How Quality Costs Drive TQM

Article

Carter, Charles Williams   (1991, ASQC)   The Product Integrity Company, Enfield, CT

Annual Quality Congress, Milwaukee WI    Vol. 45    No. 0
QICID: 9688    May 1991    pp. 482-487
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Article Abstract

This paper discusses the impact of Total Quality Management (TQM) on the cost of quality and provides methods for collecting data on Quality Costs and establishing Quality Cost Controls. Following a short historical perspective, the presentation describes the growing recognition and acceptance that Quality Cost Control techniques have received in recent years. The classical elements of Appraisal, Prevention, External Failure, and Internal Failure comprise total quality costs. Prevention and Appraisal costs can be categorized as investment costs; External Failure and Internal Failure costs can be categorized as consequential costs. Many practitioners encounter obstacles in obtaining appropriate numbers. The four most common pitfalls include: (1) Difficulties of relating these figures to financial reports from the Accounting Department; (2) The innate suspicion of bias which exists concerning dollar figures coming from the quality function; (3) Lack of consistency in the reporting basis over time; and (4) Difficulty sustaining the ongoing clerical effort. Quality costs can become a driving force in a TQM program; they advance the TQM theme in three ways: (1) establishing effective controls; (2) developing improvement goals; and (3) providing executive direction.

Keywords

Continuous improvement (CI),Cost of quality (COQ),Financial industry,Total Quality Management (TQM)


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