Cost of quality is a methodology that allows an organisation to determine the extent to which its resources are used for activities that prevent poor quality, that appraise the quality of the organisation's products or services, and that result from internal and external failures.
Cost of quality refers to the sum of costs incurred:
1) to prevent the non-conformance from happening
2) to correct the non-conformance which occurs in the products (Also called cost of poor quality) . Its the cost which is incurred when a poor quality product is delivered which doesn't meets the quality.
Quality cost has two major categories :
1) Cost of achieving good Quality :
i) Prevention Cost - Prevention costs are incurred to prevent or avoid quality problems. These costs are associated with the design, implementation, and maintenance of the quality management system. They are planned and incurred before actual operation. Eg : Design Review , Surveys , Quality Planning and Assuarance , Training , Requirement analysis.
ii)Appraisal Cost - Appraisal costs are associated with measuring and monitoring activities related to quality. These costs are associated with the suppliers’ and customers’ evaluation of purchased materials, processes, products, and services to ensure that they conform to specifications. Eg : Verification , Quality Audits , Inspections
2) Cost of poor quality :
i) Internal Failure Costs - Internal failure costs are incurred to remedy defects discovered before the product or service is delivered to the customer. This occours when a product fails to meet quality requirements.These costs occur when the results of work fail to reach design quality standards and are detected before they are transferred to the customer. Eg : Scrap , Waste , Rework , Rectification , Failure analysis ,Dowwntime
ii)External Failure Costs - External failure costs are incurred to remedy defects discovered by customers. These costs occur when products or services that fail to reach design quality standards are not detected until after transfer to the customer. Eg : Repairs , Warantee claims , Returns , Complaints , Price Concession
Cost of quality refers to the sum of costs incurred:
1) to prevent the non-conformance from happening
2) to correct the non-conformance which occurs in the products (Also called cost of poor quality) . Its the cost which is incurred when a poor quality product is delivered which doesn't meets the quality.
Quality cost has two major categories :
1) Cost of achieving good Quality :
i) Prevention Cost - Prevention costs are incurred to prevent or avoid quality problems. These costs are associated with the design, implementation, and maintenance of the quality management system. They are planned and incurred before actual operation. Eg : Design Review , Surveys , Quality Planning and Assuarance , Training , Requirement analysis.
ii)Appraisal Cost - Appraisal costs are associated with measuring and monitoring activities related to quality. These costs are associated with the suppliers’ and customers’ evaluation of purchased materials, processes, products, and services to ensure that they conform to specifications. Eg : Verification , Quality Audits , Inspections
2) Cost of poor quality :
i) Internal Failure Costs - Internal failure costs are incurred to remedy defects discovered before the product or service is delivered to the customer. This occours when a product fails to meet quality requirements.These costs occur when the results of work fail to reach design quality standards and are detected before they are transferred to the customer. Eg : Scrap , Waste , Rework , Rectification , Failure analysis ,Dowwntime
ii)External Failure Costs - External failure costs are incurred to remedy defects discovered by customers. These costs occur when products or services that fail to reach design quality standards are not detected until after transfer to the customer. Eg : Repairs , Warantee claims , Returns , Complaints , Price Concession
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