Cost of Quality: A Review and Future Research Directions

Cost of Quality: A Review and Future Research Directions

Lawrence Kau (University of Johannesburg, Johannesburg, South Africa) and Hannelie Nel (University of Johannesburg, Johannesburg, South Africa)
DOI: 10.4018/IJSESD.2019070103

Abstract

Quality management is the key to sustainability in any manufacturing business. The cost of quality has been the topic of discussions these days in various research forums. The purpose of the study is to present a review of prior literature and present a complete picture of past, present and future directions in the domain of Cost of Quality. Authors have used systematic literature review methods to conduct the analysis of literature. The study concludes with some food for thought to future researchers.
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1. Introduction

Nowadays manufacturing companies consider improving quality to upgrade customer satisfaction by reducing cost of the manufacturing and increasing efficiency. Integrating quality-oriented manufacturing strategy and sustainability is key to success of manufacturing business (Ocampo & Clark, 2017). Therefore, Cost of Quality (COQ) plays a critical role in every manufacturing firm. Monitoring and controlling are critical component of quality improvement programs. Estimation of the COQ can be used to decide the limits of budgets. The COQ analysis help organization to identify; measure and control consequences of the poor quality (Schiffauerova & Thompson 2006).

Organizations must identify; measure and analyse, to ensure that the product not only meet the required level of quality, and also satisfy the customer in terms of the cost competitiveness (Celko & McDonald, 1995; Davenport, 1997; Dubey & Chakrabarty, (2011); Dubey et al., 2016). The COQ is used as a performance measure, cost reduction in order to prioritize quality improvement initiatives (Davenport, 1997). COQ is the total costs incurred in the design, implementation, operation and maintenance of quality system, resources committed to continuous improvement, product failure and all costs involved in achieving quality of a product (Schiffauerova & Thompson 2006)

Gurus of Total Quality Management (Groocock, 1977; Crosby, 1979; Feigenbaum, 1991) claimed that by improving quality of a product or service will reduce manufacturing costs, maximise productivity and customer satisfaction. COQ is seen as a tool to help organizations to reduce manufacturing costs by identifying uncontrolled costs and waste.

Nowadays manufacturing companies are forced to review and tightly control their costs (Douglas 2009).

Rasamanie & Kanapathy (2011) highlighted that business environment globally is highly competitive as they have made quality costs a useful tool to monitor and achieve costs reduction to remain competitive. COQ help organizations to quantify specific quality levels and ultimately improve productivity (Chopra & Garg, 2011). It has been declared that in the production environment, the annual cost of poor quality can be approximately 15% of sales and 30% of production costs (Gryna & Juran, 1999).

Chiadamrong (2003) have estimated about proportion of 10% of production costs, (Kent, 2005) claimed that costs of quality were 5-15% of turnover.

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