CategoryHierarchies.com

Cost of Quality (CoQ) refers to the expenses incurred by an organization due to poor quality in its products or services, including both internal and external failures. Internal failures are those detected before the product leaves the company, such as rework, scrap, and downtime, while external failures occur after delivery and can result in warranty claims, returns, and loss of customer goodwill. CoQ emphasizes the importance of investing in quality improvement measures to minimize these costs and maximize profitability. It aligns with business principles by prioritizing long-term success over short-term gains, promoting a culture of continuous improvement, and encouraging data-driven decision-making. Additionally, it is closely related to accounting principles and cost accounting as it involves identifying, measuring, and controlling costs associated with quality. CoQ can be broken down into prevention costs (activities that prevent defects), appraisal costs (activities that detect defects), internal failure costs (defects found before delivery), and external failure costs (defects found after delivery).