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Discussion on The Concept of Quality Cost in Adidas
Deming’s 14 Points
In the following essay, I will write about Adidas Company and will describe the relationship among its various quality costs which are failure costs, internal failure costs, external failure costs, appraisal costs and prevention costs. In addition, I will analyze the efforts the company should focus on to further improve the quality of its products/services. Therefore, this essay is divided to 3 main points which I think the company should focus to improve its quality. The first point is the prevention cost which’s the most important quality cost that the company should focus because prevention is always better than correction. The second point is to Six Sigma strategy. The last point is the Deming’s 14 points which I will only discuss about three points which I think the company needs to focus and apply. Adidas is one of the most famous companies over the world which is considering as the biggest company in Europe and the second one in the world. Adidas is a German sports apparel manufacturer which consists of the Reebok Sportswear Company, Golf Company, and Rockport. Besides sports footwear, the company also produces other products such as bags, shirts, watches, eyewear and other sports and clothing-related goods.
Discussion on the concept of total quality cost in Adidas Company
The concept of total quality cost is the costs associated with preventing, finding, and correcting defective work. These costs in Adidas Company are huge, running at 20% - 40% of sales. Many of these costs can be significantly reduced or completely avoided. Before we go any further into total quality cost, we need to understand what is failure costs, internal failure costs, external failure costs; appraisal costs prevention costs in Adidas Company beside quality improvement. Failure Costs in Adidas is the costs that result from poor quality, such as the cost of fixing defects and the cost of dealing with customer complaints.
Internal Failure Costs in Adidas is failure costs that arise before the company supplies its product to the customer. The costs of the wasted time, scraps, rework and the overtime to get back onto schedule are all internal failure costs.
External Failure Costs in Adidas is failure costs that arise when and after the company supplies the products to the customer, such as customer service costs, warranty cost and public liability. External failure costs are huge. Therefore, it is much cheaper to fix problems before shipping the defective product to customers.
Appraisal Costs in Adidas is costs of activities that the Company applies to find quality problems, such as inspections cost. Design reviews are considered part prevention and part appraisal.
Prevention Costs in Adidas is costs of activities that are specifically designed by the company team to prevent poor quality. Therefore improvement in process and product simplification to improve higher productivity is needed. Periodical trainings provide to Adidas employees will increase productivity rate and higher profit. and appraisal efforts.
Adidas categorization in quality cost showed that when confronted with mounting numbers of defects, Adidas reacts by putting more and more people into inspection roles. But inspection will never end as the root cause was not solved. Therefore, I think that Adidas Company has to put more effort in prevention rather than correction. . Because, generally the most effective way to manage quality costs is to avoid having defects in the first place. It is much less costly to prevent a problem from ever happening than it is to find and correct the problem after it has occurred. Prevention costs support activities whose purpose is to reduce the number of defects. Companies employ many techniques to...
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