Upon completion of this course, participants will be able to:

• Explain the concept of Cost of Quality (COQ) and its significance to the bottom line.
• Identify and categorize costs into the four main COQ elements: Prevention, Appraisal, Internal, and External Failure.
• Develop a systematic plan for collecting and calculating COQ data across the organization.
• Analyze the current distribution of COQ and identify areas with the largest financial impact.
• Use COQ metrics to justify and prioritize quality improvement projects (e.g., Six Sigma, Lean).
• Communicate COQ findings and financial implications clearly to management.
• Understand the relationship between COQ and the Cost of Poor Quality (COPQ).
• Develop strategies to strategically shift investment from failure to prevention costs.

• Quality Managers, Directors, and Analysts.
• Finance and Accounting personnel involved in performance measurement.
• Operations Managers and Continuous Improvement Specialists.
• Project Managers seeking financial justification for their initiatives.
• Senior Management and Executives interested in profitability and efficiency.
• Internal Auditors assessing the financial impact of nonconformity.

• Case Studies focused on financial reporting of quality costs.
• Individual Exercises in categorizing and calculating specific COQ line items.
• Group Activities: Developing a COQ data collection plan for a sample process.
• Practical Application: Creating a presentation of COQ findings and justification for a project.
• Discussions on the ethical and financial implications of hidden failure costs.

Unit 1: Fundamentals of Quality Costs

• Defining the Cost of Quality (COQ) and the Cost of Poor Quality (COPQ).
• The business rationale for measuring and managing quality costs.
• Introduction to the four categories of COQ: Prevention, Appraisal, Internal Failure, External Failure.
• The "Tip of the Iceberg" concept: Understanding hidden quality costs.

Unit 2: Categorizing and Measuring Quality Costs

• Identifying and calculating Prevention Costs (e.g., training, quality planning, design review).
• Identifying and calculating Appraisal Costs (e.g., inspection, testing, auditing).
• The strategic value of investing in Prevention and Appraisal activities.
• Developing a COQ classification system for organizational use.

Unit 3: Measuring Failure Costs

• Identifying and calculating Internal Failure Costs (e.g., scrap, rework, retesting, failure analysis).
• Identifying and calculating External Failure Costs (e.g., warranty, complaint handling, product recall).
• Techniques for estimating "hidden" external failure costs (e.g., lost goodwill, diminished reputation).
• Analyzing the ratio of Failure Costs to total COQ.

Unit 4: COQ Calculation and Analysis

• Collecting COQ data from various organizational sources (e.g., accounting, operations).
• Methods for calculating total COQ (e.g., as a percentage of sales, production costs).
• Using Pareto Analysis to prioritize failure costs for reduction.
• Developing COQ dashboards and reports for different audiences.

Unit 5: Using COQ for Improvement and Strategy

• Using COQ trends to monitor the effectiveness of quality improvement initiatives.
• Justifying investment in Prevention activities based on potential failure cost reduction.
• Integrating COQ into the budgeting and management review processes.
• Developing a long-term strategy for optimizing the COQ distribution.