Quality Costing

K. Narasimhan (Bolton Institute, UK)

The TQM Magazine

ISSN: 0954-478X

Article publication date: 1 June 2000




Narasimhan, K. (2000), "Quality Costing", The TQM Magazine, Vol. 12 No. 3, pp. 214-217. https://doi.org/10.1108/tqmm.2000.



Emerald Group Publishing Limited

Barrie G. Dale has been carrying out research into quality management since the early 1980s and is gaining quite a good reputation as a researcher and an author on quality of products and services. This work is an elaboration of a chapter in his other work Managing Quality. A study of this book helps managers to understand the importance of managing quality‐related costs in enhancing an organisation’s effectiveness.

The text is divided into three sections. The first section, comprising six chapters, is logically arranged. The first chapter introduces the reader to the concept of total quality management (TQM) and examines the role of quality costing in the TQM approach. The second chapter, which is an introductory chapter on quality costing, covers the “what” and “why” of quality costing in addition to giving an outline of the historic development of the topic and charts the change in the idea over the past 40 or so years. A comprehensive list of authoritative further reading on the subject is also provided. The third chapter examines the various ways of classifying and categorising quality costs, and the difficulties associated with quality cost definitions. In concluding the chapter points out that organisations need to consider categorisations other than the prevention‐appraisal‐failure categorisation, which suit their business practices. In the fourth chapter, the longest of the six chapters, Dale examines a number of possible quality‐costing objectives and strategies and very deftly explores the various approaches to quality cost collection and application. Chapters 5 and 6 deal with the reporting, and uses of quality costs. In Chapter 5, Dale examines the key issues involved in the effective reporting of quality costs. After dealing with ways of extracting quality costs from existing systems, examples are given of different formats (tables and charts) of presenting information to suit different audiences. Stresses the importance of good standards of reporting to make an impact and promote action. In the final chapter of the first section, Dale deals with the potential uses of information contained in quality‐cost reports under four main categories:

  1. 1.

    (1) promoting quality as a business parameter;

  2. 2.

    (2) facilitating performance measures and improvement activities;

  3. 3.

    (3) planning and controlling quality costs; and

  4. 4.

    (4) motivating.

It is emphasised that senior management must be involved in clearly stating the purpose of collecting quality costs, and developing and agreeing the strategy for collection and analysis of data, and presentation of information. Such an involvement will aid avoiding pitfalls and unnecessary work.

The second section comprises six case studies. The first four case studies, based on manufacturing organisations (companies from the mechanical, electronic, and information technology industries), are in depth with discussions of the findings. These case studies illustrate the ways in which the selected companies have analysed their main areas of operation, and how they collected and reported quality costs for the areas highlighted in their analysis. However, the other two case studies lack detail to be of much benefit. A lack of examples from the public and not‐for‐profit sectors is a major limitation of this book, as managers from such organisations tend to be allergic to concepts and techniques originating from the manufacturing sector. The final chapter is a useful summary of the dos and don’ts of quality costing.

This book should be on every chief executive’s book‐shelf as a study of this book and careful consideration of the advice provided would save a lot of unnecessary work and cost in designing an effective quality cost collection and reporting system. Even those organisations that already have such a system might also benefit from a study of this book as they may find some useful material to effect improvement to their present system.

A paperback edition would prove more popular with undergraduate and post‐graduate students. It will enable the quality costing concept and its application to be more widely publicised.

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