¶ … Quality Relationship Memo John Smith

John D. Mitch, Department Supervisor

FROM: John Smith, Quality Assurance

Costs of Quality

COPQ or Cost of poor quality are costs related to providing poor quality services or products. There are four categories for COPQ.

Internal failure costs: Costs related to defect found prior to customer receipt of service or product.

External failure costs: Costs related to defects located after customer receipt of service or product.

Appraisal costs: Costs sustained to decide the level of conformance to quality guidelines.

Prevention costs: Costs sustained to maintain appraisal and failure costs to a desired minimum.

The costs are part of cost of quality which is a: "methodology that allows an organization to determine the extent to which its resources are used for activities that prevent poor quality, that appraise the quality of the organization's products or services, and that result from internal and external failures" (ASQ, 2016). Cost of quality allows businesses to assess and prevent actions that reduce quality or assess and maintain actions that promote quality. With the data collected from cost of quality analysis, a business/organization can properly assess and decide the potential savings to be garnered via implementation of process improvements. "Quality-related activities that incur costs may be divided into prevention costs, appraisal costs, and internal and external failure costs" (ASQ, 2016).

To begin, the first cost are prevention costs. Businesses and organizations incur prevention costs in order to avoid or prevent quality problems. These costs are related with the "the design, implementation, and maintenance of the quality management system" (ASQ, 2016). Businesses/organizations plan and incur prior to actual operations possibly...

Service or product requirements- establishment of conditions for any incoming materials.
1. Quality planning-formation of plans for reliability, quality, production, operations, as well as inspection.

2. Quality assurance-formation and maintenance of quality systems.

3. Training-Preparation, development, plus maintenance of programs.

The next are appraisal costs. These costs are related to the monitoring and measuring of activities associated with quality. Appraisal costs are "associated with the suppliers' and customers' evaluation of purchased materials, processes, products, and services to ensure that they conform to specifications" (ASQ, 2016). Possible inclusions are:

1. Verification-meaning checking any incoming products, material, process set up against agreed conditions.

2. Quality audits- confirmation of quality systems working properly.

3. Supplier rating- evaluation and approval of suppliers services and products.

The next are internal failure costs. Business/organizations incur these costs in order to remedy any defects discovered prior to delivery or service or product to the consumer. Such costs happen as the result of failure of workers to reach design quality standards and are only detected when transferred to customers. They could include:

1. Waste-performance of superfluous work or holding of stock as consequence of poor organization, communication, or errors.

2. Scrap-Any defective material or product that cannot be sold, used, or repaired.

3. Rectification/rework-correction of errors or defective materials.

4. Failure analysis-activity necessary to establish causes of service failure or internal product.

External failure costs are "incurred to remedy defects discovered by customers. These costs occur when…