Cost of quality in catering equipment manufacturing process

Abstract

This paper is the study and recommendation of step by step of establishing a quality cost system in the catering equipment manufacturing process with a purposing to the betterment of process quality and cost reduction simultaneously. By using performance measurement in term of quality cost, it is good starting point for achieving Total Quality Improvement, TQI. Currently, the company is facing a lot of quality troubles, for example: lacking of responsible person for taking quality action, reworks and repairs. In addition, the company is a representative supplier to a leadership company. As a result, the company has to ensure that the product is under the customer specifications. Consequently, the company has to invest a system for quality, according to the deal of customer, such as employees, tools and equipment as well as testers. Those cost are more than 1 million Baht. However, high investment needs a tracking system to ensure that each of investment cost is worthwhile, since the traditional system did not efficiently to track not only w here the problem areas were but what kinds of problems occurred also. In practical, increasing the process quality as well as product quality, the costs usually escalate without any problems areas and types of problems as mentioned; hence the quality cost collection and analysis including action to the causes of problems should be the excellent techniques. They also help to develop the relationship between top management and middle management as well as operators to work as a action team. The step by step is comprised of quality system development and then study the quality cost system. The former is emphasized on the recruitment of quality employees, quality control areas and corrective action procedure as well as quality investment, whereas the latter is stressed on activity cost analysis by using Information Definition method, IDEFO techniques and Activity based costing that also involves the development of form, accounting record, standard cost and reporting format. From the innovative system, the company found that over 26.45% of total manufacturing cost is quality problems, which 7.59% of cost is measurable quality cost and 18.86% of cost is hidden cost, respectively. Especially, the hidden cost analysis found that the most problem is non-value added activities such as wrong design. This information helps the company to improve the quality resulting to the cost of quality was reduced from 26.45% to be only 14.46%. It counted for 12% of cost reduction.