Kalyan Roy, Assistant Professor, Textile Engineering Department, Punjab Technical University-Giani Zail Singh Campus, Bathinda, Punjab.

Quality Costs system is an extremely vital tool for quality management in a garment manufacturing unit since it establishes a systematic approach to pinpoint the failures in quality in monetary terms and, therefore, suitable corrective measures can be adopted  to reduce failures and total cost. Obviously, enhancements in quality and customer satisfaction are the outcomes, besides, the accurate measurement of the efficacy of the Quality Control Department.


Today it is universally accepted that ‘Quality’ is an embodiment of design and properties of a product or service or both which guarantees customer satisfaction. In the present business scenario of barrier–free global markets, elements of excellence are a necessity for any product or service those will ensure properties, services and prices. The concept of total quality management, which encompasses almost all activities of an organization, has become part and parcel of any business and garment manufacturing is no exception to it. With the advent of modern information technology customers are well aware about the design, quality and price aspects of garments. It is no wonder that only those organizations in garment business are surviving and flourishing who can satisfy their customers with these features.

In this era of competitive business, price is a major issue for a mass-manufactured product like garment and in this issue ‘Quality Cost’ goes hand-in-hand with satisfactory product and service cost. One of the major obstacles to the establishment of stronger quality program in earlier days was the wrong notion that the achievement of better quality required much higher costs.

Reasons for applying Quality Costs concept in garment manufacturing                    

Unsatisfactory quality means unsatisfactory resource utilization. This involves wastes of material, labour, equipment time and consequently higher costs. In contrast, satisfactory quality means satisfactory resource utilization and consequently lower costs. A major reason for this mistaken concept about cost was unavailability of relevant data. Today, the scenario has changed and any scientific accounting procedure recognizes that cost of quality is measurable. In fact, quality cost is the basis through which investments in quality programmes can be evaluated in terms of cost of improvement, profit enhancement and price reduction for an organization.

Quality Costs – meaning, scope and segmentation                                                                    

Quality costs in garment manufacturing encompass two principal areas: i) The cost of control and ii) The cost of failure of control. The first includes those costs associated with the definition, creation and the control of quality as well as the evaluation and feedback of conformance with quality, reliability and safety requirements. The second includes those costs associated with the consequences of failure to meet requirements both within the factory and in the hands of customers.

Reduction of Quality Costs                                                                                                            

By universal experience, in a garment manufacturing unit, a typical ratio in the break-up of the Quality Costs may be given as:-

Segment of Quality Costs                                            % of Quality Costs

Internal & External Failure Costs                                               65%

Appraisal Costs                                                                        30%

Prevention Costs                                                                       5%

This break-up suggests that the largest portion of the quality rupees is spent in the wrong way because of failures of products. Another big sum is spent on appraisal to screen the bad products from the good and very little is spent on the real defect prevention system. Also, the failure costs being the largest component, its reduction brings largest returns and should be tackled in the first instant. An effective way of attacking failure costs is through an increase in Prevention and Appraisal Costs.

  • Appraisal Costs should be next to come under attack. An analysis of quality assurance operations is often shown opportunities for reducing expenditure without compromising effectiveness. For example, by adopting an effective statistical sampling technique, inspection of 100% products may be eliminated, thereby, saving costs.
  • Reduction of Prevention Costs comes last and it should be borne in mind that even if this cost increases by a certain amount, it is accompanied by much higher reduction in Failure and Appraisal Costs.

Definitions of Quality Costs items                                                                                    

Definitions of some principal items under the segments of Quality Costs are as below:-

  1. Costs of Prevention
  2. Quality Planning

Quality planning represents costs involved with the time that all personnel spend in planning the details of quality system.

  1. Process control

Process control represents costs associated with time that all personnel spend studying and analyzing the manufacturing process (including vendors) for enhancing productivity, safety, maintenance, etc.

  1. Quality training and workforce development

Quality training represents the cost of developing and conducting training programmes throughout the company.

  1. Product design verification

This represents the cost of evaluating pre-production products for verification of quality, reliability and safety aspects of design.

  1. System developments and management

This represents the overall quality systems engineering and management and support for quality system development.

  1. Other Prevention costs

These represent administrative costs involving quality and reliability such as salaries and travel expenses.

  1. Costs of Appraisal
  2. Tests and inspection of purchased materials

It represents the costs associated with the time that the inspection and testing personnel spend in evaluating the quality of purchased materials.

  1. Laboratory and other measurement services

This represents the cost of lab measurement services, instrument calibration and repair and process monitoring.

  1. Inspection

Inspection represents the costs involved with the time that the inspection personnel spend evaluating the quality of products in the plant and cost of supervisory and clerical personnel.

  1. Testing

Testing represents the cost of the time that the testing personnel spend evaluating the performance of the product in the plant along with the cost of supervisory and clerical personnel.

  1. Checking labour

It is the cost associated with the time the operators spend checking quality of own work as required by the quality plan, sorting out rejected lots, etc.

  1. Quality Audit

It is the cost involved with time that personnel spend in performing audit.

  1. Costs of Internal Failures
  2. Scrap

Scrap represents the losses incurred in the course of obtaining the required level of quality.

  1. Rework

It is the extra payments made to operators to achieve the required level of quality.

  1. Material Procurement costs

It represents those additional costs incurred by the material procurement personnel in handling both rejects and complaints on purchased materials.

  1. Costs of External Failures
  2. Warranty Charges

Costs of concessions made to customers due to substandard products and services being accepted by the customers as it includes loss in income due to downgrading products for sale as seconds.

  1. Product service

It represents all product service costs directly attributable to correcting defects/ imperfections or special testing.

  1. Product liability

It is the quality related costs incurred as a result of liability judgments due to quality failures.

  1. Product recall

It is the cost incurred as a result of recall of products or components of products.

Benefits of Quality Costing                                                                                               

As it is mentioned earlier, the analysis of Quality Costs shows the highest percentage of expenditure is incurred in Failure Costs followed by Appraisal Costs and very little Preventive Costs before the establishment of the Quality Costs system in a garment manufacturing company.  After a certain period of Quality Costs system is brought into operation, if the investment is increased in Preventive Costs, then the Failure and Appraisal Costs come down not only in terms of percentage but also in absolute money terms of total cost. This indicates a direct economic benefit to the company.

Besides, there are a few more advantages. By showing how much poor quality actually costs, senior management can be enlisted in quality improvement efforts. Also, the performance of the Quality Control department can be evaluated in financial terms and it can be determined how much cost is involved in achieving certain level of quality. Finally, it will help to budget realistically to achieve a desired quality level.


 As delineated in the above paragraphs, in garment manufacturing, Quality Costing is an extremely important tool in managing quality and business strategy planning by quantifying all quality related activities in monetary terms. The Indian garment manufacturers will be benefited by utilizing this concept to improve upon their quality related performances in today’s highly competitive business scenario.


  1. , ‘Quality System for Garment Manufacturing’, www.ellisdev.co.uk, 2004
  2. R M Liang and J Webster, ‘Stitches and Seams’, The Textile Institute, Manchester, 1998
  3. , Course Material of ‘Workshop on Quality Costing’, The Associated Chamber of Commerce and Industry of India, New Delhi, 1997
  4. P V Mehta, ‘Quality Management: An Overview’ in Testing and Quality Management’, editor: V K Kothari, IAFL Publications, New Delhi, 1999, p-34.