What is your opinion on John's answer the "Cost of Quality" question?
Cost of Quality (John answer)
In a perfect world with no defects or deficiencies in processes we observe a very low quality cost. Since we don't live a perfect world every attribute that is added to the manufacturing, delivering or servicing process that does not directly contribute to the end product or service is a cost of quality. The material defines four elements that contribute to the cost of quality. These elements are prevention, appraisal, internal failures and external failures.
Prevention is the measure we take to ensure a product is defective free. Throughout my career in the Air Force we have done a number of things that would be considered under this particular cost. When we sit and examine the way we try to standardize a process through policy and procedures. This would be considered a cost of quality.
Appraisal is the measure we take to ensure conformance is achieved. My current job, Quality Assurance, would fall directly under the appraisal umbrella of cost of quality. A end of line inspection or process analysis cost a company without contributing directly to the end product or service.
Internal and External failures are deficiencies discovered prior to or after delivery to the customer. I see these costs as more costly because they leave the customer with a lasting impression that can cause customer's perception of the company to change. All of these elements addd nothing to the end product and in some cases cause double work. It would be nice to reduce these costs, but it is impossible for a company to eliminate these costs of quality entirely.
I see the biggest difference between a manufacturing and service oriented organization's cost of quality to be the timeliness of the actions. In a manufacturing organization the internal failures are identified prior to reaching the customer. In a service oriented organization it is diffcult to identify a failure without the interaction of the customer. The customer serves as a valuable component of the process by serving as the quality evaluator, while at the same time as the end of the line customer. Since our customer's behavior and choices can change on a continous basis this makes for a challenging adventure for service oriented organizations. However, it is imperative that both manufacturing and service oriented organizations due everything possible to eliminate elements of cost to quality.
Cost of Quality:
I would agree with John. In the real world, it cannot be said that costs of quality can be truly eliminated. With each process that a product or service goes through, there are increased chances of increased cost of quality. Cost of quality is the cost that is incurred for not providing a quality service or product and therefore if quality is high the first time, the cost of quality is usually reduced for the product or service before it reaches the customer.
As John points out the major elements in a cost of Quality are the internal failure costs, the external failure costs, appraisal or inspection costs and the costs of preventing an error from occurring. Despite these four major elements often there are many hidden costs of quality for various companies that are often difficult to formally identify using measurements systems. In most instances, often it's only a small part of the costs of quality that are often obvious. The bigger part of the problem is often the one that is easily noticed but has huge potential in reducing the costs of quality. Identifying and understanding these hidden costs has the potential of significantly reducing the cost of quality. For instance higher customer returns, recalls or increased inspections costs, rework and wastes may be due to underlying problems in the way the company operates and its workforce. The underlying problems may be excessive employee fluctuation or turnover, delayed planning, used capacity, poor handling of complaints, billion or pricing errors, incorrect completed sales orders or even high system costs or excess overtime. Understanding these costs ...
This solution discusses the response to the "cost of quality".