An Artless Attempt to Collect Quality-Related Costs

Summary

This paper describes the outcome of an attempt to collect quality-related costs in an engineering company which makes heat exchange equipment on a batch production basis. The company employs 150 people and has a turnover of about £5 million per year. Prior to the investigation the company did not collect quality-related costs other than scrap and warranty.

The company’s quality-related activities were identified using various cost elements to form a check-list. Sometimes there was doubt whether activities should be classified as being quality related or not. Difficulties were met when attempting to quantify the activities and still further problems arose when ascribing costs to them. When the quality-related cost statement was eventually completed the problems of whether the company’s performance was good, bad or indifferent, and the scarcity of comparative data arose. The problems met, their implications, and some possible solutions are discussed in this paper.