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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.