The Cost of Quality (COQ) is the amount of money it takes to make sure that a product or service meets the quality standards that are needed. This includes the costs of preventing problems, evaluating them, and failing.
Prevention Costs: These are the costs that are paid to make sure that problems don’t happen in the first place. Some examples are training and education, planning for quality, making processes better, and evaluating suppliers.
Costs of evaluation: These are the costs of making sure that products or services meet quality standards. Inspections, tests, and audits are all good examples.
Failure costs are the costs that happen when a product or service doesn’t meet the quality standards that were set. There are two kinds of costs for failing:
a. Internal Failure Costs: These are the costs that come up when a problem is found in a product or service before it is sent to the customer. Rework, scrap, and downtime are all examples.
b. External Failure Costs: These are the costs that happen when a problem is found after the product or service has been sent to the customer. Product returns, warranty claims, and legal costs are all examples.
Managing the cost of quality means making sure that all of these parts cost as little as possible while still meeting quality standards. This can be done by making sure the organisation has a strong quality management system, processes for continuous improvement, and a culture of quality.
By spending money on quality prevention and evaluation, organisations can reduce the chance of failure and the costs that come with it. In the same way, organisations can avoid the higher costs of external failures by finding and fixing quality problems early on.
Overall, it’s important to understand and manage the cost of quality to make sure that products and services meet quality standards and are delivered to customers in the most cost-effective way.
Usage
It is used in quality management
