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Total Quality Management - Quality Costs

Quality Costs
The importance of Quality Costs is steadily being understood by many corporates as a way to ensure good quality and at the same time - Customer Satisfaction and Profitability under today's competitive scenario.

However considerable misunder standings do exist as these costs are seen as expenses of the Quality Function.

Fundamentally each time a work needs to be redone, cost of quality is increased. the obvious reasons are:
1. Reworking of a manufactured item
2. Retesting of an assembly.
3. Rebuilding of a tool.
So what are Quality Costs?
---Measure of all Costs associated with making a defective products or services.
The FOUR Elements are:-
1. Prevention Costs:- Costs that are incurred to avoid any defects arising in design, purchased material and deliverable products. These include activities prior to Designing, purchasing materials and manufacturing to ensure that good produced are of acceptable quality.

2. Appraisal Costs:- Costs incurred in appraisal (Inspecting / Tests) of materials purchased,designand manufactured Productivity check compliance withestablished requirements such as Industry Standards,Engineering,Drawing,Company Procedures, Professional standards, Operating Instructions etc.

3. Internal Failure Costs:-Costs due to manufacturing anomalies  resulting in not able to achieve the desired/set quality.

4. External failure Costs:- Costs arising outside the manufacturing organization of failure to achieve the set quality (After Transfer of Ownership.)

Q)How to make Quality costs an integral part of the system?

    * Determine Quality costs for each major product line/cost center within the manufacturing operation.
    * Establish meaningful goals for each such cost center to explore improvement potentials.  

This way quality can be maintained as it gets coupled with error identification and prevention and thus we come full circle to the Appraisal Factor of Quality Costs.

Conclusion :-Taking the time to better understand you quality costs will help you to much more cost effectively deliver a quality software product. You will be able to optimize the various costs to achieve the best quality achievable at a more reasonable price.

 
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