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Cost of quality

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  • #48264

    Andhale
    Participant

    I am new to the concept of the cost of quality. I am planning to start it in my organization. May I request some basic useful implementation tip, please.

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    #162019

    Dr. Scott
    Participant

    Deepak,
    The cost of quality is zero (or minimal). However, the cost of POOR quality can indicate failed processes leading to a failed business. As such COPQ (Cost of Poor Quality) can be lethal for any effort.
    As far as starting it in your organization, COPQ is not an effort, process, or an approach to improvement. It is merely one of the measures used in assessing your current position, to ready you for a process improvement effort.
    Ask if you need more.
    Dr. Scott 
     

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    #162024

    fake accrington alert
    Participant

    4 Types  of  Quality Costs:Prevention,Appraisal,Internal & External failure  costs.Focus first on Prevention  &  Appraisal ,so  you  minimize  the  Int.&Ext.costs
    good  luck

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    #162138

    DANG Dinh Cung
    Participant

    Dear Deepak,I agree with Dr. Scott.Do you sell defective goods ? If you don’t you have to get quality at any price. If, doing so, you cannot compete change your industry.It is very difficult (quite impossible) to calculate the whole cost of poor quality. But, it is easy to calculate the cost one single effect of lack of quality. You will find that it is very very high.Best regards,DANG Dinh Cung
    [email protected]

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    #162140

    Murray
    Participant

    “The cost of quality.”
    It’s a term that’s widely used – and widely misunderstood.
    The “cost of quality” isn’t the price of creating a quality product or service. It’s the cost of NOT creating a quality product or service.
    Every time work is redone, the cost of quality increases. Obvious examples include:

    The reworking of a manufactured item.
    The retesting of an assembly.
    The rebuilding of a tool.
    The correction of a bank statement.
    The reworking of a service, such as the reprocessing of a loan operation or the replacement of a food order in a restaurant.
    In short, any cost that would not have been expended if quality were perfect contributes to the cost of quality.
    Total Quality Costs
    As the figure below shows, quality costs are the total of the cost incurred by:

    Investing in the prevention of nonconformance to requirements.
    Appraising a product or service for conformance to requirements.
    Failing to meet requirements.
    Quality Costs—general description

    Prevention Costs
    The costs of all activities specifically designed to prevent poor quality in products or services.
    Examples are the costs of:

    New product review
    Quality planning
    Supplier capability surveys
    Process capability evaluations
    Quality improvement team meetings
    Quality improvement projects
    Quality education and training
    Appraisal Costs
    The costs associated with measuring, evaluating or auditing products or services to assure conformance to quality standards and performance requirements.
    These include the costs of:

    Incoming and source inspection/test of purchased material
    In-process and final inspection/test
    Product, process or service audits
    Calibration of measuring and test equipment
    Associated supplies and materials

    Failure Costs
    The costs resulting from products or services not conforming to requirements or customer/user needs. Failure costs are divided into internal and external failure categories.
    Internal Failure Costs
    Failure costs occurring prior to delivery or shipment of the product, or the furnishing of a service, to the customer.
    Examples are the costs of:

    Scrap
    Rework
    Re-inspection
    Re-testing
    Material review
    Downgrading
    External Failure Costs
    Failure costs occurring after delivery or shipment of the product — and during or after furnishing of a service — to the customer.
    Examples are the costs of:

    Processing customer complaints
    Customer returns
    Warranty claims
    Product recalls

    Total Quality Costs:
    The sum of the above costs. This represents the difference between the actual cost of a product or service and what the reduced cost would be if there were no possibility of substandard service, failure of products or defects in their manufacture.
    Excerpted from the ASQ Quality Costs Committee, Principles of Quality Costs: Principles, Implementation, and Use, Third Edition, ed. Jack Campanella, ASQ Quality Press, 1999, pages 3-5.

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    #162146

    Ron
    Member

    You have received a lot of standard ASQ answers to your question, however, I believe none of them are particulary useful to you.
    If you want to calculate the Cost of Quality at your site I ask you why? What are you going to do with this data?
    As one respondent told you perhaps you want the COPQ, that is indeed a more useful metric.
    A common themeto remeber the metric drives that action. So careful think about what action you plan to drive with the metric you want to capture.
    Simply the cost of quality from a finance officer in your company is the personnel working in QA, the cost of scrap and the cost of waranty, perhaps other items such as health care benefits etc.
    The best one I ever used is the cost of poor quality as a percent of direct labor hours.
     

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