QUALITY COST AND SUSTAINABILITY

Cost of quality (COQ) is defined 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.
Having such information allows an organization to determine the potential savings to be gained by
implementing process improvements.
Cost of poor quality (COPQ) is defined as the costs associated with providing poor quality
products or services. There are three categories:
1. Appraisal costs are costs incurred to determine the degree of conformance to quality
requirements.
2. Internal failure costs are costs associated with defects found before the customer receives the
product or service.
3. External failure costs are costs associated with defects found after the customer receives the
product or service.
Quality-related activities that incur costs may be divided into prevention costs, appraisal costs, and
internal and external failure costs. Prevention costs are incurred to prevent or avoid quality problems.
These costs are associated with the design, implementation, and maintenance of the quality
management system. They are planned and incurred before actual operation, and they could include:
 Product or service requirements: Establishment of specifications for incoming materials,
processes, finished products, and services
 Quality planning: Creation of plans for quality, reliability, operations, production, and
inspection
 Quality assurance: Creation and maintenance of the quality system
 Training: Development, preparation, and maintenance of programs
Sustainability is gaining increasing public attention and attracting greater debate. Also, during
the last decade, and especially in the last few years, company stakeholders’ expectations are including
more and more social and environmental aspects, while the primary company target remains financial
performance, which is increasingly affected by social and environmental performance. A good
reputation regarding social and environmental responsibility has many benefits, such as attracting and
retaining high-quality employees, reducing environmental incidents and improving employee safety
and health, improving productivity and lowering operating costs, enhancing a company’s image for its
customers and its socially conscious investors, with direct implication on market value and incomes.
Quality does not just mean the quality of a product or its manufacturing process, it is also
about the quality of relations within the organization. Whereas above we mentioned the supply chain
relationship, there is also the relationship between managers and work staff within an organization. A
workforce who feel comfortable going to managers with suggests, or even complaints, are taken care
of in the health and safety aspects of things will overall be more motivated. They will feel respected
and therefore happy to continuously input a high-quality level of effort where the organization is
concerned. This level of trusts, and combined efforts within an organization help keep it moving
throughout the years and sustaining its competitive advantage, as well as becoming known as an
organization individuals want to work for.