Understanding Costs of Quality (COQ)

Costs of Quality (COQ)

Costs of quality (COQ) refer to the sum of various costs as that of appraisal costs, prevention costs, external failure costs, and internal failure costs. Moreover, understanding the costs of quality helps organizations to develop quality conformance as a useful strategic business tool. Above all, COQ means understanding, analyzing & improving the quality performance.

Various costs which constitute costs of quality

Firstly, the appraisal cost is the cost collection because of inspecting the processes.
After that, prevention cost is the cost collection because of carrying out activities to prevent failures.
Here, external failure cost is the cost incurring because of the occurring failure when the customer using the product.
Lastly, internal failure cost is the cost incurring due to the failures within the organization.

Some examples of the various costs are,

- Prevention – Training Programme, Preventive Maintenance.etc
- Appraisal – Depreciation of Test/ Measuring Equipment.etc
- Internal Failure – Scrap, Rework, etc.
- External Failure – Warranty, Allowances, Customer Returns, etc.

COQ Benefits

Firstly, it provides a standard measure across the organization & also inter-organization.
Secondly, building awareness of the importance of quality.
After that, identifying improvement opportunities.
Lastly, being a cost measure.

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