The dynamics of quality costs in continuous improvement

Purpose – The ideals of total quality view contradicts with the traditional prevention‐appraisal‐failure (PAF) model. The PAF model, based on the “higher quality‐higher cost” notion, fails to explain the “higher quality‐lower cost” premise of total quality. The purpose of this study is to examine the behaviour of quality costs and investigate the two contradicting views. Design/methodology/approach – Based on the literature, a generic descriptive model is developed to examine the dynamics of quality costs and quality level over time. Through illustrative examples, the behaviour of quality costs is demonstrated and relevant implications are highlighted. Findings – The proposed model supports continuous improvement regardless of the effectiveness of the firm's quality improvement programs. When the quality improvement program is highly effective, the “higher quality‐lower cost” phenomenon is observed; whereas, in a less effective quality improvement program, the authors observe the “higher quality‐higher cost” phenomenon, which still calls for increased improvement effort necessary for quality sustainability. Research limitations/implications – The proposed model explains well the dynamics of quality costs, however, it can be further enhanced by incorporating the dynamics of the effectiveness of the firm's quality improvement program and its relation to quality level and quality costs. Practical implications – The proposed model is a useful tool especially for quality improvement planning and budgeting decisions. Originality/value – Balancing between the two contradictory views of quality costs, this study provides a deeper understanding of the relationship of quality costs and quality level.