When we initiate any purchasing activity, you will need calculate kinds of cost in your activities.
Cost of Quality inspection is one of the cost you’d better consider and planing at the beginning of your purchasing activities. The purpose of planning Cost of Quality, ensure:
Best utilize your resource (money)
Reduce overall expense
The construction of Cost of Quality:
FPC: Failure Prevention Cost
FDC: Failure Detection Cost
IFC: Internal Failure cost
EFC: External Failure cost ( Correct the failure which reached the client)
The traditional resource allocation for Quality Activities:
the % of resource which going to allocate for quality activities may vary in different organization, but in general (not percise equal to the percentage, but give an ideal how it composing), it shows:
Preferred % of resource allocation for Qaulity activities:
The difference between the 2 approach is: put more resource at the beginning to plan the activity of Failure Prevention, prevention always better and cheaper than correction.
Or say, allocate more resource to “conformity activity” instead of “non-conformity activity”.
In case, you are unfortunately to created any non-conformity, we need take action to correct them to conformity, then here comes the COPQ (cost of poor quality), the following picture show how these non-conformity cost us in visible and less visible way.
For visible COPQ, it cost about 4-6% of your total sales, and less visible COPQ cost you about 25-45% of your total sales.
We wish we have brought the awareness of how the poor quality of shipment cost you, and take away your profits.