The Cost of Quality

Part 2 - The Cost of Quality

Introduction

The purpose of this paper is to discuss whether or not quality represents an extra cost to a firm. I do not believe that it is an extra cost; the reasons for this opinion are set out below with support from relevant material.

Definitions of Quality

Juran (1988) defined quality as 'fitness for use', meaning that the customer should reliably be able to use it for its intended purpose. Crosby (1985) defined quality as 'conformance to requirements' and Feigenbaum (1983) stated that quality products 'meet the expectations of customers'. Features of a quality product include performance, reliability, conformance, durability, aesthetics and safety (Garvin, 1984).

The Cost of Quality

Although there is considerable expense involved in implementing and maintaining an effective quality system at a company, it is more than recouped through the positive benefits that such a system brings. In my opinion and experience a good quality system reduces costs because if it were not put in place even higher costs would be incurred instead. If this were not true, firms would not invest in managing quality.

Investment in adequate quality systems like procedures, planning, inspection and training are worthwhile because they help to avoid the costs associated with poor products. Poor products lead to dissatisfied customers, warranty claims, loss of sales, and disruptions to production. The investigation and repair of failures are costs in terms of both time and money.

Crosby (1979) described the cost of quality as the price of non-conformance. He stated that 'Quality is Free', meaning that implementing quality pays for itself, doing things wrong and then correcting them is more expensive than doing them right the first time.

Feigenbaum (1983) identified four main costs of quality; prevention costs, appraisal costs, internal failure costs and external failure costs. See figure 1.

[pic 1]

Figure 1.                                                                              (Minitab, 2015).

Prevention costs are the cost of implementing a Quality Management system to ensure good quality is built into products. 'A quality management system (QMS) is a set of policies, processes and procedures required for planning and execution in the core business area of an organization' (ISO, 2015). They include planning, design, supplier evaluation, staff training, quality control engineering and preventive maintenance (Johnson and Kleiner, 1993). Prevention anticipates where failures or mistakes are likely to happen and aims to eliminate them (Suarez, 1992).