Managing SME with an innovative hybrid cost of quality model

Abstract

Purpose The purpose of this paper is to critically examine existing models for cost of quality. Having identified issues and limitations of historic models, develop and implement a novel, structured hybrid cost of quality model to identify and effectively manage cost of company’s product. Design/methodology/approach A theoretical framework is proposed based on an integration of three existing, historical cost of quality models into a structured hybrid model. Subsequently, an exploratory pilot case study in a manufacturing environment is described that illustrates the value of the model. Findings The paper manages to find how a hybrid model can help identify cost of quality more accurately than the traditional models. Thanks to the new model, the author shows how gaps between product’s theoretical and actual costs can be highlighted. This allows management to drive down cost of quality and improve business performance. Research limitations/implications The model would benefit from a company-wide implementation. The present study provides a starting point for further research in the international manufacturing sector. Practical implications The framework improves the knowledge of cost of quality by providing a new case study with full results and analysis from a UK-based manufacturing company. It provides a critical re-evaluation of available literature, including the most recent publications as far as practically possible within timescale available. The study shows the importance of comprehensive cost collection if companies are to have the right data needed to manage business excellence. Originality/value The paper presents a development of the first structured hybrid model for measuring cost of quality using the strongest points of main three approaches and addresses their limitations. It gives new arguments against allocation of some cost elements within BS 6143-2:1990, resulting in recommendations for further brainstorming of pros and cons of the suggestion.