Prevention cost is the cost of incorporating good quality into a process or product. In other words, it’s designing products and processes in a manner that the possibility of faults being detected during internal product inspection is minimal to none. The objective is to make sure products are made exactly to prescribed design and hardware requirements.
The cost of measures taken to improve or enhance a process also comes under prevention costs. A company’s prevention cost is usually only a percent of its external and internal failure costs combined. Prevention cost examples include supplier evaluation, error proofing, new product review and evaluating capabilities, to name a few.
An aspect of cost of quality, prevention cost is the most important cost when compared to other quality costs. It’s also the least expensive since preventing a defect is less costly than correcting one. When a manufacturer is identified for quality products, it earns itself a positive reputation, making buyers prefer it over the competition. As a result, the manufacturer sells and produces more than the competition does. With economies of scale or the ability to produce more goods and accept lower profits, the consumers also benefit from higher quality at lower prices.