The Quality Loss Function

The quality loss function,(QLF), is a quality management tool. In traditional quality management systems anything that does not meet these standard is seen as a defect and rejected.

But in the thinking that is QLF, not all defects are equal; there are different types of defects, depending on how their impact. Some defects could also be seen as unimportant; what matters is defects on issues that affect the performance of a product or the customer’s level of satisfaction.

QLF in Practice

QLF awards a financial or monetary value to the dissatisfaction that customers experience when a product fails to perform.

It also awards a financial or monetary value to the escalating costs that are incurred when product performance exceeds target performance.

The secret to the appeal of QLF is that it embraces the concept of using design, robust design in fact, to build in quality; so quality is not done by inspection, but is built in to any product.

Principles Behind QLF

The Japanese electrical engineer, Genichi who developed QLF, asserted that there were 4 golden rules when it comes to quality.

1. Costs cannot be reduced without quality being affected (usually detrimentally).
2. Quality can be improved without costs increasing, if it is done correctly.
3. Overall costs can be reduced by improving the quality of a product.
4. Costs can be reduced by decreasing any variations from the norm. When variations are eliminated both quality and performance will be automatically improved.

Hence it makes sense to ensure that design issues are addressed, so that quality becomes inherent to a product.
The purpose of the QLF is to work with designers to ascertain the factors or characteristics that affect the performance of a product. Similarly any unimportant characteristics can be identified. The aim is therefore to ensure that variation is reduced with regard to the important characteristics and variance could be accepted if the characteristics are not important.

Assessing QLF

There are 3 general approaches to QLF to help assess quality.

Nominal Is Better: under this assessment the aim is to have a product that is as near as possible to the target value. In a sense it does not matter whether any variation is above or below the target value; what matters is stopping variation.

Larger Is Better Or Smaller is Better:

These two approaches attach a value to some characteristic, in the larger is better approach the company seeks to have a higher value of the characteristic (and the reverse in smaller is better). Keeping variations low is desirable in either approach, because variance from the value of the characteristic leads to increased losses.

QLF and Costs

QLF actually reduces costs, because it enables designers and managers to make financial decisions during the design process and ensures that the product is designed robustly, so quality is inherent.
QLF also moves the average of distribution nearer to the target value, so the target value becomes more achievable.

Through reducing any variances, costs are kept minimal, so it is a very effective tool to ensure that quality issues are addressed.

Use of QLF

QLF is increasingly being used by corporate manufacturing companies who are keen to ensure that they can achieve target values and ensure quality is maintained throughout the production process.
It can give companies a good competitive edge and in light of the recent economic downturn, it is seen as being important in terms of ensuring defects are minimal and thereby waste is reduced whilst customer satisfaction is kept high.