Costs of Quality

When describing the costs associated with providing a quality product or service there a few terms that can be used; these are cost of quality, poor-quality cost, and cost of poor quality.  The cost of quality is the cost of waste which is the price of non-conformance.  In other words it is the money that you waste by not doing it right the first time.  According to Dr. Donna C.S. Summers’ book “Quality Fifth Edition” there are four categories of costs.  These costs are internal failure costs, external failure costs, appraisal costs, and prevention costs.

Internal failure costs are those associated with defects found before the customer receives the product or service.  Internal failures are also considered the costs associated with product non-conformities or service failures found before the product is shipped or the service is provided to the customer.

External failure costs are those associated with defects found after the customer receives the product or service.  External failures are also considered the costs that occur when a nonconforming product or service reaches the customer.

Appraisal costs are those incurred to determine the degree of conformance to quality requirements.  Appraisal costs are also considered the costs associated with measuring, evaluating, or auditing products or services to make sure that they conform to specifications or requirements.

Prevention costs are those incurred to keep failure and appraisal costs to a minimum.  Prevention costs are also considered the money that you invest to enable you to do it right the first time.  Those costs that occur when a company is performing activities designed to prevent poor quality in products or services.

KT