Integration of Process Management Tools to Support TQM Implementation: ISO 9000 and Activity-based Costing

A variety of process management tools are available to support continuous improvement efforts in quality and/or productivity. Activity-based costing (ABC) and ISO 9000 are among these promising tools (Armitage & Chai, 2001; Brimson & Antos, 2004). Many steps involved in the achievement of ISO 9000 registration are also required to implement ABC. Thus, it is logical to assume that these techniques are complementary. If ISO and ABC are complementary, firms could ‘kill two birds with one stone’ by implementing both tools concurrently, more quickly and at less expense. Complementary implementation could also facilitate integration of functional areas (e.g. accounting, logistics, marketing, quality control) within a firm. However, it is also possible that different techniques compete for scarce resources and managerial attention. If ISO and ABC are not complementary, separate implementation and administration structures could increase time and cost of implementation – and erode any benefits. Based on review of the literature, there appears to be an opportunity to implement and use ISO and ABC in integrated fashion. Using case study methods, this paper looks at whether these two tools are implemented together as complementary initiatives, kept administratively separate, or considered competitors for scarce organizational resources (money, time and talent). The first case study completed found that managers of a logistics company viewed ISO 9000 and ABC as separate initiatives. The quality systems group led the charge to ISO registration; finance and accounting implemented the ABC model. The firm did not attempt to exploit complementary aspects of the two tools. Rather, the ABC and ISO 9000 initiatives competed for managerial attention. Total Quality Management Vol. 18, Nos. 1–2, 201–207, January–March 2007