5/15/2014

Namrata/TQM/COQ 1
NTB/TQM/COQ 1
Namrata T Biswas
M.Che. 1st year
Jadavpur University
COST OF QUALITY
Introduction
Cost of quality is
the expense of nonconformance
the cost of doing things wrong.
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WHAT IS COQ?
Cost of Quality (COQ) can be defined as the
cost which is allied with the quality of a
product. It is the sum total of costs which is
incurred while maintaining quality up to
standard levels plus the cost of failure to
maintain that level.
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COQ Map
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Namrata/TQM/COQ 2
Quality costs fall into two
main categories:
1- Cost of achieving good quality:
Prevention Costs
Appraisal Costs
2- Cost of poor quality
Internal failure Costs
External failure Costs
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Preventive costs:
Preventive costs are the cost of all activities
specifically designed to prevent poor quality
product or service. These costs are incurred to
keep appraisal and failure costs at minimum.
Examples:
Training and education
Quality improvement projects
Customer survey
House keeping
Design review
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ApprAisAl costs:
These are the costs associated with measuring,
evaluating or auditing product or service to
assure conformance to standard or
performance requirement.
Examples:
Internal audits
Incoming material inspection
Laboratory testing
Calibration costs
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Internal faIlure cost
These are the costs incurred when product or
service fail to meet quality requirements prior
to the transfer of ownership to the customer.
Examples:
Rework *Scrap *Overtime *Downtime
Excess inventory
Excess material handling *Redesign
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Namrata/TQM/COQ 3
ExtErnal failurE cost
The costs incurred by a business due to failure
of product or service at the customer end.
These costs results into warranty claims and
loss of reputation.
Examples:
Product recall
Customer dissatisfaction
Loss of market share
Price concession
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BEFORE & AFTER
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Failure Costs
Internal
External
Failure Costs
Repair Costs
Repair Costs
Appraisal Costs
Appraisal Costs
Prevention Costs
Prevention Costs
$
Before Quality
Cost Alignment
After Quality
Cost Alignment
Benefit
Title
COQ data can be measured and presented in
many different ways.
% age of sales
% age of profits
% age of manufacturing cost
Rs per direct labor hr
Rs per unit of product
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How to Prevent Poor Quality
Prepare to measure costs of quality
Determine categories of quality costs
Create measurement system that captures
categories of quality costs
Assign responsibility to collect data
Analyse collected data
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Namrata/TQM/COQ 4
Determine Quality Cost Categories
Understand your product
Understand your process
Understand where problems occur
Determine precisely what goes wrong
Determine what costs represents each
problem
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conclusion
When the cost of achieving good quality
increases; cost of poor quality decreases
automatically
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THANK YOU..!!
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