Empirical Research, Quality Cost Analysis Based On The Supply Chain Environment

Quality Cost in Supply Chain as a part of agreed Product Price from Supplier to Buyer, is paid ostensibly by Buyer and end user, but in practice it is paid by all members in the Supply Chain. Quality Cost in Supply Chain in fact is an additional costs and wastes because of the inefficiency when all the members of the Supply Chain organize their product manufacturing and collaborate on the supply process. These costs and wastes will bring about some losses to the whole supply chain or some members.Supplier Quality Cost (SQC) and Overall Definition of SQC are created in this paper to describe all those quality cost which exists within the whole chain from Supplier to Buyer. This includes the definition of relevant terms, a calculation method and an improvement process. Though this Definition, this paper explicates how to understand the relevant quality cost terms in Supply Chain, how to collect data and to calculate the quality cost and finally how to improve this cost by using Six Sigma tools and Project Management method. A case study of decreasing B Supplier SQC by 20% is introduced in this paper. This case includes three phases of Project Management, plan, implement and summarize. Six Sigma tools are used in implement phase to improve quality cost completely. The successful completion of this case interprets on how to use the definition and to verify it in practice.The conclusions are summarized as followed:1. The Definition of Supplier Quality Cost presents a general approach on how calculate Quality Cost in Supply Chain and how to decrease it using Six Sigma and project management, which can solve this quality cost issues in Supply Chain effectively.2. The balancing of product quality level and quality cost and effectively using every component of quality cost are the main approaches to decrease Supplier Quality Cost.3. The Case Study verifies that Six Sigma tools and project management methods can be effectively used in such quality cost improvement project.