EB Case AquaFun
Laura Sierra
March 19, 2015
SCHM Michael Powers
Aqua-Fun Case
Marketing is an essential aspect of the company. I believe marketing research and other similar cost categories should definitely be included in the CoQ. These costs are used to prevent the quality from the products to decrease. The cost of review of tests and inspection data is also very important. Roberta should work with the managers and other departments and get the accurate data about other costs. If Aqua-Fun implemented Six-Sigma, the cost of quality education would be expected to increase because of the different leveled training of the employees. The cost of external failure would be expected to decrease- the quality of products increase and the customer satisfaction will also increase because of this. By implementing a Six-Sigma, the corporate-wide system will help reduce variability and improve processes as well as overall quality. The factors that management teams should consider as they design a Six-Sigma implementation are 1) operations management 2) purchasing 3) supply chain management, and 4) demand. The downside to the Six-Sigma is the high costs it brings. In order to train employees for the green belt it would cost $7,500,000 ($20,000 x 50% of employees) and the black belt which is obviously better (assuming the cheapest costs as well) would cost $520,000 ($40,000 x 2% of employees). In total the cost of the cheapest Six-Sigma implementation is $8,020,00 CoQ with a 20% reduction is only $7,490,400. As the case mentioned, companies usually experience savings for several years after implementing Six-Sigma. Assuming that this is true and the cost would be reduced for 5 years, they would be saving a total $37,452,000 in CoQ ($7,490,400 x 5 years). As we all know it takes money to make money, and if you want a high return you have to take a high risk. Plus the overall benefits of implementing the Six-Sigma definitely outweigh the costs in my opinion.
March 19, 2015
SCHM Michael Powers
Aqua-Fun Case
Marketing is an essential aspect of the company. I believe marketing research and other similar cost categories should definitely be included in the CoQ. These costs are used to prevent the quality from the products to decrease. The cost of review of tests and inspection data is also very important. Roberta should work with the managers and other departments and get the accurate data about other costs. If Aqua-Fun implemented Six-Sigma, the cost of quality education would be expected to increase because of the different leveled training of the employees. The cost of external failure would be expected to decrease- the quality of products increase and the customer satisfaction will also increase because of this. By implementing a Six-Sigma, the corporate-wide system will help reduce variability and improve processes as well as overall quality. The factors that management teams should consider as they design a Six-Sigma implementation are 1) operations management 2) purchasing 3) supply chain management, and 4) demand. The downside to the Six-Sigma is the high costs it brings. In order to train employees for the green belt it would cost $7,500,000 ($20,000 x 50% of employees) and the black belt which is obviously better (assuming the cheapest costs as well) would cost $520,000 ($40,000 x 2% of employees). In total the cost of the cheapest Six-Sigma implementation is $8,020,00 CoQ with a 20% reduction is only $7,490,400. As the case mentioned, companies usually experience savings for several years after implementing Six-Sigma. Assuming that this is true and the cost would be reduced for 5 years, they would be saving a total $37,452,000 in CoQ ($7,490,400 x 5 years). As we all know it takes money to make money, and if you want a high return you have to take a high risk. Plus the overall benefits of implementing the Six-Sigma definitely outweigh the costs in my opinion.