Quality Progress - October 2017 - 13

THIS MONTH'S SECOND QUESTION

I am having trouble locating basic summary
information about the cost of quality for
various industries. What is the cost of not
having good quality in specific industries,
such as automotive? Put another way, what is
it worth to a typical company or industry to
enact good or better quality practices?

OUR RESPONSE

You are having trouble locating
cost of quality information for
various industries because I know
of no publication or place where
such information is available.
In the automotive industry, for
example, the cost of not having
good quality ranges from lost
profit to senior executives losing
their jobs to bankruptcy.
+ Lost profit. In 2000, Bridgestone/Firestone Tire took a $350
million charge against earnings
to pay for its customers to have
faulty Bridgestone/Firestone
tires replaced. Traffic accidents
involving the faulty tires caused
62 deaths.1
+ Lost jobs. In 2013, Hyundai's
R&D chief and three senior executives resigned in the wake of
quality issues involving Hyundai
cars.2
+ Bankruptcy. On Jan. 12, 2017,

reports were published of
an expected $1 billion penalty against Takata, with an
expected $25 million criminal
penalty and $850 million paid
as restitution to automakers
affected by the recall. On
June 26, 2017, Takata filed for
bankruptcy.3
ASQ has published several case
studies and white papers about
the cost of quality in manufacturing and the automotive industry,4-6
and, in association with Forbes
Insights, has explored the effect of
quality on an organization's bottom line. The research, based on
the observations of executives and
quality professionals around the
world, identifies the link between
quality efforts and corporate
performance.7
Countless examples in other
industries can be cited, but it

should be clear from the examples
given why it is important for a typical organization or industry to enact
good quality practices.
REFERENCES
1. Dan Ackman, "Firestone Tire Blowout
Recall Blows Up," Forbes, Aug. 18, 2000,
www.forbes.com.
2. In-Soo Nam, "Hyundai R & D Chief Steps
Down," Wall Street Journal, Nov. 13,
2013, www.wsj.com.
3. "Takata Airbag Recall-Everything You
Need to Know," Consumer Reports,
www.consumerreports.org.
4. "American Axel and Manufacturing,"
case study, www.asq.org.
5. "ArvinMeritor," case study, www.asq.
org.
6. John Ryan, "Making the Economic Case
for Quality," white paper, www.asq.org.
7. "The Rising Economic Power of Quality,"
white paper, www.asq.org.
FOR MORE INFORMATION
Gray, Janet, "Quality Costs: A Report Card
on Business," Quality Progress, April
1995, pp. 51-54.
Lublin, Joann S., "Lululemon Hires Product
Chief From Kmart," Wall Street Journal,
Oct. 30, 2013, www.wsj.com.
"Peanut Butter Justice," Wall Street
Journal, Feb. 18, 2009, www.wsj.com.
Schiffance, Andrea and Vince Thomson, "A
Review of Research on Cost of Quality
Models and Best Practices," International
Journal of Quality and Reliability
Management, Vol. 23, No. 6, 2006,
pp. 647-669.

This response was written by Pradip
Mehta, Mehta Consulting LLC,

Coppell, TX.

qualityprogress.com ❘ October 2017

QP 13


http://www.forbes.com http://www.wsj.com http://www.consumerreports.org http://www.asq.org http://www.asq http://www.asq.org http://www.asq.org http://www.wsj.com http://www.wsj.com http://www.qualityprogress.com

Table of Contents for the Digital Edition of Quality Progress - October 2017

Seen and Heard
Progress Report
Mr. Pareto Head
Expert Answers
Career Coach
In Focus
The Results Are In
Visual Aid
Experimental Learning
Statistics Spotlight
Standard Issues
Marketplace
Footnotes
Try This Today
STANDARDS AND AUDITING GUIDE
Quality Progress - October 2017 - intro
Quality Progress - October 2017 - cover1
Quality Progress - October 2017 - cover2
Quality Progress - October 2017 - 1
Quality Progress - October 2017 - 2
Quality Progress - October 2017 - 3
Quality Progress - October 2017 - 4
Quality Progress - October 2017 - 5
Quality Progress - October 2017 - Seen and Heard
Quality Progress - October 2017 - 7
Quality Progress - October 2017 - Progress Report
Quality Progress - October 2017 - Mr. Pareto Head
Quality Progress - October 2017 - 10
Quality Progress - October 2017 - 11
Quality Progress - October 2017 - Expert Answers
Quality Progress - October 2017 - 13
Quality Progress - October 2017 - Career Coach
Quality Progress - October 2017 - 15
Quality Progress - October 2017 - 16
Quality Progress - October 2017 - 17
Quality Progress - October 2017 - In Focus
Quality Progress - October 2017 - 19
Quality Progress - October 2017 - 20
Quality Progress - October 2017 - 21
Quality Progress - October 2017 - 22
Quality Progress - October 2017 - 23
Quality Progress - October 2017 - 24
Quality Progress - October 2017 - 25
Quality Progress - October 2017 - The Results Are In
Quality Progress - October 2017 - 27
Quality Progress - October 2017 - 28
Quality Progress - October 2017 - 29
Quality Progress - October 2017 - 30
Quality Progress - October 2017 - 31
Quality Progress - October 2017 - 32
Quality Progress - October 2017 - 33
Quality Progress - October 2017 - Visual Aid
Quality Progress - October 2017 - 35
Quality Progress - October 2017 - 36
Quality Progress - October 2017 - 37
Quality Progress - October 2017 - 38
Quality Progress - October 2017 - 39
Quality Progress - October 2017 - Experimental Learning
Quality Progress - October 2017 - 41
Quality Progress - October 2017 - 42
Quality Progress - October 2017 - 43
Quality Progress - October 2017 - 44
Quality Progress - October 2017 - 45
Quality Progress - October 2017 - 46
Quality Progress - October 2017 - 47
Quality Progress - October 2017 - Statistics Spotlight
Quality Progress - October 2017 - 49
Quality Progress - October 2017 - Standard Issues
Quality Progress - October 2017 - 51
Quality Progress - October 2017 - 52
Quality Progress - October 2017 - 53
Quality Progress - October 2017 - 54
Quality Progress - October 2017 - 55
Quality Progress - October 2017 - STANDARDS AND AUDITING GUIDE
Quality Progress - October 2017 - 57
Quality Progress - October 2017 - Marketplace
Quality Progress - October 2017 - 59
Quality Progress - October 2017 - Footnotes
Quality Progress - October 2017 - 61
Quality Progress - October 2017 - 62
Quality Progress - October 2017 - 63
Quality Progress - October 2017 - Try This Today
Quality Progress - October 2017 - cover3
Quality Progress - October 2017 - cover4
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