IT Best Practices

What Is the Cost of Quality?

It’s almost ludicrous to state the obvious, that an appreciation of money goes a long way for any business. That being said, Paul Naysmith attempts to correct a popular misunderstanding about the money saving methodology called cost of quality or COQ. In a post for Quality Digest, Naysmith asserts that too many managers have little comprehension of how COQ actually helps companies.

Less is More

Naysmith illustrates his central insight by quoting the ASQ:

“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.”  

Perhaps this inverted logic is precisely what has practitioners so confused. But as Naysmith argues, it’s not the definition that counts; it’s how the definition is used as a genuine metric for business success. He then references four main lessons outlined in Juran's Quality Handbook:

  • The Language of Money
  • The Meaning of Quality Costs
  • The Effectiveness of Cost Measurement and Publication
  • The Limits of QC Scope

Counting Cars

In his book, Joseph Juran maintains that publishing cost of quality results is a failed method for improving COQ. Naysmith once tried a different approach to publishing, one that attempted to present COQ in terms that were broadly understood. To show a car manufacturer how much money they were losing due to “scrap costs,” he posted a picture of the hundreds of cars that could be bought with the lost money. While the method was ultimately unsuccessful, it did a good job of educating company staff about the merits of COQ.

As a final admonishment, Naysmith artfully summarizes the nature of COQ for the practitioner:

If you wish to progress in your career in quality, understanding the relationship between the dollar sign and influencing change will be an asset for you. If you can demonstrate, through small investments, that costs greater than the salary you earn in a year can be magically removed, you will become instantly valuable to your employer. Increasing quality costs will not help you, but reducing them will.

Read the entire post at:

Eric Anderson

Eric Anderson is a staff writer for CAI's Accelerating IT Success. He is an intern at Computer Aid Inc., pursuing his master's degree in communications at Penn State University.

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