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This study uses structural equation modeling to investigate the impact of ABC implementation factors (management support, clarity and consensus of ABC objectives, non-accounting ownership, and training) on quality, cost, and cycle time improvements, the relations among quality, cost, and cycle time improvements and, the influence of quality, cost, and cycle time improvement on financial performance at the business unit level. Overall, the results of the structural analyses support the theoretical model indicating that ABC implementation factors influence quality, cost, and cycle time, and partial support for the relations among quality, cost, and cycle time improvement and their effect on financial performance. When these relationships are further analyzed within the context of ABC implementation stage, adoption of advanced manufacturing practices, industry characteristics and plant size to determine if these contextual factors impact the model constructs and the relationships between the variables in the theoretical model, the results show that these contextual factors do not affect the model constructs, however, they affect the model relations.

The ideals of total quality view contradicts with the traditional prevention‐appraisal‐failure (PAF) model. The PAF model, based on the “higher quality‐higher cost” notion, fails to explain the “higher quality‐lower cost” premise of total quality. The purpose of this study is to examine the behaviour of quality costs and investigate the two contradicting views.

Based on the literature, a generic descriptive model is developed to examine the dynamics of quality costs and quality level over time. Through illustrative examples, the behaviour of quality costs is demonstrated and relevant implications are highlighted.

The proposed model supports continuous improvement regardless of the effectiveness of the firm's quality improvement programs. When the quality improvement program is highly effective, the “higher quality‐lower cost” phenomenon is observed; whereas, in a less effective quality improvement program, the authors observe the “higher quality‐higher cost” phenomenon, which still calls for increased improvement effort necessary for quality sustainability.

The proposed model explains well the dynamics of quality costs, however, it can be further enhanced by incorporating the dynamics of the effectiveness of the firm's quality improvement program and its relation to quality level and quality costs.

The proposed model is a useful tool especially for quality improvement planning and budgeting decisions.

Balancing between the two contradictory views of quality costs, this study provides a deeper understanding of the relationship of quality costs and quality level.

A complete enumerative study was made of the operating and maintenance costs of the 1,255 delivery post offices throughout Japan in 2000, in order to grasp the characteristics of the whole life costs of post office buildings. The operating and maintenance cost of five standard post offices were also monitored for 20 years. This paper demonstrates how the acquired knowledge of the whole life costs is used for the decision making of the facility investment. After analysing the relationship between the rebuilding cycle, and rebuilding, repair and improvement costs, by changing the present rebuilding at age 40 to building additions at age 40 and rebuilding at age 60, it became apparent that a significant reduction in facilities investment costs could be expected.

This study aimed to bridge the gap between the financial measurement of process improvement ideas and Lean Six Sigma measurements. It was required to increase employee engagement in process improvement initiatives.

Through both a practical and theoretical application of the Design for Lean Six Sigma methodology, the researcher was able to design a process and a benefit measuring methodology that was acceptable by finance and aligns with the benefits expected from the elimination of the Lean wastes.

The project found that benefit measurement methodology is not understood by most employees, which leads to a lack of engagement in working on improvements. The result of the study was a model for employees to identify and quantify these benefits. This has resulted in a model for cost-benefit analysis aligning financial costs with non-value add waste costs and cost of poor-quality costs resulting in increased process improvement ideas and activity.

While this study was limited to one company, applying this methodology could benefit any company experiencing the same difficulties.

This is one of the first studies to try and cost the benefits of LSS projects both from an organisational and generic viewpoint.

The purpose of this paper is to describe a quality improvement collaborative conducted in 33 Nigerian facilities to improve maternal and newborn care outcomes by increasing compliance with high‐impact, evidence‐based care standards. Intervention costs and cost‐effectiveness were examined and costs to the Niger Health Ministry (MoH) were estimated if they were to scale‐up the intervention to additional sites.

Facility‐based maternal care outcomes and costs from pre‐quality improvement collaborative baseline monitoring data in participating facilities from January to May 2006 were compared with outcomes and costs from the same facilities from June 2008 to September 2008. Cost data were collected from project accounting records. The MoH costs were determined from interviews with clinic managers and quality improvement teams. Effectiveness data were obtained from facilities' records.

The average delivery‐cost decreased from $35 before to $28 after the collaborative. The USAID/HCI project's incremental cost was $2.43/delivery. The collaborative incremental cost‐effectiveness was $147/disability‐adjusted life year averted. If the MoH spread the intervention to other facilities, substantive cost‐savings and improved health outcomes can be predicted.

The intervention achieved significant positive health benefits for a low cost. The Niger MoH can expect approximately 50 per cent return on its investment if it implements the collaborative in new facilities. The improvement collaborative approach can improve health and save health care resources.

This is one of the first studies known to examine collaborative quality improvement and economic efficiency in a developing country.

Typically, the budgetary requirements for executing a supplier’s process quality improvement program are often done in unstructured ways in that quality improvement managers purely use their previous experiences and pertinent historical information. In this backdrop, the purpose of this paper is to ascertain the expected cost of carrying out suppliers’ process quality improvement programs that are driven by original equipment manufacturers (OEMs).

Using inputs from experts who had prior experience executing suppliers’ quality improvement programs and employing the Bayesian theory, transition probabilities to various quality levels from an initial quality level are ascertained. Thereafter, the Markov chain concept enables the authors to determine steady-state probabilities. These steady-state probabilities in conjunction with quality level cost coefficients yield the expected cost of quality improvement programs.

The novel method devised in this research is a key contribution of the work. Furthermore, various implications related to experts’ inputs, dynamics related to Markov chain, etc., are discussed. The method is illustrated using a real life of automotive industry in India.

The research contributes to the extant literature in that a new method of determining the expected cost of quality improvement is proposed. Furthermore, the method would be of value to OEMs and suppliers wherein the quality levels at a given time are the function of quality levels in preceding period(s).

The purpose of this paper is to provide a differentiated view of relationship‐specific proactive improvement of logistics service providers (LSPs) that distinguishes between the cost and performance and the effect that these two dimensions of innovation have on three distinct customer loyalty dimensions (retention, extension, and referrals).

A confirmatory empirical study was conducted based on social exchange theory and customer value theory. The survey responses from 298 firms were analysed using structural equation modelling and multi‐group analysis to test for direct effects and moderation.

Both dimensions of relationship‐specific proactive improvement by LSPs (cost and performance) are strong drivers of all three customer loyalty dimensions and, thus, are important to customer relationship management and relevant areas to be considered within innovation management. The effect on customer loyalty is moderated by the dynamism of the customer's market. Proactive cost improvements are more important under high dynamism, while proactive performance improvements, contrary to initial assumptions, are more important when dynamism is low.

Future studies should analyse other cultural settings, differentiate between functional and relationship value provided, consider other services, investigate how LSPs can facilitate proactive improvement and improve innovation management, and explore how customers can foster proactive improvement.

The currently low level of proactive improvement should be increased if LSPs want to enhance customer loyalty. In doing so, LSPs ought to consider the dynamism of their customers' markets.

The paper is the first to provide a differentiated view on the role of relationship‐specific proactive innovation that distinguishes between cost and performance improvements and illustrates their effects on three distinct customer loyalty dimensions.

The purpose of the paper is to present a proactive quality costs measurement methodology, which describes the value of quality improvements and the implication of this value on customers' perception regarding the value of the product.

By describing the perceived customer value in a dynamic term, it becomes possible to derive an analytical model that recognizes the implication of a company's efforts to improve design quality and conformance quality on product value as perceived by the customers. Quality costs as a performance indicator of improved design quality and conformance quality (as the results of prevention and appraisal activities) can be expressed in terms of value (i.e. a trade‐off between benefits and sacrifices), where the benefits of the improvement include higher product quality and reduction of failure costs. The sacrifices include the costs to perform improvement activities (i.e. prevention and appraisal costs). Expressing quality costs in this way thus establishes a link between a producer's efforts to improve quality and the way customers perceive the value of the product. The developed methodology of proactive quality cost measurement has been applied for collecting, measuring, and reporting quality costs in a Swedish wood‐flooring manufacturing company.

Transforming quality cost measurements into value provides a better explanation regarding the effect of prevention and appraisal activities on the quality improvement indicators. Thus, the value of quality improvements is a measure of return on quality improvements (ROQI), which indicates whether the quality improvement efforts gave higher, fair, or lower return.

This paper develops and discusses a model of customer value by accommodating its relative nature, and presents a proactive way of measuring quality costs (i.e. value‐oriented and customer‐oriented).

The purpose of this paper is to present an integrated cost of quality ‐ activity‐based costing (COQ‐ABC) framework for measuring quality costs under ABC. The main deficiencies of most COQ systems are: (1) no consensus method to allocate overhead costs to COQ elements, (2) the failure to trace quality costs to their sources, and (3) the lack of information about how indirect workers spend their time on various activities. These deficiencies can be easily overcome under ABC together with work sampling. The cost and nonfinancial information achieved from the integrated COQ‐ABC system can be used to identify the magnitude of the quality improvement opportunities, to identify where the quality improvement opportunities exist, and to continuously plan the quality improvement programs and control quality costs. The ultimate goal of the integrated COQ‐ABC system will be to continuously improve processes/activities/quality so that no defects at all are produced and quality cost measurement ultimately becomes unnecessary.