Cost of Quality Short OverviewPresentation Transcript
Cost of Quality (CoQ)
IntroductionWhat is CoQ?Total Cost Of QualityHow do we use it?Conclusion
What is CoQ? Cost of Quality can be defined as the cost which is allied with the quality of a product. It is the sum total of costs which is incurred while maintaining quality up to standard levels plus the cost of failure to maintain that level. Cost of Quality will not incur if the quality is free from faults. The "cost of quality" isnt the price of creating a quality product or service. Its the cost of NOT creating a quality product or service.
Total Cost of Quality Cost of Poor Quality (COPQ) Internal Failure Costs: Services or products not meeting the requirements of the consumers or users and is found before the time of the release of services and products to the external customers. External Failure Costs: When customers are dissatisfied due to deficiency found at post delivery period of products Cost of Good Quality (COGQ) Appraisal Costs: The necessity to control services as well as the products to make certain a high excellence level in all the stages Prevention Costs: Costs that are designed to prevent poor quality from arising in products or services
Cost of Poor Quality (COPQ) Internal Failure Costs: Scrap or product waste Rework Re-inspection of the process (what went wrong?) Material review and revision Retraining External Failure Costs: Processing customer complaints Bad customer reviews Loss in customer loyalty Loss in sales
Cost of Good Quality (COGQ) Prevention Costs: New product review Quality planning Supplier capability Process capability evaluations Quality improvement team meetings and projects Quality education and training Appraisal Costs : Incoming and source inspection/test of purchased material In-process and final inspection/test Product, process or service audits Calibration of measuring and test equipment
Cost of Quality Map
Conclusion The sum of the costs represents the difference between the actual cost of a product or service and what the reduced cost would be if there were no possibility of substandard service, failure of products or defects in the process. The way to reduce the cost of quality to a minimal level is by building the quality as part of the processes. Do it perfectly right from the beginning.