Cost of Non Conformance is when a product, or process, fails to meet a set standard of quality. CONC is one factor that adds up to the Cost Of Quality (COQ) of a product, while the other is the Cost of Conformance (COC).
COC is the total cost of achieving a certain quality level for a product/service. CONC, however, refers only to costs that are incurred to correct an error. Non-conformance may occur at any stage of the product’s lifecycle. This includes during manufacturing and poor quality audits. This can lead to both internal failure costs and external failure costs. These are costs that were identified in the development phase and prior to a product being released. These could include:
- Downtime is the loss of hours due to a system failure, or poor organization.
- Scrap: A cost for a product that is defective and cannot be repaired or replaced.
After receiving the product, the customer will identify external failure costs. These could include:
- Remember: If the manufacturer discovers that a product is defective, it will cost to return or exchange it.
- Warranty Claims: This is the cost of repair or replacement if a product breaks down within a certain time frame.
Adopting Six Sigma principles can help reduce non-conformance rates and costs. This will result in increased productivity and customer satisfaction.
What is the Cost of Non-Conformance?
According to the overall COQ model, an initial investment in quality can lower spending and result in higher profits down the road. Process improvements can improve employee morale, brand credibility, and create a positive working environment. A company can optimize its quality system and performance standards by understanding what non-conformances mean and how they are measured.
Project managers must find the right balance between compliance costs and acceptable failure costs.