Cost Of Quality Essay

COST OF QUALITY cost of quality: The means is to quantify the total cost of quality-related efforts and deficiencie
Quality is subjective and dependent upon the role of the assessor. Best practice is that quality is measured from the point of view of the ultimate consumer of the product or service. Failure to measure from this perspective will result in a gap between what the customer expects and what is actually delivered.
Best practice also indicates that any quality assessment is a “point in time” or “dynamic” rather than static. What is perceived as quality will change over time with additional information, new choices or more experience.
Although the popular name for this concept is the cost of quality, it is in reality, the cost of poor quality. For the Business Analyst, the cost to design and develop a new system, or modify an existing one, is of key importance. The language of business is money. Therefore, the impact of quality decisions should be convert into financial terms so that makes good sense. It helps to bridge the gaps in understanding which can occur when there is no other common basis.
• Product Cost: The amount of resources (time and money) required to build the product one time, correctly. In manufacturing environments, this represents the bulk of the total costs, often as much as 95%. By contrast, in Information Technology, it is common for this to represent as little as 30% of the final cost of a product. The remaining funds expended are the cost of (poor) quality. Some of these costs are to prevent errors from being created, while others are to catch and correct defects already built.
• Product Appraisal and Inspection Costs: The resources used to determine if the product has been built corr...

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... and implement good standards and procedures, including time to train in how to use them effectively, time spent in collection and analysis of defect data, time spent to acquire, install and train staff of the use of appropriate tools, and time spent learning effective communications and interpersonal skills. Because they prevent defects from being created, prevention costs are the most effective in actually improving quality; but because those defects do not actually occur, it is often difficult to demonstrate the return on investment directly.
• Total Product Cost: this is the sum of all four of the elements above. Juran, Crosby and Perry have demonstrated that small percentage increases in Prevention Costs yield much larger percentage cost reductions in Failure Costs, thereby producing a net reduction in Total Product Costs as shown in Figure 1-6 Cost of Quality.