performancecomparestheidealoutputandtheactualoutput.Forexample,ifacertainprocessis
plannedtotake10minutes,butactuallytakes20,thentheproductivityis50%.[2]
3.Qualitytoshowthequalityofaproduct,acompanyhastocomparethenumberofgoodparts
producedwiththetotalpartsproduced.Ifitproduces100partsperhourbutonly50ofthemareof
saleablestandard,thenqualityisrunningat50%.[2]

Valueaddedperperson(VAPP)
VAPPshowshowwellpeopleareusedtoturnrawmaterialsintofinishedgoods.InordertocalculateVAPP,

8/1/2016

Quality,cost,deliveryWikipedia,thefreeencyclopedia

threethingsneedtobetakenintoaccount:
1.Thesalesvalueofaunitafterproduction(outputvalue).
2.Therawmaterialvalueofaunitbeforeproduction(inputvalue).
3.Thenumberofdirectproductionprocessemployees.[21]

Floorspaceutilisation(FSU)[22]
FSUmeasuresthesalesrevenuegeneratedbyasquaremeteroffactoryfloorspace.Usuallytoachieve
higherFSUthefloorspacehastobereduced.Thatmeanseliminatinginventoryandreducingthenecessary
spacetoaminimum.[21]

Externallinks

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