Taking into account the need of Cuban companies to have a Management system that allows them to know the behavior of their costs, the quality of their productions and the economic impact of putting a product on the market with a higher or lower quality than their competitors or what customers expect, this research was developed. With which a basic tool for decision making is placed in the hands of managers.
The main objective of this work is to develop procedures for the determination and evaluation of Quality Costs in rice agricultural production. The theoretical foundation of the subject is carried out taking into account the criteria of renowned specialists, taking into consideration for the design of the procedures that will allow determining and evaluating the Quality Costs of rice, the particularities of the entities under study.
On the basis of these elements and taking into account the characteristics of the entity, it was possible to establish a procedure through which an analysis of the production process is made in a comprehensive manner, defining the activities that guarantee the quality of the product and with its application was able to quantify the value of the Total Quality Costs in the rice production process, as well as its impact on the entity's economic results.
Introduction:
Neoliberal Globalization as a social economic system starts from a basic assumption, competitiveness; Quality as a basic and essential concept to achieve product competitiveness, arises in terms of satisfying the needs and expectations of customers who attend a market subject to changes that occur with impressive speed.
The guarantee of meeting these expectations provides the customer with a level of security, since he trusts that the products or services he consumes on a daily basis will guarantee his health, safety and well-being, is what Juran calls “… living inside quality levees… ”.
Achieving this quality, as it may also be not achieving it, originates a cost, a category that the consulted bibliography defines as quality costs. The measurement of quality costs allows to focus attention on issues in which large amounts are spent, and to detect opportunities that could potentially help reduce expenses, facilitates measuring performance and constitutes a basis for internal comparison between products, services, processes, departments and external with the competition; it also helps managers justify any possible quality improvement.
"… quality costs are a weapon in the quality area, by assigning a cost to quality this can be managed and controlled like any other cost… expressing quality in accounting terms offers a very powerful means of communication and control … ”
Despite this, the so-called "traditional" Cost Systems do not have procedures that allow information to be offered to management related to quality control. Referring to this issue, Cost Accounting has traditionally dealt with the reprocesses that are carried out in those products that move away from the quality of the design to bring them closer to it, developing techniques for the treatment of waste and the so-called defective production.
The need for the Cuban economy to develop its agriculture, being an eminently agricultural country, without access to the most important market in the world, and under the conditions that companies currently have to face in the world market due to the dramatic changes suffered in the economy In recent times, it forces them to walk the path of efficiency.
In correspondence with this complex task, the current Cuban company has proposed significant transformations based on a new business management system that seeks to increase efficiency and competitiveness, one of the bases of this system is the adequate administration of costs, to which control and management techniques have been integrated.
To achieve this and maintain a process of continuous improvement, many entities are taking on the task of installing Management Systems for their processes as a mechanism to achieve and measure the quality of their productions and the cost of achieving that quality or not.
Based on all this and knowing that this issue has a direct impact on society because in the end the poor quality is reflected in the price and the level of customer satisfaction, most of our entities, although they need it, do not have procedures or techniques for the control and analysis of quality costs.
For all the aforementioned, the research entitled » Methodological Procedure for the determination and analysis of Quality Costs in rice-based agricultural production » aims to design methodological procedures that allow managers to have timely and relevant information on Costs Quality and facilitate the decision-making process.
Research methods used:
Universal method:
- Dialectical and Historical Materialism: as a general method of investigation that conceives the phenomena in interrelation.
Theoretical methods:
- Historical and Logical Method: to analyze the antecedents, causes and conditions in which the analysis of Quality and Quality Costs has been developed Analysis and Synthesis: of the scientific-technical information through which the insufficiencies were revealed raised in the problem Induction and deduction
Empirical methods
- Group work Ishikawa method Interviews and surveys Observation Comparison
Development
Methodological procedure for the determination and analysis of quality costs
First step
Characterization of the cost system used in the entity and knowledge of the subject under investigation in the same
To develop this step, an exploration of the accounting system of the entity under study must be carried out, the analysis of the procedures and techniques used to obtain the costs. It will be verified how they are recorded and controlled, if they allow other types of analysis to be carried out, if traditional systems provide the qualitative and quantitative information related to quality and necessary for the development of strategies on this aspect, contributing to timely decision making by managers.
It is also necessary to apply some instruments such as the survey and the interview to assess the level of knowledge of the workers on the subject under investigation and show the need or not to carry out the research. In this case, it is necessary to take into account whether the company has a quality department or group and evaluate its functions and its participation in the production process and in the decision-making processes. If a quality management system is implemented in the entity under study, this must also be analyzed and become the main source of both qualitative and quantitative information for the research to be developed and the future proposal for the measurement and evaluation of costs. quality.
Second step
Definition of the activities that guarantee the activity of the product
In this step, a study must be made of the main activities that take place in the production process with the aim of guaranteeing high performance rates and achieving a product with the best moisture and impurity levels. In defining these activities, the starting point should not be the Quality Cost, but rather the origin of the process and identifying those that add value to the product.
By identifying these activities from the technical characteristics of the process, the elements that determine the quality of the product can be determined and quantified. For this, it is recommended to obtain group work and the application of the Ishikawa method. This method is proposed to determine the activities that guarantee production since it allows disaggregating each of the fundamental processes in the different sub-processes that are developed and in turn in each of the tasks. To achieve this, it is necessary to know the productive flow of the entity and on the basis of this develop the Ishikawa diagram. Based on the knowledge of the production process and the elements involved in it,You can define which are the activities that provide quality to the final result as well as the elements that intervene in each of the sub-processes.
A correct identification of the activities will allow to correctly assign the quality costs to the processes that originate them and thus facilitate the decision-making process based on quality improvement.
Third step
Definition of the possible elements of the Quality Costs by categories
Taking into account the economic-productive characteristics of the entity, as well as the activities carried out in it to guarantee the ideal levels of humidity and impurities to increase production performance and its price, which are defined in In the previous step, possible Quality Costs are identified, grouped by different categories. These must be in correspondence with the activities defined in the previous step and will make up the Prevention and Evaluation Costs. Those that are generated by errors in the production process or by the incorrect development of the activities of the process itself, which are the ones that will force repeat activities and consume resources beyond what was planned,They will be grouped within the Non-Quality Costs and classified as Internal or External Failures, according to the impact they have on the client.
Fourth step
Organization and coding of the elements defined for each category
In this step, we proceed to the classification and codification of the costs defined in the previous step for a better organization of them and in this way to guarantee their control and analysis and a correct decision-making based on the information provided, according to the categories to which it belongs. This organization must define which are the costs for quality and which are those of non-quality and after this, which belong to prevention and evaluation and which to internal or external failures respectively from their incidence in the assurance of the quality or as a consequence of errors or non-compliance in the process. This will allow to draw the opportune strategy that in the increase of the Costs for the Quality to achieve the reduction of those of no Quality.
Fifth step
Expressions for the calculation of the elements defined by each cost category.
The expressions used to calculate quality costs will depend essentially on the elements that are determined in the analysis and that will respond to the economic and productive characteristics of the entity under study. These should start from the activities that are carried out for the successful development of the process and that allows to obtain a better product according to the customer's specifications and end with the elements that arise from non-compliance or incorrect treatment of these activities, taking into account the affectation for both the client and the producer by not complying with the parameters established for the final product.
A proposal for them is presented below to serve as a guide for future applications to this entity or another with similar characteristics in its economic-productive structure:
- Prevention
- Seed classification costs (Ccs)
CCS = + (Sac * ps)
Where:
HTCS = Hours worked in the classification of the seed
THTP: Production Technician Hourly Rate
i 1: n
n: months
SCP = Seed consumed in the process
PS = Seed price
- Seed preparation costs (Cps)
CPS =
Where:
HTPS: Hours worked in seed preparation
THTC: Production Technician Hourly Rate
i 1: n
n: months
- Costs for cleaning and maintenance of the irrigation system (Cmsr)
CMSR: + (MCMS * PM)
Where:
HTMS; Hours worked on system maintenance
THTP: hourly rate of the production technician.
i 1: n
n: months
MCMS: Materials consumed in system maintenance
PM: price of materials consumed
- Cost for water availability (Cda)
CPDA = QAC * PA (m 3)
Where:
QAC = Amount of water consumed
PA = Price of water
- Costs for the control of the production process (Ccpp).
CCPP =
Where
HTCP = Hours worked in process control
THJL = Hourly rate of batch manager
i 1: n
n: months
- Preventive Maintenance Costs (Cmc)
CMC = PRCM * (
Where:
PRCM = Price of resources consumed in maintenance
HTMtto = hours of work depending on maintenance
i 1: n
n: months
THmec = mechanic hourly rate
- Fertilization and biological control costs
CFCB = (QFUT * PF) + (QHU * PH) +
Where:
QFUT: Amount of fertilizer used
FAQ: Fertilizer price
QHU: Amount of herbicides used
PH: Price of herbicides
HUA: Hours of use of Aviation
i 1: n
n: months
THA: Plane hourly rate
- Staff improvement costs
CSP =
Where:
HDS = Hours dedicated to overcoming
THT = Hourly rate of the worker in overcoming
HDSR = Hours dedicated to improvement received
THP = Teacher hourly rate
i 1: n
n: months
- Evaluation
- Costs to measure compliance with specifications (CMCE)
CMCE =
Where:
HTMC = Hours of work for quality measurement and control
i 1: n
n: months
THTC = quality technician hourly rate
- Internal faults.
- Auxiliary Material Costs (CMA)
CMA = (QRMA - QPMA) * PRMA,
Where:
QRMA = actual amount of auxiliary materials consumed.
QPMA = planned quantity of auxiliary materials to be consumed
PRMA = actual price of auxiliary materials
- Rework costs (CReelab)
CReelab =
Where:
HTMNP = Unplanned machine working hours
i 1: n
n: months
Th = Hourly rate of the combined operator
MCR: Materials Consumed in Rework
PM: Price of materials consumed
- Reprocessing costs for cultural activities (CRAC)
CRAC = QNPS * PR + QNPF * PR +
Where:
QNPS = unplanned amount of seed
QNPF = unplanned amount of fertilizer
Pr = Real price of the products consumed when repeating the activities
HTRA = work hours of activities that need to be repeated
i 1: n
n: months
THA = Hourly rate of the drowners.
- Unplanned salary costs (CSNP)
CSNP =
Where:
HTNP = Unplanned hours worked
i 1: n
n: months
THTDP = hourly rate of workers direct to production
- Costs for breaks in the production process (CRPP)
CRPP = PPD +
Where:
PPD = Price of the defective part
HTPR = lost work hours due to breakage
THOC = hourly rate of the combined operator
HIRC = Hours invested in repair of combine harvester
THMEC = Hourly rate of mechanic
i 1: n
n: months
- External faults
- Cost of concessions and price (CCRP)
CCRP = +,
Where:
P1ra = Selling price of 1st quality rice
P2da = Sale price of 2nd quality rice
P3ra = Sale price of 3rd quality rice
Qq2da = quantity of quintals of rice sold at second-rate price
Qq3ra = quantity of quintals of rice sold at the price of 3rd
In the case of counting other quality levels, the same analysis is made, always comparing it with the premium price.
Step six
Establishment of the bases to compare the defined quality costs.
The best way to measure differences in quality costs is to use percentages as a basis or relative to some appropriate basis. The total quality costs, whether of the company or of a process, compared with a base indicator, result in an index that can be plotted and periodically analyzed. The most appropriate thing would be to have several bases and as you gain experience with the reports, keep only the most significant ones.
For comparison, the following bases are recommended:
- Percentage of the cost of prevention with respect to the Total Cost of Quality. Percentage of the cost of valuation with respect to the total cost of quality. Percentage of internal failures with respect to the total cost of quality. Percentage of external failures with respect to the total cost of quality. 0 Percentage of costs to achieve quality over total quality costs
- Percentage of non-quality costs with respect to total quality costs.
- Percentage of the total cost of quality with respect to the total cost of production Percentage of the total cost of quality in the value of sales.
Based on the criteria of the consulted authors and the economic-productive characteristics of the entity under study, an element that strengthens the analysis for the decision-making process is the establishment of behavior patterns for the different categories of defined quality costs on the research. Taking into account that the increase in quality costs must bring with it a decrease in non-quality costs and therefore a superior product, Table # 1 proposes the following bases for the comparison and analysis of the results:
| Category | % that is recommended |
| Prevention costs | 20-40 |
| Valuation costs | 10-30 |
| Internal failure costs | 10-20 |
| External failure costs | 5-10 |
Table # 1: Proposal for the analysis of the behavior of Quality Costs.
These percentages are established according to the criteria established by various authors and which have been adapted to the economic and productive characteristics of the entity, taking into account the prevention approach as an essential instrument to achieve quality.
Work results:
After the application of the procedure in the entity under study, it was determined for the analyzed period that the Prevention Costs constitute 25.05% of the Total Quality Costs, thus showing an acceptable behavior within the range considered optimal for this type of production.. Within it, the elements that have the most weight are the Fertilization and Biological Control Costs with 82.75% of the total in the category, this has the highest participation due to the increase in the price of fertilizers and herbicides used and the excessive use of the same. In that order follow the Preventive Maintenance Costs with 4.94% and the Costs for Water Availability with 4.89%. This behavior shows that the work carried out by the entity is aimed, above all,to guarantee production.
Seed Preparation Costs and Human Resources Overcoming Costs are those with the least effect on the total, with 0.79 and 0.66% respectively. This gives the idea that the entity does not have among its priorities the improvement of its human resources, existing in them an important source of improvements both from the economic point of view and to turn these into a competitive advantage.
It can also be seen that for the different categories of Quality Costs, Internal Failure Costs represent the highest percentage of the total with 38.53%, followed by external failures with 33.19%, which indicates that more than a third of the errors They reach the customers' hands, and these are reflected in the price of the final product. It is important to point out that this product, due to its characteristics, cannot be reprocessed after the process has concluded, but it is necessary to sell it under these conditions and is the cause of the decrease in the sale price according to the degrees of humidity and impurities established.
The valuation costs are given only by the measurement in the fulfillment of the client's specifications, which amount to $ 3078.00, representing 3.22% of the total quality costs. This cost is caused by the salary paid to the quality technician who measures the degrees of humidity and impurities of the wet rice (final product) that is sold to the industry, which has established according to these parameters the different prices to be paid to the entity.
When carrying out a more detailed analysis of the Costs of Internal Failures, since they are the ones with the highest incidence on the total, it was possible to conclude that this value shows a behavior much higher than the optimum established for this type of production and gives the idea that the activities developed To ensure optimal performance and adequate levels of moisture and impurities are not enough. It was possible to determine that among the elements that most influence the total amount of the same, we find the Cost for reprocessing of cultural activities with 34.48% of the total and followed by breaks in the production process, which presents 29.82% of the total of internal faults, which gives the measure that these are the first problems to be solved.Most of the elements that make it up present a similar behavior above what was planned, being the overconsumption of seed in the first place. This occurs because when the rice does not germinate according to the established percentages due to the poor quality of the seed and the incorrect preparation of the soils, it is necessary to reseed.
Fertilizers and herbicides also affect, which, caused by the above, it was necessary to apply more than expected to increase the volume of production.
When we analyze the influence of quality costs in relation to the Total Cost of Production, and it is appreciated that it is 11.08%, we can see that it has a weight, although not significant, but with sufficient importance to influence the economic results of the entity, since with its decrease it is a real possibility to reduce production costs, which translates into increased profits with the same sales volume, in addition to reverting to customer satisfaction by receiving a superior and consistent product with its specifications, thus achieving the entity a competitive advantage.
The total of the Total Quality Costs in relation to the volume of sales has a similar behavior to that of the Production Costs as this constitutes 99% of the sales of the period. Most of the companies with good profitability and efficiency indices have their quality costs at around 5 or 15% of the sales amount, from here it can be deduced that the value of this index for this entity is in the range of what is permissible but not for this reason it ceases to be a source for the search for profitability, competitiveness and continuous improvement.
Conclusions:
- Quality costs are a powerful tool to achieve the effectiveness of the organization and efficiently ensure the different processes, until a product with a high impact on satisfying their needs and expectations reaches the client. The diagnosis carried out in the entity allowed to detect the following:
- There is ignorance both by managers and by the rest of the workers about Quality Costs and their way of managing them based on efficiency and productivity.In the production process, a set of activities are developed whose objective is to guarantee the quality of rice as Final product, however, with current procedures, they are not quantified independently within the total costs, which prevents control and incidence on them in the interests of better quality.
- In the three entities analyzed, a similar behavior is shown in the structure of Total Quality Costs that are manifested in a range of between 71 and 73% for Non-Quality Costs and between 25 and 27% for Quality Costs The highest incidence in Non-Quality Costs is found in the Reprocessing Costs of Cultural Activities, which are above 30% in all the entities analyzed
Recommendations:
- Use the procedure proposed in this research in a systematic way, incorporating it into the analysis carried out by the entity that allows the results to be updated, so that the decision-making process is timely and relevant. Evaluate technological and other means with the technical staff. Resources that are being used to carry out land preparation and other cultural attentions, as these are the elements that are deteriorating the Non-Quality Costs Solving the complex problems related to the issue of quality costs requires personnel qualified and prepared to face the challenges of these management models, which is why it is necessary to request postgraduate courses and continue to perfect this research and generalize it to other entities in the agricultural sector.
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