What is Cost of Quality??How it can be used to improve Business Outcome??

Cost of Quality = cost of nonconformance + cost of conformance

cost of nonconformance is the cost of treatments, such as; rewarks

cost of conformance is the cost of preventative, such as; appraisals

In order to improve the business outcome, we need to deploy quality planning, quality assurance, and quality control tools and techniques

cost of quality = effort of System, staffing or procedures incorporated to benchmark a method of production or distribution based on  limited quantity of the resources.

how to improve the business outcome = Study, analyze the cause, need, segment, environment, position where the product, market or service is quenching for quality and invest that cost of quality there in a way that in medium or long term, this cost applied for quantity is grabbed back by increasing the quantity produced, service delivered and brand image or good will earned.

The cost of quality is divided into two componnents, that is:

Non conformance cost:

These are the costs incurred when one fails to incorporate quality into its work processes. These constitute of internal failure cost and external failure cost.

Internal failure costs are the costs of inventory that requires rework or needs to be scraped and are identified before the products are dispached to the customer.

External failure cost is the cost of warranty claims and lost goodwill that occurs when a defected good or an item that does not meet the quality standards specified are dispached to a customer.

Conformance costs:

These are the costs that occur in order to prevent internal and external failure, these occur at input and process level in the production cycle before the final item is made. This category includes appraisal costs and prevention costs.

Appraisal costs are the costs of various quality controle measures taken to insure that any defects in rawmaterials and processes are detected before the final product is made. These include raw matterial inspection, process audits etc.

Prevention costs includes cost of sourcing trusted suppliers, costs on maintainning inventory, costs of labour trainnings etc.

It is normally accepted that investment in conformance costs will reduce non conformance costs by a larger amount. Such an investment should be made untill a balance in achieved where the total cost of quality is lowest.

"The cost of quality."

It’s a term that's widely used – and widely misunderstood.

The "cost of quality" isn't the price of creating a quality product or service. It's the cost of NOT creating a quality product or service.

Every time work is redone, the cost of quality increases. Obvious examples include:

• The reworking of a manufactured item.
• The retesting of an assembly.
• The rebuilding of a tool.
• The correction of a bank statement.
• The reworking of a service, such as the reprocessing of a loan operation or the replacement of a food order in a restaurant.

In short, any cost that would not have been expended if quality were perfect contributes to the cost of quality.

Quality is nothing but it is future....... Because of if any product or material are quality = its gets the Quantity.

Degree of quality depends upon to get the numerous of quantitys.