Quality Assurance and cost

Quality assurance consists of the auditing and reporting functions of management. The goal of quality assurance is to provide management with the data necessary to be informed about product quality, thereby gaining insight and confidence that product quality is meeting its goals. Of course, if the data provided through quality assurance identify problems, it is management's responsibility to address the problems and apply the necessary resources to resolve quality issues.

Cost of Quality

The cost of quality includes all costs incurred in the pursuit of quality or in performing quality-related activities. Cost of quality studies are conducted to provide a baseline for the current cost of quality, identify opportunities for reducing the cost of quality, and provide a normalized basis of comparison. The basis of normalization is almost always dollars. Once we have normalized quality costs on a dollar basis, we have the necessary data to evaluate where the opportunities lie to improve our processes. Furthermore, we can evaluate the effect of changes in dollar-based terms.

What are the components of the cost of quality?

Quality costs may be divided into costs associated with prevention, appraisal, and failure. Prevention costs include

• quality planning

• formal technical reviews

• test equipment

• training

Appraisal costs include activities to gain insight into product condition the "first time through" each process. Examples of appraisal costs include

• in-process and interprocess inspection

• equipment calibration and maintenance

• testing

Failure costs are those that would disappear if no defects appeared before shipping a product to customers. Failure costs may be subdivided into internal failure costs and external failure costs. Internal failure costs are incurred when we detect a defect in our product prior to shipment. Internal failure costs include

• rework

• repair

• failure mode analysis

External failure costs are associated with defects found after the product has been shipped to the customer. Examples of external failure costs are

• complaint resolution

• product return and replacement

• help line support

• warranty work

As expected, the relative costs to find and repair a defect increase dramatically as we go from prevention to detection to internal failure to external failure costs.

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