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Relationship between quality assurance costs and failure costs

M

Mary McD

#1
Does anyone have any data on the relationship between assurance costs and failure costs -- in order to help me justify why it's a good idea to do assurance?

real-life examples or actual data is the most helpful; but feel free to 'sanitize' the data while still providing info if you're more comfortable with that!

Thanks so much,
Mary McD
 
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D

Duke Okes

#2
The typical "theoretical" ratio given is $1 in prevention = $10 in appraisal = $100 in failure. However, the ratios would vary very widely depending on industry and which costs a specific company elects to include in each COQ bucket.

You might try contacting the ASQ Quality Management Division's Cost of Quality committee.
 
H

Howard Lee

#3
My dad used to say something about an ounce of prevention being worth a pound of cure.:notme:

It seems the older I get, the smarter he was.
 

Helmut Jilling

Auditor / Consultant
#4
Does anyone have any data on the relationship between assurance costs and failure costs -- in order to help me justify why it's a good idea to do assurance?

real-life examples or actual data is the most helpful; but feel free to 'sanitize' the data while still providing info if you're more comfortable with that!

Thanks so much,
Mary McD

I don't see that it would be possible to do a "Rule of Thumb" though I often use the 10 to 1 rule as a discussion point. Obviously, assurance or prevention is cheaper than failure in most cases.

If you can determine what failure would cost you, based on your current customers, it would be a good starting point.
 
J

JP Frisbee

#5
I agree with hjilling, however, I believe there are things such as a loss of customer confidence in the product, loss or reduction of sales, as well as increased costs by vendor services which are much more difficult to measure.:confused: These issues may result in contract rewrites, additional requirements placed on the company, or even certain guaranties be made in the event of delayed or failed service. Good Luck!:bigwave:
 
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