Cost of Quality - Is it good or bad and why - Critical Review Research

[M Greenaway]

Hi All

I am looking to do some research into the subject of 'Cost of Quality' to provide a critical review on this approach. I would like to leave the discussion open to see where we go on this subject matter, suffice to open the discussion with 'is it good or bad and why ?'.

I will respond to any posts, and of course have a certain view, but would like to see where we go on this, may even call on willing participants to undertake a survey.

Thanks

 

[Duke Okes]

There is a lot of information on COQ already out there. Have you reviewed it? What specifically are you looking for?

 

[George Weiss]

Quality and quantity generally don’t mix. They are opposing forces.
Some would say quality built-in means less defective product or process.
Quality Management Systems in the business world seems to be a means of quantifying. It allows the guys on top to look at the beans that have been counted and make a decision on a process going forward.
If you have a small business in a niche market, then you might have such a tuned & skilled team, and such a small loop of corrections, that a QMS is jus a pain in the butt.
QMS put you in the big leagues with the other big business players who have the quality flags waving in the wind.
QMS and Sigma Lean Sigma 6 and etc. quantify quality for people who want 95% perfection or 99% perfection. It become a price for quality. More $ gets more quality many times……………

 

[Jen Kirley]

The thing to understand is that there is more than one type of "cost of quality." One type is cost of good quality and the other is the cost of bad quality.

ASQ breaks up the difference in their Cost of Quality page. Note: I have an "affiliation of convenience" with ASQ. That is, I hold one of their certifications and they enjoy my volunteer service as an Associate Exam Editor.

 

[howste]

I agree with Jennifer. If the cost of good quality is lower than the cost of the poor quality that it prevents, then it's good.

 

[George Weiss]

So then we are looking for the bad/good quality break even point?

 

[JaneB]

Quality and quantity generally don’t mix. They are opposing forces.

Not sure I agree with this. But you'd need to define your terms a bit better for me to be clear. If you are saying 'if you make lots of stuff (quantity) then you cannot possibly achieve and maintain consistent levels of quality ' I disagree.

If you have a small business in a niche market, then you might have such a tuned & skilled team, and such a small loop of corrections, that a QMS is jus a pain in the butt.

I do disagree with this. The way it's written, you seem to be saying, any small business with a tuned & skilled team doesn't have and doesn't need a QMS. Not so. They almost certainly have a QMS! OK, it might not be certified as meeting ISO 9001 (say) but that does not mean they don't have a QMS.
If you mean 'for a very small business, having an external certified QMS' could be a pain in the butt and not worth it, yes, that could well be true.

 

[Jen Kirley]

So then we are looking for the bad/good quality break even point?

Yes, but the challenge is in understanding the eventual value of customer satisfaction and public opinion. That makes the cost/benefit curve less clear than the cost/demand curve that economists use to predict effects of pricing. Just what was the extent of the damage from a well known quality failure? To what degree did customers buy from a competitor, and did they change their minds later? Such an exersize can drive people to bickering, so we just steer toward the prevention side. Since we know that engineering quality into a product/process/service generally bears lower cash costs than litigation, we can assume customer confidence will also be affected. Sales trends would then confirm or deny that hyppothesis, IF customers tell us they left because of XYZ.

Decline to do this and what you have is:

 

[M Greenaway]

Ok, so any thoughts on the 'Cost of Quality' models that are out there, such as the traditional Prevention, Appraisal, Failure model - does it serve a purpose, why should we do this ?

Is anyone using any models ?

Is quality 'free' as Crosby would claim, is there a cost benefit trade off as Feigenbaum and Juran might suggest, or is it all a waste of time cos most things cant be measured in financial terms such as lost sales, as Mr Deming might put it ??

 

[M Greenaway]

Hmmm im starting to think that Cost of Quality is as poor a concept, and as poorly implemented as people say !

I wonder why this is the case, and I wonder what impact it has on 'quality' ?

Crosby championed Cost of Quality such that the quality professionals could talk in business terms - is this still valid in this day and age when there are broader concepts of the purpose of business, and CEO's and senior managers/directors can talk in terms of non-financial performance measures, such as the triple bottom line ?

Rather than quality talking in business terms, does business now understand the language of quality, and as such the translation of quality to cash terms is no longer required ?

Or is it simply the failure of the Cost of Quality models themselves that have prohibited their wide uptake, and now by and large consigned them to the garbage can (to us the US vernacular) of quality management approaches ?

Has maybe Lean Manufacturing usurped the relevance of Cost of Quality, as it analyses processes in terms of the forms of waste within them, and acts on reducing these wastes, many of which can be considered to be the 'hidden' costs of poor quality that traditional CoQ models failed to identify ? The Lean Manufacturing approach can certainly be seen to closely align with the Process Cost model, and Activity Based Costing.

Also in a world where lagging financial measures are considered inadequate, and leading non-financial measures are coming to the fore, e.g. the Balanced Scorecard, is Cost of Quality a relic of old school business ?

Does the apparent absence of Cost of Quality from Japanese organisations suggest that if we were to benchmark ourselves against the world class organisations, they wouldnt be using Cost of Quality ?

Finally (for now), as Cost of Quality is often touted as necessary to acheive competative advantage, just like many other TQM approaches, if an organisation has no competition is Cost of Quality, or indeed TQM relevant in terms of maintaining competative advantage ? Would the presumed ongoing need to manage costs in monopolies, or public sector organisations, really necessitate a Cost of Quality model, or simply a cost model ?