Mapping of Costs of Quality (CoQ) for Enhancing Competitiveness of Local Products to Global Market:

Purwanugraha, Heribertus Andre Mapping of Costs of Quality (CoQ) for Enhancing Competitiveness of Local Products to Global Market:. [Research]

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Abstract

Quality is a critical success factor for achieving competitive advantage in today’s market. Any serious attempt to improve quality must take into account the costs associated with achieving quality, Quality-related costs represent a considerable proportion of a company’s total costs and sales. Measuring and reporting these costs should be considered a critical issue for any manager who aims to achieve competitiveness in today’s markets. The purposes of this research were to identify and analyze data concerning the practices of Small Medium Enterprises (SME’s) to control Costs of Quality. Mapping the costs of quality will be benefit to management for the strategic decision making, and for decision-makers in government to provide intensive assistance program in order to improve the quality of products for accelerating quality improvement program. The data were collected from SME’s throughout Yogyakarta Special Region Province, Indonesia. The research concluded that the costs of quality in all surveyed companies categorized cost of quality (CoQ) as prevention, appraisal, and failure costs. The costs of quality were allocated as prevention cost 38.79%, appraisal cost 29.93% and failure cost 24.14% (internal failure cost 15.92% and external failure cost 8.22%). The result indicated most of SME’s more focus on appraisal costs than prevention costs. It proved that they are still concerning to operational activities rather than preparing the precaution of quality in the planning at the beginning process (lack of prevention in a previous stage). In a study of SME’s in Yogyakarta revealed that majority all SME’s spent the quality cost on controlling cost (68.72% of total quality cost) in order to decrease failure cost. It also reported that the costs of quality at 4.81 % of sales (on average).

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