Quality Management: Factors Impacting Of Nonconformance Costs

Quantifiable Gains EXHIBIT Signetics Corporation (A) Cost of Nonconformance Internal • • • • • Rework Scrap Yield loss-standard is 100% Screens Corrective actions External • • Customer returns Failure analysis (field failures) Appraisal • • • Quality costs (QA/QC-inspections) Production-test/inspection Reliability engineering monitors (sure) Prevention • • • • • • Training Reliability (testing/qualifications) Quality activities-Quality Circles/Qualification Engineering Preventative maintenance/calibrations Design reviews and process release reviews considerable doubt, as to the likelihood of ever getting and maintaining accurate data on the factors in Exhibit 3 and the negative motivational impact of telling manufacturing that their poor quality was the source of 15-20% (the preliminary number cited by Q&R) of total costs. A second aspect of measurement and reporting that was still in the early stages of implementation was the inclusion of quality both in each manager's job specifications and in his or her Responsibility, Measures, and Objectives statement. While those involved in the pilot program seemed to be making good progress on this, it had been hoped that the entire organization would adopt it in 1980. However, the results seemed to be mixed, depending on the division and the level of support coming from division senior management. For many managers it looked like another "procedure" that kept them from their real task of producing product to meet customer needs at a profit (that is, emphasis on volume, delivery and profit.) McKenzie and his people also had been able to gather some information about the attitudes of managers throughout the company. As McKenzie had anticipated, the behavior and response varied from extremely negative to extremely positive. At the former end of the spectrum was the whole notion of the quality improvement program of keeping people honest and quality having to compete with productivity, which was already lower than it should have been. Clearly, they hadn't made much progress in areas where such a view prevailed At the other end were the results achieved to date in the Orem, Utah, plant, which was part of the pilot program. The plant manager, Dennis Peasenell, was extremely enthusiastic about the program and performance statistics already indicated that: • Wafer lines were running at rates consistently higher than both the U.S. industry average and the plant's own 1979 performance. • The number of defective circuits uncovered in destructive physical analysis performed in Sunnyvale on Orem-made products had plummeted from 12% to something down in the 1 to 2% range. • One fab line seemed well on its way to doubling the number of good dies per wafer and expected to reach that goal in another three months. • Reworks had declined from 20% in 1979 to what the plant manager projected would be 2% by the end of 1980 if the current trend continued. McKenzie and his people were extremely pleased with the results at the Orem plant. The plant manager was highly committed, as was his boss; several other people were also playing key roles, including the work-force, which seemed to be particularly receptive to the whole idea. The results had come not from simply following a 14-step program, but from broad-based support and commitment to the entire philosophy.