Reducing Quality Costs

Billions of dollars a year are wasted due to poor quality. In less demanding organizations, the cost can be five percent of sales, while others incur up to forty percent of sales. Most costs can be attributed to excess variation in processes and products. But there is also a cost associated with reducing variation. These costs are distributed among four major categories:

• Detection

• Internal failure

• External failure

• Prevention

In general, these are the costs associated with producing, identifying, avoiding, or repairing products that don't meet requirements.

While Cost Management can help you capture and analyze the cost of quality, Quality can help you avoid these costs. Quality enables you to reduce process and product variation with advanced control charting methods, Pareto analysis, distribution assessment, and process capability evaluations.