Abstract:
Manufacturing organizations are continuously affected by chronic waste and hidden
quality costs resulting in increased Total Cost of Quality and reduced Profitability.
However the existing systems only focus on sporadic waste and visible quality costs
and fail to capture the real picture of total cost of quality. Therefore severities of
issues are often unidentified by organizations and no preventive actions are triggered
for continuous improvement. This research focuses on developing a reliable Quality
Costing System for knitted fabric manufacturing organizations in which all
dimensions of prevention, appraisal, internal and external failure costs are
encompassed and enables the achievement of organization’s quality objectives and
long term success through proper identification, monitoring, analysis, and reporting of
quality costs and thereby facilitate management decision making to manage “Total
Cost of Quality”. The comprehensive literature survey depicts the nature of chronic
and sporadic waste, distinguishes between visible and hidden costs, categorization of
cost elements, analysis of quality costs, real impact of quality costs on organizational
performance and the strategy for managing total cost of quality. Initially a detailed
process study was conducted to identify all the cost elements, categorize their impact
and to define the method of quantifying such cost elements. Collected quality cost
data was analyzed and the impact of cost of quality on organizational performance
was identified. Finally a Microsoft excel based system was developed to produce
useful management information which includes cost distributions, trend analysis of
cost categories and key cost elements, highest cost elements and monthly cost of
quality report.
