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Costs of quality management

Quality management costs

How much does quality management actually cost and what do you stand to gain from it?

The costs and ultimate benefits of quality management depend on many factors. That’s exactly why arguing about whether quality management actually makes sense is unfortunately still very popular nowadays.
We can tell you from long-term practical experience that with well thought-out planning and targeted implementation, quality management is always worth the costs, which can be amortized quickly through the benefits you stand to gain from it.

Benefits of quality management

The specific benefits of introduced quality management for a company usually can’t just be quantified by this or that amount of money that has been saved but in practice, it does strongly depend on individual factors having to do with the company, the industry and the competitive situation.
Aside from pure cost savings, quality assurance might also aim specifically at the extension of shares in the market, the improvement of the company’s products or higher average customer satisfaction. Such objectives have no immediate savings potential but they serve to lower costs in the medium up to the long run, to increase sales figures and to strengthen the brand of the company.

Costs of quality management

Apart from the costs having to do with its introduction and with obtaining certificates, which vary greatly depending on the specific industry, the company size or external networking with suppliers and clients, quality management also causes ongoing costs which can be divided up into the following groups:

  • Error prevention costs. This includes all types of costs that serve error prevention, like, e.g., quality training, supplier assessments and quality planning in general.
  • Inspection costs. Inspection costs encompass cost ranges for staff and material within the framework of quality inspection, meaning, for example, test equipment (laboratory tests, ….), manufacturing inspections, etc.
  • Internal error costs. The costs that stem from fixing detected faults are referred to as internal error costs. They include, for example, reworking defective products, disposal of substandard goods or required changes to the manufacturing process.
  • External error costs. External error costs are made up by costs for errors that have been detected outside of the company, like, for example customers’ warranty claims, and recall actions and complaint management in general.

Reduction of quality management costs

In order to achieve specific benefits and cost savings ASAP, quality management costs (quality costs) ought to be optimized and regularly checked as well, of course. This can be done very efficiently through comprehensive analysis and planning before the actual introduction and implementation of the quality management system. Economic optimization might clearly require more efforts when it comes down to already existing quality management systems as processes which are already in place frequently need to be adapted or replaced. Specific reduction of quality costs is a very individual matter in practice but it is practically always aimed at lowering testing efforts and improving material and product qualities.

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