M E M O R A N D U M
TO: Supervisor, Name
Re: Cost of Quality considerations
Date: December 6, 2013
We as a manufacturer of tangible products must ensure our merchandise is of the best quality before it reaches the consumer. This is imperative if we are to maintain a competitive advantage in the marketplace, while in addition earning repetitive and referral business from our customers.
There are three main types of costs associated with producing quality products. If we are aware of the following costs of quality, and implement them in areas in need of improvement, the quality of our merchandise will improve, our customer satisfaction will improve, and our reputation will improve, resulting in a more prosperous business.
The three types of costs associated with quality considerations are prevention costs, appraisal costs, and internal/external failure costs.
Prevention costs are the most effective way to mitigate problems with production quality. Prevention costs are comprised of processes the organization can take to proactively avoid defects. For example, we should ensure our employees have the right tools for their jobs; they have safe working conditions; all new employees are properly trained, and existing employees are continually trained in their areas of responsibility. The Prevention costs will help the organization by providing our employees the tools, training, and procedures needed to reduce the amount of defective products coming off of our assembly lines. This is the most cost effective way to prevent defects, as it captures potential failures at the beginning of the products creation.
Appraisal costs, which are sometimes called inspection costs, involve testing and inspecting materials used in the production process for defects, before they reach the customer. Appraisal costs are typically