Page 158 - The Handbook for Quality Management a Complete Guide to Operational Excellence

144 I n t e g r a t e d P l a n n i n g O r g a n i z a t i o n a l A s s e s s m e n t 145

Cost per good unit of product Failure quality costs

Total

costs

Costs of appraisal
plus prevention
0 100
Quality of conformance, %
Figure 8.4 New model of optimum quality costs (Juran, 1988, by permission).

Quality costs are lowered by identifying the root causes of quality
problems and taking action to eliminate these causes. The tools and
techniques described in Chap. 5 are useful in this endeavor. KAIZEN,
reengineering, and other continuous improvement approaches are com­
monly used.
As a general rule, quality costs increase as the detection point moves
further up the production and distribution chain. The lowest cost is gener­
ally obtained when nonconformances are prevented in the first place. If
nonconformances occur, it is generally least expensive to detect them as
soon as possible after their occurrence. Beyond that point there is loss
incurred from additional work that may be lost. The most expensive quality
costs are from nonconformances detected by customers. In addition to the
replacement or repair loss, a company loses customer goodwill and repu­
tation. In extreme cases, litigation may result, adding even more cost and
loss of goodwill.
Another advantage of early detection is that it provides more mean­
ingful feedback to help identify root causes. The time lag between produc­
tion and field failure makes it very difficult to trace the occurrence back to
the process state that produced it. While field failure tracking is useful in
prospectively evaluating a “fix,” it is usually of little value in retrospectively
evaluating a problem.
The accounting department bears primary responsibility for account­
ing matters, including cost of quality systems. The quality department’s

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