Six Sigma Cost of Quality Management

six sigma is a quality standard that establishes a goal of no more than 3.4 defects per millionunits or procedures. Motorola popularized the use of stringent quality standards more than 30 years ago through a trademarked quality improvement program called six sigma. 

Using six sigma philosophy, we can reduce the total cost of quality. As we know that total cost of quality we can divide it into two categories, first is cost of good quality and cost of poor quality.

As shown in the picture above, the traditional management view for total cost of quality would be to conclude that if a company wants to reduce defects and by this reduce the cost of poor quality, the cost of good quality would have to be increased like higher investments in item/goods checking, testing, evaluation, training for operators, etc. 

Using Six Sigma philosophy, as shown above, want to say that to minimise the total cost of quality, the manufacturer's or the company is to bring the building quality into process, service and products and doing things right the first time, the increase of the cost of good quality, while striving for zero defect performance. as the picture above shows how business processes with better process sigma will have significantly lower prevention and appraisal costs.

Here shows the sigma level, where DPMO is Defective Part per Million Opportunities. Sigma level 2 could take your revenue portion more than 40% for cost of quality. The goal is to reach sigma level 6 where your cost of quality only takes your revenue less than 1%.

Sigma Level	DPMO	Cost of Quality as Percentage of Sales
2	298,000	More than 40%
3	67,000	25-40%
4	6,000	15-25%
5	233	5-15%
6	3.4	Less than 1%

Sumber :
http://en.wikipedia.org/wiki/Six_Sigma
http://accounting4management.com/six_sigma.htm
http://www.isixsigma.com/implementation/financial-analysis/cost-quality-not-only-failure-costs/