The Cost of Quality has been defined as the
sum of 4 separate costs: the cost of prevention,
the cost of appraisal, the cost of internal
failure and the cost of external failure. You
can use the Statit SPC tools to understand and
adjust these costs.
Cost of prevention is the cost of activities
focused on preventing poor quality in the product
or service. These costs can be things such as
the design process, process capability studies,
quality meetings and planning and a host of
other activities having to do with preventing
failures.
Costs of appraisal are those costs associated
with measuring or evaluating conformance to
your standards, specifications and quality measures.
These include things such as inspections (incoming
material and product testing); product, process
and service audits; calibrations, as well as
the cost of the equipment and materials to appraise
the product or service.
Costs of internal failure are those
costs associated with finding a failure in-house
before it reaches the customer. Rework and scrap
are prime examples of these costs as well any
other activities associated with a failure found
before delivery to the customer.
Costs of external failure are typically
viewed as the most expensive and may include
some intangible costs. Tangible costs could
include processing customer complaints, warranty
claims, recalls and returns. Intangibles could
include things such as lost opportunities and
diminished reputation.
SPC tools are effective in ascertaining the
costs of internal and external failures. A weighted
Pareto or Paynter chart is a good example of
such a tool. For example, the following Paynter
chart reflects number of defects in certain
categories over the last 6 months.
There is some good information here but we
might wonder what it would look like if we assigned
a cost to each category. This cost might be
the cost to rework or scrap.
This chart gives us much better information
on where we are spending the most in relation
to defects produced. We see now that when we
look at the costs, LS0001 defect code may be
the most important defect code to work on.
If we look at a p chart for the LS0001 Defect
Code, we see that the process has definitely
shifted over the last few months.
(mouse over data points for more details)
With these data, the i chart also shows an
issue with the cost of defects. This is not
always the case with an i chart.
(mouse over data points for more details)
If the codes in this data were all failure
codes, whether external or internal, how could
we have avoided this situation? Let’s take
a look at a p chart from earlier in the year.
(mouse over data points for more details)
Obviously, we could have prevented much of
the failure cost by making a change to the process
at this early date. If we can investigate an
assignable cause as soon as we detect it and
implement a process change, we prevent future
failures. And in your process, I would hope
that you would be looking at a data period shorter
than 1 month so that you can respond in a more
timely manner.
We would certainly need to evaluate the cost
of prevention (as in changing the process) in
relation to the costs of failures. If we are
NASA, cost of failure is very high, so our cost
of prevention can be significant. In any regard,
we would need to weigh the tangible costs of
external failure as well as the intangibles,
the costs of internal failures and the cost
of appraisal against the cost of prevention.
One note on appraisal: 100% inspection does
not necessarily mean 100% of failures captured.
You can further explore these charts, as well
as other quality reporting, on our live demo
site, live.statit.com.
