Total Quality Management - The cost of poor quality

What is it?
The cost of poor quality is a technique that has been developed to identify the need and opportunities for quality improvements in a language we all understand ... money.

When to use it

The cost of poor quality indicates 'how it is today' and in particular it can be used:

To size problems and focus attention for need for improvement:

• As a useful tool in Step 1 of the Problem Solving Process
• As an output from step 4 of Department Purpose Analysis
• As a source of improvement/project opportunities

What does it achieve?

The immediate benefits of conducting a cost of poor quality exercise will be:

• A greater degree of awareness of quality problems
• The association of day to day failure with costs and in consequence a desire to improve
• The identification of improvement opportunities
• To give manages a new set of 'mental tools' and perspective to get underneath the realities of their operations

Summary:

Basic work - is as it suggests, the essential/unavoidable activities required to do a job of work.

Prevention - is any activity aimed at preventing getting things wrong ... eg. training, planning and analysis data for improvement purposes.

Appraisal - is checking that the requirements have been met, for example, such as verification, inspection and audit..

Failure - is any activity created as a result of not meeting the requirements first time ... eg. scrap, correcting, customer complaints, lost opportunities and exceeding requirements

The cost of poor quality = appraisal costs + failure costs.