Business Leadership Thru World Class Quality Costs

Article

Dobbins, Richard   (1991, ASQC)   Dobbins Management Consulting, Hatboro, PA 19040-4446

Annual Quality Congress, Milwaukee WI    Vol. 45    No. 0
QICID: 9687    May 1991    pp. 475-481
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Article Abstract

World Class Quality Cost Management (WCQCM) refers to the advanced application of a technique known as Quality Cost Analysis. This paper discusses the advantages of using this technique to determine the cost of your company's current quality assurance measures. The author offers suggestions for collecting and analyzing quality cost data. The Quality Cost Analysis technique captures costs incurred in the design, production, and distribution of a product or the costs associated with providing a service. All significant costs incurred in accomplishing quality functions and all costs related to correcting quality problems are reflected for every product line or service that the company provides. Most quality costs fall into one of four broad categories; prevention costs, which account for approximately 5% of quality costs; appraisal costs, which account for approximately 25% of quality costs; and internal failure costs and external failure costs which, combined, account for approximately 70% of all quality costs. Management should use Quality Cost Analysis as a tool to recognize which operations incur the most cost, analyze the factors involved, compare actual costs to expected costs and, if necessary, refocus the company's resources to reflect priorities.

Keywords

Cost of quality (COQ),Leadership,Quality management (QM),Quality tools,World-class quality


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