IntroductionWhat is COQ?• History:It was Joseph Juran who first discussed the cost of qualityanalysis in 1951 in the first edition of “Quality ControlHandbook”and it was Armand Feigenbaum who identified four qualitycost categories in 1956 in “Total Quality Control” in theHarvard Business Review, Vol. 34 The Quality Cost Committee was established by the then ASQC in 1961
COQ - DefinitionQuality costs are the costs associated with Preventing………Investing in the prevention ofnonconformance to requirements Finding………. Appraising a product or servicefor conformance to requirements Failing to meet requirements……….Correctingdefective work
COQ ComponentsPreventive CostThe costs of all activities specificallydesigned to prevent poor quality inproducts or services.Examples are the costs of:• New product review• Quality planning• Supplier capability surveys• Quality improvement team meetings• Quality improvement projects• Quality education and training In the ideal situation, Prevention costs will be the largest portion of theTotal Cost of Quality Typically, prevention is less than 10% of Total COQ where it should beabout 70%
Appraisal CostThe costs associated with measuring,evaluating or auditing products orservices to assure conformance tostandards & performance requirements.COQ Components Appraisal Costs should be the second largestcategory, but should not exceed prevention costsThese include the costs of:•Inspection/test of purchased material•In-process and final inspection/test•Product, process or service audits•Calibration of measuring and test equipmentE.g. Radiography appraisal cost is the amount spent toradiograph a weld. This includes the;Cost of RT equipmentRT personnel salaries/MhrsRT film costs etc.
Failure CostsThe costs resulting from products orservices not conforming torequirements or customer/user needs.Failure costs are divided into internaland external failure categories.COQ ComponentsInternal Failure CostsFailure costs occurring prior to delivery or shipmentof the product, or the furnishing of a service, to thecustomer.Examples are the costs of: Scrap Rework Re-inspection Re-testing
Failure Costs (Contd.)• External Failure CostsFailure costs occurring after delivery or shipment of theproduct — and during or after furnishing of a service — tothe customer.Examples are the costs of: Processing customer complaints Customer returns Warranty claims Product recallsCOQ Components
Why measure COQ? “When you measure what you are speaking aboutand express it in numbers, you know somethingabout it” – KelvinYou cannot manage what you cannot measure ” –Anon
Why measure COQ?Measure COQ - Why? COQ can be used to identify quality improvementcandidates COQ provides one measure of comparing thesuccess of projectsCOQ can provide cost data for motivationalpurposeMoney is the language of management, youneed to show them the numbers - Crosby