Cost of Quality

...

This will boost an organization's productivity level and profit levels.

The graph above shows the result of employee's training. [pic 3]

- Organization and operations management:

These are operational and administration procedures and include things like disorganized or inaccurate record keeping.

Interruptions to supply chain or faulty machinery is also a factor that need's to be evaluated.

It is therefore important that company ensure that their book keeping is accurate, machines are regularly inspected, suppliers are evaluated, and final product inspected to keep their operation running smoothly.

If all these factors are not overcome, customer's might see the company as unreliable and cause the organization to lose all it's customer's.

3. Quality control: Quality is an important factor for any product or services and with high market competition, quality is one of the best way company's differentiate their products and services from one others.

Therefore, companies are often looking for ways to enhance their product or service quality.

Quality is therefore standards when customer's compare one product or services to one another and have become a symbol of quality. This gives customer's the assurance that they are purchasing from a certified manufacturer or service provider.

Therefore, companies should actively comply with standards such as ISO(International organization for standards) if they want to continually attract and retain their customer.

Quality however, is not fixed but can be actively improved. And this means that there is plenty of opportunities to improve the quality of a product or services.

Some ways to improve quality involves:

- Track and correct mistakes

- Staff training

- Choose good suppliers

- Maintain good customer's relationship

Quality control is therefore, making sure the end products meet the quality requirements of the customer's.

3. External failure cost

External failure costs are costs that are caused by defects found after the product or services has been delivered to customer, which lead to customer dissatisfaction and can be very damaging to a company reputation.

Take for example: Apple Iphone battery catches fire.

Taken from the article: http://www.cnet.com/news/man-blames-3rd-degree-burns-on-exploding-iphone-at-wake/

“Man blames third-degree burns on exploding iPhone

On Valentine's Day, Erik Johnson's iPhone 5C was aflame, but not with love.

That, at least, is his reported version of what happened when he sustained severe burns on his leg."

[pic 4]

External failure cost means that products with defects have been shipped to customers, failed to meet quality standards, and can cause damage to a company's image as well as lead to criticism about the company.

Say an Apple Iphone battery were to catch fire, Apple external failure cost would include warranties, replacements, lost sales because of bad reputation, payment for damages, and dissatisfied customer's.

They will also lose customer's and cause their sales and profit to drop. It will draw away potential future customer's because the trust and confidence of the company has been tarnished.

In this modern age of social networking, business must take extra care of the quality of their products before they leave the plant because if a defect is found in their product, news will spread very quickly to others.

Reference list

https://totalqualitymanagement.wordpress.com/2008/09/12/cost-of-quality/

http://sixsigmabasics.com/six-sigma/statistics/cost-of-quality-coq.html

http://www.isixsigma.com/implementation/financial-analysis/cost-quality-not-only-failure-costs/

http://www.geocities.ws/granvilleie/quality3x.htm

http://pestleanalysis.com/internal-factors-affect-business-organization/

http://www.tutorialspoint.com/management_concepts/quality_control_assurance.htm