Cost of quality: findings of a wood products ' manufacturer

Abstract

Purpose

Today substantial investments are made to improve the bottom line and cost of quality (CoQ) is a tool that identifies weaker areas where these investments should be directed. In literature, the authors find various CoQ models and their applications but it is deficient in providing a standard format of a “Quality Cost Procedure” for a CoQ program’s company-wide deployment. A procedure was thus developed and its effectiveness was evaluated implementation. The paper aims to discuss these issues.

Design/methodology/approach

CoQ program was implemented in the production department of a wood products’ manufacturer using the action research approach. Prevention, Appraisal and Failure Cost model was employed. Data collection was challenging, however, stakeholders were interviewed, data were acquired from Management Information System and various reports were reviewed for cost elements.

Findings

Total CoQ as a percentage of sales was found to be 11, while as a percentage of material cost was 15 percent. It was found through the implementation that development of a quality cost procedure is highly iterative in nature and a standard format is proposed in the Appendix. This procedure worked satisfactorily and the company is confident in moving to the next phase of company-wide deployment of CoQ Program.

Originality/value

A robust “Quality Cost Procedure” is developed, which not only helped the company but will serve CoQ implementers in their operational as well as tactical levels of management. CoQ implementation prior development of procedure brought conviction and accredited it. Practitioners can mold this procedure as per need, which will further enhance the body of knowledge on CoQ.

Citation

Malik, T.M., Khalid, R., Zulqarnain, A. and Iqbal, S.A. (2016), "Cost of quality: findings of a wood products ' manufacturer", The TQM Journal, Vol. 28 No. 1, pp. 2-20. https://doi.org/10.1108/TQM-01-2014-0014