Suppliers, Cost, Price Tag, and Assurance Price and Cost “When you stop to think about what price is, are you talking about the price tag or are you talking about the cost, the total cost” (Dr. W. Edwards Deming as cited in Encyclopedia Britannica Education Corporation, 1984). “. . . [I]t is total cost that is important not the price tag on what you buy” (Dr. W. Edwards Deming as cited in Massachusetts Institute of Technology, 1982). These words, or others along these same lines, are probably some of Dr. Deming’s mostly quoted sayings. And why not, he was right. It is still not at all that uncommon of a practice for purchasing departments to select a supplier based on price alone. That is, the supplier with the lost price gets the job. In addition, in order to insure the lowest price, is obtained the performance appraisals of purchasers are often tied to the amount money they save the company. On the surface this may seem reasonable and rational. The problem arises when the part is used and downtime, rework, and scrap results. The cost of the initial part is what Dr. Deming refers as the “price tag,” this plus the cost of using the part, rework, scrap, etc. is the “total cost.” So what you want is ‘good’ quality parts from your suppliers. All we need to do then is tell them to implement TQM and everything will fine, right? Well it would be nice if were that simple. But if you think out about it a bit, if the supplier had the desire, or the capability to implement TQM, wouldn’t they probably already have done it? With that said, then we will have spend some of our time and effort, to get them go where we want them to be. This includes providing them with training and consulting expertise as needed. If these things alone are not enough to get the supplier moving towards TQM then some additional incentive might be necessary, such as making them our sole source for a