Cost of Quality
The Cost of Quality (COQ) is the amount of money it takes to make sure that a product or service is good enough for users. It is the amount of the money spent to avoid, find, and fix problems with goods or services, as well as the money lost because of those problems. COQ tries to reduce the total cost of quality while still meeting customer needs.
There are four main types of COQ, which are:
Prevention Costs: These are the costs that have to be paid to keep problems from happening in the first place. Some examples are teaching workers, making rules for quality control, and making processes that can’t go wrong.
Costs of Appraisal: These are the costs of figuring out how good a product or service is. Tests, inspections, and quality checks are all examples.
Internal Failure Costs: These are the costs that come up when problems with a product or service are found before it is sent to the customer. Rework, scrap, and slowdown because of quality problems are all examples.
External Failure Costs: These are the costs that come up when problems with a product or service are found after it has been sent to the customer. Some examples are service claims, customer concerns, and sales lost because of a bad name.
By lowering the general cost of quality, a company can make customers happier, cut down on changes, and make more money. The goal is to find the best balance between the costs of protection and evaluation, as well as the costs of internal and external failure, so that quality can be reached at the lowest cost.
Key Points
– The overall cost paid by a corporation to provide a quality product or service is referred to as the cost of quality.
– It encompasses both the cost of doing things correctly and the cost of not doing them correctly.
– There are two sorts of costs: conformance costs (preventing mistakes) and nonconformance costs (correcting mistakes).
– The cost of conformity entails investing in appropriate procedures, training, tools, and preventative strategies from the outset to assure quality.
– Nonconformance costs include rework, defect repair, warranty claims, customer complaints, and missed opportunities due to poor quality.
– Balancing these expenses aids in getting high-quality results while avoiding overpaying on error correction.
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