The Costs and Benefits of

Quality Management Systems

Dr Joe Gunning
School of Built Environment
University of Ulster
Q

TQM

Certified QMS

Documented
QMS
Quality Plans
Time
Quality Control
Intermediate goals of quality development
Key Elements of a Management System

• Overall Policy
• Clear Aims and Objectives
• Effective Programmes
• Documentation
• Working Procedures
• Record-Keeping
• Audit and Review
 4 Basic Requirements of a QMS
1. Everyone should play their part – and know what
their part is.

2. There should be a policy for quality attainment set

down by management and understood by all.

3. Activities should be as effective and efficient as

possible – with procedures, instructions and
training.

4. Continuous review and updating is required to

ensure continuing compliance and relevance.
• Define WHAT is to be done
• Explain WHY it is done
• Establish WHEN it is to be done
• Control HOW it is to be done
• Show WHERE it is to be done
• Identify WHO is to do it
 The ISO 9000:2000 family of standards on quality management systems
BS EN ISO Name Purpose

9000:2000 Quality management systems – Describes the fundamentals and specifies

Fundamentals and vocabulary the terminology for a QMS

9001:2000 Quality management systems - Specifies the requirement for a QMS where
Requirements an organization needs to demonstrate its
ability to provide products that fulfil customer
and applicable regulatory requirements
and aims to enhance customer satisfaction

9004:2000 Quality management systems –
Guidelines for performance improvements
Provides guidelines that consider both the
effectiveness and efficiency of the QMS, with
the aim of improving the performance of
the organization and satisfaction of customers
and other interested parties
 Reasons for Quality Certification

• Gain of market advantage

• Customer pressure (present or future)
• Compliance with specifications /
regulations
• Improved quality of product and service
• Avoidance of multi-assessment
 Benefits of
Quality Management Systems
• Satisfied customers with repeat business
• Enhanced reputation and market share
• More consistent performance, with fewer
defects and claims
• Higher productivity, with reduced wastage
and delays
• Better planning and communication
• Clear operating procedures
• Increased morale and job satisfaction
 Quality Costs for a Typical RMC Producer
Notional %
of Total
1 Costs of Prevention
a Auditing and review of QMS 2
b Periodic updating of the system 2
c On-going training of staff 4
Sub total 8%
2 Costs of Appraisal
a Increased testing of raw materials 10
b Increased sampling and testing at plant/on site 10
c Operation of a quality control system (ie Cusum) 2

Sub total 22%

3 Costs of Quality Failure
a1 Rejected loads – at plant – to be scrapped or downgraded 10%
a2 Rejected loads – on site – to be scrapped or downgraded 10%
b Consequential claims by customers 50%
c Loss of goodwill/reputation – incalculable!
Sub total 70%

Grand Total 100%

 Total quality – related costs

Failure
Quality related costs

Appraisal

Prevention

Quality awareness and improvement

Increasing quality awareness and improvement activities
Source: British Standard BS6143, 1991
 Quality Management – Diagnosis of State

STATE UNCERTAINITY AWAKENING UNDERSTANDING INSIGHT CERTAINITY

ASPECT

Quality cost as Unknown Assuming 3% Assuming 7% Assuming 5% Assuming 3%

% of turnover (Probably 20%) Actually 15% Actually 12% Actually 8% Actually 3%

Summary of “We don’t know “We try to “Problems “Preventive “We know
attitude to why we have a motivate but Solved” by a efforts are a why we don’t
quality quality problem” our efforts are quality natural have a quality
fragmented” improvement activity” problem”
programme
 Initial Costs of a QMS
1. Consultant Fees: £10,000
2. Document Development: £5,000
3. Staff Training: £3,000
4. Certification: £2,000
______________
TOTAL: £20,000
 Maintenance Costs
- Auditing
- Reviewing
- Updating documentation
- Administration
- Adherence to procedures
- Periodic reassessment/surveillance
 PEOPLE EFFECTIVE
COMMUNICATIOTION
PERFORMANCE
MEASUREMENT
CULTURAL
TEAMWORK CHANGE

SYSTEM TOTAL
(ISO 9000) COMMITMENT

QA/QMS TQM
 Features of Total Quality
• Commitment from Senior Management
• Philosophy of quality and continuous
improvement
• Customer Focus
• Closeness to suppliers
• Benchmarking against best practice
• Training in quality principles
• Trusting culture
• Employee empowerment
• Target of zero defects
• Measurement of quality performance
 Recommendations
- Involve senior management
- Retain good existing practices
- Involve as many people as possible
- Train all relevant staff
- Delay certification until fully prepared
- Allocate all costs carefully
- Circulate key cost data
- Use audits and reviews to drive improvements