Tuesday, October 30, 2012

Quality Costs

I believe that there has been a recent shift to the importance of quality. Many companies are focusing their efforts and money towards the quality department. The shift to quality means that companies need to have a better understanding of the associated costs. When I think about the cost of quality I break it down into two parts: the costs to prevent quality issues from happening and the costs acquired when things don’t meet quality standards. Things like the cost of return shipping, warranty claims, retesting, redesign and rework would go into the first category; while, things like preventive measures, quality planning, supplier evaluation, and product review/testing costs would go into the second.
Through the exercise done in class, it was made apparent that the cost of return shipping and rework is quite hefty. I would suggest lowering the costs acquired when products don’t meet quality standards and increase the funds that go toward quality planning, appraisal and preventative measures. By increasing the efforts to prevent non-quality products, there will be less of chance that quality issues will be encountered by the customer decreasing the costs for failures. The extra funds available by not having to pay out for failures can be used to further enhance preventative and appraisal efforts.
 If companies are serious about maintaining customers and having a great reputation while lowering their overall costs, they will explore and invest in their quality departments. Having a positive mindset and implementing a method similar to my suggestion above, they can increase quality and use the dollars they would have spent on failures to further the company and the quality department.


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