A STUDY OF SUPPLIER PERFORMANCE RATING USING TOTAL INVOLVED QUALITY COSTS ANALYSIS

摘要

This research establishes a rating system for vendor's performance from the perceptions and measurements of total involved quality cost. Its purpose is to provide a methodology of "how to integrate the capability between suppliers and manufacturers through the common goal - low total cost driving of purchased material under the needs of profitability improvement". The merits of measuring supplier quality performance using total involved quality cost include 1) a measurement of common language - money; 2) very simple and visible numbers and ratios of the direct and indirect loss to help management and employees understand the importance of "doing right things right the first time". The study investigates the interactions and mutual movements among the three groups in the supply chain "supplier-manufacturer-customer" integrating the results of different stages: incoming inspection, internal customers, external customers, and levels in severity of quality events: rejects, sorting, rework, shut-down, rejects, scrap, and customer return. A Total Involved Quality Cost (TIQC) and pre-determined cost structures, and the principle of Management By Objectives (MBO) are developed and utilized in planning and establishing this rating system for vendor's performance. We obtain very satisfactory and sensitive results in system simulation and demonstration. The rating system using total involved quality cost as proposed in this study can be very beneficial for manufacturers in selecting the best vendor and driving quality improvements.