Cost of Quality

Topics: Costs, Management Pages: 4 (1279 words) Published: March 25, 2012
Assuming an agreement is made between a supplier and a customer such that the supplier must ensure that all parts are within tolerance before shipment to the customer, what is the effect on the cost of quality to the customer? Cost of quality is the cost associated with the quality of a work product. As defined by Crosby in his "Quality Is Free", Cost Of Quality (COQ) has two main components: Cost Of Conformance and *Cost Of Non-Conformance. Another view is that cost of quality is the amount of money a business loses because its product or service is not done right in the first place. From fixing a warped piece on the assembly line to having to deal with a lawsuit because of a malfunctioning machine or a badly performed service, businesses lose money every day due to poor quality. For most businesses, this can run from 15 to 30 percent of their total costs. Firms spend time in diagnosis and rework, development schedules slip, support costs climb, and its company's and products' reputations sink. These Failure Costs, which are the more significant Cost of Quality, are beyond direct control. But it can gain control over them indirectly, by investing in Appraisal Costs that minimize Failure Costs, reducing the total Cost of Quality and making it more predictable. The Cost of Quality is a significant cost on any project, so prudent managers look for ways to keep those costs in check. The Quality costs we can control are things like performing reviews, preparing tests, and maintaining QA infrastructure. But there are also the Quality costs no one could control. Failure Costs are the ones that happen to us. We incur these "Costs of Poor Quality" every time a defect comes to light, both during testing and after release. Failure costs take many forms: •The effort that our developers spend investigating and diagnosing defects, and then reworking designs and code to correct them. •Slips in our schedules, as testing uncover defects that require rework and re-testing. •...
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