Quality cost deployment (QCD): a Lean-Inspired methodology for systematic reduction of total quality costs

Abstract

Purpose This paper aims to tackle a key challenge in Lean Six Sigma (LSS): the rigorous financial justification and prioritisation of improvement projects. It introduces Quality Cost Deployment (QCD), a novel methodology to enhance the LSS toolkit by systematically linking Cost of Quality (CoQ) data to specific operational root causes. QCD provides a structured, financially-driven framework to evaluate and select initiatives, ensuring resources target projects with the highest strategic return. Design/methodology/approach The paper proposes a structured, five-step methodology that deploys five interconnected matrices to systematically map quality-related financial losses to their operational root causes, quantifies the financial impact of each cause and enables data-driven project selection. The methodology’s practical application and effectiveness are validated through an empirical case study within an electronics manufacturing firm. Findings The case study validates QCD’s effectiveness for strategic project selection. It uncovered significant financial losses by tracing them to origins like inadequate training, which contributed to a €51,000 annual loss. The analysis justified an improvement portfolio with a €35,000 investment, projected to deliver a three-year Net Present Value of €160,202, demonstrating a substantial return. Originality/value This paper contributes a new framework to the LSS toolkit. It addresses the gap between strategic CoQ analysis and operational deployment. QCD provides a structured, matrix-driven methodology to systematically link financial losses to their operational root causes. This operationalises CoQ insights, offering managers a financially robust tool to strategically select improvement projects and allocate resources to initiatives with the highest return.