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Custom Architectural Woodwork & Specialty Finishes
Custom Architectural Woodwork & Specialty Finishes
The American Society for Quality defines Cost of Quality as a methodology that allows an organization to determine the extent to which its resources are used for activities that prevent poor quality, that appraise the quality of the organization’s products or services, and that result from internal and external failures. There are four categories of COQ: prevention, appraisal, internal failure, and external failure. Internal failure and external failure are considered cost of poor quality (CoPQ). Prevention and appraisal are considered cost of good quality (CoGQ).
Internal failure cost happens when a product does not meet defined standards before being shipped out of the manufacturing facility. There are many things that could happen that are the cause of internal failure cost. Using the wrong substrate for casework, machine failure due to lack of maintenance, damaged products that are not stored correctly and more. Internal failure can also cause delays in product delivery that will impact your project and reach your customer.
External failure cost happens when there are defects found after the customer has received the product or service. This is the most expensive COQ. The cause and effect of external failure are damaged product caused by inadequate packaging during shipping, damage caused during installation, defects in product that were not caught during manufacturing, and more. The result could be scrapping the product and reworking or shipping back to the facility and reworking. This will dramatically increase the manufacturing cost and will have a negative impact on the relationship with your customer. Some people might describe CoPQ as “throwing good money after bad”.
Prevention cost is when defects and failures are reduced because of activities designed to keep them at a minimum. Using product specifications is a prevention cost. This sets a standard for how something is manufactured. A good example of this is AWI standards. Employee training and implementing a quality management system are also methods of prevention cost. It is generally considered that the best money spent on COQ is prevention cost.
Appraisal cost is when costs are incurred to maintain acceptable product quality levels. Appraisal cost is an investment in loss prevention. This includes inspection of finished goods, received material inspection, process review and control. Process review and implementation can be one of the best investments a company can make to ensure good quality.
The total cost of quality is equal to the sum of CoPQ and CoGQ. If you have zero defects or zero CoPQ then the total cost of quality is the cost of prevention and appraisal.
The bottom line is that it is better to invest in CoGQ rather than CoPQ. It is better to prevent a problem rather than to resolve a problem. The goal is to reduce COQ, and this results in increased profits and happy customers. At Giffin Interior, COQ is a weekly key measure that we use to improve our business and to provide a higher standard of work than our competitors. The result is that our customers know we take pride in the work we perform with excellence in every step.
At Giffin Interior we have been producing quality products since 1980.
Contact Giffin Interior to discuss your next large millwork project.
