A firm-specific analysis of service quality costs

Abstract

This article seeks to synthesise two disparate views of the cost of quality into one theory. The two views of quality are that higher quality costs more and that higher quality can eliminate certain costs thereby reducing total costs. The theory promulgated by this paper proposes that both views are true but each applies to a different dimension of quality. This theory is tested by examining the cost of improved quality of a truckload carrier's customer service. A transcendental logarithmic cost function, which includes a variable for each dimension of quality, is estimated to test the hypotheses that the physical capacity dimension of quality is directly related to costs and the human performance dimension of quality is inversely related to costs. Results of this estimation support the two hypotheses and give carrier managers an idea of how much it should cost or save them to improve either of the two dimensions of service quality.

Future research avenues of cost of quality: a systematic literature review

“…Using novel approaches to gather quality cost data (Karg et al, 2011); identifying how a company makes use of the quality cost information (Cheah et al, 2011;Pires et al, 2017); determining how quality cost data can be used (Al-Tmeemy et al, 2012); providing organization-wide CoQ information (Ozkan and Karaibrahimoglu, 2013); studying how to encourage managers to use quality cost information (Novas and Saraiva, 2014); getting detailed service quality and cost data (Johnston and Ozment, 2015); developing suitable approaches and methods to reduce the burden of CoQ data collection (Rabfeld et al, 2015); considering CoQ data collection methods (Zhang et al, 2015); examining the practical implications of the different uses of qualityrelated cost information (Pires et al, 2017), the reasons why managers use the quality-related cost information according to a diagnostic profile or an interactive profile (Pires et al, 2017) and CoQ data collection in several departments (Czajkowski, 2017); generating new knowledge on the implementation of CoQ measurement (Moschidis et al, 2018); collecting subjective CoQ data from more than one company representative as well as objective data from the company files (Psomas et al, 2018); conducting interviews instead of questionnaires for CoQ data collection (Glogovac and Filipovic, 2018) (continued )…”

“…Carrying out CoQ research using large research samples (Mart ınez and Selles, 2015), a variety of motor carriers (Johnston and Ozment, 2015), a large number of banks (Duarte et al, 2018), broad samples of food companies (Psomas et al, 2018) and great sample of projects and firms (Sawan et al, 2018); increasing the number of participants in the CoQ evaluation (Glogovac and Filipovic, 2018).…”

“…In this era of increased globalization of markets and liberalization of local economies, the interest of researchers and practitioners in the CoQ concept is increasing, as evidenced by the large number of publications in different contexts and disciplines (Uyar and Neyis, 2015;Grbac et al, 2015;Johnston and Ozment, 2015;Sawan et al, 2018;Psomas et al, 2018). Since the introduction of the concept of CoQ in the 1950s, substantial work has been done by numerous researchers and practitioners in a variety of areas such as manufacturing, construction, building and highway engineering (Sharma et al, 2007).…”

Costs of Quality in Clinical Development

“…The studies by Al-Dujaili, 3 Holota et al, 24 and Johnston and Ozment 29 all show that by tracking, measuring, and analyzing the costs of quality, and increasing the prevention and appraisal costs, it is possible to reduce the failure costs as well as the overall quality costs. It is all about shifting the focus from a reactive to a proactive way of working, which implies that doing the right thing right the first time saves money.…”

“…Choosing the cheapest material to reduce costs may increase the failure costs, which will not improve competitiveness, nor customer satisfaction. 8 The studies by Al-Dujaili, 3 Holota et al, 24 and Johnston and Ozment 29 all show that by tracking, measuring, and analyzing the costs of quality and increasing the prevention and appraisal costs, it is possible to reduce the failure costs as well as the overall quality costs.…”