20 QUALITY | October 2013 www.qualitymag.com
In 2011, Sipho Tjabadi, general manager, Eskom
Quality Management, South Africa, spoke at the
ASQ Audit Division Conference. To punctuate his
keynote address, Tjabadi brought a video titled,
“The Cost of Quality.” For seven minutes the audience
was transfixed while several quality failures
were presented, root causes offered, and total cost
in materials (and, too often, life) were calculated on
screen. After the conference the video was posted to
the Audit Division website, where it continues to be a
popular page.
The video powerfully illustrates cost of quality. But
what does cost of quality really mean? To answer the
question, let’s take a step back. Define quality. Take a
moment to ponder.
A visit to Dictionary.com will bring us to the
following list:
qual·i·ty (kwoliti)
1. an essential or distinctive characteristic, property,
or attribute: the chemical qualities of alcohol.
2. character or nature, as belonging to or distinguishing
a thing: the quality of a sound.
3. character with respect to fineness, or grade of excellence:
food of poor quality; silks of fine quality.
4. high grade; superiority; excellence: wood grain
of quality.
5. a personality or character trait: kindness is one of
her many good qualities.
Character. Nature. Excellence. Did any of these
terms appear in your definition of quality? While
most of us can identify what a quality product or
service is, it is often more difficult to convey that
to someone else. How many times have you—as a
quality professional—when a person asks you what
quality is, allowed the asker to supply the answer
and then filled in the gaps? That’s fairly common
with ASQ members. In fact, in recent informal polls
on ASQ social media, when asked “what is quality?”
a number of visitors answered “whatever the customer
says it is.”
The customer will generally relate quality to the
way in which a product works. While a good starting
point, quality is not only what a product is but
also what a methodology or tool does. This is certainly
the way a quality professional must think.
Stating what quality “does for me” is not only a
way of explaining to family, neighbors and coworkers
but a means of justifying its importance to
senior management.
So, where are we in our quest to define quality?
Quality is:
• Waste reduction
• Continuous improvement (which might include
process improvement)
• Performance excellence (there’s that word excellence)
• Product safety
• Service delivery
• Exceeding customer expectations
Depending on what you are trying to do, quality will
mean something different to you.
With quality more or less defined, we can finally
turn to cost of quality. With the multiple quality definitions
in circulation, it is no wonder cost of quality
is defined in different ways. Unlike the definition of
quality, however, many of the terms used to define
cost of quality are incorrect.
WHAT IS COST OF QUALITY?
Cost of quality is often thought of as the price of
creating a quality product. While on the surface
this appears to make sense, this definition is absolutely
incorrect.
In actuality, the cost of quality is the cost of NOT
creating a quality product or service. What is the
difference? The former (incorrect) definition covers
product/service costs only. Cost of quality covers any
cost that would not have been expended if quality
were perfect.
In 1999, ASQ Quality Costs Committee
published the third edition of “Principles of Quality
Costs: Principles, Implementation, and Use” (ed.
Jack Campanella, ASQ Quality Press), beginning
the book with references to costs associated
with quality.
• Prevention Costs—The costs of activities specifically
designed to prevent poor quality in products
or services.
• Appraisal Costs—The costs associated with measuring,
evaluating, or auditing products or services to
ensure conformance to quality standards and performance
requirements.
• Failure Costs—The costs resulting from products or
services not conforming to requirements or customer/
user needs. Failure costs are divided into internal
and external failure categories.
WHAT DOES
(COST OF) QUALITY MEAN?
MANY OF THE TERMS USED TO DEFINE COST OF QUALITY ARE INCORRECT.
SPEAKING OF QUALITY
020-QM1013-CLMN-ASQ.indd 20 9/17/13 3:33 PM
www.qualitymag.com October 2013 | QUALITY 21
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• Internal Failure Costs—Failure costs occurring prior to
delivery or shipment of the product, or the furnishing of a
service, to the customer.
• External Failure Costs—Failure costs occurring after delivery
or shipment of the product —and during or after furnishing
of a service—to the customer.
• Total Quality Costs—The sum of the above costs. This
represents the difference between the actual cost of a
product or service and what the reduced cost would be if
there were no possibility of substandard service, failure
of products, or defects in their manufacture.
Yes, this is a daunting list of costs. But quality is essential.
There is a cost to attaining and improving quality, but there
is a bigger cost in failing to produce quality work. Don’t allow
a definition to get in the way of your work. You know what
quality is. Achieve it!
You can fi nd more about cost of quality, including free articles and case
studies, at http://asq.org/cost-of-quality/index.html.
020-QM1013-CLMN-ASQ.indd 21 9/17/13 3:33 PM
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