IT Best Practices

Cost of Quality in Brief

What comes to mind when you hear the phrase ‘cost of quality’ or COQ? Drawing a blank? If so, then you should brush up on a few of the basics in a blog for Total Quality Management. 

COQ Defined

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.  

  1. External Failure Cost: defects discovered by customers.
  2. Internal Failure Cost: defects discovered before purchase by customers.
  3. Inspection (appraisal) Cost: cost of measuring conformance to quality requirements.
  4. Prevention Cost: cost of preventing defects.

Read the original blog at: http://totalqualitymanagement.wordpress.com/2008/09/12/cost-of-quality/

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