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The price of pursuing perfection: the process of turning a foundry into a cost-effective, quality-driven environment takes a deliberate effort from all areas of the operation.

Inside This Story:

* This article describes the four categories typically associated with quality costs, including specific recommendations for reduction of quality costs in the foundry.

* This article provides strategies to help identity opportunities for a more prevention-based management approach to quality assurance.


The recent emergence of global sourcing in the foundry industry has manufacturers in the U.S. looking at their bottom line more than ever. But how do foundries keep costs at a minimum without compromising the integrity of their product?

While competition with foundries in Asia is intense, it is enhanced by a sometimes unimpressive quality showing from stateside suppliers. Competitive advantage for U.S. foundries is not just for profit--it is a necessary survival strategy. Quality improvements and overall cost reduction are connected and both are imperative for a successful company today.

Well-known author Philip Crosby popularized the notion that "Quality is Free." His book of the same title, published in 1979, communicated the basic measurement of quality on the basis of cost. He wrote, "Quality is free. It's not a gift, but it is free. What costs money are the un-quality things--all the actions that involve not doing jobs right the first time. Quality is free, but no one is ever going to know it if there isn't some sort of agreed-on system of measurement."

The agreed-on system of measurement is a four-fold categorization of quality cost. This has been widely accepted since that time and is repeated in ISO 8402 in its definition of quality costs. These categories are identified as failure (both internal and external), prevention and appraisal costs.

Failure Costs

Failure costs are incurred when something goes wrong. They are the costs that result from products or services that don't conform to requirements or customer/user needs. Failure costs are classified as either internal or external.

Internal failure costs are costs that occur prior to delivery or shipment of the product (or the furnishing of a costs are costs that occur after delivery or shipment of the product (and during or after furnishing of a service) to the customer.

Every metalcaster knows a scrap casting is a failure. When the casting is found and scrapped before it is shipped, it is an internal failure cost. But what dollar amount should be associated with the casting? The selling price is often used as the internal failure cost, but that may not always be the most accurate. The selling price includes a margin for profit and will overstate actual production costs. Also, the costs accumulated prior to the discovery of the scrap casting, including the costs of inspection, should be included.

What other costs are or can be associated with internal failure costs?

Rework and repair costs should be included as well. Minor surface imperfections that require removal by grinding, or the grinding of a riser pad or an ingate are considered a normal part of the process. However, if the casting were sent back to grind because the riser pad wasn't ground properly or the casting was returned to the grinding station, this would be a failure cost.

Inspection activities not designed as a part of the process also should be included. When incoming material is inspected as a normal part of operation, or parts are inspected on the line, these costs are assigned someplace else (appraisal). But when the material must be 100% sorted or re-inspected, it becomes an internal failure cost.

Staff activities associated with scrap castings also should be included. The time spent in material review board activities, time spent by the scrap recorder and all time spent on corrective action follow-up (including problem solving exercises and tests designed to uncover the root cause of the problem) are internal failure costs.

Foundries must consider factoring In:

* any internal or external lab costs incurred to analyze scrap castings for root causes;

* costs incurred because supplied materials require extra processing (this could be any rework/repair costs to bring the material to an acceptable condition);

* costs associated with design failure (this occurs when problems are encountered with using the castings after the production run has begun).

Costs that arise after castings have been shipped are the most expensive. Typical external costs associated with field failure investigations include travel and expenses for the sales representative and the field engineer, shipping and handling costs for returning the parts, the cost of the replacement parts and the shipping and handling of the replacement parts.

Recall, replacement or repair costs to fix the products that remain in the field are external failure costs. These include welding, grinding, re-drilling, disassembly and reassembly. The costs of the recall activities and the recalled products themselves also should be accounted for.

When a castling fails, it is already in a subassembly that has been placed into a larger assembly. It is common to inspect and maintain inspections until the assembly is due for scheduled downtime or disassembly.

The costs for warranty" claims, liability costs (insurance deductibles) and penalties incurred for failure to meet the contract conditions also should be included.

Appraisal Costs

Appraisal costs can represent up to 50% of the total quality cost picture tot businesses, particularly foundries serving industries with high regulatory and documentation requirements, such as the aerospace and medical industries. Foundries that serve these industries face similar requirements as they flow down from tier-one manufacturers.

Appraisal costs are costs of inspection and audit, but these activities are so pervasive and complex that a listing of some appraisal cost contributions is necessary. Some typical appraisal costs are:

* test and inspection of purchased materials (i.e. receiving inspection);

* laboratory acceptance testing (including extra costs for PPAP or ISIR initial product approvals);

* calibration and repair of gages and in-process inspection equipment;

* inspection (the entire cost of labor and the operation of inspection departments, including consumable supplies and burden);

* in-process and final testing including nondestructive (e.g. x-ray, dye penetrant, magnetic particle), functional (e.g. air leak), chemical (e.g. spectrometer), mechanical (e.g. mechanical properties, hardness, compactability of sand) and reliability or durability;

* that portion of direct labor used for checking by production personnel;

* test and inspection supplies, gages, masters, standards and reference blocks;

* supervisory and management audits, patrols and roving inspection costs;

* quality certification costs for systems and products;

A chart describing the theoretical relationship between cost categories (Fig. 1) is worth studying for one additional truth--investments in prevention and appraisal have a high rate of return in a reduction of failure costs. Most quality cost texts estimate at least a 10 to 1 return from prevention costs with some reporting a rate of 100 to 1. But keep in mind the chart is not intended to estimate the percent conforming at the point of least product cost. While it might appear on the chart to be 80 or 90% conforming, those active in business understand that would be a horrible place to stop improvement efforts.

The most fundamental approach to reducing all quality costs is to shift the focus of the organization to prevention and preventive activities of all kinds. Regular, planned preventive maintenance for equipment reduces the need for inspections and failures (breakdowns). The same is true with quality activities such as advanced product quality planning (APQF), error proofing and process capability improvement. They all work to reduce the need for inspection and costs associated with rejects and rework.

Preventative Costs

Preventative costs of quality can be widely overlooked. If an organization spends some up-front time and money looking at operations, documents, processes and methods, then the costs of quality associated with failure and appraisal would be drastically reduced. Many foundries overlook spending more time and effort in the preventative side of quality issues in order to reduce appraisal and failure costs.

The most common preventive actions performed by the foundry industry are training related.

This also is the most effective money a foundry can spend--more time and effort focusing on educating the staff and providing the proper tools to use with the education will dramatically cut quality costs in other areas (appraisal and failures).

But what are the true preventative costs? How are these costs measured, monitored and reacted upon? How does an organization show objectivity behind these "true" measurements, and what questions do they need to ask to obtain those answers?

Start with the quality system.

To determine which areas require training, evaluate the current documentation. Does it adequately transfer the information from one entity to another? Does the information result in action? If not, modify the document or evaluate the need for the document. If it is a requirement of some standard, such as an ISO 9000 QMS, then there is an issue with other areas of the quality management system.

After the effectiveness of the documents is determined, decide what is needed to educate the employees. Help them understand the need of the document and explain to them why they should complete it and what the impact of the information could be on their job (how will it benefit them). Then work with them on filling out the document clearly. The more accurate the information, the more accurate the decision. Management must then follow through with the promises.

To utilize the quality system even more effectively, refer to the Automotive Industry Action Group's (AIAG) Failure Mode and Effects Analysis (FMEA) manual. By" having cross functional teams review current processes and determine where improvements can be made, management will be able to provide the appropriate resources in prevention categories. But the key to an FMEA program's effectiveness lies in timeliness. It is meant to be a before-the-event action, not an after-the fact exercise.

Up front time spent properly completing an FMEA (when product/process changes can be most easily and late change crises. An FMEA can reduce or eliminate the chance of implementing a preventative or corrective change that would create an even larger concern.

A foundry also can examine its use of measuring equipment and what is essential. This can be accomplished through quality planning. An evaluation of the competency of the operators performing the measurements also will be needed. Are they reliable, and do they respond adequately when the measurement starts to move toward the outward ranges? The key measurements detrimental to the product must then be determined. Also, take a look at the method used for monitoring. Is it adequate and reliable?

Now, take a look at the Statistical Process Control program. If the foundry has spent time working on documentation and the use of measurement equipment training, then an effective SPC program will complement the quality management system. After identifying the areas where measurements will occur, utilize an effective SPC chart. Work with the operator on completing the SPC process and identifying when reactions should occur.

Successful Quality

It is no easy chore for a foundry to maintain a high level of quality. But planning ahead and taking steps to avoid problems after the cast has been made can ease the process, a mature company can keep its total cost of quality near 3-5% of its sales level. Prevention activities should be the bulk of this, perhaps 60% (3% of sales) with 30% (1.5% of sales) spent for appraisal and only 10% (0.5% of sales) on failure costs.

The process of turning a foundry into a cost-effective, quality driven environment takes time and deliberate effort. It requires a cooperative effort from accounting, quality and manufacturing management. It requires disciplined follow-up. But then again, what truly useful improvement doesn't?

While there are no miracle cures offered by cost-of-quality measurement, what is available is a new lens to examine the business' health and attack problems that face us in a careful and cost-sensible manner.

For More Information

Visit to view "Failure Costs: Mare than Scrap Castings," Dave Hughes, 2003 AFS Transactions (03-121).

Nick Fox has worked for Galesburg Castings, Galesburg, Illinois for eight years and is a certified quality auditor. Dave Hughes has more than 30 years of foundry experience and maintains certifications through ASQ as a Certified Quality Manager, Certified Quality Engineer, Certified Quality Auditor and Certified Reliability Engineer. Ted Schorn has spent the past 15 years at Enkei America, Inc., Columbus, Indiana, and currently serves as the General Manager of Corporate Quality.
COPYRIGHT 2003 American Foundry Society, Inc.
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Comment:The price of pursuing perfection: the process of turning a foundry into a cost-effective, quality-driven environment takes a deliberate effort from all areas of the operation.
Author:Schorn, Ted
Publication:Modern Casting
Geographic Code:1USA
Date:Nov 1, 2003
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