Quality cost analysis

Quality cost analysis is a method for analyzing the financial consequences of quality management in the context of quality controlling. From a cost-oriented perspective, all costs related to quality issues are analyzed as part of the quality cost analysis. In this context, the term quality costs or quality-related costs subsumes all costs that are primarily caused by quality requirements, i.e. by activities to prevent errors, by scheduled quality checks as well as internally or externally detected errors as well as by the external quality management presentation.
Bei der traditionellen (tätigkeitsorientierten) Gliederung der Qualitätskosten werden drei Arten von Qualitätskosten unterschieden: Präventionskosten (Fehlerverhütungskosten, prevention costs), Prüfkosten (appraisal costs) und Fehlerkosten (failure costs). Präventionskosten werden durch Aktivitäten generiert, die spezifisch zur Vermeidung einer nicht anforderungsgerechten Qualität unternommen werden. Prüfkosten entstehen durch Mess-, Evaluierungs- oder Audit-Aktivitäten, die der Gewährleistung der Übereinstimmung der Leistung mit gewissen Normen, Standards und/oder Anforderungen dienen. Fehlerkosten resultieren aus Aktivitäten, die durch die mangelnde Übereinstimmung einer Leistung mit diesen Normen, Standards und/oder Anforderungen hervorgerufen werden. In Abhängigkeit von dem Ort der Entstehung der Fehlerkosten werden interne (z.B. Kosten aufgrund von Nacharbeit) und externe Fehlerkosten (z.B. Guarantee services) unterschieden.

As part of the new (impact-oriented) structure of quality costs, a distinction is only made between two categories of quality costs: costs of quality in the sense (conformity costs, costs of conformance) and costs of non-quality (non-conformity costs, costs of nonconformance). The costs of quality in the sense contribute to the company's success by serving to meet customer expectations. The conformity costs include those costs that arise from measures to permanently rectify errors and avoid the risk of errors. The cost of non-quality is a waste of resources. Above all, they arise from additional effort that is required due to the provision of services that do not meet the requirements, ie if the process and result of the provision of services do not meet the quality requirements placed on them. Similar to the error costs, internal and external non-conformity costs can be distinguished.

Defect costing is based on the consideration that neither a combination of defect and quality assurance costs (defect prevention and testing costs) nor a combination of conformity and non-conformity costs makes sense. Based on the principle that quality is part of the product or service, quality-related cost accounting is replaced by error cost accounting. As part of the error cost calculation, the error costs are broken down using two dimensions: Internal and external error costs are differentiated according to the location where the error occurred; According to the consequences of the error, a distinction is made between direct and indirect error costs and error-related opportunity costs. While the location of the defect is also used in the activity-oriented classification of the quality-related costs to differentiate the defect costs, the consideration of the defect consequences leads to a further specification of the defect costs.
The direct error costs include those costs, the origin of which can be clearly traced back to an error and which can usually be clearly assigned to cost centers and cost units. Indirect error costs are generated by analyzing and correcting errors. Ultimately, the error-related opportunity costs do not represent costs that actually occur, but rather lost contribution margins or profits. When considering the conceptual conclusiveness, the positive and negative effects of quality measures are not compared with one another within the framework of the concept. Rather, the costs of creating quality and the costs that can be traced back to poor quality are added up. In this way, a consistent comparison of the positive and negative financial consequences of quality management is not possible.

Furthermore, the term “quality costs” gives the impression that the financial consequences of quality management are only costs. The term “quality costs” is misleading, especially against the background of lost benefits due to lower customer loyalty, etc. The lack of conceptual conclusiveness means that no statements can be made about the profitability of quality measures with regard to the interpretability of the analysis results on the basis of the concept of quality-related costs. The reason for this is that those costs are considered that are related to quality, but no consistent cost-benefit analysis is made.

In particular, a measure assessment cannot be carried out. With regard to the practicability of the approach, it should first be mentioned positively that the respective classifications are comprehensible in their presentation and have a high level of clarity. These arguments also justify the widespread use of the concept in practice. On the other hand, however, it should be noted that the categorization of quality-related costs is usually carried out according to their actual recording. Thus, the data presentation is the main aim of the consideration of quality-related costs.

As a result, the quality-related costs are not directly related to the company's business activities and are not structured according to how they arise. With regard to the completeness of the categorizations of quality-related costs, it should first be noted that, due to the concept's orientation towards the past, a proactive profitability analysis cannot be carried out. Therefore, a quantification of the quality-related costs can only be used to identify and clarify quality-related improvement potentials, but less so for effective planning and control of corresponding improvement measures
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