Quality Costs - Definitions

Definitions

Feigenbaum defined the following quality cost areas:

Cost area		Description	Examples
Costs of control (Costs of conformance)	Prevention costs	Arise from efforts to keep defects from occurring at all	Quality planning Statistical process control Investment in quality-related information systems Quality training and workforce development Product-design verification Systems development and management
Costs of control (Costs of conformance)	Appraisal costs	Arise from detecting defects via inspection, test, audit	Test and inspection of purchased materials Acceptance testing Inspection Testing Checking labor Setup for test or inspection Test and inspection equipment Quality audits Field testing
Costs of failure of control (Costs of non-conformance)	Internal failure costs	Arise from defects caught internally and dealt with by discarding or repairing the defective items	Scrap Rework Material procurement costs
Costs of failure of control (Costs of non-conformance)	External failure costs	Arise from defects that actually reach customers	Complaints in warranty Complaints out of warranty Product service Product liability Product recall Loss of reputation

The central theme of quality improvement is that larger investments in prevention drive even larger savings in quality-related failures and appraisal efforts. Feigenbaum's categorization allows the organization to verify this for itself. When confronted with mounting numbers of defects, organizations typically react by throwing more and more people into inspection roles. But inspection is never completely effective, so appraisal costs stay high as long as the failure costs stay high. The only way out of the predicament is to establish the "right" amount of prevention.

Once categorized, quality costs can serve as a means to measure, analyze, budget, and predict.

Variants of the concept of quality costs include cost of poor quality and categorization based on account type, described by Joseph M. Juran.

Cost area	Examples
Tangible costs—factory accounts	Materials scrapped or junked Labor and burden on product scrapped or junked Labor, materials, and burden necessary to effect repairs on salvageable product Extra operations added because of presence of defectives Burden arising from excess production capacity necessitated by defectives Excess inspection costs Investigation of causes of defects
Tangible costs—sales accounts	Discount on seconds Customer complaints Charges to quality guarantee account
Intangible costs	Delays and stoppages caused by defectives Customer good will Loss in morale due to friction between departments

ISO 9004 also accounts for "external assurance" quality costs to account for customer– or government–required certifications (e.g., for UL, RoHS, or even ISO 9000 itself).

Read more about this topic: Quality Costs

Famous quotes containing the word definitions:

“The loosening, for some people, of rigid role definitions for men and women has shown that dads can be great at calming babies—if they take the time and make the effort to learn how. It’s that time and effort that not only teaches the dad how to calm the babies, but also turns him into a parent, just as the time and effort the mother puts into the babies turns her into a parent.”
—Pamela Patrick Novotny (20th century)

“What I do not like about our definitions of genius is that there is in them nothing of the day of judgment, nothing of resounding through eternity and nothing of the footsteps of the Almighty.”
—G.C. (Georg Christoph)

Related Phrases

Related Words