Designing Quality into Products : The Use of Accounting Data in New Product Development

Accountants have developed tools to evaluate firms' quality performance; however, a focus on evaluating one aspect of quality ?? conformance to pre-established specifications ?? has limited unnecessarily accountants' contribution to quality improvement. Product and process design are the most effective levers in quality improvement and cost reduction; yet, product designers often base decisions on cost estimates that do not reflect the experience of the firm. This paper presents a quality management framework that spans product design, production and consumption or use by end users. We describe and identify shortcomings of cost estimation methods used by product design engineers and propose a framework for new accounting information that focuses on achieving quot;design quality.quot; The framework incorporates data from the relatively new practices of target costing and activity-based costing and identifies opportunities to develop accounting data that promotes quality being designed into, rather than inspected into, products