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Namrata/TQM/COQ 1

NTB/TQM/COQ 1

• Namrata T Biswas

• M.Che. 1st year

• Jadavpur University

COST OF QUALITY

IntroductionCost 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 activitiesspecifically designed to prevent poor qualityproduct or service. These costs are incurred tokeep 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 failureof product or service at the customer end.These costs results into warranty claims andloss 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

TitleCOQ 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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