Research On The Bullwhip Effect Of Quality Cost In Supply Chain Management

Competition is getting more and more intense and brutal under the trend of globalizing and professionalizing manufacture. Supply Chain to Supply Chain competition has taken place of corporate to corporate one, especially focus on "Cost competition". All manufacturers are facing a war of cost-down and making big effort to save money not only in labor cost, material procurement, logistics, manufacturing efficiency but also in the Quality Cost. They implemented the Quality Cost Management by enhancing accounting system to estimate the cost of quality and taking actions of tuning prevention cost and appraisal cost to minimize the total quality cost. But they are also facing great difficulties in quality cost control. The overall saving of supply chain quality cost was very limited, and a kind of "Bullwhip Effect" in supply chain quality cost management often results in huge loss to upper chain suppliers. Numberless of materials and semi-products were discarded due to improper management from customers.From some cases studies we confirm that,the bullwhip effect of Quality cost in supply chain management is truly existent. We also analyze and indicate its characters, reasons, and possible ways to reduce its damages by reviewing actual cases and making model simulation. Finaly the corrected simulation model of Quality cost in SCM is contributed and tested for its effectiveness. The major contributions of this study are as below:1. Explored and clarified "The Bullwhip Effect of Quality Cost in Supply Chain Management" the very first time in the world.2. Proved the incompletion of existing quality cost model which conflicts with the basis of supply chain management and directly results in the named phenomenon.3. Proposed a major revision on Quality Cost Model to include "Supplier Quality Cost" besides existing "prevention cost", "appraisal cost", "external failure cost", and "internal failure cost". This additional item is quantifiable and will greatly enhance the integrity and accuracy of said model.4. Proved our solutions can greatly reduce the loss of said phenomenon by model simulation. And also pointed out other strategic directions that can help resolving the bullwhip effect in supply chain quality cost management.