What are the comparisons and challenges of Six Sigma management methods versus traditional quality cost management?

The cost of quality was firstly proposed by American quality management expert Feigenbaum in the early 1950s, who advocated to consider the quality prevention cost and inspection cost together with the in-plant loss and out-plant loss caused by the product's failure to meet the requirements, and to form a report on the cost of quality, which would be the basis for the enterprise managers to understand the impact of the quality problem on the enterprise's economic efficiency and to make quality decisions. Quality cost has been generally valued in Western countries, especially with Dr. J. M. Juran "gold in the mine" theory, more established on the basis of this quality cost theory is becoming more and more perfect. In ISO8402-1994 quality cost is to ensure and guarantee that the quality of the expenses incurred to ensure the satisfaction of the quality as well as the loss caused by the failure to achieve satisfactory quality.

But the essence of this quality cost theory is still the cost of quality is divided into four parts of the cost of prevention, appraisal costs, internal quality losses and external quality losses, and based on their cause and effect relationship, the construction of its theoretical and methodological systems. According to this quality cost theory, inspection costs and prevention costs are generally low at the beginning and gradually increase with the improvement of quality requirements, when the quality reaches a certain level, if the requirements to improve the quality, quality management costs will rise sharply. Internal quality loss and external quality loss is just the opposite of the situation, the beginning of the lower rate of qualified products, quality losses, but with the improvement of quality, quality losses will gradually decline, when the quality reaches a certain level, despite a substantial increase in inspection costs and prevention costs, but the decline in quality losses will gradually slow down the rate. Therefore, in product quality there must be an ideal point, that is, when the product quality is determined at this point, the total cost of product quality is the lowest, the enterprise's revenue is maximized. This point is the optimal level of quality, and its corresponding cost of quality is the optimal cost of quality.

This quality cost theory from the birth of its entire content is centered on the minimum quality capital investment, eliminate as much as possible the loss of defective products this core idea. Its research and application, in the enterprise quality management has played a positive role. But in the face of 6 sigma quality management has shown many problems:

1, in the face of 6 sigma quality management has achieved great results, the traditional cost of quality theory shows defects.

According to the traditional quality cost theory, 3 sigma quality level for the most economic and reasonable quality level. But from the relevant information, to achieve 6 sigma quality level of enterprises, the quality of the cost is less than 10% of sales; to achieve 5 sigma quality level of enterprises is 10% to 15%; to achieve 4 sigma quality level of enterprises is 15% to 20%; to achieve 3 sigma quality level of enterprises is 20% to 30%. With the continuous improvement of quality, the enterprise's profitability continues to improve, the proportion of quality costs to sales continues to decline. Such as the United States General Electric (GE Division from 1996 formally introduced 6 sigma quality management, in just a few years to obtain a great quality and productivity improvements and huge market returns. GE's 1998 operating margin reached a record 16.7 than the previous year, an increase of 1 percentage point, more than the level of the early 1990s ?12% ?4 percentage points, from the 6 sigma quality management benefits more than 1.5 billion U.S. dollars.

2, 6 sigma quality management goal is to increase profits, the traditional cost of quality theory can not fully reflect the performance of quality management .

6 sigma quality management goal is to eliminate non-value-added activities, shorten the production cycle, increase profits. The cost of quality is only one part of the quality capital movement, and it can only affect one aspect of quality profit and loss, not replace it. Therefore, accounting for quality cost alone is not enough to evaluate the gains and losses of quality management, quality economic benefits, nor can it provide a complete value reference for the effective development of total quality management, and sometimes it may also provide wrong cost information for total quality management. For example, traditional quality cost theory believes that rising quality costs are a bad sign and should be controlled; however, if the increase in quality revenues caused by increasing quality costs exceeds the increase in quality costs, it should be regarded as a good phenomenon. Conversely, a decrease in the cost of quality is a desirable goal of management and should be consolidated; but if the decrease in quality revenues caused by a decrease in the cost of quality exceeds the decrease in the cost of quality, the decrease in the cost of quality should be regarded as abnormal and must be stopped.

3, 6 sigma quality management to the customer as the center, the traditional quality cost theory to the enterprise as the center.

6 Sigma quality management is to consider quality from the customer's point of view, emphasizing customer satisfaction. However, the optimal quality level determined according to the optimal quality cost model is the most economical quality level considered only from within the enterprise, obviously not necessarily the best quality level evaluated by the market, the result is to allow defective products to be placed on the market, which can not greatly satisfy the customer's needs, and the product lacks competitiveness in the market. The best quality cost model with an isolated view of the problem, did not consider the impact of the market on the enterprise, did not consider the product quality of the consumer's use of the cost and production efficiency, did not consider the product quality of the community, the impact on the environment.