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  1. Provides a framework for reducing costs based on the COQ approach to quality improvement.
  2. Provides guidelines on how to identify, measure and analyze items related to the Cost of Non-Conformance (CONC) and the Cost of Conformance (COC).
  3. Provides a cost management system to support your continuous improvement or Lean Six Sigma program.


As a key factor of competitiveness, you must manage cost all the time, not only in times of economic downturn. Reducing the Cost Of Quality (COQ) program helps achieve this. This training fits well into any cost reduction or process improvement initiative, including Lean management and TQM. The COQ methodology instills a practical approach to quantifying the financial impact of the Cost Of Non-Conformance (CONC) and the Cost Of Conformance (COC). The COQ calculation methods are also used in quantifying the impact of Lean Six Sigma programs.

This presentation covers four essential steps for setting up a measurement system to track COQ. These steps are identification, collection, reporting and analysis, and reduction of quality costs.

By teaching this presentation, you can improve the company culture and improve the bottom line. This presentation changes employees problem solving focus from quick fix solutions to preventing issues before they occur. This course teaches the skills to prioritize quality improvement opportunities based on the expected financial return.


1. Introduction & Basic Concepts of COQ
•  Business case for quality
•  Impact of quality improvement program
•  Link between quality costing and profits
•  Why are quality costs important?
•  Why measure COQ?
•  What is COQ?
•  COQ iceberg model
•  COQ versus Lean & Six Sigma
•  Goal of COQ system
•  Preparation
•  Four phases of a COQ system

2. Step 1: Identifying COQ Items
•  PAF model
•  Prevention costs
•  Appraisal costs
•  Failure costs
•  Internal failure costs
•  External failure costs
•  Eight types of waste
•  CONC checklists
•  Guidelines for identifying COQ items

3. Step 2: Collecting COQ Data
•  Matching accounts with CONC items
•  Quality costing
•  COQ Data source
•  Example calculations of Failure cost, Appraisal cost and Prevention cost
•  COQ scorecard and indices
•  Process flow for COQ reporting
•  Collecting and reporting COQ data
•  Role of Finance
•  Role of line managers/supervisors
•  Practical guidelines

4. Step 3: Analyzing COQ Data
•  Selecting quality cost bases
•  Trends analysis
•  Pareto analysis
•  Variance analysis
•  SMART criteria
•  Set targets for improvement
•  Case study

5. Step 4: Reducing COQ & Improving Quality
•  Reduce COQ through quality improvement programs
•  Tools and techniques
•  System for quality is prevention
•  Some results from industries
•  Sustaining COQ

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Reducing the Cost of Quality

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File Type: PowerPoint (pptx)

File Size: 7 MB

Number of Slides: 131 (includes cover, transition slides)

Related Topic(s): Cost Reduction Assessment Quality Management & Assurance Cost of Quality

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Initial upload date (first version): Feb 23, 2013
Most recent version published: Apr 17, 2021

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