This single point about COQ cannot be restated enough:
The “cost of quality” isn’t the price of creating a quality product or service. It’s the cost of NOT creating a quality product or service…Every time work is redone, the cost of quality increases.
Some examples of work being “redone” include correcting an error on a bank statement, retesting an assembly, or reordering food at a restaurant.
Assumptions about COQ
In the past, a common manager’s misconception was that improving the quality of a product, service, or process entailed the necessity of higher costs. Over time, experts in the field of Quality Control divulged new insights to improve our understanding of Quality, and yet differing philosophies persist.
- Higher Quality = Higher Cost
- Cost of Quality Improvement < Savings of Quality Improvement
- Quality Costs = Cost in excess of Prevention and Appraisal
4 Common Categories
The best way to understand COQ is to break it down into the four categories commonly used by Quality experts.
- External Failure Cost: defects discovered by customers.
- Internal Failure Cost: defects discovered before purchase by customers.
- Inspection (appraisal) Cost: cost of measuring conformance to quality requirements.
- Prevention Cost: cost of preventing defects.
Read the original blog at: http://totalqualitymanagement.wordpress.com/2008/09/12/cost-of-quality/