Why Quality Management Should Focus on the Total Cost of Quality

Introduction to Cost of Quality

• Concept Origin: Introduced by Armand V. Feigenbaum in 1956, the cost of quality is categorized into four types: prevention, appraisal, internal failures, and external failures.
• Good vs. Poor Quality: Prevention and appraisal costs relate to good quality, while internal and external failure costs relate to poor quality. The total cost of quality is the sum of these categories.

Prevention Costs

• Definition: Activities aimed at preventing defects and non-conformance, such as market research, design inputs, risk management, and process validation.
• Examples: Vendor management, employee training, quality planning, and predictive equipment maintenance are all prevention activities.

Appraisal Costs

• Definition: Activities focused on measuring, inspecting, and evaluating products to ensure they meet quality standards.
• Examples: Includes receiving inspections, supplier audits, in-process testing, finished goods inspection, and equipment calibration.

Internal Failure Costs

• Definition: Costs arising from defects detected before shipping the product to the customer.
• Examples: Scrap, rework, re-inspection, root cause investigation, extra material handling, and lost labor due to equipment downtime.

External Failure Costs

• Definition: Costs incurred when defects are discovered after the product has been shipped to the customer.
• Examples: Warranty claims, repairs, customer complaints, product recalls, lost sales, legal fees, and loss of reputation.

Juran's Quality Cost Curve

• Explanation: Juran’s curve shows that prevention and appraisal costs increase linearly as quality improves, while failure costs decrease exponentially, indicating the lowest total cost at 100% conformance.