Cost Of Poor Quality Reduction Of Xinbao Electrical Appliances Holdings Co., Ltd

1,Summary and main topicGuangDong XinBao Electrical Appliance holdings Ltd co. was founded on Dec. 21st, 1998, its products include the following: steam iron, blender, coffee machine, water kettle, bread maker and similar home appliances, and related parts and plastic products.With more than ten years of development, we have developed about two thousands of kinds of home electrical appliances. The diversification of products provides more choices for consumers, but at the same time, it also brings many difficulties. Because of inherent characteristic of home electrical appliance, it is unavoidable to bring many inferior costs.inferior cost will show in the following aspects in practical management: waste, reject, rework, test and inspection cost, complaint, design error, unsalable, low efficiency, document delay, poor follow-up, wrong quote and payment, un-fulfill orders, frequent personnel flow, missing commercial chance, compensate reserve and etc. Practically, the total quality cost may reach 20%-40% of the sale, most of the quality cost is recessive cost and can be avoided, but generally, there is nobody to kill them in the organization.To improve and control the quality cost, the study emphases of this thesis is to find out the main factor affecting the waste cost in GuangDong XinBao electrical appliance holdings Ltd Co. and research a feasible improvement method to reduce inferior cost, and increase profit.2,Basic theory summary of quality costToday, quality has become the common topic of the whole world, it is a prominent popular attentive problem in modern commerce and the economical development in all countries. Whether developed countries or developing countries (including many high developed countries such as Japan, USA and European Union) proposes to regard quality and service, and they also make great efforts to find the effective methods to improve quality, service and satisfy the requirements of customers.Quality cost is also named as quality charge. To ensure the satisfied quality cost and dissatisfied quality cost. Till now, there are two definitions of quality cost, 1. Quality cost is the cost to realize the quality; 2.Quality cost is the additional cost caused by poor quality. In this thesis, the latter is emphasized, its main purpose is to reduce cost and improve profit.3,Basic theory of inferior costThe main subjects of any quality system and progressing procedure are: how to improve the satisfying degree of customers, reduce the cost caused by mistake. Radically, they all relates to money. Corporations hope to improve the satisfying degree to sell out more products to get more profits. Remember this, we can learn that the old quality tool is now the quality cost in fact. Quality cost is not only the words on investment, but also the best method to evaluate a quality system.Quality cost originally includes four factors: check cost, prevent cost, inner defect cost, outer defect cost. We can trace the concept of"quality cost"from fifties of 20 century, at that time manufacturer believes that better quality products need more costs. Besides the change of manage attitude on quality, it is added with a new definition on the former concept, it may confuse today's quality theory if using the old definitions. So"poor quality cost"is the more proper definition.4,Basic theory of Sigma management6 sigma is a managerial method to pursue nearly perfectness based on data, and it realizes zero probability through killing variances and defects. 6 sigma can be defined to there are 3.4 error chance in one million, that is the check out probability is 99.99966%. Comparatively, the quantification probability of 3 Sigma is 93.32%.The emphasis of 6 sigma managerial method is to regard all tasks as a flow, analysis factors affect quality in flow procedure adopting quantification method, and find the most important factor and improve it to get the higher customer satisfy degree. 6 sigma is changed to an effective flow procedure design, improve and optimize technical from a whole quality managerial method in the middle of nineties, and provide a series of developing tools for design, production and service, and then coequal to the globalization, service and electron commerce, become the most important stratagem project for the corporations seeking for excellent management. And its goal from getting error probability of 3.4 in million is developed to becoming the No.1 in the whole industry. And it is a important stratagem in corporations competition, become the most important stratagem for the corporations seeking for excellent management in the whole world.6 sigma is developed to a strategic target and developing design criterion and quality managerial philosophy keep on seeking progress, which take the customers as main body. After proved by practice, 6 sigma is the most effective method which leading people take on quality revolution, and the most effective practical method, and it is approved by many top corporations and managers, it's the production of managerial thinking.5,common method of 6 sigma quality improvement6 sigma program regards on customer satisfying degree, and will bring better products and service. It is a culture revolution affecting each staff. It will change thinking fashion, and pay attention to their participation in working, and treat around things with different recognition.Realizing 6 sigma is not the final purpose and seeking 6 sigma is an endless procedure. It is composed by 6 steps: establishing management problems and measure index which need improvements; building a good improve team; distinguishing potential reasons; searching root reason; lengthening the actions; showing and celebrating the improved fruits. After actualizing the steps effectively, all management actions will not be low efficient, and staff will become high morale, and seek the better quality tirelessly.6,summarization and expectation6 sigma is in order to reduce product defects, save cost and increase corporation profit, the differences between 6 sigma and other actions which reduce cost blindly are: 6 sigma recognize and exclude the cost which not bring profits, and emphasize on reduce product defects, improve products and flow quality to get more profits.The statistic material from Chicago university economy doctor indicates: when a corporation is leveled at 3 sigma, relative cost, that is quality cost is equal to 10%-15% of sales profits, but when it is leveled at sigma, its quality cost is equal to 5%-10%, but a corporation of 6 sigma, its quality cost is just the 1% of total sale profits. Thus it can be seen, products of best quality is also the products of lowest cost.Take the inferior cost as important point, it can define the 6 sigma improve programs effectively, along with the actualization of improving policy, Bring 6 sigma into corporations to improve management of corporations, it will also realize the two main targets of 6 sigma: improve customers satisfy degree and reduce cost, thereby improving survival force and competitive capability.