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Quality Management – Quality and Production Costs

What Are Quality Costs?

What do you think of this quote from Deming?

“Defects are not free.  Somebody makes them, and gets paid for making them.”

Does the organisation you work for know how costly their defects are?  Juran developed the ‘Cost of Quality’ concept, which allowed managers to calculate whether additional expenditure on preventing defects could be justified.

He divided the costs of producing a given level of quality into avoidable and unavoidable costs.

He referred to avoidable costs as ‘gold in the mine’ because they can be greatly reduced by investment in quality improvement.

Feigenbaum divided an organisation’s quality costs into:

  • Prevention costs
  • Appraisal costs
  • Failure costs (internal and external)
  • Prevention costs

Prevention costs are also referred to as cost of conformance.

Prevention means getting the job right first time and reducing the possibility of defects before defects occur.  Customers will purchase your goods if they are always happy with what they are getting.  If one defective product slips through, sales could be lost.

This can occur not only through the customer but also the people that customer associates with and relates their story to.

Prevention is long term cost recovery.  It may require a large initial outlay of capital e.g. metal detectors on every line, but the long-term results can more than cover this cost e.g. no loss of markets due to metal contamination harming customers.

However, costs are not necessarily high, for example spending $2.50 for a machine part on a printing press.

The cost associated with replacing these every month, instead of waiting until the machine breaks down thus generating costly down time, is of far more benefit.

Quality Prevention costs may include:

  • • Training (internal and external)
  • • Interviewing to ensure the best applicant is chosen
  • • Process capability studies
  • • Re-engineering
  • • Quality planning

LMIT delivers the Diploma in Quality Auditing and the Diploma of Quality Management online, so contact us today for a free information pack.

Published by: LMIT

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