When Crosby (1979) speaks of the cost of quality, he is referring to something more technical than what could easily come to mind for the literal meaning of ‘cost of quality’. Literally, the cost of quality could be said to be the financial cost that quality adds to a product or service (Antoni, Nilsson-Witell and Dahlgaard, 2005). But this is not so from the perspective of Crosby (1979). Crosby actually sees the cost of quality as the cost that a company or business outfit faces for refusing to produce according to quality standard (Peters and Austin, 1985). Total quality has been said to be very considerable, typically between 10-40 percent of turnover. This is why these costs are also known as the hidden factory (Dahlgaard et al., 1999 as cited in Krishnan, 2006). This view is in direct relation to what is put forth by Crosby as the refusal to adhere to quality would actually take away from the company or business the percentage that quality is expected to add up to the overall turnover. As this cost is deducted from the general turnover, what happens is that the company records lowered rates of income and that difference becomes the actual cost of quality. The essence and cost of quality actually have to do with the cost that business operatives pay for refusing to stick to quality standards. Quality could be costly in a number of ways. For example, refusing to adhere to quality at the initial stages would demand that work is redone and this will certainly increase the cost of quality. All the following instances are known to bring about increases in the cost of quality and they include the reworking of a manufactured item, the retesting of an assembly, the rebuilding of a tool, the correction of a bank statement, the reworking of a service, such as the reprocessing of a loan operation or the replacement of a food order in a restaurant (ASQ, 2012). Invariably, it is always a good idea to reduce the cost of quality. But how should this take place done successfully? The use of lean production has been said to be an effective means of achieving quality and thus reducing the cost of quality (COQ). Plant Services (2013) notes that ‘lean’ is defined as the elimination of waste and things that do not add value as defined by the customer. This means that lean operation is based on finding efficiencies and removing wasteful steps that don’t add value to the end product (Mind Tools, 2013). This means that lean operation is directly rooted in the fundamental stage of manufacturing and thus ensures that quality conditions are adhered to in order to avoid waste (Nilsson-Witell, Antoni and Dahlgaard, 2005). As operations are made more and leaner, unwanted excesses and factors that would have compromised on value are taken care of (Conti, 1997). Ideally, quality becomes achieved in the long run.
Quality as a Factor in Manufacturing and Service Sectors of Business