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Cause-And-Effect Diagram: Why Implement Cost of Quality (COQ) ?

The Cause-and-effect Diagram, also known as a Fishbone or Ishikawa Diagram, is used to analyze the causes of quality problems or other issues. It visually displays the effects, main causes and sub-causes in a diagram resembling the skeleton of a fish. The Cost of Quality methodology measures the resources used for preventing defects versus costs from failures. It is calculated as the Cost of Good Quality plus the Cost of Poor Quality and can help organizations improve quality and reduce costs. There are two main types of costs: the Cost of Good Quality which are prevention and appraisal costs, and the Cost of Poor Quality which are internal and external failure costs.

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184 views3 pages

Cause-And-Effect Diagram: Why Implement Cost of Quality (COQ) ?

The Cause-and-effect Diagram, also known as a Fishbone or Ishikawa Diagram, is used to analyze the causes of quality problems or other issues. It visually displays the effects, main causes and sub-causes in a diagram resembling the skeleton of a fish. The Cost of Quality methodology measures the resources used for preventing defects versus costs from failures. It is calculated as the Cost of Good Quality plus the Cost of Poor Quality and can help organizations improve quality and reduce costs. There are two main types of costs: the Cost of Good Quality which are prevention and appraisal costs, and the Cost of Poor Quality which are internal and external failure costs.

Uploaded by

Doren Joy Batucan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Cause-and-effect Diagram

The Cause-and-effect Diagram is also called Fishbone diagram or Ishikawa

Diagram. It is a method for analyzing process dispersion. The diagram's purpose is to

relate causes and effects. Three basic types: Dispersion analysis, Process classification

and cause enumeration. Effect = problem to be resolved, opportunity to be grasped,

result to be achieved. Excellent for capturing team brainstorming output and for filling in

from the 'wide picture'. Helps organise and relate factors, providing a sequential view.

Deals with time direction but not quantity. Can become very complex. Can be difficult to

identify or demonstrate interrelationships. It helps in identifying root causes of the

quality failure journey.

Cost of Quality

Cost of Quality is a methodology used to define and measure where and what

amount of an organization’s resources are being used for prevention activities and

maintaining product quality as opposed to the costs resulting from internal and external

failures. The Cost of Quality can be represented by the sum of two factors. The Cost of

Good Quality and the Cost of Poor Quality equals the Cost of Quality, as represented in

the basic equation below:

CoQ = CoGQ + CoPQ

The Cost of Quality includes all costs associated with the quality of a product

from preventive costs intended to reduce or eliminate failures, cost of process controls to

maintain quality levels and the costs related to failures both internal and external.

Why Implement Cost of Quality (COQ)?

Effective use and implementation of Cost of Quality methodology enables an

organization to accurately measure the amount of resources being used for Cost of

Good Quality and Cost of Poor Quality. With this valuable information the organization
can determine where to allocate resources to improve product quality and the bottom

line.

2 Types of Cost of Quality

1. The Cost of Good Quality (Cost of Control Quality) – these costs are

designed to stop defects before they happen and to evaluate the operations.

a. Prevention Cost- costs incurred from activities intended to keep failures to

a minimum. It prevents or avoids quality problems. It needs to be planned

ahead and incurred before actual operations. These can include, but are

not limited to, the following:

 Establishing Product Specifications

 Quality Planning

 New Product Development and Testing

 Development of a Quality Management System (QMS)

 Proper Employee Training

b. Appraisal Cost – costs incurred to maintain acceptable product quality

levels. Appraisal costs can include, but are not limited to, the following:

 Incoming Material Inspections

 Process Controls

 Check Fixtures

 Quality Audits

 Supplier Assessments

2. The Cost of Poor Quality (Cost incurred from failure to Control Quality)

a. Internal Failures – costs associated with defects found before the

product or service reaches the customer. Internal Failures may include,

but are not limited to, the following examples:

 Excessive Scrap

 Product Re-work
 Waste due to poorly designed processes

 Machine breakdown due to improper maintenance

 Costs associated with failure analysis

b. External Failures – costs associated with defects found after the

customer receives the product or service. External Failures may

include, but are not limited to, the following examples:

 Service and Repair Costs

 Warranty Claims

 Customer Complaints

 Product or Material Returns

 Incorrect Sales Orders

 Incomplete BOMs

 Shipping Damage due to Inadequate Packaging

Sources

https://quality-one.com/coq/

https://totalqualitymanagement.wordpress.com/2008/09/12/cost-of-quality/

https://asq.org/quality-resources/cost-of-quality

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