It has been proven that a company can increase its profitable operations by eliminating wasteful and unnecessary steps. During the 1950s, companies first began to evaluate the cost associated with quality. This initiative was a result of the convergence of several forces. First, the cost of quality began to grow due to the growth in volume of complex products, which demanded higher precision and greater reliability. Second, the extreme growth of “long-life” products that resulted in high costs due to failures, maintenance labor, and spare parts. (Often the costs of keeping such products in service exceeded the original purchase price.) Third, the pressures arising from the phenomenon of quality in Japanese operations began to mount. Finally, American manufacturers realized the urgent need for quality specialists who could express their findings and recommendations in the language of upper management – the language of money. The concept of the “cost of quality” takes the business of quality out of the abstract and brings it sharply into focus as cold, hard cash. Philip Crosby notes that his estimate that “companies spend one of every four dollars” on quality costs “has proven to be low over the years.” In fact, Crosby contends that service and administrative organizations spend 40% of their cost structures on quality costs, while the portion of the operating budget of production companies going to wasted manufacturing is an easy 25% of revenue.
Since American companies became cognizant of the cost of quality, many notable researchers have expounded on the subject. The competitive advantage that is to be gained by addressing the cost of quality and implementing this concept as part of the production or service system is indisputable. However, there has been some disagreement as to method of quantifying this cost and as to the point at which this strive for perfection