Understanding Cost of Quality: When and Why Should Your Organization Apply COQ?

COQ (Cost of Quality)

COQ is a financial measure of the quality performance of an organization. It is essentially a measure of lack of quality and can also be termed as the cost of bad quality.

Why is COQ required?

Understanding the cost of quality helps organizations develop quality conformance as a useful strategic business tool that improves their products, services, and brand image. This is vital in achieving the objectives of a successful organization.

When should COQ be applied?

COQ is primarily used to understand, analyze, and improve quality performance. It can be used by shop floor personnel as well as a management measure. It can also be used as a standard measure to study an organization's performance vis-à-vis another similar organization and can be used as a benchmarking index.

How to check COQ?

Read more What is Cost of Quality * TQM + Lean

Dear Ashima, Thanks for sharing important information on Cost of Quality (COQ). Along with COQ goes the measurement of Cost of Poor Quality (COPQ). Measurement of both costs should go hand in hand.

All HR interventions, be it employee training or any other, should be focused on the reduction of COPQ. Many times, HR professionals launch some HR interventions but are unable to give a definitive reply on whether COPQ was reduced or not.

Why Measurement of COQ is Required?

You have asked a question in your post "Why is COQ required?" This question needs to be rephrased as "Why Measurement of COQ is Required?" The reply to this question is given as "Understanding the cost of quality helps organizations to develop quality conformance as a useful strategic business tool that improves their products, services & brand image." Your reply also merits revision as the measurement of COQ is purely an operational tool. Far from being a strategic tool, it cannot even be considered a tactical tool.

When Should COQ be Measured?

Your second question is "When Should COQ be Applied?" This question also merits revision as it is not the application of COQ but the measurement of COQ. Secondly, measuring COQ is part and parcel of operational activity; therefore, the question of "when to measure" does not arise. Measurement must start after a few months of the commencement of the operational activity. The reply to this question does not cover service organizations. It may be noted that the measurement of COQ and COPQ applies to both manufacturing and service organizations.

Anyway, suggestions apart, thanks for bringing out this important subject for discussion.

Thanks,
Dinesh Divekar