Quality costs in practice and an analysis of the factors affecting quality cost management

Understanding and application of quality costs in automotive manufacturing companies in North Macedonia: empirical study

Purpose

This study aims at presenting deeper insights regarding the understanding and application of the quality costs (CoQ) in the automotive manufacturing industry. The empirical research included three general determinants: reasons for, difficulties during and benefits from implementing quality costs, as well as two specific determinants: measuring and evaluating quality cost elements.

Design/methodology/approach

The empirical research methodology employs the expert evaluation method – the Delphi method, using a survey questionnaire comprising a total of 200 questions, and answered by 9 companies.

Findings

The survey results showed that companies do recognize the reasons for implementing quality costs as a need arising from the quality management standards, the lack of knowledge of quality costs by employees and management as the biggest difficulty while the biggest benefit includes the quality costs enhance the company competitiveness. The costs competence and qualification, the quality management system costs, the costs for improvement, the production control costs, the input control costs, the new measuring and control equipment calibration costs, the costs related to scrap, repairs and product finishing are the most significant elements of the quality costs.

Research limitations/implications

This study is limited by the small number of surveyed companies from the automotive cluster.

Practical implications

The proposed quality costs model provides to the management to conceive CoQ elements as possible drivers in the improvement process of product quality. The structure and the nature of the CoQ elements is expected to advance the process of detailing the quality costs elements.

Originality/value

The novelty of this paper refers to development of a generic quality cost model, whose relevance is confirmed by the structuring of the model with elements published in literature and validating in research companies.

The influence of the quality criteria on the quality cost of suppliers in SMEs

Purpose

After quality costing, most companies do not know how to invest in supplier quality improvement. This study aims to develop a comprehensive model for the effect of supplier quality criteria on supplier quality costs.

Design/methodology/approach

The independent variable of supplier quality criteria and the dependent variable of supplier quality costs have been identified based on a literature review. Then a model has been developed for the effect of the variables. A questionnaire has been designed and distributed to 158 small and medium enterprises (SMEs) in Jey Industrial Town located in the Isfahan Province. Structural equation modeling and partial least square structural equation modeling (PLS-SEM) have been used for data analysis.

Findings

Supplier quality criteria influenced supplier quality costs (with a value of 0.711). The results also implied that organizational quality had the highest impact. The appraisal costs and the internal failure costs of purchasing received most of the influence. Also, process quality and consequential costs of failure purchasing had the lowest influencing and influenced values.

Practical implications

The findings of this research encourage the managers of SMEs to evaluate and rank the most appropriate quality criteria related to quality costs for selecting a supplier as one of the most fundamental decisions in supply chain management.

Social implications

Appropriate selection of quality criteria influencing quality costs results in reduced quality cost. Quality cost reduction also results in decreased products' fixed prices. Ultimately, the company will have more competitive pricing, and consumers will benefit from such a significant advantage.

Originality/value

Studying the influence of supplier quality criteria on supplier quality costs is relatively new in the manufacturing industry. The comprehensiveness of the investigated variables is also another advantage of the proposed model.

Cost Early-Warning Model System of Large-Scale Construction Project

China's construction industry has been suffering from high cost, high efficiency, and maladjustment of management. The traditional management mode makes the construction project face the risk of cost overruns and delays, which cannot achieve the effect of cost control. Therefore, by summarizing the characteristics of construction projects and the classification of costs, this paper analyzes the foundation of earned value management method in construction and combines it with cost management; in addition, the actual development of Company A is taken as an example, where a cost early-warning system suitable for construction projects is constructed, including the design of the organizational structure, operation platform, and early-warning model of this system, which can improve the cost management level of construction enterprises to a certain extent.

Practical implications of cost of quality: a systematic literature review

Purpose

The present study focuses on the cost of quality (CoQ) based on which organizations can evaluate their quality-related activities in economic terms. The purpose of the study is to identify the CoQ practical implications as well as to group them into logical themes.

Design/methodology/approach

A systematic literature review (SLR) was conducted based on well-known academic publishers, such as Emerald Insight, Elsevier/ScienceDirect, SpringerLink, Taylor & Francis, Wiley and Scopus. Sixty-seven peer-reviewed journal articles in the field of CoQ were collected, which were published between 2010 and 2019. The “affinity diagram” was applied to group the practical implications identified into logical themes.

Findings

A plethora of CoQ practical implications were identified and grouped into the following meaningful themes: benefits of CoQ measurement, effects of CoQ, business sectors measuring CoQ, factors influencing CoQ measurement, CoQ elements, future research in CoQ and the role of government.

Research limitations/implications

The limited number of the publishers and keywords used to search for the articles of interest, as well as the subjectivity of grouping the large number of the practical implications into themes are the main limitations of the present study. These limitations constitute the basis upon which future literature review studies can be designed.

Practical implications

The present study by presenting analytically and in summary (through the themes revealed) the CoQ practical implications, provides all the respective available literature in a single study for the benefit of practitioners and academics. Thus, clear and straightforward guidelines are given to practitioners with regard to CoQ issues and academics with regard to research topics of high interest.

Originality/value

No previous SLR study focusing on analyzing the practical implications of CoQ has been published so far.

The influence of cost of quality on the performance of food manufacturing companies: an empirical study

Purpose

Due to the ever-increasing competitive and complex business environments, food manufacturing companies have to maintain high-quality products while simultaneously minimizing customers' costs. Cost of quality (COQ) plays a crucial role in enhancing companies' efficiency and reducing expenditures that can contribute to companies' competitive performance. This paper investigates the underlying relationship between the level of COQ practices adoption (prevention, appraisal, internal and external failure costs) and organizational performance in Palestinian food manufacturing companies (PFMCs).

Design/methodology/approach

A quantitative research methodology using a structured questionnaire collected data from 119 PFMCs. Partial least squares structural equation modeling was used to analyze collected data.

Findings

Results indicated that COQ adoption has a significant positive effect on the organizational performance of PFMCs. Besides, prevention, external and internal failure costs were all associated with a positive impact on organizational performance of PFMCs, whereas appraisal cost did not affect organizational performance.

Originality/value

This study is considered one of the first studies to investigate COQ practices' effect on organizational performance in food manufacturing companies in a developing country context. Thus, it adds significant value to the literature responding to calls to tackle competitiveness issues in current complex business environments.

Quality cost management in the SMEs of Poland

Purpose

The purpose of the study is to examine the research problem that represents an attempt to approximate the importance of quality costing in managing a modern enterprise using the selected enterprises from small and medium-sized enterprises (SMEs) in Poland.

Design/methodology/approach

The primary goal of the research is a need to acquire knowledge about the use of quality cost accounts in enterprises operating in Poland. The research has been conducted in the SMEs of production and services. From October 2018 to December 2018, survey-based research was carried out in the selected SMEs of production and service in Poland. The targeted participants of the study are from the medium-sized enterprises, employing 50–250 people.

Findings

The pilot studies conducted in companies indicate that modern enterprises are focused on quality. Many enterprises declare to be continuously improving quality system and quality costing. However, generally, these are large companies that have implemented ISO standards, often part of international corporations. The survey result of the study shows that medium-sized enterprises still make little use of modern cost accounting variants. Based on the study, only 9.75% (39 enterprises) from a representative group of 400 companies from the sectors of manufacturing, services and production as well as service companies apply quality costing. Some of the other enterprises are only taking measures to implement quality cost accounting.

Research limitations/implications

The research has been conducted in randomly selected SMEs in the form of a questionnaire interview. In order to further analyze the construction of quality cost management (QCM) systems and the use of information from QCM by enterprises, case study method should be used more widely.

Practical implications

The results of the study provide useful help for companies that are quality-oriented and want to implement quality costing. The survey has been conducted in 400 enterprises, and the survey results of considered SMEs reveal the most important aspects of the application of quality costing.

Originality/value

The questionnaire used, the answers provided and the resulting conclusions fill the identified research gap. In the author's opinion, findings of research are relevant and useful, not only for accounting practice but also for theory. They show that although TQM and quality costing have been very popular in the literature since the 1990s, the degree of application of quality costing in practice (except for large, often international companies) is too low. So, the suitability of QCM in managing a modern enterprise from the SMEs should be promoted.

Redefining quality in terms of value, risk and cost: a literature review

Purpose

The purpose of this paper is to present a literature review demonstrating that quality and its management are increasingly definable as a balancing act between value, risk and cost throughout the value stream, from product/service design to production and delivery, and purchaser decision-making. An original framework is presented showing this interplay across the value stream, referred to as the QVRC framework.

Design/methodology/approach

Content analysis is combined with bibliometric analytics, displayed via temporal graphs and citation networks. Reviewed literature is transdisciplinary, encompassing marketing, operations/quality and psychology sources. Core quality management methodologies are positioned on the framework illustrating their relative contribution to value, risk and cost management.

Findings

The QVRC framework is developed, and used as a basis for classifying models and methodologies associated with quality management. A set of propositions are developed, which, together with the framework, set an agenda for further research.

Research limitations/implications

No literature review can capture the richness of discourses on terms as pervasive as value, risk and cost. This paper aims to present a systematic and reliable sampling of such literature.

Practical implications

The resulting model can be applied to management tools, and to products and services.

Originality/value

Researchers, particularly in marketing, have developed models of value, risk and cost in terms of products and services. However, delivering products that provide the appropriate value, risk and cost trade-off is an operations management problem. This is the first paper to combine value, risk and cost across the value stream showing how this interplay extends beyond product.

Future research avenues of cost of quality: a systematic literature review

Purpose

The purpose of this paper is to identify the future research suggestions which have been made by several authors with regard to cost of quality (CoQ) and to group them into respective themes.

Design/methodology/approach

This study was based on a systematic literature review (SLR) of 97 peer-reviewed journal articles in the field of CoQ published in well-known academic databases, such as Emerald, Elsevier, SpringerLink, Taylor & Francis, Wiley and Scopus. The time horizon for reviewing the literature was 9 years, particularly in the period between 2010 and 2018. The “Affinity diagram” was applied to group the future research suggestions into logical themes and the “Pareto diagram” to further categorize and prioritize these themes.

Findings

A plethora of future research suggestions identified in the literature are analytically presented. Moreover, the analysis showed that the future research suggestions in the field of CoQ can be grouped under eleven meaningful themes, which are further categorized into two broad categories, meaning the vital and the useful.

Research limitations/implications

This SLR was based on only fully accessed English articles published in international, peer-reviewed journals of the selected publishers. The restricted number of keywords used and the subjectivity in applying the “affinity diagram” are also limitations of this study.

Practical implications

This paper provides insights into the future research perspectives in the field of CoQ. Thus, this analysis can serve as a resource for both researchers and practitioners to further develop this area according to the future research suggestions and the respective themes revealed.

Originality/value

To the best of the authors' knowledge, this is the first SLR presenting and analyzing the future research suggestions of CoQ.

Supply chain network design based on cost of quality and quality level analysis

Purpose

The purpose of this paper is to explore the impact of the cost of quality (COQ) expenditure allocations on a capacitated supply chain (SC) network.

Design/methodology/approach

This paper proposes a non-linear optimization model which integrates the opportunity cost (OC) (i.e. customer satisfaction cost), into the COQ with consideration of the QL in the supply chain network design decisions. In addition, it examines the effect of considering an investment at each SC echelon to ensure the best overall QL. A numerical example is presented to illustrate the behavior of the model.

Findings

The results show how the QL, COQ and facility location decisions change when incorporating the OC, investments and transportation costs into the SC model.

Originality/value

The novelty of this paper is that it considers the effect of OC, investment at each echelon and transportation costs on SC design by minimizing the overall spending on the COQ. These issues have not been explored, and for that reason, this paper contributes to the understanding of the critical factors that optimizes the SC COQ.