Managing cost of quality: insight into industry practice

Abstract

Purpose The objective of this paper is to present results of the study of the quality costing practices at four large successful multinational companies. Design/methodology/approach The method of benchmarking was used for the purpose of this study. Company representatives, who were invited for a benchmarking session, described the quality management programs running at their companies. Direct observation and archival records data collection were also used to extract more precise information for the following analysis and discussion. Findings The findings of the study show that all four companies use systematic quality initiatives; however, a formal cost of quality (CoQ) methodology was only employed at one of them. This is in agreement with the literature findings arguing that a CoQ approach is not utilized in most quality management programs. Originality/value This paper discusses and compares the quality programs of four companies and explains the benefits of the eventual adoption of a CoQ approach in each case. The analysis provides a new insight into company practice, useful both for academic research and industry.