Quality Control Costs: A Competitive Advantage for Companies - Essay Sample

Introduction

Basing on the competitive nature of the markets today, companies must produce and provide goods of high quality for them to guarantee their existence. The quality of products has become the main competitive factor, and this can determine the failure or success of a company (Love & Li, 2000). There are three classes of cost as far as quality considerations are concerned; Appraisal cost, failure cost and prevention cost. The main purpose of this memo is to identify, explain, and evaluate the categories of the cost related to quality (Love & Li, 2000).Appraisal costs are a particular class of quality control costs. They can be the major expense for a company aiming to sustain high levels of regulatory and customer satisfaction. Secret payment of shopper salaries, screening of technical equipment and factory floor inspectors all belong to this type of cost (Barber, Graves, Hall, Sheath & Tomkins, 2000). Firms that use a lot of funds for appraisal costs are aware of their reputations. To avoid faulty products from reaching their clients, firms incur appraisal cost to identify the defective product. It is advisable to incur appraisal costs, rather than losing customers who are not impressed with low-quality products. Nowadays, social media and the internet give customers a chance to forward their dissatisfaction views of any product or company that does not meet their expectations (Barber, Graves, Hall, Sheath & Tomkins, 2000). Unpleasant aspects pose a great threat to firms and force them to invest in the appraisal of their goods. Examples of appraisal products include; inspecting the final goods, supervising inspection personnel, maintaining test of equipment, the supplies in conducting inspections, depreciation of test software and equipment, among others (Barber, Graves, Hall, Sheath & Tomkins, 2000).

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Prevention costs entail any expenses incurred that are meant to reduce the number of faults in products and services. These costs are related to implementation, maintenance, and design concerning quality management systems (Sahin & Polatoglu, 2009). Prevention costs are incurred and planned before introducing the product to the customers. It is wise to incur preventive cost rather than selling defective products because the correction of these products can minimize the interest of customers pertaining to these goods (Sahin & Polatoglu, 2009). Examples of preventive cost include; a company training those who operate the production machinery, to ensure their awareness concerning the manufacture of parts correctly and a business creating standards that will ensure that the raw materials that they purchase from suppliers are of high quality and introduce a program that will ensure these standards are applied (Sahin & Polatoglu, 2009).

Failure costs are costs that manufacture incurs after the production of the defective goods. There are two main types of failure costs, i.e. internal and external costs (Slaughter, Harter & Krishnan, 1998). Internal failure cost arises before goods are transported to consumers, while external failure costs occur after the transportation of products to the market. Example of internal failure cost includes performing unintended work or keeping stock as a result of poor organization, communication, and the possibility of errors, fault materials, and products that cannot be remade, sold or used, correction of fault materials and failure to find out the causes of product failure (Slaughter, Harter & Krishnan, 1998). External failure costs include servicing and repairing the products that are on the field and the returned ones, the costs involved in maintaining and addressing customer complaints and the costs involved in investigating the rejected products (Slaughter, Harter & Krishnan, 1998).

Conclusion

In conclusion, prevention entails money that is paid to engineers to ensure that the quality of a product is acceptable, starting from the initial stages of a project. The cost is worth since it is less expensive to pay engineers at first rather than scrapping a fault product and begin again. Appraisal costs consist of a process that involves audit and inspection to confirm that the products maintain their quality (Love & Li, 2000). It is economical to have several reviews and audits for quality to approve that goods are not defective. The quantity of sales that vanish from ineffective public relations from fault sections is more expensive than correcting for the first time. Failure costs are external and internal. Internal cost is the lost time of production and the injury of the worker while the external cost is substituting a product that is under warranty (Sahin & Polatoglu, 2009). Failure cost is expensive since the time of production can never be reversed. Resources are utilized in a better way to avoid defect that can result to repair. Damaging the name of the company is not worth the failure cost (Slaughter, Harter & Krishnan, 1998). It is more helpful and economical to confirm that products are of good quality before delivering to the market.

References

Barber, P., Graves, A., Hall, M., Sheath, D., & Tomkins, C. (2000). Quality failure costs in civil engineering projects. International Journal of Quality & Reliability Management, 17(4/5), 479-492.

Love, P. E., & Li, H. (2000). Quantifying the causes and costs of rework in construction. Construction Management & Economics, 18(4), 479-490.

Sahin, I., & Polatoglu, H. (2012). Quality, warranty and preventive maintenance (Vol. 15). Springer Science & Business Media.

Slaughter, S. A., Harter, D. E., & Krishnan, M. S. (1998). Evaluating the cost of software quality. Communications of the ACM, 41(8), 67-73.