EB114 - Quality is Free © Question:   The phrase “Quality is Free” sounds misleading.   Almost nothing is really free.   So what do you think Philip Crosby really meant to say?

Larry:  Like many things, the phrase "Quality is Free" is often mistaken to be a marketing slogan used by consultants and trainers to sell their services.  But Phil Crosby was a man who spoke clearly and specifically about such things.  In his groundbreaking book "Quality is Free" (1979) he applied his typically adroit and sledge-hammer insight into quality by defining the "cost of quality."

With credit to my mentor, the following is a simple recitation of how to calculate the cost of quality.   I think you will see that Phil meant exactly what he said, which is no surprise to those of us who knew him.

1.    The cost of quality (COQ) is what it costs to do things right -- by this we mean what it costs to operate a stable, reliable process that's producing products or services that conform to the customer's requirements.

2.    First, calculate the price of non-conformance (PONC) -- which is the cost of rework, replacement and other warranty expenses from errors, in the process you are measuring.  Errors and defects represent lost earnings because we have to do things more than once while getting paid only once.

          Read "Making the Economic Case for Quality: by John Ryan

3.    Next, calculate the price of conformance (POC) -- what it will cost to prevent the errors we have identified and do things right the first time. This would include improvements in the process, additional human resources, materials, training, etc.

PONC minus POC = COQ.  When we deduct the one-time and continuing expenses for preventing errors (POC) from our potential losses (PONC), it usually results in financial gains.  This is why Philip Crosby said, “Quality is Free.”