Costs of QualityWhen a process fail

Costs of QualityWhen a process fails to satisfy a customer, the failure is considered a defect. For example, according to the California Academy of Family Physicians, defects for the processes in a doctor’s practice are defined as “anything that happened in my office that should not have happened, and that I absolutely do not want to happen again.” Obviously, this definition covers process failures that the patient sees, such as poor communication and errors in prescription dosages. It also includes failures the patient does not see, such as incorrect charting.Closely tied to the notion of defects is the question of determining how much quality is enough. There is a greater societal effect that also must be factored into decision making involving the production of services or products that often requires balancing the costs of quality with the overall benefits to society. For example, in the health care industry, aiming for zero complications in cardiac surgery might sound good; however, if it comes at the cost of turning down high-risk patients, is society being served in the best way? Or how much time, energy, and money should go into delivering vaccines or preventing complications? These are questions that often do not have clear answers.Many companies spend significant time, effort, and expense on systems, training, and organizational changes to improve the quality and performance of their processes. They believe that it is important to be able to gauge current levels of performance so that any process gaps can be determined. Gaps reflect potential dissatisfied customers and additional costs for the firm. Most experts estimate that the costs of quality range from 20 to 30 percent of gross sales. These costs can be broken down into four major categories: (1) prevention, (2) appraisal, (3) internal failure, and (4) external failure. In addition, there is a fifth category of costs associated with unethical behavior in making quality decisions, and which can be significantly higher than all the other four costs combined.