| Company A |
Memo
To: Supervisor
From: Brian Nunez
Date: 12/3/12
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Re: Cost Quality Considerations
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Company A has been producing consumer tangible products in the United States and abroad for more than a decade. We pride ourselves in producing products that anyone can enjoy, no matter age, race, or gender. Our most popular product to date is the Ninja Juicer 2000. This memo will address three cost quality considerations for the Ninja Juicer 2000. The first recommendation is in the area of prevention costs. In order to save the company time and money, there has to be a more detailed defect prevention plan. A great way to ensure fewer defects in the Ninja juicer 2000 is by developing an automated system that assembles the main components of the Ninja juicer 2000 automatically. Assembling the main components of the juicer is becoming more difficult as demand for the juicer has risen. Due to this increased demand, human error has increased. An automated assembly line will drastically decrease human error, and will decrease production time. Tradeoffs for this approach include the potential layoffs of employees, and the high cost to get the automated assembly line up and operational. Although costs may be high at first, the automated assembly will pay for itself the first year.
The next recommendation is in the area of appraisal costs. Our company spends thousands of dollars every quarter paying shipping costs on returned items, due to improper packaging or damage before packaging. In an effort to lower these costs we plan on implementing an employee reward program. This program will reward the employee that finds and corrects defects or damage to any Ninja Juicer 2000 before the product is shipped. This will result in fewer customer returns, and will encourage our employees to pay more attention to quality control. As a result profits will increase, and work efficiency will improve. Tradeoffs for this approach will include slightly slower production of the Ninja juicer due to added inspections, but the revenue saved on items not having to be returned will be well worth the added inspection times. The final recommendation is in the area of internal and external Failure costs. Failure cost consists of a products inability to function the way it was designed too. In order to lower internal failure costs, I am going to recommend pre-shipment testing. Testing the functionality of the Juicers before they are packaged and shipped will help pinpoint problem features before the customer does. Cost to implement this procedure will be minimal because it can be performed while employees are looking for defects or damaged equipment. Tradeoffs include additional man hours in order to test the products before they are shipped. In order to lower external failure costs, I suggest sending a member of management to the shipper’s facility once a quarter in order to oversee handling of our products. Tradeoffs will include the additional costs to send management to these facilities. Implementing these cost quality considerations will allow us to invest in new technology in order to develop safe and efficient products for years to come.