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  #1  
Old 29th May 2007, 05:11 PM
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Question Which Cost of Quality (COQ) Model is best?

Hello,

I'm wondering what the pros and cons are of using the traditional method of gathering quality cost data - prevention/appraisal/internal failure/external failure - compared to the process quality costs method and other methods of obtaining costs of quality/poor quality?

Thank you,
Patrick

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Old 29th May 2007, 05:32 PM
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Money Re: Which quality cost model is best?

Patrick;
My experience of quality costs gathering (back in the mid 80's, in the U.K) was that the prevention/appraisal/failure model was extremely difficult to get data for. In many organizations, it's not usual to pull together the details (some might say 'infinite') required to populate each category so it becomes a balanced view. For example, in the design organization of the company I worked for, there wasn't any project tracking for attending design reviews, PFMEA workshops etc. so we didn't bother, because the management thought it was going to spend more time putting in accounting systems to report on stuff they knew was good to do.

In the final analysis, we just reported (skewed in some way) on the costs of failure.


Interesting screen name, given than curry has overtaken 'good ole' fish n' chips as the no. 1 carry out in the U.K.

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Old 29th May 2007, 07:04 PM
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Re: Which Cost of Quality (COQ) Model is best?

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In Reply to Parent Post by curryassassin View Post

Hello,I'm wondering what the pros and cons are of using the traditional method of gathering quality cost data - prevention/appraisal/internal failure/external failure - compared to the process quality costs method and other methods of obtaining costs of quality/poor quality?Thank you, Patrick
If by "process quality costs method" you mean activity-based costing, I would imagine it would be somewhat easier to collect, but will still have to be categorized in some way to identify the higher/lower value components.

The best method is the one you can get your organization to use to help identify/prioritize, justify/resource, and track improvements.
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Old 29th May 2007, 10:03 PM
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Re: Which Cost of Quality (COQ) Model is best?

Good responses so far.

The reason for gathering data, including costs of quality, is to understand and manage based on the data for the organization's health and improvement.

Using quality cost calculators to assess appraisal costs can be helpful if the costs factor in somehow with understanding the value of activities. One might be interested to compare the costs of appraising against the alleged consequences (I say alleged unless the relationships can be proven) of not appraising. I would use activity based costing principles to understand both of these factors.

I remember reading (Dr. Juran, I think) that the method of costing is less important than that it is done reliably. The specific advice was to not try to account for every dime, but to use methods as consistent as practical and trend the results.

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Old 30th May 2007, 04:47 AM
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Re: Which Cost of Quality (COQ) Model is best?

Thanks Andy, Duke, Jennifer.

The idea of gathering quality cost data in the prevention/appraisal/failure model seems very daunting. I prefer the activity or process method, which seems to fit with analysing/controlling/managing activities/processes and seems to be an obvious means of maintaining effective and efficient processes along with owners/responsibility/customers/sequence of events/interrelationships etc.

It may turn out that the organisation didn't realise the cost of one step or the amount of waste/scrap,and, as you point out, the cost savings that an improvement may bring.

Cheers (bit early for curry).
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Old 30th May 2007, 08:30 AM
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Re: Which Cost of Quality (COQ) Model is best?

Yes, tracking quality costs can be a big project, but I find it worhwhile.

Please see this thread, which discusses the subject, includes references to articles and contains an attachment if a quality cost calculator, plus a link to a thread containing a second calculator attachment.

When speaking the language of money to the organization, I recommend limiting the discussion to one or two select improvement topics. When realizing return on investment in very specific cases via carefully crafted actions, the theory of cost savings through quality improvements can be demystified. Gradually an organizational change can happen if the most influential people can learn to understand when, how and why the discipline works to the overall benefit.

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