quality costs

Due to the global harmonization of product quality it is essential for a firm’s success to pursue a quality strategy that balances the trade-off between customer satisfaction and quality costs. For selecting an appropriate quality strategy it would be necessary to include risk considerations and customer satisfaction into strategy evaluation approaches. However, current methods do not integrate these customer related effects. This article presents an approach for calculating the value added by quality strategies integrating risk considerations and customer satisfaction as a major success factor.

The quality endeavors of an organization, like other enterprise activities, must be oriented towards the economic principles. This approach give way to many organization to question the extent to which the quality management contributes for the overall business success and to pin point the areas where particularly a high value can be created in order to attain the maximum possible economic benefits out of QM-Systems. Without including the answer of this question in the decision making process, the resources can not be allocated optimally for the quality purpose. The following illustration depicts how the quality-based activities generate the value to enhance the performance and a variety of indicators reflects how they indirectly add value to an organization and hence contribute to its economic success.