An activity based quality cost and information system
Many companies are increasing their competitiveness through quality improvement. However, a widely held view among quality practitioners is that companies simply do not know the true total cost of quality, which are mostly hidden among the general overhead of the business. This problem is often attributed to an inappropriate costing system. Thus, any system that assisted companies in identifying and properly quantifying these costs will be valuable. This research, therefore, was aimed at developing a Quality Cost Information System for manufacturing industry, and to show that such a system could provide a basis for analysing quality costs and developing and evaluating the quality improvement process. A literature review of the quality literature highlighted that the major problems that hindered potential users from implementing an effective and efficient Quality Cost system were: current quality cost measurement systems were limited by their inability to trace quality costs to their source; quality was manageable only if it could be measured; quality cost did not easily fit into the traditional cost accounting structure; traditional accounting systems were unlikely to change radically to accommodate proper quality costing. This literature review was complemented by an industrial survey aimed at identifying knowledge of quality costing and current practices in manufacturing industry. The findings of the literature review and industrial survey formed the basis for the remainder of the study. As part of an integrated solution, three approaches have been proposed and detailed: 1) A graphical model of quality costing in the form of a visual tool to facilitate the introduction and communication of a quality costing information system within the organisation. 2) A proposed integration of Activity Based Costing tools with the theory of quality costing to provide a system that can deliver valuable information. 3) A Software tool for the design of Quality Costing Information Systems. The thesis concludes with the major findings and issues raised from the research undertaken. This is followed by recommendations for the successful pursuit of the beneficial implementation of the proposed quality costing system and tools along with several suggestions for further work and future research potential.