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FAQ 11- What is meant by the term cost of quality? How to reduce cost of quality?

9/27/2021

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​This multi-part blogpost series presents practical answers to frequently asked questions on improving business entities. 
frequently asked questions on continuous improvement
Its objective is to assist business leaders in these trying times, whether they are learning the basics of business process improvement, planning their first business improvement project, or evangelizing process-oriented thinking throughout their organization.
 
So, let’s get started … 
 
Cost of Quality refers to the entire sum that takes to produce a product or service while guaranteeing high standards of quality. This encompasses conformance as well as non-conformance costs, such as- costs allocated to repeat work, errors, and defects. For example, in the manufacturing industry, cost of quality can be increased by situations such as returned goods items.
 
There are a few different opinions that professional’s debate regarding Cost of Quality.
 
Few opine that, increased quality means increased cost. Enhancing features that relate to quality, such as performance and procedures, require more money for designing, sourcing materials, using labor and various other resources that add up significantly. Sometimes the added bonuses of quality improvement do not make up for the extra expenses.
 
Another opinion is that it costs less to improve quality of a product or service than it does to deal with the defects. Companies save more money since they do not have to spend it unnecessarily on costs that directly relate to defects. This concept is very popular among Japanese manufacturers.
 
Another popular opinion regarding Cost of Quality is that costs would be less if, a product or service were created in the optimal way right from start. This includes losses such as hidden expenses and missed opportunities.
 
Irrespective of the different Cost of Quality concepts, the criteria used to judge it remains the same, namely: production cost, internal and external failure cost, defect prevention cost, opportunity cost and inspection cost.
 
Internal failure cost refers to expenses incurred from defects found prior to reaching the customer and includes reviews, re-inspection, revision, and rework.
 
External failure cost refers to expenses involved with defects found once the product has reached hands of the customer and includes costs of product recalls, returns and warranty claims.
 
Prevention costs refer to the costs related to deterrence of quality that is lacking, such as training, reviewing and planning.
 
Inspection costs occur during the time that it takes to find out if a product or service fulfills the standard of quality that is required through testing and evaluation.
 
Therefore, lower the cost of quality, higher is the profit.
 
Hence, all technical and business processes undermining cost of quality must be regularly studied, improved or redesigned to make the business more efficient and profitable. This can be done by installing a culture of continuous improvement in your organization. 

​There are more than eighteen different business process improvement techniques. Check them out here.
 
I shall discuss more FAQs concerning effective & efficient business process improvement in upcoming parts of this blog post series...
 
By the way, if you run a company that is facing a challenge to thrive in these difficult times, I would suggest that you please revisit your business processes in order to accelerate growth and bring a quick turnaround.
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Related reading:

  1. Kaizen for pharmaceutical, medical device and biotech industries.
  2. Business process improvement techniques for manufacturing and service industries.
  3. How to choose a business process improvement technique for your organization.
  4. 30 Popular continuous improvement tools.​ 
  5. YouTube #Shorts videos on Continuous Improvement.
Keywords and Tags:

#businessprocessimprovement #QMS #howtoimprovequality #whatiscostofquality #howtoreducebusinesscost #costofquality #howtoreducecostofquality #costofqualityexplained #strategicplanning #processimprovement #qualitymanagementsystems #strategymanagement #qualitymanagement #continuousimprovement  #businessprocessmodification   #businessprocessreengineering 
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Continuous Improvement in the Food Industry-  FDA Adds QR Code to Certain Export Certificates for Food.

6/22/2020

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Today USFDA announced addition of QR Code to certain export certificates for food products. This unique QR code will allow easier verification of the authenticity of the export certificates. ​
continuous improvement in the food industry by shruti bhat
Beginning June 29, 2020, the "Certificate to a Foreign Government" and "Certificate of Exportability" for human food products will include a unique QR code to allow easier verification of the authenticity of these certificates.

This added security measure means that anyone who receives a certificate from a U.S. exporter can scan the QR code and see a copy of the certificate as issued by the FDA. The use of QR codes will expedite verification of FDA-issued export certificates compared to the current system.

You may view / download details of the QR code certificates here. 

​
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Keywords and Tags:
#ContinuousImprovement   #Innovation
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Kaizen Training for R&D, Manufacturing and Service-based Organizations

5/2/2019

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A Kaizen Transformation roadmap will help you balance two worlds- the 'right now' and the 'next future'.

Top Experts in Kaizen Strategy Design & Training 

Kaizen Masterclass workshop by Dr Shruti Bhat
Kaizen Masterclass
To learn more about how Shruti can help your organization achieve new heights or to book a Workshop, Contact Dr. Shruti Bhat via Form or WhatsApp

Follow Shruti on Twitter, Facebook, YouTube, LinkedIn



​Keywords and Tags:
#Kaizen  #KaizenTraining #KaizenLeaderMasterclass #ManufacturingExcellence #AgileKaizen #Lean #BPM #Manufacturing  #OrganizationalExcellence
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Popular Continuous Improvement Workshops & Webinars for Manufacturing Industries

1/30/2019

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Increase Manufacturing Efficiency, Reduce Rework, Errors, Defects, Variations, Product Returns, Improve Productivity & Save Costs, Increase Sales and Market Share with Lean, Kaizen and other Continuous Improvement Methodologies. 

Some of the Popular Continuous Improvement Workshops & Webinars Conducted by Dr. Shruti Bhat for Manufacturing-based Companies -

Workshop on Lean Manufacturing by Dr Shruti Bhat
Continuous Improvement Tools for manufacturing and service industries workshop by Dr Shruti Bhat
root cause analysis and other investigation tools for continuous improvement in manufacturing industries workshop by Dr Shruti Bhat
visual management in manufacturing industries workshop by dr shruti bhat
Workshop on gemba walks by Dr Shruti Bhat
Kaizen masterclass workshop by Dr Shruti Bhat
Workshop on Kaizen for improving process efficiency by Dr Shruti Bhat
Are you audit ready succeeding with USFDA and other regulatory audits with Kaizen implementation workshop by Dr Shruti Bhat
CAPA, corrective actions preventive actions workshop by Dr Shruti Bhat
Worksop on agile kaizen for improving sales and marketing by Dr Shruti Bhat

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About Shruti Bhat PhD, MBA, Certified Lean Six Sigma Black Belt
 
Dr. Shruti Bhat is an award-winning Business Excellence Leader, Global Continuous Improvement Mastermind, Best-selling Author and Speaker. She is Continuous Improvement Advisor to several start-ups, mid-size and growing firms in Canada, USA, India, Africa and Emerging markets. She has authored eight business books and is an invited speaker at several national and international conferences, symposia and workshops.


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Keywords and Tags:

​#Manufacturing #Lean #ContinuousImprovement #Kaizen  #QualityImprovement  #Innoworks   #Quality  #eLearning    #BusinessProcessManagement  #ManufacturingManagement  #BPM  #LeanManagement  #KaizenLeaderMasterclass  #LeanSixSigma  #Kanban  #FMEA  #RiskManagement  #Workshops
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Out of Specification Impurity and Non-Compliance to Manufacturing Standards Continue to Haunt Pharmaceuticals- The Lupin Story.  Here's One Way to Correct the Mess ...

1/29/2019

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Out of specification impurity continues to haunt pharmaceutical products. There is yet another USFDA report citing out of specification product impurity and inappropriate processing issues in a reputed pharma company!
out of specification impurity and non-compliance to manufacturing standards continue to haunt pharmaceuticals- the lupin story. Way to correct the mess
For the third time in four months, Lupin Pharmaceuticals has been admonished by the Food and Drug Administration for a series of troubling quality-control issues at a manufacturing facility.

In a recent inspection report dated January 25, 2019, the regulator cited the company for failing to thoroughly review unexplained deficiencies in batches of medicines and not taking ‘scientifically sound’ steps to evaluate samples.

Few other deficiencies include- OOS (out of specification) investigations not handled correctly, impurity levels in products exceed specification limits and detailed health hazard assessment for the presence of this impurity was not conducted as needed.

Further remarks include- failure to re-train analysts who were involved in the purported mis-identification of product impurity, CAPA (Corrective Actions Preventive Actions) not designed and implemented correctly, insufficient investigation of customer complaints.
​
Other observations include- Appropriate controls were not exercised over computers or related systems to assure that changes in master production and control records or other records are instructed only by authorized personnel; Equipment used in the manufacturing, processing, packaging or holding of drug products is not of appropriate design to facilitate operations for its intended use; Established lab control mechanisms are not documented at the time of performance, and a lack of oversight and training.

Related reading:

  1. Valsartan, Irbesartan, Losartan Product Recalls- What are the Lessons for Pharmaceutical Industry?
  2. Mistake-Proofing Pharmaceutical Products: What can we learn from Valsartan, Losartan and Irbesartan recalls?
  3. Mistake-Proofing Pharmaceutical Product Development, Manufacturing and Logistics, Cost Savings via Poka Yoke​​​.
​A detailed root cause analysis shall of course open avenues of true ‘problem areas i.e. disjointed business processes’ which need correction, followed by a neat process improvement strategy and its flawless execution.​
Ideally, pharma companies must structure a dedicated Continuous Improvement lead and team within its organogram.
​There are over eighteen different continuous improvement methodologies to choose from.
Kaizen can be an excellent start to sort out this mess.​

How to Employ Kaizen in Pharmaceutical Operations?

Though a combination of nine types of Kaizen would be most suited; for starters, Gemba Kaizen can provide maximum help.

Gemba Kaizen is a method of continuous improvement that involves real time action. It is commonly used to add valuable activities to an organization, which help to add to the quality of customer satisfaction. When a problem arises, Gemba Kaizen pinpoints the issue as promptly as possible. The solution to the problem is then used to deal with the same problem, if it should reoccur, but ideally stops the problem from reoccurring in the first place. 
​
This method also implements ideas used in lean manufacturing, which help to reduce waste and unnecessary procedures.

One of the main goals of Gemba Kaizen is to eliminate anything that is not valuable, or adds value, to an organization, whether it is systems, procedures, employees, business verticals, machinery, facility and others. 

​Kaizen Case Studies:

  1. ​​Reduced Variations in Eye Drop Dosage; a Continuous Improvement Case Study: Kaizen in Pharmaceutical Product Development
  2. Kaizen Improved Patenting and Patent Filing Process ~ 20% drop in Patenting Cost; a Continuous Improvement Case Study
  3. How to Speed-up Pharmaceutical Generic Product Development?: Continuous Improvement Case Study
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​
Keywords and Tags:
​#OOS #OutOfSpecification #ProcessExcellence  #ContinuousImprovement #QualityImprovement  #ManufacturingManagement  #Pharmaceutical  #LifeSciences    #Drugs  #RiskManagement  #Lupin
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Valsartan, Irbesartan, Losartan Product Recalls- What are the Lessons for Pharmaceutical Industry?

1/27/2019

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Since September last year, news of *SARTAN drug recalls are doing the rounds. Yesterday's CNN Health carried yet another story on recalls of tainted Valsartan, Irbesartan, Losartan drug products.
Valsartan Irbesartan recalls_ What are the lessons for pharmaceutical Industry
Valsartan, Irbesartan, Losartan product recalls- What are the lessons for Pharmaceutical Industry? 

Straight answer- Big Time Business Process issue which must be rectified ASAP...

And, these 'process issues' are at several areas viz. product development process, manufacturing process, outsourcing or procurement process, customer service process to name a few; though a
company-specific root cause investigation will indicate more business processes that might have fully or partially impacted this drug product recall mess.

Presence of a potential carcinogen impurity in the drug as well as drug product clearly shows flaws in 'development and manufacturing processes'.
Companies that purchased this potentially contaminated API (active pharmaceutical ingredient) obviously have huge flaws with their 'procurement / outsourcing process' and need immediate process re-design!
​
​The fact that, carcinogen-contaminated drug products were consumed by patients show huge issues with 'customer service processes' of pharma companies and pharmacies. The issue with 'customer service process' gets further augmented because of the drug product shortage scenarios patients must now deal with.

As these recalls are not just with native irbesartan, valsartan, losartan products, but also extended to their fixed dose combinations i.e. *sartan combined with other drugs such as amlodipine, hydrochlorothiazide etc., the
product shortage mess gets sticky. Further, since these products are consumed daily, the impact of product shortages on patients (i.e. customers) is more intense...

Related reading:​

Mistake-Proofing Pharmaceutical Products: What can we learn from Valsartan, Losartan and Irbesartan recalls?
Mistake-Proofing Pharmaceutical Product Development, Manufacturing and Logistics, Cost Savings via Poka Yoke
​
Recommended steps to solve this problem:

  1. A logical thing to do in such cases is to study the Value Stream Map and identify all business processes that might have contributed to this mess.
  2. Next take a call on where these 'problematic' processes must be improved or re-designed. You can learn more about business process improvement and redesign here.
  3. Improve or redesign process(es) by using appropriate business improvement methodologies. There are over 18 different business improvement methodologies to choose from. Note that, selection of correct business process improvement methodology is very important too. 
  4. Once the problematic process(es) have been improved or redesigned as the case may be, conduct a robust risk-management exercise with FMEA and install a CAPA.
  5. ​Supplementing CAPA with Error-proofing mechanisms via Poka Yoke highly guarantees a 'no risk' scenario.​​
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​
#Kaizen   #BPM #ContinuousImprovement  #QualityImprovement     #ManufacturingManagement #Pharmaceutical  #LifeSciences #Drugs #FMEA   #RiskManagement  #ErrorProofing #Losartan  #Irbesartan  #Valsartan
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80% Reduction in Product Returns; a Continuous Improvement Case Study: Kaizen-based improvement in Manufacturing and Service Processes

12/13/2018

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Learn how Kaizen was used to improve manufacturing and service processes ...

To learn more about how Shruti can help your organization achieve new heights or to book a Workshop, Contact Dr. Shruti Bhat via Form or WhatsApp
​
Follow Shruti on Twitter, Facebook, YouTube, LinkedIn 

#Lean #ContinuousImprovement #Kaizen  #QualityImprovement  #BusinessProcessManagement  #ServiceIndustry  #ManufacturingManagement #LifeScience  #Food  #Beverage  
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