COST OF (POOR) QUALITY

Due to continuous improvement of product and service quality in modern business environment, the costs required to attain the demanded, desired and expected quality level have been rising. As a result, they represent a considerably large share of a business system's total costs. Business system...

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Bibliographic Details
Main Authors: Kondic, Zivko, Miletic, Boris, Bojanic, Branislav
Format: Conference Proceeding
Language:English
Subjects:
Cost control
Cost of quality
Customer services
Defects
Failure
Information science
Operating costs
Prevention
Quality control
Quality improvement
Quality management
Quality of service
Technological change
Valuation
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Summary:Due to continuous improvement of product and service quality in modern business environment, the costs required to attain the demanded, desired and expected quality level have been rising. As a result, they represent a considerably large share of a business system's total costs. Business systems today seek to reduce all types of costs; however, the costs of creating quality products and services and quality monitoring are often neglected or given inadequate attention. These costs rarely represent a small percentage of the total operating costs as they are known to reach as much as 20% of total costs in some systems. The paradox is that, on the one hand, enormous efforts are invested in reducing the costs of certain items in the overall cost structure by a certain percentage, and on the other, quality costs are paid very little or no attention, despite the fact that only a small effort is needed to reduce them, thereby reducing the total cost of the product or service. This paper presents a flexible method of systematization of quality-related costs as well as several examples from a real system.
ISSN:1849-6903
1849-6903