Quality is a one of the very important parameters in customer satisfaction index. Product quality is directly proportional to customer satisfaction. As you all know now a day’s market coopetition is too huge and maintain customer satisfaction is very important. One of the very important parameters for measuring quality is cost perspective. As per old myth if we improve product quality cost will be increased but now a day’s many organizations follow the concept improve quality with reduce cost. In this article we will try to understand what are the cost associated with product quality & its measurement system.

Types of cost associated in product quality

Basically there are two cost associated with product quality and if we structurally monitor, its positively impact on quality performance improvement. Before we proceed let’s try to understand what is quality assurance and quality control.

• Quality Assurance (QA) Quality Control (QC)
• Quality assurance is a proactive strategy for quality monitoring.
• Quality control is a reactive strategy for quality control.
• QA focused on defect prevention.
• QC is focused on defect detection.
• Quality assurance is majority focused on quality system process standardize.
• Quality control is focused on product oriented approach.
• Quality assurance is a pre-production activity.
• Quality control is a during production activity.

1. Cost of good quality (COGQ)

cost of good quality is basically cost associated with producing good product such as cost of maintaining quality management system and many more. there are basically two sub activities are involved with cost of good quality as per mention below.

Appraisal Cost

Appraisal cost is part of good quality and its associated with conformance to quality requirement. Review below attached activities are involved with appraisal cost.

• Cost of manpower associated with quality measurement system.
• Cost associated with vendor products and services approval.
• Cost of quality audit for quality system standardization.
• Cost associated with calibration and testing of measuring instruments.

Prevention cost

Prevention cost is also part of good quality. Its associated with prevent quality defects. Review attached activities are involved with prevention cost.

• Cost of manpower and system associated with quality planning and quality system development.
• Cost of quality assurance activities such as quality improvement at design stage, additional proactive activities for system improvement.
• Cost associated with training and development activities related quality improvement.
• Cost involved with developed specifications for incoming and outgoing products and services.

2. Cost of poor quality (COPQ)

Cost of poor quality is basically cost associated with producing poor product during manufacturing or assembly such as cost of defects. There are two sub activities are involved with cost of poor quality as per mention below.

Internal failure Cost

Internal failure cost is associated within organization level. Internal failure cost occurred when product produced out of desired specification or out of customer required range. In another way internal failure cost involved when not following critical to quality parameters.

• Cost associated with rework.
• Cost associated with rejection or scrap.
• Cost associated with failure analysis of rework and rejection.

External failure Cost

External failure cost is associated with out of organization premises, means product defects identified from customer side. Either it is design un-fulfilment or not useful product functionally.

• Cost of product repair at customer site.
• Cost of product replacement at customer site.
• Cost of transportation and hospitality for repair and replace products and services.
• Cost of handling and serving customer complaints including lost order and many more things.