Quality cost reduction : a case study in electronics appliance manufacturing company

Abstract

Quality cost principle can provide the manufacturing business with a management philosophy of “the economics of quality”. The objective of this thesis is to take a manufacturing company as a case to study how to reduce cost through quality cost program. This thesis seeks to discuss how to successfully apply the quality cost program and its impact on a firm’s profitability. The ultimate target to ensure the quality program can be implemented and is capable of improving a firm’s profitability. The methodology is to follow prevention, appraisal and failure cost model, to identify the key areas via Pareto analysis. Cause and effect analysis. To apply quality tool to improve the overall quality cost. The comparison before and after the quality cost program is performed. As a result, a significant cost reduction is achieved. We got quality cost reduction 0.97% to sales from 2.21% (before program) to 1.24% (after program) which cquals to 4.67 million Thai Bahts on the selected product within 5 months. In addition, through implementing the quality cost program, the quality tools application is also strengthened. The observation on this research is that quality cost program is difficult to kick off, but can run smoothly after a lot of communication. Several suggestions are raised for further improvement.