In order to compete successfully in an environment as aggressive and changing as the one we are living in, service companies require increasingly detailed and accessible information for the exploitation of which they must use increasingly sophisticated analysis methods. Companies that provide services must face new realities. One of them is the growing public demand for a greater quality commitment by suppliers with respect to the products or services they market.
Quality is no longer just another factor, but has become one of the main competitive factors, without which every company will be doomed to failure and its subsequent disappearance.
Currently the cost of quality is an indispensable factor. If a company is not competitive in terms of these, it cannot even enter the market. In this diploma work, it is proposed to address the problem of poor quality Costs and their implementation in a service company.
1.1 Quality background
Until the middle of the 20th century, quality was seen as a problem that was solved by means of inspection tools. In the 1940s all final products were 100% tested to try to ensure the absence of defects. At this time, Quality was defined as the suitability of a product for its use (Evans, 1995).
In the 1960s, the Quality departments had Quality Assurance as a function and had a strong development. According to (Ivancevich 1997), at this time the Japanese had launched and were implementing their theories on Total Quality in the company as a whole and had assumed the approaches on the effectiveness of group work, with the massive implantation of the Circles Quality and Improvement Groups, made up of personnel generally from different areas, who analyze the causes of the most important problems and seek their solution.
In the 1970s, principles such as "Quality is everyone's responsibility" and "You have to do things right the first time" were already established in Japanese companies and it was common to speak of "internal customers". All these concepts were adapted throughout the 1980s in the rest of the world, when observing the excellent result they had given in Japan. In the 90s, the liberalization of markets, new technologies, increased competition and the need to make drastic cost reductions, have led to the implementation of programs for the implementation of Total Quality Management Systems, with the fundamental objective of increasing competitiveness and meeting customer expectations.
This vision changes when considering quality as a strategic factor. It is no longer an inspection activity but a preventive one: planning, designing, setting objectives, educating and implementing a process of continuous improvement, strategic quality management makes it a source of competitive advantages that requires the collective effort of all areas and members of the organization. ( Romero, 2003).
In Scheme 1 can display a set of quality concepts that have evolved throughout history.
| Authors | Concepts |
| Spanish dictionary | "Property or set of properties inherent in a thing, which allows it to be appreciated as equal, better or worse than the rest of its kind." |
| Dr Kaoru Ishikawa | "Quality means product quality, but in its broadest interpretation it means quality of work, quality of service, quality of information, quality of the process, quality of management, quality of the company." |
| Philip Crosby | "Quality is meeting the requirements." |
| Swear
|
"The quality of a product or service is the characterization of the article or service obtained in the production or service process that determines the degree of its correspondence with the set of requirements established by the technical documentation and consumers" |
| Quality | "Satisfaction of the needs and reasonable expectations of customers at a price equal to or less than what they assign to the product or services based on the" value "they have received and perceived." |
| According to MBA | "Quality is the set of characteristics of a product or service that gives it the aptitude to satisfy the explicit and implicit needs of the consumer." |
| According to what the ISO 9000: 2000 standard proposes | "It is the degree to which a set of inherent characteristics (differentiating range) meets the requirements (established need or expectation, generally implicit or mandatory)." |
| Fernández Clúa | “The capacity of service processes that increase their value by developing servuction in balance and with a suitable climate in a competitive way to satisfy the needs, desires and / or expectations of customers without negative effects on the environment and that contribute to elevation of their standard of living. " |
Source: Own elaboration from the bibliography consulted
1.1.2 Total Quality
To study the development of a Total Quality program we are going to divide it into four bases:
- 1 . Technical Aspects. Human Factor. Strategic Imperatives. The External Client.
Technical aspects:
These are the procedures or techniques responsible for achieving greater organizational efficiency. They are also techniques directed inside the company that tend to maximize production, improve and eliminate waste. On the other hand, they underpin costs and time, emphasizing increasing value, reducing waste and simultaneously adopting a philosophy of continual improvement.
Quality costs are those that the company incurs in meeting customer requirements. There is a culture that accepts failure as something inevitable that cannot be prevented, which is why they are overstated in complex 'quality control' organizations, inspectors, etc. and in many cases it is the clients themselves who act as detectors of this nonconformity. Phill Crosby has defined quality costs as contributing two factors: compliance costs and non-compliance costs.
Compliance costs:
Reducing quality costs is possible by investing in preventive activities that focus on meeting customer requirements (internal and external). It is about looking for root causes of failures, analyzing them and implementing preventive solutions that prevent their recurrence in a definitive way.
There is a group of tasks associated with prevention that have a cost to perform them, hence this so-called compliance cost arises:
- Investment in preventive activities, Operational Procedures Manuals, Operations planning, Statistical Process Control, Equipment calibration and testing, Supplier development, Audits and quality systems.
Non-conformity costs:
In order to draw attention to the cost incurred in not doing things right the first time and to the need for continuous improvement, their measurement is used as “Non-Compliance Costs” (CONC).
Nonconformity costs are all those incurred because errors occur. Without mistakes evaluation and correction tasks would not be necessary. These costs are basically produced by:
- a) The right job is not done: for example, a task that is superfluous to customer requirements or a report that no one reads. b) An activity is performed incorrectly the first time (defective products, reprocessing).
The main sources for identifying CONCs can be Failure Costs, Inspection Costs, and Costs of not doing the right things.
Failure costs:
Warranty repairs, product returns, waste, products sold as others of lesser value, excessive post-sale support, complaints management, reworking, losses in efficiency and production capacity, excess stock, delay in collections, overtime due to poor planning, idle capacity, loss of sales and image in front of customers.
Inspection Costs:
To find the economic value of inspection costs, the costs of direct and indirect labor involved, materials consumed, costs of services (electricity, gas, telephone, etc.), depreciation and maintenance of equipment, financial effects will be considered. and extraordinary expenses or losses (sale at a lower value, waste treatment, etc.).
Taking as an example the company that receives a return of a product for not meeting the requirements, the tasks to be performed would be:
- a) Give attention to the claim by a seller or Customer Service. b) Put in place the internal administration. c) Remove the merchandise from the client and pay the freight with his labor. d) Generate a credit note. to the client.e) Give the deposit to the material and reclassify it f) Reprocess it if possible or dispose of it g) Replace the material to the client or lose the sale h) Internal investigation of the cause of the error.
Human factor:
This aspect refers to the human component of the organization. Within the company, transactions are carried out in which individuals or sectors offer others a service to continue the production chain. It is here where the notion of Internal Client arises. These definitions allow to extend the concept of "meet the requirements" within the organization.
The different techniques that work in the field of Organizational Development deal with this problem. This focuses on values, relationships and the organizational climate, "the variable man" implies facing communication problems etc.
It tends to achieve the following goals:
- Improved interpersonal competence. Human factors and feelings come to be considered legitimate. Greater understanding between and within working groups. More effective team management. Better methods for conflict resolution. Organic rather than mechanical systems.
The objective is to create an environment in which people can express themselves as individuals and feel satisfied in an increasingly organized and impersonal society that imposes more and more restrictions, and forces employees to work in a formal structure.
Strategic Imperatives:
Within the organization we find in the strategic imperatives of the business vital imperatives that must be met for the company to prosper. A process is a linear chain of related activities. Such processes cross departmental lines. Focusing on business imperatives and observing the interdepartmental processes on which they depend will help groups avoid falling into the shortsightedness of their own function or department by forgetting the overall strategy or interest in the customer. Within the company, activities are made up of a series of supplier and customer chains. If the quality process is to be carried out correctly, it is essential that the requirements are identified and met in each of these stages.
The external client:
So far, organizational development has looked inward and isolated, focusing entirely on the internal climate and employee interaction. The customer and the interest to satisfy their needs and exceed their expectations and at the same time produce what has been promised must be the driving force of total quality. Doing so ensures customer loyalty, which translates into increased market share. Furthermore, this achieves an extremely strong impact on the internal climate.
The aim is to involve clients in the improvement process so that their voice is both dominant and clear. Total quality is dependent on the client and originates from a deep interest in meeting the client's needs and exceeding their expectations. “Total quality describes the state of an organization in which all the activities of all the functions are designed and carried out in such a way that all the requirements of external customers are covered, while reducing internal time and costs. and enriching the work environment ”.
The first part of a quality system is the clear identification of customer requirements. The external customer is the engine of the quality system, so the following two steps must be taken:
- Identify the requirements of the external client. Make sure that the internal processes produce the fulfillment of the requirements at minimum cost.
Customer requirements translate into specifications. These are classified as Hard or Soft.
By Hard specifications we understand the properties that must be met by the product: size, weight, packaging, deadlines, price, technical support, etc.
Soft specifications are determined by the soft characteristics of the product and serve to improve customer business relationships and increase customer loyalty. They are called soft because they are not written in any contract but they represent something very valuable in customer satisfaction.
1.1.4 Continuous Improvement
Economies today need to focus on organizational change aimed at continuous improvement at all levels of the organizational structure.
The company must focus on knowing the needs of its internal and external clients, since the change in their needs is very dynamic, practices must be developed that make this change a valuable opportunity to improve towards competitive positions.
The philosophy of continuous improvement, assumes that the way of life in the work and family environment, deserves to be constantly improved, since at any time and place that improvements in performance standards are made, these will eventually lead to improve in quality and services.
The Continuous Improvement process is a human task and for it to work it needs all the people involved in it to do their part in the best way possible.
This process does not work with the effort of a single person, it is necessary for the whole group to be directly involved and convinced of the benefits of the continuous improvement process.
1.1.5 Quality Trilogy
This theory establishes three basic points to obtain, maintain and improve quality.
- Quality planning: Determine the needs of customers and develop the ideal products and activities to satisfy them. Quality control: Evaluate the actual performance of the quality, comparing the proposed results obtained, and then acting to reduce the differences. Quality improvement: Establish an annual plan for continuous improvement with the aim of achieving an advantageous and permanent change.
2.1 Quality in services
2.1.1 Importance of service activity and its quality
Service activities exist, in terms of economic category, since classical Greece. The importance that Greek society gave to the education of young people is recognized, although here it had a marginal economic role, given the slave and agricultural nature of this society. Already in the late Middle Ages, the transport services of species and fabrics through the Silk Road, which crossed Europe and the East to China, constituted the wealth of city-states like Venice, becoming an activity more economically important from entire countries like Portugal and Holland with their shipping companies.
Starting in the 18th century, with the first Industrial Revolution, services lost their economic importance, which would only be resumed in the mid-20th century and maintained, increasingly until today. Traditionally, economic activities have been classified into three sectors:
Primary sector (agriculture, livestock and extractives, Secondary sector (industry) and Tertiary sector (service).) During the 1980s, it was possible to observe with particular clarity a trend that places service in a predominant position in the development of the economy.
- Albrecht's thesis is confirmed: "There is a true Service Revolution." We are in the Age of Service.
This means:
- a) That the service should be treated as a clearly differentiated activity b) That the service is no longer a simple provision: it is an art, a culture! c) That the “problem of systems (management models) and service provision, based on a new philosophy (way of thinking) generated by changes.
It is obviously two different approaches. A traditional approach where the producer produces with his back to the customers and the market, although for them and where the customer simply submits to the companies' offer (PUSH). Another, where the client and the market come to occupy the central place, the starting point, the force that pulls the system (PULL) .
This idea is represented in the graph that is presented. As it is logical to suppose, this Revolution poses new challenges, which must be faced from a strong will to transition and change .
Quality of services is called the perception that a client has about the correspondence between performance and expectations, related to the set of secondary, quantitative, qualitative elements of a main product or service..
The quality of the service is the responsibility of the entire organization, from the strategic apex to the operational nucleus, including the elements of the technostructure, Media Line and Support Staff, including everything that is directly and indirectly related to customers, since the more the quality of service and behavior of the Human Resource, the greater the risk that it will not be in accordance with the established.
Those who produce service must be taught that the client does not see in the service more than "what does not work", that is, when a client evaluates and does it constantly, the quality of a service does not separate its components, it judges it entirely, what prevails is the overall impression and not the relative success of one or another specific action.
In other words, quality is rather the correspondence between the perception of the properties of a good and / or service with what is expected of it. Therefore, “the quality of the service is total or non-existent. When a client values the quality of the service, it does not disassociate its components. He judges her as a whole. ”.
According to the customer's perception of the satisfaction of each of their needs, there are three types of quality:
Quality required: Level of compliance with service specifications.
Expected quality: Satisfaction of unspecified or implicit aspects.
Underlying quality: Related to the satisfaction of the unexplained expectations that every client has.
According to Juran and Gryna, "customer satisfaction is defined on the basis of two components: the characteristics of the product and the lack of deficiencies." Making customer satisfaction one of the characteristics that define the aptitude of the processes.
In the reports "Quality management in service organizations", the author, Fernandez Clúa, raises the need for the terms of real and substitute quality, perceived quality and potential quality to be integrated into the Quality Loop, which would allow analyze it in all its dimensions. Actual quality is given by expectation or need. Substitute quality is the derivation of real quality to service conditions in terms of specific quality characteristics. The perceived quality is the impression, the impact that the service has caused on the client and the potential quality refers to that which the entity is capable of giving with the conditions it possesses; in general, it is modified with the result of a process of analysis or improvement.
2.1.2 The service cycle
It represents the continuous chain of events that a customer must go through when experiencing the service. In this way, the cycle helps to resolve the conflict between technical focus and customer focus and staff to collaborate with the customer. The cycle helps to resolve the conflict between Technical Approach and Customer Approach. As we already know, providers do not generally think of the process as a single stream of related experiences. They think about their own individual tasks and responsibilities.
The customer is the only one who sees the whole picture, the organization as a whole, even though the Moments of Truth are, as a rule, heterogeneous in their impact on the customer.
The analysis and improvement of service cycles is a fundamental part of the "Engineering" process of service management.
3.1 Quality Costs
3.1.1 Historical evolution of Quality Costs
| Authors | Criteria |
|
Feigenbaum |
" Quality operating costs such as consolidation between costs, to achieve and maintain a certain level of product quality with the costs resulting from failure, to achieve that particular level of quality" |
| Schroeder | “It states that the cost of quality is the cost of not meeting customer requirements, of doing things wrong, and it can be divided into two fundamental components: control costs and failure costs. The total cost can be expressed as the sum of the latter ” |
| Alexander | “Defines the costs of poor quality as a measure of the costs specifically associated with the fulfillment or not of product quality, including the established requirements of the company with its customers. It divides them into four fundamental categories ” |
| Cuatrecasas & Gutiérrez | “They agree that in relation to overall or total quality costs, two types must be clearly distinguished: quality costs and non-quality costs. Quality costs can be considered as costs produced by obtaining quality and are divided into prevention and evaluation. On the other hand, non-quality costs are derived from the lack or absence of quality, from non-compliance, non-compliance with customer needs or, simply, from not reaching the required quality levels and are classified as internal failures and external ” |
| Juran & Gryna | “By following their low-quality cost approach, they define this term as the sum of internal or external costs. They argue that most companies summarize these costs in four broad categories " |
| Domínguez & Garbey | “In their articles on quality costs, they state that they are those incurred to determine if production is acceptable, that is, the investment made to verify the level of product quality and that made to prevent or correct the occurrence of non-quality. But to these are added any other costs incurred by the company and the client because the production did not meet the specifications. These costs can be classified into four broad categories: prevention, evaluation, internal failure and external failure. Total quality costs are defined as the sum of the four main categories described above ” |
Source: Own elaboration from consulted bibliography
The development that leads to this assertion occurs from a clear identification of the "quality costs" of a product. These costs are the specific indicator of Quality Management. The concept and identification of costs for various functions (Marketing, Production, Services)
These costs are evident in the usual account lists and summary submission systems and do not meet the needs of the Quality function.
Likewise, the specialists pose two clear requirements:
- a) Establish a classification of Quality Costs for their correct elevation. b) Clarify and determine the "optimal level" of said costs.
3.1.2 Quality Costs and Their Classification
There are several classifications given by the authors for the quality cost categories on different approaches, which are appropriate to the organization. Quality costs can be classified into the compliance and non-compliance cost categories.
Compliance costs : Costs incurred by meeting a set of requirements for an appropriate product or service to meet the implicit or explicit needs of customers. These costs are controllable by the company, since it is she who will decide how much is spent on preventing and evaluating the quality costs that occur, these are subdivided into prevention and evaluation costs.
The elements that may be presented in a service company may be the following:
Prevention costs: administration of the quality system, research, planning and development of new services, training, protection, safety and health at work, verification and calibration of measurement equipment, preventive maintenance and insurance coverage.
Evaluation costs: supervision of the service process, measurement of customer satisfaction and evaluation of the staff's state of opinion.
Internal failure costs: An internal failure is one in which the client does not feel harmed, either because he does not perceive it, or because it does not affect him. Whether these failures are perceived by customers depends largely on the evaluation activities undertaken by the company.
External failure costs:External failures are those that come to affect customers, as they are able to perceive them. Logically, when a product is being manufactured, if a failure is detected in the early stages of the production cycle, the cost is less than if that failure is detected when the product has already been delivered to the customer, since in the latter case the product incorporates many more operations. The cost of failures increases as more value is added to the product. That is why external failures, in addition to incurring the costs of the internal failure, are increased by all the tangible costs that are caused when the client perceives the failure (processing of claims, after-sales service, returns, etc.) plus the intangible costs that such failure also causes (loss of image of the company,delay in collecting sales, compensation, etc.)
The activities caused by external failures are the same as those needed to correct internal failures more, all those that intervene to satisfy the customer by solving the problem caused by the failure.
Here are some examples that demonstrate the importance of an organization striving to minimize Failure Costs:
¨ Accepting 3% of defective products or services implies accepting that for every 1000 Clients, there will be 30 unsatisfied.
¨ Accepting components with 5% defects implies accepting 950 good ones and 50 bad ones.
¨ When a Client complains, it is estimated that there are 260 dissatisfied Clients.
It could be said that the ideal percentage of Failure Costs would be zero, in practice, 6% or more offers great opportunities for improvement and 2% or less allows a great possibility of competitiveness (Source).
Tangible Costs: Tangible costs or explicit costs are those that can be calculated with conventional cost criteria, normally following generally accepted accounting principles. In general, these costs are accompanied by a cash outlay by the company, basically dealing with personnel costs, raw materials and materials.
Intangible Costs: Intangible costs, also called implicit costs, are those that are calculated with subjective criteria and that are not recorded as costs in the accounting systems.
Most of the intangible costs are in the external failure cost category, such as loss of image of the company. However, they can also appear when the company incurs internal failures, for example the demotivation of employees.
In quantitative terms, the relative importance of intangible costs is greater than that of tangible costs. Many authors use the example of the iceberg, pointing out that most of the intangible costs are located in the hidden part of it, being ignored by conventional accounting systems, taking possession of the tangible ones in the visible part, implying that they are perfectly located in the accounting system.
3.1.3 Types of calculation and analysis of Quality Costs
The method of calculating quality costs as proposed by Lidia Gómez Napier (?) Is shown below:
Where:
e: activity that constitutes an element of quality expenses
n: number of workers who worked in activity e.
m: Total Materials used in the activity e.
l: total equipment used in the activity e.
h: total other expenses in the activity e.
Quality costs eprev = Cost salary e + Cost of materials e + Cost of equipment e + Cost of Other expenses
Quality costs eeval = Cost salary e + Cost of materials e + Cost of equipment e + Cost of Other expenses
Quality costs eF.int = wage cost e + Cost of materials and + Cost of equipment and + Cost of Other expenses
Quality costs eF.ext = Cost salary e + Cost of materials e + Cost of equipment e + Cost of Other expenses
Total Quality Costs = ∑ (eprev Quality Costs) + ∑ (eeval Quality Costs) + ∑ (eF.int Quality Costs) + ∑ (eF.ext Quality Costs)]
Where:
Quality costs eprev. : Quality costs of the quality expenditure element e that is classified in prevention.
Quality Costs eeval: Quality costs of the quality expenditure element e that is classified in evaluation.
Quality Costs eF.int: Quality costs of the quality expenditure element e that is classified as internal failures.
Quality Costs eF.ext: Quality costs of the quality expenditure element e that is classified as external failures.
The best way to measure differences in poor quality costs is to take percentages as a basis or relative to some appropriate basis. Total quality costs, whether from the company or from a process, compared to a base indicator, result in an index that can be regularly graphed or analyzed.
The specialized literature emphasizes using the company's net sales as a comparison guide. For a long-term analysis, they may be a better basis for comparison, but in industries where they vary significantly from period to period, they will not be the basis for making short-term comparisons.
A report must be made to the entity's management where it summarizes the behavior of quality costs in a given period of time, tables, charts and descriptions will be used. The charts will present the data as a function of time and trend curves can also be given.
Reports to senior management can be monthly or quarterly. For middle and lower managers they are generally more frequent. All management levels should receive quality cost reports and the information may vary depending on who will be delivered.
Another way of calculation according to the author (Garbey 2001) with the aim of comparing quality costs and the one most used according to his criteria is the following:
The ratio of Quality Costs / Actual Sales Volume is compared, in such a way that Quality Costs may increase, provided that the Actual Sales Volume is increased in a greater proportion.
3.1.4 Advantages of the Implementation of a Quality Cost System
| Advantage | |
| 1- Provides management with a tool to better direct the quality improvement process. | Once the information has been processed and quantified, through the Quality Cost System, the reports of the expenses are presented to the Management, so that it has a complete view of what the lack of Quality costs the organization. Said reports are made at the required frequency, to support the decisions of the Management and the implementation of improvement actions. |
| 2. It provides a tool to uniformly measure the results of each area and the impact of the improvements made. | When there is no Quality Cost System, each area frequently talks about quality in different terms, creating various reports and systems that are difficult to unify when top management wants to know the global picture regarding quality. It allows to identify all the expenses and the improvement actions of the organization and integrate them into an administrative tool that analyzes them in a common term, the monetary value of the cost or savings. It also classifies the actions of the administration for Quality, in such a way that it makes it easier to request systematic information on expenses and savings. It allows monetary quantification of the progress of each and every one of the improvement actions implemented in the organization, thereby facilitating greater knowledge of the actual performance of each area. |
| Advantage | |
| 3. Provide a priority system for problems. | It hierarchises the impact of expenses, highlights its relevance in terms of total amounts, in such a way that it facilitates senior management decision-making and the programming of systematic actions for continuous improvement with the aim of reducing and / or eliminating expenses. |
| 4. It ensures that the quality objectives are together with the objectives and aims of the organization. | Since the activities related to Quality are expressed monetarily. It allows them to be planned both in the short and long term, together with the general objectives and purposes of the organization. |
| 5. It improves the effective and efficient use of resources, provides the information that allows investing where the maximum benefits can be obtained, as well as providing a measure of the improvements made. | The processed information allows detecting the points where it is convenient not to do something or stop applying certain improvement actions and invest those resources in other points that do need it to obtain the maximum benefits for the organization. Resources are allocated only where positive results, savings, quality improvements are expected, avoid making mistakes when allocating resources where it is not economically justified. |
| 6. Help establish new processes. | When calculating losses when effective and efficient processes are not achieved, it provides the necessary information to determine the need to establish processes that guarantee the necessary effectiveness and efficiency throughout the organization. |
Source: Own elaboration from the bibliography consulted
3.1.8 Steps to follow in an implementation of a Quality Cost System
Before beginning with an implementation of a Quality Cost System, it must be planned, a work plan or a schedule must be made, defining the dates and the sequence of each of the tasks and coinciding with (Garbey 2001) We detail them below:
Step 1: The creation of a work team that is trained to implement the Quality Costing System. It is recommended to start by creating this working group since the financial reports from the Quality area are generally questioned, in addition to the fact that it is recommended to take advantage of the established roles for both areas, the drawback that may arise at the beginning is that of convincing the financial area of the need to calculate Quality Costs.
Step 2: Select a Test Area:
It is recommended to establish selection criteria such as:
¨ Being an autonomous area, since it allows evaluating the impact of costs on sales.
¨ Have a good cost database.
¨ Management open to new ideas and changes.
¨ To be an area that needs to improve Quality. Step 3: Analysis of the key process diagram.
The working group together with the head of the test area shall carry out the analysis of the key processes of the selected department or area to determine the elements that will be included in the calculation of quality costs.
Step 4: Identify and classify cost elements.
It consists of identifying all the elements of the Cost of Quality related to the test area, classifying them in Prevention, Evaluation, Internal Failures and External Failures. By brainstorming and taking into account the analysis of the key processes, each member of the working group suggests the costs that they consider should be included in the Quality Cost System.
Step 5: Establishment of the elements of Inputs to the System and of the primary and statistical records.
Based on the classification made in the previous step, the elements to include are defined. It is recommended that to obtain the necessary information for the calculation of Quality Costs, models and reports that are already established in the organization be used, either as they are established or by adding small changes and avoiding the creation of new models.
Step 6: Establish the Output Formats:
Performance reports are designed that reflect the calculation of the Quality Costs classified in Prevention, Evaluation, Internal Failures and External Failures.
Step 7: Automation of the system.
It is recommended to use computer techniques, such as spreadsheets in excel.
Step 8: Start the system testing and tuning period.
For this, first of all, the period of time during which the test will be carried out must be limited, improvement teams are formed and the team that analyzes the Quality Costs begins to function. Since it is a living process, based on the changes generated by practical experience, it is modified according to the expectations of the Client (Senior Management).
Step 9: Review of the Monthly Quality Cost Report.
Monthly reports of quality and non-quality costs are issued and reviewed in detail by the Board of Directors.
Step 10: Generalization of the Program to the rest of the areas.
When it is considered that all the issues related to the Quality Cost System have been foreseen, it is generalized to the entire organization, developing for this a strategy that takes into account the capacity of the Accounting area.
3.1.9 Methods for quantifying Quality Costs
This is one of the most important and difficult points when implementing the (SCC). Here are some of the methods by which these costs can be calculated (both tangible and intangible):
- Accounting for primary documents. Explicit items in the monthly income statements. Calculation and recording of event costing. Activity Costing (ABC).
Bibliography:
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