Managing Through Cost of Quality

Quality is not free! For most businesses, the Cost of Quality averages 15 to 20 percent of gross sales. Yet most businesses have no way of monitoring or managing the Cost of Quality. Understanding, identifying, and reducing your Cost of Quality is the best way to improve your company’s profitability.

Managing Through Cost of Quality will show you how to quickly estimate your company’s Cost of Quality, how to start or improve a Cost of Quality System, and how to combine Cost of Quality with Corrective Action Tracking for effective management. You will learn how to identify Quality Cost Elements in any department in a company and for any kind of business.

Managing Through Cost of Quality is oriented toward Executives, Managers, Supervisors, and Quality Professionals. It consists of six instructional units and requires approximately eight hours for presentation.

Seminar participants receive a Learner Handbook, a Learner Workbook, copies of selected illustations, and additional materials.

Please contact us to learn how identifying and managing your company’s Cost of Quality can make a positive difference in your company’s future.

To download the data sheet for this program, please click here. (PDF 41 KB)

Seminar Outline:

Unit 1 - Introduction to the Cost of Quality
Definitions of Quality
Traditional Definitions
Quality Defined as Fitness for Use
Quality Defined as Conformance to
Requirements
Defining the Cost of Quality
Costs of Conformance
Costs of Nonconformance
Direct Quality Costs
Prevention Costs
Appraisal Costs
Internal Failure Costs
External Failure Costs
Indirect Quality Costs
Lost Opportunity Costs
Customer Goodwill
Erosion of Market Share
Liability
Penalties
Concept of a Total Cost of Quality

Unit 2 - Cost of Quality Programs
Phases of Implementing Cost of Quality
Programs
Selecting a Basis for Measurement
Sales
Costs
Labor
Units
Estimating Your Cost of Quality
Using the Quality Cost Estimation Survey
Analyzing Your Results

Unit 3 - Defining Cost Elements
Making Detailed Estimates of Your Cost of
Quality
Direct Quality Cost Elements
Prevention
Appraisal
Internal Failure
External Failure
Using the Quality Cost Elements Worksheets

Unit 4 - Detailed Estimates of Your Cost of Quality
Using the Direct Quality Cost Estimation
Worksheet
Analyzing Your Results
Relative Percentages of Cost Categories

Unit 5 - Getting Started
Considerations for Selecting Pilot Projects
Focus on Internal Failure
Using Pareto Analysis
Collecting and Using Actual Cost Data
Labor
Materials
Utilities
Monitoring and Controlling the Cost of Quality
Direct Quality Cost by Department Report
Direct Quality Cost Summary Report
Trend Analysis of Cost of Quality Data
Determining an Optimum Direct Cost of
Quality
Indirect Quality Cost Considerations

Unit 6 - Managing the Cost of Quality
Create a Common List of COQ Codes
Prevention Codes
Appraisal Codes
Internal Failure Codes
External Failure Codes
Establish Policies and Procedures
Time Card Reporting
Corrective Action Reporting
Corrective Action Credit System
Collect Real Data
Time Cards
Corrective Action Forms
Management Reporting
Cost of Quality by Category
Cost of Quality by COQ Code
Cost of Quality by Department
Corrective Action Tracking

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