Quality costs analysis in the service sector: an empirical study of the Colombian banking system

TL;DRAbstract

Since almost a century ago, quality has been a key factor of any business, and managers are continuously taking decisions to reach the adequate level of quality in order to be competitive. Therefore, measuring Cost of Quality (COQ) is a critical but challenging task. According to both academicians and practitioners, the COQ approach seems to be much more used and explored among manufacturing companies rather than among service organizations. One of the main reasons is the existence of a tangible product in manufacturing, which makes the measurement of defects, rework, and scraps, and the standardization of one single model for different companies relatively easy, while defining similar cost categories is quite challenging in service company settings. Even though the literature suggests a possible applicability of the COQ model to services under the concept of both product and process performance, no practical examples of measuring COQ from the product performance perspective

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