Quality and Lean Operations
Quality economics and lean thinking
Quality means fitness for use and conformance to requirements. The cost of quality has four categories: prevention (training, design reviews, supplier development), appraisal (inspection, testing), internal failure (scrap, rework) and external failure (warranty, returns, lost goodwill). Prevention is cheapest long term; external failure is dearest. TQM rests on customer focus, continuous improvement (PDCA), employee involvement and fact-based decisions.
Lean operations attack waste: transport, inventory, motion, waiting, overproduction, overprocessing and defects (TIMWOOD). Tools include 5S, kanban (pull signalling), value stream mapping, poka-yoke (error proofing), SMED and standard work. Six Sigma targets 3.4 defects per million opportunities and uses DMAIC.
Worked example
A firm spends 4 lakh on inspection, 6 lakh on rework, 10 lakh on warranty claims and 1 lakh on operator training. Classification: appraisal 4 lakh; internal failure 6 lakh; external failure 10 lakh; prevention 1 lakh. Total 21 lakh. Shifting 3 lakh from inspection to training may raise prevention to 4 lakh but should cut rework and warranty; the exam rewards identifying the category and the trade-off, not just the total.
Traps
Rework found before dispatch is internal failure, not appraisal. Inspection detects defects; it does not prevent them. Lean is not merely headcount reduction, and kanban is a pull signal, not a push schedule. Six Sigma is 3.4 defects per million opportunities, not per million units produced.