Dobbins, Richard K.; Brown, F.X. (1989, ASQC) Dobbins Management Consulting, Hatboro, PA; Westinghouse Electric Corp., Pittsburgh, PA
Compatibility with your present accounting system is a vital necessity for the successful introduction of a Quality Cost Analysis program. This presents a major obstacle to quite a few companies, since normal company accounting systems use traditional methods to collect, classify and report costs, which don't consider quality cost analysis strategy. Since this existing accounting system is intended to fulfill legal disclosure purposes and to provide executive management with key operating indices, it can't be comprised from those principal tasks. This common situation has frequently created a confrontational position between the accounting and quality functions, with the expected lose/lose result. Can this apparent conflict of interest between two major disciplines be resolved into a win/win situation, with a still bigger WIN result for the whole company? The answer is "Definitely yes!" Typical Cost Accounting statements are described, together with the normal eight-layer cost and pricing "sandwich", to show the relationship to quality cost analysis data elements. Comparison is made between Accounting and Q.A. objectives, and the roles each discipline should exercise, together with eight basic tips to achieve effective quality cost analysis reporting. Quality's common interest with Financial Accounting is explored briefly, in the light of the "PIMS" study by the Harvard Business Review. In "PIMS", the effect of quality upon Percent of Market Share, and Return on Investment is examined for 521 different businesses. This tutorial study is presented from the standpoint of a senior quality professional who is neither an accountant nor a bookkeeper. It is intended primarily for use by other quality professionals, who may be considering the implementation of a quality cost analysis system within their company. It should also promote better understanding of common interests between the two disciplines, and foster better executive management appreciation of the dynamic interaction between profitability and product/service quality.
Cost of quality (COQ)