Cost of poor quality in connection with the complaint process

During the 1970’s the interest for quality management and the concept of quality costs increased considerably. Business leaders noticed that there was a great potential for reducing costs of poor quality. Since up to 10-30% of a company’s total turnover may consist of poor quality costs some consider them as an unexploited goldmine. The reason for this is that a mapping of poor quality costs creates great opportunities to improve profitability without reducing quality. This thesis has been carried out on the behalf of Draka Kabel in Nässjö. The company is a part of the Prysmian Group, which operates in the energy and telecom cables and systems industry. The purpose of the study has been to identify and analyze the quality costs incurred in connection with the complaint process, and to make suggestions for improvements. The study began with a literature review of relevant theories in the field. This was made in order to create a solid foundation about common poor quality parameters, but also to gain knowledge about how measurements can be made. The mapping of poor quality costs was made through studies of secondary data and with the help of a relatively large number of interviews with various employees within the company. The complaint process was examined to find its strengths and weaknesses and each type of error was analyzed separately using its process scheme. This was done to obtain a cost but also to find the cause of the problem. The mapping shows that Draka Kabel in the first three quarters of 2014 had a total of 439 customer complaints. For example defect products manufactured at Nässjö, defect cables that has been imported, wrong packing and raw material. The study shows that 1,3 % of the company’s order lines during the studied period resulted in customer complaints. This resulted in a cost of just over one million Swedish kronor. The result shows that a large number of complaints are due to internal error. This must be seen as positive as the company themselves may affect and fix the problems. If the cause of the problem disappears so does the cost later in the chain. Draka Kabel should be able to reduce the cost of poor quality by implementing a better picking system at their stock department, which would largely eliminate the influence of the human factor. Currently there are a large number of unknown cases regarding defect raw material. The company should therefore improve their communication regarding raw materials in order to get a clearer picture of these costs.