Quality cost has greater impact on the productivity and profit margin of the organizations.
The guidelines and advice offered here will help those responsible for an organization's financial management to develop and implement a
quality cost system.
The inconvenience of the traditional
quality cost account is dividing cost of quality only to three main groups: cost of prevention, cost of appraisal and cost of failure.
If you can estimate the
quality cost of the existing design and the new proposal, it could well be that an apparent 5% saving is more likely to be a 15% on cost!
The
Quality Cost Delivery (QCD) award is given to those suppliers whose quality, cost and delivery exceed a 95% standard of excellence.
Costs associated with each
quality cost category (prevention, appraisal, internal failure and external failure) should be plotted periodically as a fraction of one or more measurement bases appropriate for future use as indicators of business activity.
There are many research made and publications published related with
quality cost. It is identified the efforts between
quality cost and value by classifying the
quality cost elements into "value added" and "non-value added" grounded on activity based costing (ABC); prevention-appraisal costs are value-added
quality costs and failure costs are nonvalue added
quality costs [7].
The book also outlines what the IRS seeks in a
quality cost segregation study and report.
Its
Quality Cost function determines the cost of finding, fixing, and preventing mistakes in manufacturing.