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Cost of Quality in Last Mile Industry

The main focus of the quality is to fulfill customer service as we promised, which is they are our external party. But what about the focus of our quality, internally especially on stake holders (owners, employees, etc.)?

Is it for the satisfaction of external parties that we sacrifice internal parties ?? Often times because we pursue external satisfaction we sacrifice internal parties such as employee time and excessive costs. Because of that, in achieving quality services or products, it is of course necessary to improve business processes in the company to achieve quality services for both external and internal customers.

This paper will focus on the cost of achieving quality.

To achieve quality, there must be no tolerance in terms of costs, even though we still have to make arrangements or management on costs without reducing the quality produced. Two important things that need to be considered in the concept of quality costs are as follows;

1. Emphasis on the quality of bad costs or Cost Of Poor Quality (COPQ)
2. Efficiency of the Production or Service Process

Let us now speak one by one;

1. Cost of Poor Quality

The biggest costs that usually arise and have a large impact on the overall cost of production or service are costs due to poor service.

Let us remember again the concept of quality delivery services that I recently shared, namely;

- Correct address and on correct time.

- Secured shipment without damaged and secured the shipment from lost.

From incapacity or failure to fulfill the concept of quality of the above items, additional costs will arise, they are;

- Late shipment claim costs.

- Lost item claim costs.

- Damaged item claim costs.

- The cost of communication with the customer or other parties.

- Tracking costs or tracking items.

- Re-delivery cost.

- Return costs

Well, the obligation in terms of management is to analyze the costs that arise because of that and the percentage of its contribution in reducing company profits.

2. Efficiency of the Production or Service Process

Inaccurate selection of improper production processes or services can also incur additional costs. Each service or product must have its own unique processes that cannot be immediately equated or put together.

In shipping services there are at least 3 aspects of the shipment orientation that we set to be the focus of the process selection and of course the modes of transport namely;

- time aspect

- aspect of space or large shipment

- the specific aspects of the contents of the shipment (DG, Fragile, Vaccine, Burglary , etc.)

Usually a shipment will focus on one of them or it can also be a combination of them or even all three. Surely the more combinations cause the cost of shipping to be more expensive and vice versa if the focus is only on space can be much more economical.

The inaccuracy of recognizing the focus on this scientific aspect will cause costs. As an illustration, a shipment that only focuses on space, but we treat it as time-sensitive shipments and special shipments which cause additional costs in faster modes of transport and additional packaging.

There so many quality techniques to find solution for these quality problems. One of them known as DMAIC (Define, Measure, Analyst, Improve, Control), its belong to Six Sigma. You can learn more about DMAIC in linkedin learning, I suggest you to visit this link DMAIC.

Rama Wijaya

Last Mile Expertise

Quality Engineer

Six Sigma Enthusiast

Cost of Quality in Last Mile Industry