Most companies know their visible quality costs: scrap, rework, complaints. The invisible ones — hidden in waiting time, lost trust and lost customers — are often considerably larger, but rarely quantified. This article reviews the concept of Cost of Quality.
The four types of quality cost
Cost of Quality is traditionally divided into four categories. Two are about preventing faults, and two are about handling them once they've happened. The balance between these tells you a great deal about how mature the quality management is.
The four categories
- •Prevention — training, process design and maintenance that prevent faults
- •Appraisal — inspection, testing and audits that detect faults
- •Internal failures — scrap and rework before the product reaches the customer
- •External failures — complaints, returns and lost trust after delivery
Shifting towards prevention
When a company moves investment from detecting faults to preventing them, the total quality costs typically fall over time. The external failures — the most expensive and most damaging — are reduced, because fewer faults arise in the first place.
The shift towards prevention happens in practice through systematic root cause analysis and follow-up — precisely what we review in Quality systems that work: from paper to practice. To structure the analysis, you can use our 5-why template.
✓Concrete takeaways
- →Quantify both the visible and the hidden quality costs
- →Be aware that external failures are often the most expensive
- →Gradually move investment from appraisal to prevention
- →Track the development over time rather than looking at a snapshot
Sources and further reading
- Crosby, P. B. (1979). Quality Is Free: The Art of Making Quality Certain. McGraw-Hill.
- American Society for Quality — Cost of Quality (ASQ knowledge resource).
The references show the professional basis. Sources are reproduced in their original language.