Cost of quality in small- and medium-sized enterprises: case of an Indian engineering company

Abstract

Quality has emerged as a strategic entity making quality management a necessity for overall operational effectiveness and global competence. Many quality and productivity improvement techniques are generally not finding a place in SMEs (small- and medium-sized enterprises) due to lack of knowledge and resources to implement the same. Effectiveness of this sector can be ascertained through efforts expended in quality engineering and management and the cost of quality (COQ) system can prove to be one of the most effective performance measurement techniques for them. This paper illustrates the efforts to introduce and implement COQ at SME and is a real life case analysis. The quality costing approach is adopted containing four basic elements: prevention, appraisal, internal failure and external failure. Present COQ were calculated and future quality costs budgeted with improvement in quality level. COQ was successfully introduced and implemented. Methodology and findings of the study can be further strengthened through implementation at larger samples.