The Cost of Poor Quality
Quality costing remains one of the most effective tools in Total Quality Management for evaluating the success of a quality management programme and for contributing to a firm’s competitive advantage. Therefore, it is regarded as a key component of company strategy and recognized as a metric of overall organizational performance. Although approximately 80% of companies in the United States are involved in quality programmes, only 30% calculate the costs associated with quality. Since total quality costs may reach 20% of operating expenditure, or even of turnover, quality costs are too substantial for manufacturers to ignore in today’s competitive markets. Most companies, however, are unaware of the actual cost of quality and therefore underestimate or deny it.