A Proposed Model For Measuring and Management Of Poor Quality Cost ‘Case Study’

Abstract

Quality and poor quality has always been an interesting area of study, but the attitude towards quality and the meaning of quality has changed over time. This has been especially obvious during the last decades, with the increased focus on quality. A long time ago, the quality of products was high since they were purchased directly from the craftsmen, and the customers’ requirements were known. Because of this, the craftsmen were forced to maintain high quality, otherwise they would stand the risk of loosing their customers. The situation on the market has then changed, with the introduction of mass production methods at the beginning of the Century, companies became more specialised. Some large companies produced high-volume products and each worker became a specialist within his area. Most companies focused mainly on producing large quantities, in order to meet the market’s demands for high volumes. (Lund et al, 1990; Tisell, 1991; Jönson, 1995; Sandholm, 1997) Today, more and more companies are providing services, and the competition on the market has intensified. This forces the companies to continuously improve their quality, and most companies today have started to undertake quality improvement activities. Companies have become aware that improved quality will lead to more satisfied customers who will return, which in turn leads to higher market shares and hopefully higher profits.

Quality is interesting primarily because it is a potential source of large costs, but also a way to decrease total costs by having better products and processes. Previously, the main focus was on quality in manufacturing processes, and trying to improve production. During the past decade companies have also started to focus on quality in service production, since we are moving from an industrial society towards a service producing society. As the products become more and more similar it has been important for companies to focus on the services they provide, and ensuring that they are of high quality. (Gummesson, 1996) Moreover, with the high level of competition that exist in almost every industry today, it is necessary for all companies to try to reduce their costs and capital tied up, e.g. in fixed and current assets. This can be done by having high quality in both the final products and the processes, where high quality is usually the result of more efficient operations and less non-value adding activities. (Sörqvist, 1998) One way of doing this can be to set up a shared services centre, which can provide both high quality services and lower costs, by consolidating some operations in one location, thereby trying to reach economies of scale. The increased interest in quality the last time-period has also lead to that companies are looking for new methods and new ways of organizing their businesses. To be process-oriented is one recently developed strategy that many companies have used in order to try to improve their quality level.