Cost of Quality

More than any other subject of interest to business people the world over in the past decade, Quality has become a focal point of activity. But unfortunately, the most reliable and accurate measure of that "elusive" attribute, namely, the Cost of Quality, is still unclear in a lot of people's minds. The Quality profession has always been about improving processes, products and services. From TQM to PDCA to Six Sigma, all Quality methodologies are focused on eliminating defects and the root cause of those defects. It involves products that satisfy your customers, running processes at greater efficiencies, producing less waste and increasing business productivity. All of this, of course, is based on the fact that these processes are driving financial benefits. If it didn't make sense financially, would you still do it? In some cases you might, but as a rule of thumb you can't sustain a business unless you bring in revenue and produce a profit.

a.    Understand the Quality Cost Model that includes Prevention Costs, Appraisal Costs,
       Internal Failure Costs and External Failure Costs.
b.    Know where Cost of Quality fits into Quality Management Systems
c.    Appreciate the magnitude of Quality Costs on the business and benefits of            
       implementing a Cost of Quality System.
d.    Develop a draft listing of the Quality Costs present within organization across the 
       four cost categories.
e.    Devise a system to identify, track, analyze and take action on Quality Cost data.
f.     Use the tools that can support a Cost of Quality program.
g.    Create an action plan to support the full implementation of a Quality Cost system.
h.   Be aware of the Pitfalls


  • Introduction to Cost of Quality (CoQ)
  • Categories of CoQ
     - External Failure Cost
     - Internal Failure Cost
    - Appraisal/Inspection Cost
    - Prevention Cost
  • Examples of CoQ
  • Why is it important to track CoQ?
  • Comparison to 6 Sigma
  • Goal of a CoQ System
  • Model of Optimum CoQ
  • How to start a CoQ program? The Seven Step Aproach
  • Pitfalls of CoQ

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