Manufacturer of Tangible Paper Products

COMPANY MADE UP

To: Director of Operations

From:

Date: 2/18/2013

Re: Cost Quality Concern

Made Up Manufacturing is a small family owned manufacturer of tangible paper products. Made Up creates and distributes products to a variety of consumer outlets. "Made Up provides customers with diverse packaging capabilities and services from design conception to the finished product." ("Made Up Paperboard and Packaging", n.d., p. xx-xx)

At this time our more popular and in demand product is the retail packaging of gift paper bags for specialty stores. At this time we could benefit from implementing a quality cost control system within our company. There are three types of costs when quality considerations are reviewed.

Direct Labor Costs

Our first predominant cost has to do with reworking the product within the factory. At this time we are exceeding our profit margin on our products to rework poor quality merchandise. My first recommendation in our quality cost control system will be to automate our assembly line. At this time we are creating company logos and design templates by hand and placing them into a printing plate. By upgrading our assembly line to a computer generated, implemented and printing adaptable automated system we can improve on manual errors and reworks. Human error quality due to the repetition of the current process creates more of the final products not being assembled properly and up to par for the clientele. By computer automating the process using computer technology we can prevent human error during assembly and produce products with few if any defects. This is a prevention cost that can help us deflect costs of poor quality and the cost of return of faulty products that ultimately become waste. We will also decrease labor costs. The downside of the decrease in product errors and the decrease in the labor time can potentially decrease the number of employees required to operate leading to downsizing.

Consumer Product Failure Cost

Our second cost is failure cost. Failure cost is when the product does not match the actual order or quality of the job specifics. The faulty quality of our products will negatively impact our customers. It can cause our customers disruption to its stores and decrease their marketing and advertising to the public, which is real-time cost. The time it takes to replace the product can never be recovered. They will then have to expedite re-orders/ corrections of the product to ensure a proper inventory for all stores. Our company will incur extra costs to replace our bags; they will need to use a substitution from another company or from us. The customer will also lose the impact