Cost-of-Quality: COQ is a relative term!

Components of the Cost-of-Quality in Kaizen parlance are as follows.

1/ Costs of external-failures incurred due to failures at customer's end.

2/ Costs of internal-failures incurred in order to handle failures at supplier's end.

3/ Costs of appraisal incurred in order to inspect/audit the adequacy and compliance of quality and quantity of work, and the workmanship as well, as per standards/procedures.

4/ Costs of prevention incurred in order to undertake improvement or failure-prevention activities (as preventative/proactive measures) & corresponding education/training for the same.

First two components are the 'cost-of-poor-quality' (CoPQ) that are incurred after failures. 

Last two components are the 'cost-of-good-quality' (CoGQ) or you can say 'investment' required to prevent a failures in the first place.

The components, rather it's terminology, is relative and hence the  term Cost-of-Quality itself is relative! Use of the components may depend upon the context of the situation.

Is the statement: "If the customer needs to administer incoming inspection on his inputs received from the supplier then that's typically the 'cost of appraisal'!", made by a participant in one of my sessions, 'true' or 'false', for instance?

The statement is 'false'!

It's actually the 'cost of prevention' for the customer. Because she wants to prevent defective inputs from going into the next process. Engaging into inspection activities on the customer's own processes or processing activities, although it's a NVA (non-value-activity or waste) however, is the 'cost of appraisal' for the customer in order to prevent the 'cost of internal failure' in the customer's processes.

Whereas the incoming inspection on his inputs may be is the 'cost of external failure' for the supplier. This is particularly so if the customer engages into 'inspection', a NVA (non-value-activity) 'forced' on to her by herself, because of lack of trust (past dissatisfaction) in the supplier's quality and hence in the supplier's brand image.

Also read a few relevant blogposts hereunder:

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