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    Cost of Quality

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    Jeffery Gul
    This document discusses quality management tools and concepts. It defines cost of quality as the costs associated with preventing poor quality, appraising quality, and failures. These include prevention costs for planning and design, appraisal costs for inspection and auditing, and internal and external failure costs for fixing defects. Tracking cost of quality allows organizations to determine quality-related costs and identify areas for improvement. Customer satisfaction occurs when quality meets expectations, and quality provides benefits like reduced waste and improved efficiency.

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    Cost of Quality

    Uploaded by

    Jeffery Gul
    25 views17 pages
    This document discusses quality management tools and concepts. It defines cost of quality as the costs associated with preventing poor quality, appraising quality, and failures. These include prevention costs for planning and design, appraisal costs for inspection and auditing, and internal and external failure costs for fixing defects. Tracking cost of quality allows organizations to determine quality-related costs and identify areas for improvement. Customer satisfaction occurs when quality meets expectations, and quality provides benefits like reduced waste and improved efficiency.

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    This document discusses quality management tools and concepts. It defines cost of quality as the costs associated with preventing poor quality, appraising quality, and failures. These include prevention costs for planning and design, appraisal costs for inspection and auditing, and internal and external failure costs for fixing defects. Tracking cost of quality allows organizations to determine quality-related costs and identify areas for improvement. Customer satisfaction occurs when quality meets expectations, and quality provides benefits like reduced waste and improved efficiency.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    25 views17 pages

    Cost of Quality

    Uploaded by

    Jeffery Gul
    This document discusses quality management tools and concepts. It defines cost of quality as the costs associated with preventing poor quality, appraising quality, and failures. These include prevention costs for planning and design, appraisal costs for inspection and auditing, and internal and external failure costs for fixing defects. Tracking cost of quality allows organizations to determine quality-related costs and identify areas for improvement. Customer satisfaction occurs when quality meets expectations, and quality provides benefits like reduced waste and improved efficiency.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 17

    Q

    Kuality Management Tools

    pirzada
    Quality in Projects

    By definitions every project is unique so project quality


    management little relation to the codified quality
    tools of manufacturing.
    Product quality provides “No quality, no sales.
    profitability due to larger No sales, no profit.
    market share and No profit, no jobs.”
    premium prices.
    - VP of Chrysler Corp.
    Cost of Quality
    Cost of Quality (CoQ)

    Cost of quality is a methodology that allows an organization


    to determine the extent to which its resources are used for
    activities that prevent poor quality, that appraise the quality
    of the organization’s products or services, and that result
    from internal and external failures. Having such information
    allows an organization to determine the potential savings to
    be gained by implementing process improvements.
    -ASQ definition
    Cost of Quality

    Quality-related activities that incur costs include:


    • Prevention costs; To prevent or avoid quality problems
    • Appraisal costs, and
    • Internal and external failure costs.
    Cost of Quality: Prevention Costs

     Associated with the design, implementation, and maintenance.


     Planned and incurred before actual operation,
    These include:
    • Establishment of specifications for incoming materials,
    processes, finished products, and services.
    • Quality planning; creation of plans for reliability, operations,
    production, and inspection
    • Quality assurance; creation and maintenance of the quality
    system
    • Training; development, preparation, and maintenance of
    programs
    Cost of Quality: Appraisal Costs

    Measuring/ monitoring activities of evaluation of purchased


    materials, processes, products, and services to ensure
    conformance.

    These include:
    • Verification; checking of specifications, and process setup.
    • Quality audits; confirming proper functioning of that the
    quality system.
    • Supplier rating; assessment/ approval of suppliers.
    Cost of Quality: Internal Failure Costs

    Fixing defects of product/service discovered before delivery.

    These include:
    • Waste: performance of unnecessary work or holding of stock
    as a result of errors, poor organization, or communication
    • Scrap; defective product/ material (unrepairable).
    • Rework; correction of defective material or errors
    • Failure analysis; activity required to establish the causes of
    internal product or service failure
    Cost of Quality: External Failure Costs

    Fixing defects discovered by customers.


    These include:
    • Repairs and servicing; returned products and those in the field
    • Warranty claims; products replaced or serviced under a
    guarantee.
    • Complaints; all work and costs associated with handling and
    servicing customers’ complaints
    • Returns; handling/ investigation of rejected/ recalled products,
    including transport costs
    Cost of Quality & Organizational Objectives

    • The costs of doing a quality job are best determined from an


    analysis of the costs of quality.
    • CoQ analysis helps determining (i) the effectiveness of the
    management of quality, and (ii) the problem areas, (iii)
    opportunities, (iv) savings, and (v) action priorities.
    • CoQ as an communication tool can raise awareness of the
    importance of quality.
    • Organizations can have true quality-related costs 15- 20% of
    sales revenue, and as high as 40 percent of total operations in
    worst cases.
    Customer Satisfaction

    • Satisfied customers are unpaid


    sales representatives.
    • Customer satisfaction occurs
    when product quality meets or
    exceeds customer expectations.
    • It costs 5 times more to find a
    new customer than to keep an
    existing one happy.
    Benefits of Quality

    • Quality reduces wastes, improves efficiency, productivity and


    market share.
    • Better product, better project performance (with reduced lead
    times*), increased competitiveness and more jobs.

    *Time between the initiation and completion of a production process.

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