The document discusses the cost of quality, which refers to the costs that arise from poor quality products or services. These costs include things like rework, repairs, returns, and lost customers. While quality initiatives seem like they cost money up front, they actually reduce costs in the long run by preventing defects and issues that lead to higher costs. The document also provides information about ISO 9001 certification and training from PECB, which can help organizations implement quality management systems to lower their cost of quality.

1. www.pecb.org
What is the Cost of
Quality?

2. Doing it right the first time!
Almost all executives claim that they manage quality, but yet the need for corrective actions continues to grow.
Imagine if we lived in a world where preventive actions are enough to have the desired products and services,
and that spending for corrections would be unnecessary. Imagine if organizations didn’t have to spend money
to improve their mistakes. Unfortunately, they do, and they call it the cost of quality.
Is the cost of quality related to the cost of undertaking quality initiatives, or not undertaking them? The term
might sometimes confuse people in thinking that quality is a cost. However, experience shows that quality
is only a drive that increases profits while lowering costs. According to the 3rd point of Deming’s 14 points
for management, one should “cease dependence on inspection to achieve quality. Eliminate the need for
inspection on a mass basis by building quality into the product in the first place.” He suggests that quality
comes from process improvement and not from inspection. Practically, the cost of quality is also the cost that
derives from not creating a quality product or service.
Let us first analyze why this term confuses people so much. The cost of quality measures the lack of quality,
or the result of not improving the quality performance beforehand. Improving quality is highly important for
organizations that want to achieve their objectives. Taking measures before the products or services are
produced or offered lowers the risk of having a high cost of quality.
The cost of quality increases from several reasons such as not evaluating supplier quality which can lead to
rework, loss, customer complaints and returns. In addition, if an organization does not calibrate its equipment
it can lead to machine repair, which also increases the cost of quality. Unskilled employees can have a low
performance leading to rework, which also raises the cost of quality related to labor for rework. All of the
above mentioned reasons and many others such as environmental costs, repairing products, re-designing,
re-testing, warranties, and so on can increase the cost of quality.
If the reason leading to such cost is prevented, the cost of quality would keep decreasing and preferably
eliminated. Many actions can be taken to decrease the cost of quality and they include supplier quality
evaluation, machine calibration, training the employees can decrease the costs related to labor for rework,
providing work instructions, controlling materials used for production, and so on. All these actions are
preventive actions which aim at reducing the cost of quality.
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3. According to Philip Crosby, the cost of quality is comprised of internal and external failure costs that result
from not meeting the requirements. In addition, cost of quality identifies two other cost areas and they include
prevention which result from preventing non-conformance to requirements, and appraisal costs which include
measuring, evaluating or auditing to check whether products and services were performed in accordance
with set standards.
Organizations worldwide are implementing quality systems, tools and methodologies because quality
commitment is crucial for the success of every organization. Managing quality usually means having a lower
cost of quality, which is why many organizations engage in the process of continual improvement to secure
their future. Organizations keep their customers satisfied and reduce the risk and cost of defective products
through quality initiatives.
ISO has developed different standards which aim at improving quality in organizations. One of the most
used ISO standard worldwide is ISO 9001 (Quality Management System - QMS). ISO 9000 family addresses
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Visible
Defects
Inspection
Rework
Scrap
Rejects Waste
Excess Inventory
Delays
Overdue receivables
Excessive Materials
Lost time
Cost of lost sales
Employee overtime
Equipment Failure
Lost Customer Loyalty
Unnecessary
Procedures
Hidden

4. various aspects of quality management for organizations who want to ensure that their products and services
meet customer’s requirements.
You may be wondering, how much does it cost to have an ISO 9001 certification? But have you thought about
what is the cost of not having an ISO 9001 Certification?
PECB (Professional Evaluation and Certification Board) is a certification body for persons on wide range of
international standards. It offers ISO 9001 training and certification services for professionals wanting to gain a
comprehensive knowledge in quality management, its principles, core subjects and issues. This training suits
quality professionals, project managers or consultants wanting to prepare and to support an organization in
the integration of a quality management system throughout the organization. In addition, ISO 9001 training
can also be followed by auditors wanting to perform and lead quality management certification audits, and
staff involved in the implementation of the ISO 9001 standard.
ISO 9001 and Quality Management Trainings offered by PECB:
• Certified ISO 9001 Lead Implementer (5 days)
• Certified ISO 9001 Lead Auditor (5 days)
• Certified ISO 9001 Foundation (2 days)
• ISO 9001 Introduction (1 day)
ISO 9001 Lead Auditor, ISO 9001 Lead Implementer and ISO 9001 Master are certification schemes accredited
by ANSI ISO/IEC 17024.
Lorika Bina is the Transport, Telecommunications and Energy (TTE) Product Manager at PECB. She is in
charge of developing and maintaining training courses related to TTE. If you have any questions, please do
not hesitate to contact her at: tte@pecb.org.
For further information, please visit: www.pecb.org
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