ASSESSMENT AND REDUCTION OF COST OF QUALITY AT ELGI SAUER COMPRESSORS LIMITED

Submitted by: D.Lakshmipathy 09MF66

ME-Industrial Engineering (PT) Faculty guide: Mr.R.Prakash Asst.Professor

Department of Mechanical Engineering

UNDERSTANDING

Cost of

uality

Cost of

uality

Definition in Performance perspective

The cost difference between present operation and the possible operation of a business with all systems and employees at 100% performance

Cost of

uality

Definition in Revenue perspective

The difference between actual revenues and what revenues could be if

all customers were always satisfied,

that is , No Unhappy Customers.

Cost of

uality Goal

Goal of a Cost of Quality system is to:

Facilitate Quality Improvements that leads

to operating cost reduction Opportunities.

By Jack Campanella - ASQ, "Principles of Quality Costs", 1986

VARIOUS COQ MODELS

Prevention appraisal and failure (P-A-F) model Crosbys model, Opportunity cost models, Process cost models and Activity Based Costing (ABC) model

P-A-F MODEL
Prevention costs - actions taken to ensure that a process provides quality products and services. Appraisal costs - measuring the level of quality attained by the process. Failure costs - to correct quality in products and services before (internal) or after (external) delivery to the customer.

CROSBYS MODEL
Similar to the P-A-F model. Crosby sees quality as conformance to requirements, and therefore, defines the cost of quality as the sum of price of conformance and price of non-conformance.

OPPORTUNITY AND INTANGIBLE COST MODEL

Intangible costs are costs that can be only estimated such as profits not earned because of lost customers and reduction in revenue owing to non-conformance. In this approach quality costs are defined in three categories:

Cost of conformance, Cost of non-conformance and Cost of lost opportunity.

Opportunity losses may be broken down into three components: Underutilization of installed capacity, Inadequate material handling and Poor delivery of service.

PROCESS COST MODEL

Process cost is the total cost of conformance and non-conformance for a particular process. Cost of conformance - producing products or services first time to the required standards. Cost of non-conformance - failure cost associated with the process not being executed to the required standard

PROCESS ACTIVITY-BASED COST (ABC) MODEL

The ABC approach - an alternative approach to identify, quantify and allocate quality costs among products to manage quality costs more effectively. The long-term goal of ABC systems is to eliminate non-value added activities and to continuously improve processes, activities and quality so that no defects are produced.

OBJECTIVE AND SCOPE

Prime requirement to sustain in market is to meet customer expectations at low cost. To attain this present state to be measured and reported. Scope is to assess and reduce CoQ

PROBLEM DEFINITION

Until July 2011, the organization under study has captured only the quality trend for its internal and field operations with the quantum of occurrences. As a focus towards improvement, the organization plans for continual improvement programs which again strive to reduce the quantum of defects relative to the previous term. There is no exclusive method adopted by the organization to evaluate the quality costs incurred towards appraisal and prevention of failures.

WHY PAF MODEL

P-A-F model has obtained good results. Model is simple to operate. Present situation of organization gathering information on intangible costs is remote. Organization is product based, so process cost approach cannot be adopted

PAF MODEL - ELEMENTS

Appraisal Prevention
Total Sales

Cost of Quality%
TOTAL SALES

Internal Failures External Failures

COQ

Examples of Elements
PREVENTION Design, Quality ,Progress Reviews Requirements, Documentation SQA Training Clean room INTERNAL FAILURE Recode/Repair Labor Defect Tracking & Reports Requirement Changes Down Hardware APPRAISAL Unit Testing Regression Testing Automated Test Tools User Interface Reviews EXTERNAL FAILURE Returned Goods Liability Costs Help Desk Lost Sales/Market Share

Element Decision Flow

Is Cost related to Prevention of NonConformance ?

YES

PREVENTION

NO
Is Cost related to Evaluating the Conformance ?

YES

APPRAISAL

NO
Is Cost related to Non-conformance ?

INTERNAL FAILURE
YES
Is Non-Conformance found prior to Shipment ?

YES

NO
Not a Quality Cost

NO EXTERNAL FAILURE

COQ ELEMENTS OF THE ORGANIZATION

Prevention cost
Quality

System Development Exp. Training & Consultancy Exp Quality Administration Exp.

Appraisal cost
Cost

of QAD personnel Cost of Inspection & Test Equipment Calibration Charges

COQ ELEMENTS OF THE ORGANIZATION

Internal Failure
Assembly

rejection cost Assembly rework cost

External failure
Product/part

field returns Expenses to attend field complaints Free of cost (FOC) replacement

COMPILATION OF COQ DATA

ELEMENT OF COST CATEGORY Quality System Development Exp. Jun-11 18384 Jul-11 0 Aug-11 0 Sep-11 0

Training & Consultancy Exp Quality Administration Exp. Prevention Cost Cumulative Prevention cost

13348 6457

0 9124

5578 5768

0 3145

38189

9124

11346

3145

Monthly Sales value

1,67,83,567

1,24,17,567

1,85,43,245

90,42,586

Percentage to Sales

0.228

0.073

0.061

0.035

COMPILATION OF COQ DATA

ELEMENT OF COST CATEGORY Cost of QAD personnel Cost of Inspection & Test Equipment Calibration Charges Appraisal Cost Jun-11 65036 141490 18750 Jul-11 65036 141490 7652 Aug-11 65036 141490 11522 Sep-11 65036 141490 3845

Cumulative appraisal cost

225276

214178

218048

210371

Monthly Sales value

1,67,83,567

1,24,17,567

1,85,43,245

90,42,586

Percentage to Sales

1.342

1.725

1.176

2.326

COMPILATION OF COQ DATA

ELEMENT OF COST CATEGORY Assembly rejection cost Assembly rework cost Cumulative Internal failure cost Percentage to Sales

Jun-11 7850 18550 26400 0.157

Jul-11 1321 19654 20975 0.169

Aug-11 5423 12452 17875 0.096

Sep-11 3526 13542 17068 0.189

Internal Failure Cost

COMPILATION OF COQ DATA

ELEMENT OF COST CATEGORY Product/part field returns Expenses to attend field complaints External Failure Cost Free of cost (FOC) replacement Cumulative Internal failure cost Percentage to Sales Jun-11 247580 21563 316875 586018 3.49 Jul-11 365432 34526 412654 812612 6.54 Aug-11 335422 29564 405214 770200 4.15 Sep-11 217541 19457 354511 591509 6.54

INTERPRETATION AND TO FOCUS ON AREA OF IMPROVEMENT

INTERPRETATION AND TO FOCUS ON AREA OF IMPROVEMENT

From the above chart interpretations can be made that the external failure cost is predominant in the organization which have a range from 3.49 % to 6.54 % of total organizational sales value. Subsequently the appraisal cost is positioned number two with a range between a minimum of 0.10 % to 0.19% of total organizational sales value. Prevention cost is the lowest among the three elements which ranges between a minimum value of 0.03 % to 0.23%

THR

CATEGORIES OF EXTERNAL FAILURE

Total parts Received from Customer as a warranty failure ( TWW + TWO ) Total parts Out of warranty period (Beyond 18 months from the manufacturing date) Defect Code A B C D E F G H Nature of Defect I & II stage cylinder unit III Stage cylinder unit oil pump shaft Blowdown valve shock mounts Temperature sensors Hooter Contact manometer Qty. (Nos.) 7 7 2 1 1 1 1 1 Cum. Qty. (Nos.) 7 14 16 17 18 19 20 21 % 33 33 10 5 5 5 5 5 1 2 3 4 5 6 7 8

22 1 Cum. % 33 67 76 81 86 90 95 100

TWO Sl. No.

PARETO - EXTERNAL FAILURE

PARETO ANALYSIS FOR EXTERNAL FAILURE (FROM JUNE 2011 TO SEP 2011)
8 100 80 60 40 33 2 1 1 1 1 1 20 0 A B C D E F G H ---- Defect Code ----> Failure Qty. Cumulative Percentage

7 81 86 90

-- Failure Qty. (Nos.) -->

7 6 5 4 3 2 1 0 67 76

95

100

---- Percentage ---->

INTERPRETATION FROM PARETO

Pareto reveals top two failures contributes to 67 % of failure. So focus shall be given to eliminate the top two failures will reduce 67% of failures. Viz. I,II and III stage cylinder units.

EXPLORATION OF FAILURE
Scoring marks observed on in I and II stage cylinder with water jacket.

EXPLORATION OF FAILURE
Replica of same observed in the piston

EXPLORATION OF FAILURE
The pattern of failure exhibits that entry of foreign particle inside the compression zone resulted in the failure Two possibilities of entry of foreign particle are

1. External source through air filter

2. Internal source debris of internal failed parts

EXPLORATION OF FAILURE
External source Through air filter Air filter is provided with a 50 micron filter mesh so the possibility is very negligible Internal source: The valve plate has failed and debris might have entered the compression chamber. To explore this possibility the valve assembly was

verified and it is confirmed that source of failure is

the broken valve plate.

PHOTOGRAPHS

It is observed that failure has happened in the zone where forming process replicates

I & II STAGE CYLINDER UNIT

Valve

III STAGE CYLINDER UNIT

Valve

BRAINSTORMING FOR POTENTIAL CAUSES

To explore the potential causes of failure a brainstorming session is conducted with the CFT of the product and the outcomes are categorized in the cause and effect diagram.

Level 1 CAUSE AND EFFECT DIAGRAM

A.APPLICATION Operating compressor with unspecified parameters Entry of foreign matter High Valve lift, spring stiffness high rpm & plate not guided axially Wobbling movement of the valve plates High impact velocity & stress High/low spring stiffness Using unspecified material
Water Pump inefficient

B.MATERIAL No material specification

Fluttering/slamming of plates High volume of air intake High outlet air temperature Improper air inter cooling between stages
Oil carry over causing carbonizing on plates

Material selection not suitable for press operation s

Physical damages of material in supplied condition

valve plate breakage

Un trained member allotted for processing Not aware about the implication Importance not made aware among operating level members

Measurement not as specified Low plate thickness

Purpose full by supplier

Machine not able to give consistent result

Non availability of material for specified thickness Requirement is not a standard thickness

Cost saving proposal

In appropriate machine selected for processing

No maintenance schedule followed for machine, tools, jigs and fixtures

Not aware about the requirement

Maintenance schedule not available D.MACHINE E.MAN

C. MEASUREMENT

Level 2 Cause and effect diagram

Material Phase transformation From austenite to martensite

Deformation during press operation increases pitting

Pitting happens in the material

Material selection not suitable for press operation

Discharg e valve plate breakag e

MICROSTRUCTURE ANALYSIS OF THE VALVE PLATE

Observation in non deformed area ASTM Grain size number is between 5-6 Full austenite is observed

MICROSTRUCTURE ANALYSIS OF THE VALVE PLATE

Observation in deformed area ASTM Grain size number is between 8-9 Austenite and strain induced martensite is observed.

CALCULATION FOR MARTENSITE FORMATION

The formation of strain induced martensite can be calculated by the empirical equation given below
Md30(C)=413 462(C+N)-9.2Si-8.1Mn-13.7Cr-9.5Ni-18.5Mo

Plastic deformation supplies the necessary energy for the martensite transformation. This energy can increase the temperature of martensite formation. The pitting corrosion and generalized corrosion resistance decrease with the increase of volume fraction of martensite.

INFERENCE

Steels that present higher values of Md30, for example AISI 302 and AISI 304, are more susceptible to form induced martensite when deformed at room temperature. Steels like AISI 316 or AISI 321, that present low values for temperature Md30, generally do not present strong martensite formation when deformed at room temperature. The Md30 value is calculated for AISI 302 and AISI 316 and found to be 30.9 C and -46.7 C respectively.

MODIFICATIONS IMPLEMENTED

Form the analysis it is concluded to modify the raw material of the valve plate to AISI 316 instead of AISI 302. The profile of the valve plate is eliminated and in the process of valve plate manufacturing, forming process is eliminated and the valve plate is made flat. Thickness of the valve plate is increased from 1.0 mm to 4.0 mm. Since thickness is increased the debris (if broken) will not enter in to the subsequent stages. Rear portion of the valve is covered with perforations so that the valve plate remains intact inside the valve housing in case of failure.

PHOTOGRAPHS
PREMODIFIED AND MODIFIED PLATES
Premodified plate Modified plate

PHOTOGRAPHS
PREMODIFIED AND MODIFIED HOUSING
Premodified housing Modified housing

VERIFICATION AND VALIDATION ON MODIFICATIONS

The implication on performance of the compressor due to change of valve plate is ascertained and the results are tabulated below

VERIFICATION AND VALIDATION ON MODIFICATIONS

Apart form verification the part is subjected to endurance trial run and has not failed in 3 compressors for 800 hours against the specification of 400 hours for earlier valve plate.

FURTHER ACTIVITIES TO BE COMPLETED

Since the preventive action proves to be effective, effectiveness monitoring needs to be carried out and the CoQ to be recalculated for the subsequent period to ascertain the reduction in CoQ. Corrective action impact needs to be captured through horizontal deployment activity by implementing the preventive action proactively for related part families.

DISCUSSION OPEN TO FORUM THANK YOU