Rajesh Ranjan's Weblog

We always find people looking for quality in the products and services they acquire. Professionals define ‘quality’ as something which meets or better still, exceeds the specification originally envisaged. Any organization would aspire to be known as a provider of such offerings for its stakeholders – the people, the government or regulatory bodies, the customers, the suppliers, and the society, at large.

There are various measures of organizational improvement and many methodologies and tools are employed to assess and work upon the areas to move up in the journey toward excellence by any organization. Taking up transformational initiatives help companies become fit for the future by implementing effective and efficient processes by overcoming the blind spots in their functioning.

Executives are cautious in opting for Quality measures in their operations as there is cost involved in anything not understood properly. Therefore, it is important to understand the Cost of quality (COQ), which is defined as a method to assess the cost of ensuring offerings meet quality standards, as well as the cost of creating goods or services that fail to meet such standards. The COQ can be categorized into four (4) major types:

📍Preventive: Associated cost for reducing the potential for defective products/ services. (Re)Skilling and Training, Knowledge sharing, etc.

📍Assurance: Inspection of products, parts, processes would need a quality assurance plan. Costs associated with the evaluation and assessment of offerings like laboratories, inspecting personnel, testing, etc. are examples of such costs.

📍Internal failure: Producing defective components or services (before delivery to intended clients) would need corrective measures such as rework, rejection, resultant downtime of production processes, and add to the cost to quality.

📍External failure: Returned or rejected equipments, loss of goodwill, loss of brand name, etc. (no repeat order or punitive action by client, etc.) are some of the cost aspects which come to light after delivery of the goods or services to the clients.

The costs associated with external failure are difficult to assess and many times, have worse intangible impact than the tangible one. Professionals have to deal with the factors affecting the Cost of Quality in more than one way, so as to deliver value to Customers in their journey to excellence.

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