Quality Costs Example

The Quality cost It is a logical phenomenon that occurs in every company, it varies in each case, whether in the industrial field, manufacturing, etc. The quality cost It is a cost produced by renewals, investments or repayment and expiration movements. This cost has varied since its origins, because when starting industries and factories, industrialists concentrated on production without taking Much into account the quality of the product, but with the passage of time and competition, they were focusing a lot on quality and costs that this it entailed; Later, with the arrival of the Second World War, the supervision of the war material began and the supervisors checked that the quality was sufficient.

Subsequently, other terms were added to these costs, such as:

• Design
• Implementation
• Investment in higher quality material
• Operation
• System maintenance
• Damages and returns
• Expiration of products Etc.

Therefore, they can be divided into two, quality costs, which focus on improving and maintaining the quality of the product and the

non-quality costs that emphasize losses caused by errors, mishandling, poor design, expiration and return of products, bad service and claims of any kind, which generate an expense on the part of the company.

The quality costs, involve various departments within a company, and focus on improving and maintaining excellence in products and Costs ofnot quality, that resolve and absorb the costs for errors, breaches and omissions etc.

The departments that can be involved can be:

• Production departament,
• Sales, Marketing,
• Design and Research
• Developing
• Material purchases
• Storage
• Material handling
• Production
• Planning
• Control
• Maintenance
• Service
• Complaints
• Refunds etc.

And these departments can vary, increasing or decreasing depending on this directly with the line of business.

The quality and non-quality costs indicate to the departments the points that must be corrected, so that the company can continue with its mission.

The costs can be:

• Quality costs
• Investment costs
• Upgrading costs
• Prevention costs
• Valuation costs
• Quality quantification costs
• Failure or failure costs

Example of quality costs:

In the company “Promociones y Publicidad Jiménez S.A. de C.V ”. It is required to invest in a new desktop computer system for handling calls and movement promotional videos, the investment would initially be for dual-core and processor-based computers integrated; but by decision of the technicians the decision was changed and computers I3 and I5 will be installed so that the work of video processing and will be invested in DDR3 class memories, with aluminum heatsink, increasing this by 45% the initial value of the investment.

Example of non-quality costs:

In the company Legumbres “Rancho Santo Tomas S.A. de C.V. ”, in January 2000 he received batches of cans of peas that were expired in the warehouses. A small investment was made in market researchers, who extensively analyzed the reasons why these products were discarded.

Investigations were conducted on the product itself and it was discovered that the cans were labeled mistakenly with later expiration dates, reaching the conclusion that they were shipped with expires date.

The new batches were rectified and the packer was ordered to make new expiration records in the new products, and rectify computers, since the change of date for the new millennium, directly affected the production.

The machines were rectified and certified by the Ministry of Health, who corroborated the ruling and To sustain the cost of the returned products, food was reused for consumption by the animals.

The cost of non-quality amounted to 15% of the expected profit in the quarter corresponding to January-March of the year 2000.

The accounts were sent to take effect in the corresponding area.