Why Companies Use Cost Of Poor Quality And Others Use Cost Of Quality Systems, Why The Difference?.. Benefits?

Why Companies Use Cost Of Poor Quality And Others Use Cost Of Quality Systems

1a.Summary of Articles

Article 1: Measuring the Cost of Quality for Management

The main reason as for the failure of quality management in most organizations is due to the fact that the accounting field has put a lot of emphasis the reporting that are external rather than the internal ones. This makes the initial data to be capable in expressing the information required for decision making process.

In this article the cost of quality can therefore be referred to as the cost that are involved in the process of finding, avoiding, repairing errors and defects and then making an assumption that all the errors and defects have been detected and corrected. It can therefore be coined to mean the deficit realized when the actual cost is compared against the reduced cost assuming that there were no errors or defects incurred in the overall operation.

The main objective of costing is to show how much an activity costs in order to justify the future decisions on spending through estimates.

Article 2: Measuring Cost of Quality Management- Myth or Reality?

The success of a particular organization can be measured using the cost of quality technique especially where the use of human factor in the production or delivery processes.

Understanding the concept of cost of quality can therefore contribute to the reduction of rework, improvement of the production and even to the engagement of the employee.

Cost of quality can therefore be categorized into three categories namely; error free, conformance and non-conformance. Conformance therefore refers to the cost associated with appraisal and prevention with an aim of achieving the standards while non-conformers refer to the cost associated with correcting both internal and external failures.

Incorporation of the total expenditures when measuring the cost of quality has the following benefits such as the reduction of debates and increment on employee focus.

1b.Comparison between the Two Articles

Comment

Article on the measuring of the cost of the quality for management suggests that by adding the valid costing data, the quality movement will become more legitimate. This is the same suggestion is put forward by the article on measuring the cost of quality- myth or reality? Both articles proceed to suggest that financial measurement is still the best method for assessing the performance of the organization with an aim of determining whether the set objectives have been fulfilled.

I would like to comment that these two articles have exhausted some of the key elements that make cost of quality an essential requirement towards effective management of an organization.

Critics

Both articles tag their attributes to the categories of cost of quality rather than the cost of the process which is the primary function of costing as opposed to the secondary function.

The article on the measuring cost of quality- myth or reality gives the full account on the total quality of management movement from the year 1980s to the recent past. This provides the overview of how much progress has been put in place as managers strive to achieve the best in their management practice. In as much as this information is critical to the development of cost of quality as a method of measurement, it is however omitted in the article of measuring the cost of quality for management, making it insufficient in elaborating the cost of quality.

2. Why Companies Use “Cost Of Poor Quality”, And Others Use “Cost of Quality” Systems

Cost of quality is the neutral ground where managers and the quality professional meet to contrast and compare on the benefits of ensuring their products have the required quality before being released into the market.

From my research work, I have come to realize that some people refer to the cost of quality as the cost of poor quality due to the fact that it mostly concerned with the identifying and correcting defects and errors in the production process. I was able to realize that some managers refers to it as the cost of conducting all the operations in the department responsible for the quality of the products produced by the organization.

Cost of poor quality is the cost that disappears incase each and every task were to be executed without defects and errors. It is difference between the actual cost of operation and the minimum cost involved. Cost of poor quality involves the following processes; identification and the quantification of the quality cost, exposing the hidden cost, assessing the measurement system and then improving the measurement system.

From the research work I conducted I realized that most of the organizations that employed the use of cost of poor quality system for management had the following advantages to site:

It provides the management with a single overview and the manageable entity which are very crucial components as far as the management practice is concerned.

Cost of poor quality also strives to align the goals and the quality of products produced by a particular organization. Since the success of organization is majorly attributed towards the realization of the goals and production of quality goods, this system is therefore very essential to the management. One of the best ways of increasing the profits of a company is through reducing its cost of poor quality, therefore recommended by the organizations that use it.

Cost of poor quality system provides the management of the organization with the appropriate means of distributing the controllable quality cost for maximum profits correctly.

It is also essential when it comes to the presentation of problems as a priority hence providing the organization with appropriate means of measuring its changes.

Since the cost of poor quality factors for the provision of incentives to the workers each and every time they conduct their duties accordingly, it leads to increased product and reduced labor turn-over. It is therefore recommended by most of the organizations.

 From my research work I was able to realize that managers who use the cost of quality system tend to forget that the cost of hidden should be incorporated in the total value of reduced cost. Most of these managers tend to neglect the hidden cost because it is difficult to measure, therefore refer to it as the unmeasured cost.

The system of cost of quality has almost the same benefits as those of the cost of poor quality discussed above except for the fact that it does not incorporate the hidden cost in its measurement procedure. I would like to conclude by stating that most managers employ the use of cost of quality system because it does not require several steps when conducting the measurement.

Reference

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