The cost of quality – how to measure it in line with ISO 9001
Quality management is a key part of ensuring customer satisfaction and maximizing business profitability. Quality is an investment, and understanding how to measure the cost of quality is an essential part of any ISO 9001 quality management system.
The concept of cost of quality (COQ) has been around since the mid-20th century and is defined as “the cost incurred by an organization to prevent non-conformance, or the cost of not producing quality products or services”. Quality is not free, and in order to ensure that your products and services meet customer expectations, it is necessary to understand the cost of the quality inputs and processes.
Measuring the cost of quality is important for a variety of reasons. It enables organizations to identify areas where quality improvement can be made, and it can help to identify the cost-effectiveness of quality initiatives. In addition, it helps to ensure that quality is managed in line with customer expectations and that quality initiatives are cost-effective and well-targeted.
In this blog, we will explain what the cost of quality is and how to measure it in line with ISO 9001. We will cover the following topics:
- What is the cost of quality?
- What are the four types of cost of quality?
- How to measure the cost of quality in line with ISO 9001?
- What are the benefits of measuring the cost of quality?
What is the Cost of Quality?
The cost of quality is a term used to describe the total cost of quality inputs and processes in an organization. It includes the costs associated with preventing non-conformance, the costs of non-conformance and the costs associated with achieving customer satisfaction.
The cost of quality is not just the cost of producing quality products or services. It also includes the cost of implementing quality processes, the cost of testing and inspecting products, the cost of training staff on quality processes, the cost of complying with regulatory requirements, and other costs associated with quality management.
What are the Four Types of Cost of Quality?
The cost of quality can be broken down into four main categories:
- Prevention Costs – These are the costs associated with preventing non-conformance. This includes the cost of implementing quality control systems, the cost of training staff, the cost of auditing processes, and other costs associated with preventing non-conformance.
- Appraisal Costs – These are the costs associated with testing and inspecting products and processes in order to ensure that they meet customer expectations. This includes the cost of testing and inspecting products, the cost of quality audits, and the cost of using statistical process control methods.
- Internal Failure Costs – These are the costs associated with non-conformance. This includes the cost of reworking products, the cost of scrap, and the cost of warranty claims.
- External Failure Costs – These are the costs associated with not meeting customer expectations. This includes the cost of customer complaints, the cost of lost sales, and the cost of lost market share.
How to Measure the Cost of Quality in Line with ISO 9001?
Measuring the cost of quality in line with ISO 9001 is relatively straightforward and involves a few simple steps.
- Identify Quality Inputs and Processes – The first step is to identify all of the quality inputs and processes in your organization. This includes any quality control systems, processes, and procedures that are used to ensure quality products and services.
- Calculate the Cost of Quality Inputs and Processes – Once all of the quality inputs and processes have been identified, the next step is to calculate the cost of each. This can be done by assessing the cost of materials, labor, energy, and other resources that are used to implement quality processes.
- Calculate the Cost of Non-Conformance – The next step is to calculate the cost of non-conformance. This can be done by assessing the cost of reworking products, scrap, warranty claims, and other costs associated with non-conformance.
- Calculate the Cost of Not Meeting Customer Expectations – The final step is to calculate the cost of not meeting customer expectations. This can be done by assessing the cost of customer complaints, lost sales, and lost market share.
What are the Benefits of Measuring the Cost of Quality?
Measuring the cost of quality offers many benefits, including:
- Identifying areas where quality improvement can be made.
- Understanding the cost-effectiveness of quality initiatives.
- Ensuring that quality is managed in line with customer expectations.
- Identifying the cost of not meeting customer expectations.
- Ensuring that quality initiatives are cost-effective and well-targeted.
Conclusion
Measuring the cost of quality is an essential part of any ISO 9001 quality management system. It enables organizations to identify areas where quality improvement can be made and to ensure that quality initiatives are cost-effective and well-targeted. By understanding the cost of quality inputs and processes, and the cost of non-conformance and not meeting customer expectations, organizations can ensure that their quality management processes are efficient and effective.