9

Two New Dimensions i n t h e

Cost of Quality
by Batoul Modarress and A. Ansari
Albers School of Business, Seattle University

Introduction
In recent years the quality and cost of manufacturing products have become important
factors that influence national and international business and economic patterns. These
two factors have been considered the main causes of the trade imbalance between the
United States and Japan. Japan, beyond almost anyone's imagination, has grown into
an economic colossus. For 20 years the world has watched with envy as the Japanese
have captured markets with high quality products at competitive prices. Lewis and
Allison[l] point out that an economic war has started among the world's leading
industrial nations for dominant shares of the world market. The authors conclude
that the US is losing its domestic and international market share to Japan.
Statistics describing the decreasing rate of US market share during the past decade
justify this conclusion. Between 1960 and 1980 the US share of world trade declined
from 17 per cent to 13 per cent. More specifically, it declined in consumer electronics,
steel, automobiles, wide jetliners, and semiconductors, while Japan's share of the
market for these items increased from 3.6 per cent to 7 per cent (Balloun[2]).
The penetration of Japanese goods into the US domestic markets is also increasing.
From 1972 to 1983 the importation of foreign goods increased more than 50 per cent.
Now foreign cars account for 33 per cent of all cars sold in the United States, with
the Japanese selling eight out of ten of those (Johnson[3]). The increased level of
imports pushed the US-Japan trade deficit to $37 billion at the end of 1984.
In the panic produced by an escalating trade imbalance, an important fact about
Japanese industrial products has been overlooked. Their continually improving quality
has been combined with lower manufacturing costs than in the US.

Why the Japanese have Lower Manufacturing Costs

The traditional view of the relationship between cost and quality assumes that quality
is an attribute which has a per unit cost. The cost is a function of quality and increases
in direct relation to quality. Such a formulation sees quality as an economic good
and assumes that producing higher quality goods costs more because it requires better
materials, operations inspection, and equipment. This static formulation cannot
explain, however, the situation where one firm produces a product of higher quality
10 International Journal of Quality & Reliability Management 4,4

than its competitors at a lower cost. It is inconsistent with the cost-quality differential
between the US and Japan (Fine[4]).
There are a few possible explanations for Japan's lower manufacturing costs.
Abernathy, et al. [5] attribute part of the Japanese cost advantage to a difference in
wage rates. This attribution is pure fiction. By 1978, aided by devaluation of the US
dollar, Japanese wages rose above US levels. Hayes[6] rejects the possibility that
differences in capital investment and/or factory automation account for the cost
differential. Nevertheless, major US industries have allocated their resources to various
industrial improvements. Indeed, US technological capabilities, especially in automotive
industries, cannot be challenged by the Japanese.
One possible explanation for cost differentials offered by traditional economic theory
is the existence of economies of scale. Perhaps the Japanese have achieved lower
production costs because they work at a higher scale of production than the US. This
does not explain the differential in auto industries. Major US auto firms like General
Motors and Ford are larger than any Japanese firms, due to industrial concentration
in the US[4].
Another possible explanation for cost differentials is the dynamic effect of the
learning curve. Production and production related costs can decline as a result of
learning from experience, economists say. But this also does not hold for US firms
and Japanese firms. US car manufacturers have had more rather than less time to
learn from experience[4].
Many experts in operations management and manufacturing disciplines, such as
Deming[7] and Schonberger[8], believe that the key to Japanese success is its
revolutionary, organised quality system. The forces that shape the organisation of the
quality system are the Statistical Quality Control (SQC) programme and Just-In-Time
(JIT) production. These are two reasons, among others, why the Japanese have excelled
in improving quality at lower manufacturing cost. According to one estimate,
implementation of SQC and JIT gives the Japanese automaker a $2100 per car
advantage in cost (Sullivan[9]).
The first purpose of this paper is to explore the proposition that implementing SQC
and JIT systems would consistently improve product quality and that high quality
will eventually lower manufacturing costs. The second proposition is that it would
also add two more dimensions to the four-dimension quality-cost concept introduced
by Feigenbaum[10]. The fifth dimension is the cost of quality design. The sixth
dimension is the cost of inefficient utilisation of resources.
This paper first presents an overview of quality and quality control, to provide a
better understanding of these concepts and to pave the way for discussing the impact
of SQC and JIT on the cost of quality. The overview is followed by an account of
the development of SQC in US and Japanese industries. Next, the impact of SQC
and JIT on quality cost is discussed. Finally, the problems of using SQC and JIT
in industries and some recommendations to overcome these problems will be discussed.

An Overview of Quality and Quality Control

Concept of Quality
The concept of quality as it is used in modern manufacturing began with the first
crude attempts at making duplicate objects. The basis for the concept of quality lay
 Cost of Quality 11

in the extent to which the characteristics of the duplicate object corresponded to those
of the original. It should be recognised that the perception of quality differs greatly
as a function of the position of an individual in the production-consumption cycle.
The three primary populations of concern in the cycle are production personnel, design
engineers, and consumers.
For most US production personnel, quality is the capability of a product, which
is linked with conformance to specifications. Excellence is equated with meeting
specifications. Japanese production personnel define quality as product uniformity
around the target, rather than conformity to specifications. This difference in thinking
results in a higher reliability and durability of products. The Japanese also define
quality in terms of the loss it inflicts on society from the time it leaves the
manufacturer's location, (Taguchi[ll]). This gives the quality control concept a social
relevance.
Design engineers define quality as the features, styling, and other product attributes
that enhance utility for consumers. From the consumer's viewpoint, quality means
fitness for use. It represents the degree to which a product or service is fit for specified
usage. In recent years, however, consumer emphasis has been on the reliability and
durability of products. Japanese industries accept fitness for use as a preferable
criterion, thereby keeping the firm significantly more in touch with the consumer than
US firms are. US management has too often defined quality in its narrowest sense:
conformity to specification. This becomes an end in itself, the subject of dispute among
different departments, and the final user is forgotten. Although the Japanese approach
reflects the consumer's interest in quality, their primary focus is to provide a basis
for designing quality control into the production line.

Quality Control
Quality control is defined as a system for the realisation and management to
specification of the desirable cost quality, performance quality, and reliability quality
standards for the product (Feigenbaum[12]). Quality control is also defined as the use
of statistical methods from raw material to consumer and back again. Building on
this definition, Deming[13] introduced a philosophy of statistical quality control based
on two fundamental ideas. First, the key to producing a consistent, high-quality product
is control of the manufacturing process. Second, the key to successful process control
is distinguishing between numerous small variations inherent in the process (common
causes) and a few large structural variations (special causes).
Statistical techniques, the analytical tools, are often the sole resource, not only for
solving problems of variation but also for designing products, determining capabilities,
assessing conformity, and attaining and retaining control in all aspects of the quality
system.

Development of SQC in the US and Japan

SQC is not a new concept, nor is the current interest shown by American manufacturers
a new phenomenon. From 1900 to 1923, Bell Telephone Laboratories developed and
used probability distributions, frequency distributions, and control charts to make
12 International Journal of Quality & Reliability Management 4,4

logical management and production decisions. In 1924 Shewhart[14], a member of

the technical staff of Bell Telephone Laboratories, originated the first control chart.
During World War II the military services adopted statistical sampling inspection
procedures and brought direct pressure on producers of war products to adopt SQC
in order to meet requirements of acceptance and to lower the rate of rejection of
products. In the 1950s the automobile makers began to show an interest in SQC. This
was the result of the slowdown in the economy and the automobile makers' attempt
to decrease production costs. They relied heavily on receiving inspection to control
the level of quality from outside suppliers. Although much emphasis was placed on
sampling plans, the responsibility for quality was split between consumer and supplier.
The supplier regarded consumer-receiving inspection results as the measure of quality.
Therefore, supplier and consumer were both inspecting parts to control quality. This
system added significant costs to the manufacturing process through re-work, scrap,
and the inherent cost of dual inspection.
There were also other problems associated with adopting SQC, such as lack of
trained industrial statisticians and managers' resistance to statistics. In the meantime,
the economy started to pick up again, and the industry's attention to statistics faded
away.
In the early 1960s the automakers again indicated interest in statistics for essentially
the same reasons as the 1950s. This time they replaced receiving inspection with Supplier
Quality Assurance (SQA) as a more cost-effective way to control supplier quality. The
SQA programme transferred quality responsibility from consumer to supplier. In a
real sense the cost of quality using the SQA approach was not much different from
the receiving inspection approach (Chisholm[5]). During the 1970s much emphasis
was placed on initial process capability. This was the basis for determining whether
the process was capable of producing parts within specification. Although the method
is statistically valid, its results had little meaning without the use of control charts.
As quality demands intensified in the marketplace, industries (especially automobile
makers) placed more emphasis on inspection, often 100 per cent inspection for the
control of quality. This resulted in an even higher level of production costs.
Now, in the 1980s, there is increased interest in statistics, as was the case in the 1950s
and 1960s. The US is confronted with an economic downswing and foreign
competition. This competition brings into question the quality effectiveness of
American products. According to a survey conducted by Ford Motor Company in
1980, 30 per cent of the defects in its product were corrected by the supplier through
process improvements and 70 per cent were corrected through inspection action in
the auto industries[9]. This data verifies that inspection is still the dominant form
of quality control.
During the early 1950s, Japanese products were notoriously shoddy in quality. The
Japanese were reconstructing industries that had been damaged or destroyed during
World War II. During the period from 1950 to 1954, various SQC methods, including
the cause-and-effect diagram, were developed by Kaoru Ishikawa with the help of
Edward Deming. In this period many good results were achieved, although one major
problem remained: top management lagged behind in the process. In 1954, Joseph
Juran visited Japan and presented a managerial aspect of quality management. The
impact of these seminars, combined with a desire on the part of top management
 Cost of Quality 13

to succeed, inspired a number of firms to integrate SQC into their management

system.
In 1961, emphasis in Japanese industry was placed mainly on new development in
the automotive and electric product industries. As they developed new products,
companies sought to build a quality assurance system throughout all stages of design,
research and development (R and D), product sales, and services. With the emphasis
on R and D, Taguchi[11] introduced statistical, experimental design to impose efficiency
in product and process design. In 1967, Taguchi introduced on-line quality control
techniques for production divisions and off-line quality control techniques for
management, R and D, and design engineers.
Today as many as 70 per cent of Japanese quality control programmes are based
on off-line quality control, bringing the use of on-line quality control to a minimum.

The Impact of SQC on Cost of Quality

The cost of quality for US industries at the beginning of the 1970s was 10 per cent
of the sales dollars in numerous manufacturing organisations. The cost level reached
20 per cent in 1980. It has been estimated that it will increase again unless
manufacturers take action to control the cost[16].
The concept of cost of quality was introduced by Feigenbaum[10] and is defined
as the ratio to sales of any manufacturing costs in excess of what would have been
incurred if the product had been built right the first time. Feigenbaum considers quality
in terms of the degree of conformation to an established level, and he classified the
costs associated with conformation in four dimensions:
(1) prevention costs, such as the amount spent for quality planning, quality
training, process control, and quality improvement projects;
(2) appraisal costs, including the costs arising from inspection of materials,
inspection and tests of work in process and final output, and equipment
maintenance;
(3) internal failure costs, including scrap, rework, retest, down time, and related
losses resulting from off-standard product quality;
(4) external failure costs, which include warranty claims, complaint adjustments,
returned material, product liability suits, and loss of customer goodwill due
to the sale of defective items.
The traditional view of quality costs is that the achievement of better quality requires
much higher costs. This view dominates the thoughts of many US manufacturers.
However, a new point of view, Crosby[17], directly challenges the traditionally assumed
relationship between quality and cost. This point of view, which is widely held by
Japanese manufacturers, is that producing high quality reduces cost. The Japanese
automobile industry lends credibility to this view by showing cost of quality in the
2.5 to 4 per cent range of sales after improving quality. This success was achieved
through greater reliance on SQC in all departments and at all levels of management.
This is in sharp contrast to the 25 per cent quality costs in the US auto industry, where
quality personnel are responsible for inspection and fixing failures.
14 International Journal of Quality & Reliability Management 4,4

Lundvall and Juran[18] present a simple model of a conformation decision problem

which emphasises this new school of thought. The objective is to bring the total cost
of quality (the costs of prevention, appraisal, and failures) to a minimum, while
maintaining or improving quality levels. The model points out that an increase in the
costs of prevention should result in a larger decrease in the costs of failure, thereby
reducing the total cost of quality. For example, in a study of the air-conditioning
industry conducted by Garvin[19], Japanese manufacturers brought their failure rates
down to levels from fifteen to seventy times lower than their US competitors, with
average total costs of quality of 1.3 per cent of sales. Thus, effective prevention activities
result in fewer quality-related losses by correcting problems at early stages of
production.
Improving quality and product uniformity also leads to lower quality cost. When
defective parts are not corrected at their sources, there is a dramatic escalation in quality
cost. Richard Anderson, General Manager of the Computer System Division of
Hewlett-Packard, describes the damage that a faulty two cent resistor can do. If workers
catch the resistor before it is used, he said, the company loses two cents. If they don't
find it until it has been soldered into a computer component, the cost of repairing
the part is about ten dollars. If they don't find the resistor until it is in the customers'
hands, the cost of repairing a $5000 computer will be hundreds of dollars, (Main[20]).
SQC is helpful in identifying poor quality as soon as possible in the production process.
Thus, it eliminates the source of subsequent larger expenses for companies.

Production Process
Implementation of SQC helps to reduce errors in production and the costs of internal
failure, such as scrap, rework, retest, down time, direct labour and material. Harry
Williams, Vice President of Stacoswitch Company, reports that between 1981 and 1983
his company reduced the level of scrap to almost zero by statistically controlling the
process. Quality costs were reduced by 34 per cent, with a 30 per cent reduction in
labour time and a 27 per cent reduction in material usage.
One area of quality cost that US industries wish to overcome is associated with
external failures, such as recalls and repair of defective products. One report indicated
that about $3 million was spent to fix the pollution control systems on 27,000 1976
American motor cars, including $40,000 just for first-class postage to notify the car-
owners. Another example is Firestone's replacement of 7.5 million steel-belted radial
tyres in its notorious recall case; 41 deaths and 65 injuries were allegedly connected
with the tyres. The costs of the recall exceeded $135 million — more than the company's
net income in 1977 (Roth and Morse[21]). This problem can be eliminated by adopting
SQC and by stressing process capability to produce more reliable products.
The loss of customers' goodwill as a result of a quality problem is an intangible
quality cost. This loss is broader than it might seem at first: it includes customers
who refuse to buy a product because of problems they have had in the past; it also
includes consumers who turn away from a product because of publicity about a recall
or lawsuit. This type of cost can be critical and responsible for a loss of 33 per cent
of the automarket share to the Japanese.
 Cost of Quality 15

Design Process
Another quality cost area, which Feigenbaum does not mention, is the cost of designing
the product and bringing it to production; Design has basically two major phases:
system design, the design and experimentation or testing of all components parts or
manufacturing processes; and specification design, the determination of how much
variation from the target specification can be allowed, based on testing and process
capability (McElroy[22]).
Experimentation and testing account for the greatest expenditure and time, as design
engineers must achieve several design objectives while developing a product with several
hundred elements. Perhaps the cost of quality design should be a fifth dimension in
the quality cost concept introduced by Feigenbaum. Advanced SQC and experimental
design can help to optimise time and design elements by determining the least expensive
materials for the product to perform to specification and still ensure that the product
will perform satisfactorily under varying conditions. These techniques are considered
one of the key reasons the Japanese are able to achieve higher quality at lower costs.
For example, one Japanese watchmaker, through the use of SQC, found it unnecessary
to use an expensive quartz crystal to achieve high accuracy in a wristwatch. An
inexpensive capacitator could compensate for variations in a cheaper crystal without
sacrificing the overall accuracy.
Indirect manufacturing costs associated with inefficiency of manufacturing resources
account for part of the total quality costs. These include salary costs of staff employees
and costs for capital equipment and depreciation. An effective system of SQC can
reduce administrative expenses associated with not doing things right the first time
and effect more efficient use of equipment. Radical quality cost reduction can be
achieved through such an effective SQC system.
In conclusion, any money spent on SQC as a preventive programme is as cost
effective as possible. In the long run, there will be a sharp decrease in failure costs
with a downward trend in preventive costs, while maintaining high quality. This
programme, when combined with a complementary quality-related programme, Just-
In-Time production, can achieve significant improvements in the quality and cost of
manufacturing.

The Impact of Just-In-Time Production on Cost of Quality

The practice of Just-In-Time (JIT) in manufacturing systems reflects its title. Materials
are purchased or parts are produced in an exact quantity and just in time as they are
needed[8]. The idea was developed into a formal management system by the Toyota
organisation in order to meet the precise demands of customers for various vehicle
models and colours with minimum delivery delay. The JIT system is considered a major
factor, among others, contributing to the success of Japanese companies in achieving
high quality with low manufacturing costs. This can be clearly realised by comparing
the US and Japanese auto companies. According to one estimate, the JIT system gives
Japanese industries a $500 per car advantage in cost.
The primary objective of the JIT technique is the improvement of quality through
the elimination of waste. Waste is defined as anything other than the minimum amounts
of equipment, materials, and workers that are absolutely essential to production.
16 International Journal of Quality & Reliability Management 4,4

Deming[23] points out that from 15 to 40 per cent of the quality cost for almost any
American product is for imbedded waste. JIT demands that inventory be kept to a
minimum. Extra supply adds extra cost to quality and forces an operation which ties
up capital that could be invested elsewhere. According to the Ford Motor Company,
every dollar's worth of parts carried in inventory costs the company 26 cents, mainly
in interest and insurance. This means that it costs US automobile makers $8.5 billion
to carry excess inventory to produce 11 million cars as compared with Japanese auto
industries' $800 million cost to carry inventory (McElroy[24]). Significant improvement
in quality and cost can be achieved by the elimination of inventory. Any defective
part is detected promptly and a fast feedback is given to the producing process, which
can identify the problem and correct it on the spot.
In addition to quality improvement, with the JIT programme there is no need for
a profusion of warehouses, fleets of forklift trucks, tons of racks, hundreds of employees,
to move the inventory, or millions of dollars to maintain materials. The implementation
of JIT production necessitates changes in other phases of manufacturing in a plant,
such as smoothing production and utilising group technology. Each of these changes
can result in further improvement in manufacturing costs.

Smoothing Production
With zero inventory in the system, any fluctuation in the production at the final
assembly line (such as unsatisfactory product) would create variations in production
requirements in preceding stages. The variation becomes larger for the processes further
away from the final assembly line. To prevent variance in production requirements,
production should be at its minimum quantity size (lot size), ideally a lot size of one.
Small lot sizes help to reduce nonconformities through the detection and solution
of problems quickly; through accurate and simplified data collection for process
analysis and quality analysis; and through elimination of losses due to large contracts.
For example Commodore International had a contract with the Japanese for 170,000
disc drives for a special model of personal computer. The whole shipment was rejected
due to nonconforming product. With a small lot size, such a loss could be prevented
by suspending the production and eliminating the problem.
A major obstacle in producing small lots is set-up time (time to adjust a machine).
Long set-up time makes the small lot production uneconomical. By cutting the set-up
time, machine down time and work-in-process are reduced, and so are the costs
associated with obsolescence, materials handling, materials control, and quality control.
In addition to these cost reductions, short set-up time leads to shorter lead time (total
time required to manufacture an item). As a result of short lead time and small
inventory, manufacturers will have much more flexibility in process for adapting to
changes in the market or changes due to other factors (Shingo[25]).

Utilising Group Technology

This involves grouping a series of machines with different functions according to the
required production steps of one or a family of items. With this approach, functions
that were performed in a few separate work stations can be performed in one work
 Cost of Quality 17

station. Implementation of group technology contributes to the company's efforts

to maintain low material handling costs and low costs of inventory.
By adopting group technology and a convenient transportation system, more cost
reduction will occur in industries. Factory floor space will be utilised more efficiently,
usually by a factor of two or more; the number of forklifts required will be significantly
reduced. Furthermore, such changes shorten the lead time by a factor of at least one.
The application of JIT requires some changes in manufacturing practices, which
result in a significant reduction in the cost of quality. The cost of inefficient utilisation
of resources and its subsequent losses was not included in Feigenbaum's four-dimension
concept of quality control. Thus, JIT emphasis has revealed a possible sixth dimension
to the concept of cost of quality.

Combined JIT and SQC Impact on Cost of Quality

The JIT system seems to be the ultimate way of organising the production of standard
products. But the system is premised on consistently high quality. Industries using
JIT cannot function with the conventional approach to quality, the inspect and fix
mode. The preferred approach is the standardisation of product through SQC, which
signals poor quality as it occurs and reduces the possibility of making scrap.
The reason the Japanese moved strongly into a JIT manufacturing system is that
they relied heavily on SQC programs. They made a great deal of effort to solve quality
problems first. This requires substantial time and commitment to training, problem-
solving, and establishing continuous quality improvement.
The adaptation of JIT should be done in two sequential stages. Solve quality
problems first, then take care of quantity. Both JIT and SQC demand simplicity and
high quality in manufacturing processes. JIT simplifies the manufacturing process
by employing the "kanban" system. SQC simplifies the manufacturing process by
reducing the variability of process output, not just meeting specifications.
The tight inventory requirement of the JIT system offers a further quality and cost-
improvement opportunity. The system will not work if nonconforming products are
produced frequently. There is an inescapable pressure for both exposing and solving
problems. This pressure may be considered an opportunity to make improvements.
SQC exposes the patterns and location of problems in processes and provides the tools
to eliminate the problems. As soon as the causes of the exposed problems are
eliminated, more and more inventory can be pulled from the system, which forces
other problems to the surface. The ultimate result is better quality with lower
manufacturing costs.

Problems Encountered in the Implementation of SQC and JIT Systems

Although SQC originated in the US, its application is relatively new in different areas
of manufacturing. The resistance of personnel and a general lack of appreciation for
SQC account for the lack of knowledge, lack of communication, and lack of
management co-operation. These problems may be removed through motivation and
training of management and personnel and their early involvement in quality problems.
The weaknesses of SQC are its ineffectiveness in reducing inventory to a minimum
18 International Journal of Quality & Reliability Management 4,4

level and its limited capability in bringing hidden problems to the surface. These
weaknesses result in added costs to industries. Table I is a summary of the major
problems involved in the implementation of SQC and recommendations to overcome
these problems.

Table I. Problems Encountered in the Implementation of SQC

Major problems Recommendations

Lack of communication in industry Early involvement and education of personnel about

Lack of top management support
Resistance of personnel and lack of
mathematical knowledge
Added initial cost of implementation
Slow feedback among managers and
engineers
Ineffectiveness in reducing inventory
to a minimum level
Lack of support from suppliers
Lack of support from engineers
the SQC techniques and their potential benefits.
Motivation of top management by getting them
involved: train top executive and have him train the
managers who work for him. Managers train their
staff, continue until the training reaches operation
workers
Development of a statistical course by experts who are
aware of quality requirements
Short-term initial prevention cost will decrease by
improving quality and using advanced SQC
Emphasis on JIT forces managers and engineers to
co-operate quickly and constantly
Emphasis on JIT production and education of
personnel about its potential benefits
Education and training suppliers on SQC and its
potential benefits
Education and constant co-operation among
production personnel, engineers, and suppliers

The implementation of JIT systems encounters several problems, as does any new
programme, such as lack of top management support and lack of communication
in industry. Also, the shortcomings of JIT are its inability to pinpoint the areas that
have the greatest impact on quality and manufacturing costs and its dependency on
consistently high quality. Table II provides a list of six significant problems that
companies have encountered in the implementation of JIT and recommendations to
reduce these problems. These weaknesses force industries to seek to improve operations
by attacking many areas within the plant at once. Costs increase in attempts to find
the non-existent cause of problems. These weaknesses may be reduced or eliminated
by using the two complementary SQC and JIT systems.
 Cost of Quality 19

Table II. Problems Encountered in the Implementation of JIT Production

Major problems Recommendations

Lack of communication in industry Early involvement and education of personnel about

Lack of top management support
Lack of support from suppliers
Disruption of production due to
unsatisfactory quality
Inability to recognise the most
cost-effective area
Lack of engineering support
JIT and its potential benefits
Motivation of executives and top management through
learning and analysis of situation
Education and training in JIT and long-term
relationships with suppliers
Emphasis on SQC programme: aim at early detection
of critical problems; continuous reduction of
variations; and fast follow-up analysis
Emphasis on SQC to recognise the most cost-effective
area and improve product and process design
Education and constant cooperation among engineers,
production workers, and suppliers

Conclusion
The Japanese industries' high product quality at lower cost is not because of lower
wage rates, modern equipment, the existence of economies of scale, or other such
mythical factors. Their success has resulted instead from a better control system in
manufacturing — namely JIT production and SQC programmes.
A move toward JIT and SQC can lead to manufacturing excellence in the 1980s.
Because JIT removes the buffer of inventory, it becomes vital to know the true needs
of production when JIT is implemented. Developing and understanding those exact
needs is the function of SQC. JIT and SQC systems together provide synergistic results
which form a solid basis for better quality at lower quality cost. Using SQC triggers
the idea of adding a fifth dimension to the four-dimension quality-cost concept
introduced by Feigenbaum[10]. This fifth dimension is the cost of quality design. Using
advanced SQC brings further cost improvement to manufacturing through the
substitution of less expensive material, a decrease in experimentation and testing, a
reduction in the manufacturing process, less process control, and less product
inspection.
Furthermore, the JIT production experience suggests yet a sixth dimension to the
quality cost concept, the cost of inefficient utilisation of resources and its subsequent
losses. Because JIT emphasises efficient utilisation of manufacturing resources, it
provides a significant reduction in quality cost.
SQC and JIT are not one-time efforts that can easily be implemented and stopped.
Rather they are systems that require continuous application and improvement for a
continuous improvement in quality. They also require the continuous close co-operation
and communication of management with personnel at all levels of industry.
20 International Journal of Quality & Reliability Management 4,4

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