Cost of Quality

Hi everyone In this Article we are going discuss about few concepts related to quality.

Such as

·       costs of quality,

·       Quality control,

·       Quality Assurance,

·       Quality Management

·       and Total Quality Management.

costs of quality

Here we are discussing the costs of quality. What is meant by Quality Product? We know that, a quality product is one which does what it is designed to do. Or a product which does what it is expected to do. This means, the product is fit for purpose. We also know that, a quality product is one which matches the standards or features or performances described in the user specifications.

This means, the product confirms to specifications So for a buyer, a right quality product is one which is fit for purpose and confirms to specifications.

Now let us discuss

Costs of Quality: The costs of Quality can be defined as, the cost of good quality & the cost of poor quality. In other words, the costs of Quality can be defined as, the cost of ensuring and assuring quality & the loss incurred when the quality is not achieved. So the quality related costs include: the cost of appraisal and prevention activities & the cost of quality failure. The cost of failure is divided into the costs of internal failure and the costs of external failure. First Let us see, the 2 costs under cost of good quality: or the 2 costs under cost of ensuring and assuring quality

They are,

·        Prevention Costs

·        Appraisal Costs,

Prevention Costs,

These are the costs incurred to prevent or minimize defects or failures. These are the costs of all activities   designed to prevent poor quality from arising.

 Some examples are cost of building quality into design cost of quality improvement projects cost of quality education and training cost of running quality problem-solving groups, ie quality circles Appraisal Costs These are the costs incurred as part of the inspection process to make sure, incoming materials and outgoing finished products are of the expected quality. ie, the Costs of testing and inspections to confirm quality requirements are met.

 Examples are: Cost for Checking and testing purchased goods and services Cost of quality Audits Cost for Field testing By looking at the 2 costs we can say: Prevention Costs are the costs incurred in order to minimize appraisal costs. One might argue that, these costs are high, and it will be more cost effective to spend less on such preventions activities and simply deal with few defects now and then. Is this so? The answer is no. Because the cost of quality failures can be very high. Even in recent times we have seen big firms facing crisis’s due to quality failures. So we have to understand that there is always scope for improvement & cost of “getting it wrong” is much bigger than cost of “getting it right”.

 Now let us see, the 2 costs under costs of poor quality, or the 2 sessions under loss incurred when the quality is not achieved. Costs of Failure ie, internal failure costs& external failure costs internal failure costs These are the costs arising from quality failures, where the problem is identified and corrected before the product reaches the customer. Problems are caused by defects in input products or by inefficiencies in the processes.

 Here, before the product is delivered to end user, the non-conformance to requirement is identified and corrective actions are taken. Hence the customer dissatisfaction from receiving a faulty product can be avoided, but still there are chances of dissatisfaction due to delayed delivery.

Some examples are: Cost of scrapping Cost of reworking Cost of delays Cost of failure analysis External failure costs these are the costs arising from quality failures, where the problem is identified and corrected after the product reaches the customer. This can cause customer dissatisfaction and sometimes losing loyal customers.

So we can easily understand that, the costs of external failures need to be avoided or reduced to the minimum.

Some examples are: cost of customer claims for compensation cost of repairing or replacing cost of reputational damage cost of lost customer

So we discussed the four main categories of costs of quality. We learned that there are costs related to assuring or maintaining quality. Still, cost of “getting it wrong” is much bigger than cost of “getting it right”. Hence efforts are made to assure quality. These days there is an increased emphasis on “getting it right first time” through quality management.