Quality cost management in the SMEs of Poland

The Relationship between Food Safety Culture Maturity and Cost of Quality: An Empirical Pilot Study in the Food Industry

In the food industry, a mature food safety culture (FSC) is linked to better food safety performance. However, the relationship between FSC maturity and key economical performance indicators, such as cost allocation, remains unexplored. This research is the first pilot study to empirically explore the association between FSC maturity and cost of quality (CoQ). A CoQ survey was developed and pretested. CoQ data were collected through collaboration with company management. FSC maturity was assessed through a validated mixed-method assessment (diagnostic instrument, questionnaires, and interviews). A convenience sample of five food processing companies was assembled and subjected to FSC and CoQ assessment. Results revealed that monitoring CoQ is not yet standard practice in the food industry: three out of five companies were unable to specify all failure costs. For prevention and appraisal costs, results showed descriptively and statistically that when these costs are higher, FSC is more mature. Considering the theoretical context of the research (CoQ models and available literature), these results present the first empirical evidence to substantiate that FSC could replace product/service quality in CoQ models. Findings justify the push for a shift in perception, from considering FSC as a task on the list of resource demanding activities toward a narrative in which FSC contributes to financial health.

Analysis of Warehouse Value-Added Services Using Pareto as a Quality Tool: A Case Study of Third-Party Logistics Service Provider

The study aims to analyse warehouse value-added services (VAS) data for a third-party logistics (3PL) service provider, which leads to identifying service improvements and cost-cutting opportunities in performing VAS for clients using Pareto analysis as a quality tool. Using a case study approach, qualitative and quantitative data were collected from a leading 3PL firm in Belgium. The approach is conducted by applying major steps of Pareto analysis. Two pharmaceutical products were analysed according to medical general classification, namely narcotic analgesics (NA) and ophthalmic antihistamines and decongestants (OAD). The results showed that the Pareto principle is proven in the NA—ticketing case, and five activities consumed 83.3 percent of the total time of VAS operations. Furthermore, in the OAD—display case, the Pareto principle is proven and six activities were validated as they accounted for 81.26 percent of the total time of primary VAS operations. The study recommended a solution to each of the four causes of delay, including lack of training/best practices, inefficient space utilization, lack of automation, and lack of cohesiveness and planning. Despite the recognized importance of avoiding warehouse operation inefficiencies, the literature lacks studies applied to practice, and few contributions exist regarding analysing 3PL service providers’ warehousing VAS operations data. This study identified all VAS activities for temperature-controlled pharmaceutical products. Moreover, the study proposes a warehouse operations improvement framework for non-automated 3PL warehouses and guides managers through Pareto analysis to cut costs and improve service level.

Understanding and application of quality costs in automotive manufacturing companies in North Macedonia: empirical study

Purpose

This study aims at presenting deeper insights regarding the understanding and application of the quality costs (CoQ) in the automotive manufacturing industry. The empirical research included three general determinants: reasons for, difficulties during and benefits from implementing quality costs, as well as two specific determinants: measuring and evaluating quality cost elements.

Design/methodology/approach

The empirical research methodology employs the expert evaluation method – the Delphi method, using a survey questionnaire comprising a total of 200 questions, and answered by 9 companies.

Findings

The survey results showed that companies do recognize the reasons for implementing quality costs as a need arising from the quality management standards, the lack of knowledge of quality costs by employees and management as the biggest difficulty while the biggest benefit includes the quality costs enhance the company competitiveness. The costs competence and qualification, the quality management system costs, the costs for improvement, the production control costs, the input control costs, the new measuring and control equipment calibration costs, the costs related to scrap, repairs and product finishing are the most significant elements of the quality costs.

Research limitations/implications

This study is limited by the small number of surveyed companies from the automotive cluster.

Practical implications

The proposed quality costs model provides to the management to conceive CoQ elements as possible drivers in the improvement process of product quality. The structure and the nature of the CoQ elements is expected to advance the process of detailing the quality costs elements.

Originality/value

The novelty of this paper refers to development of a generic quality cost model, whose relevance is confirmed by the structuring of the model with elements published in literature and validating in research companies.

A conceptual framework of quality cost chain in strategic cost management

Purpose

This study aims to discover a practical and effective way to apply the quality cost concept in Strategic Cost Management (SCM) framework. The interaction of preventive, appraisal and failure (PAF) activities in a company's internal value chain will be the starting point of SCM implementation.

Design/methodology/approach

This study begins by establishing value chain and quality costs as the scope of conceptual analysis. Discussions on the interrelationships between activities, quality and costs were gathered to clarify conceptual and practical gaps in the scope of the study. The PAF quality cost model is applied to find viable, practical solutions. The costs of activities will serve as performance indicators.

Findings

The PAF quality cost model depicts opportunities to lower costs and increase profit in a business simultaneously; current poor quality costs are the benchmark. Identifying PAF activities and costs in the business value chain and linking it with others is crucial in evaluating SCM applications. These linkages will generate a Quality Cost Chain (QCC). The leading indicator of improvement is a higher ratio between new possible failure costs (FC) and the combination of prevention and appraisal costs (PAC) than the current value, followed by a lower total quality cost (TQC). The subsequent attention is a lower ratio between the appraisal cost (AC) and prevention cost (PC). Mathematically, for assessing the operability of new quality-related activities, ΔPACnew < ΔFCnew, TQCnew < TQCcurrent, (FC/PC)new>(FC/PC)current and (AC/PC)new<(AC/PC)current are proposed as feasible conditional-quantitative improvement criteria.

Research limitations/implications

This study only discusses the relationship between quality costs and activities related to quality management in the PAF quality cost model, not cost behavior. This limitation opens up opportunities for future research that intends to link QCC with cost behavior in the context of managerial accounting and Strategic Cost Management. The use of QCC in certain industrial areas is the next research opportunity. The variety of PAF activities this study addresses originates from a wide range of industrial sectors; QCC research by sector may produce unique industrial quality cost phenomena.

Practical implications

QCC will make it easier for managers to evaluate how strategically their departments or activities contribute to quality costs at the departmental or organizational level, as well as to effectively and efficiently improve quality cost performance.

Originality/value

The quality-related activity and quality cost issues are still rarely treated as subjects of research studies in the field of Strategic Cost Management. Even so, the discussion tends to be very broad, complex and difficult to apply. This study combines a simple diagrammatic and mathematical approach to simplify the discussion and, at the same time, manage the value of strategic quality management.