Quality Management Tools – including TQM, Six Sigma, Cost of Quality and EFQM

Cost of Quality (CoQ)

According to CIMA Official Terminology, CoQ is the difference between the actual cost of producing, selling and supporting products or services and the equivalent costs if there were no failures during production or usage. The cost of quality can be analysed into:

Cost of conformance – cost of achieving specified quality standards

Cost of prevention – costs incurred prior to or during production in order to prevent substandard or defective products or services from being produced

Cost of appraisal – costs incurred in order to ensure that outputs produced meet required quality standards

Cost of non-conformance - cost of failure to deliver the required standard of quality

Cost of internal failure – costs arising from inadequate quality which are identified before the transfer of ownership from supplier to purchaser

Cost of external failure – costs arising from inadequate quality discovered after the transfer of ownership from supplier to purchaser.