Risk analysis of estimates for cost of quality in supply chain: a case study

Abstract

Risk analysis for Cost of Quality (CoQ) in supply chain has not been adequately researched as evidenced in the literature. This paper attempts to analyse risk involved in estimating elements of CoQ in the internal supply chain of an integrated aluminium manufacturing company. We have applied grounded theory methodology on accounting codes of the case company primarily to bring out various elements of CoQ in its internal supply chain. They are categorized as ‘cost of prevention’, ‘cost of defective inputs’, ‘cost of defect in process’, and ‘cost of defect in output’. These elements are considered to be risky due to availability of partial information in past records of accounts while applying grounded theory methodology. In order to estimate the range and probabilities of all possible outcomes of various categories CoQ in the supply chain, Monte Carlo simulation has been used. The results have facilitated decision makers in strategic total quality management.

Keywords:

• Risk analysis
• cost of quality
• aluminium industry
• supply chain
• quality management
• operations management

Acknowledgements

The authors delightfully acknowledge the critical and valuable comments made by the distinguished anonymous reviewers to advance the state-of-the art on CoQ. Further, the insightful suggestion made by Dr. Stephen Childe to make the paper a very appreciative research in PPC is worth mentioning.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Amiya Kumar Pattanayak

Mr. Amiya Kumar Pattanayak is a Doctoral Research Scholar at Siksha O Anusandhan University, Bhubaneswar, India. He is currently working as General Manager (Human Resource Development & Administration) at National Aluminium Company Limited (NALCO) in Bhubaneswar, Joint Secretary at National Human Resource Development Network of Bhubaneswar Chapter and Honorary Secretary at National Institute of Personnel Management of Utkal Chapter. He has worked as a Technical Secretary to Executive Director (Mines & Refinery), Executive Director (Smelter & Power), Director (Production) and Director (Personnel & Administration) at NALCO. His research interest includes Corporate Social Responsibility and Cost of Quality.

Anand Prakash

Dr. Anand Prakash is an Associate Professor at School of General Management (SOGM), National Institute of Construction Management & Research (NICMAR), Pune, India. He has more than 14 years of strong experience in reputed organizations and academics. He is engaged in post-graduate teaching, guidance to research scholars and undertakes projects. He has published a number of papers in scholarly peer reviewed international journals. His research interest includes Operations Management, Service Quality, Supply Chain Management and creative applications of Statistics & Quantitative Techniques.

R. P. Mohanty

Prof. R. P. Mohanty is currently the chief consultant of Siksha O Anusandhan University (deemed to be university), Bhubaneswar, India. He was the former senior adviser to ICFAI Group of Universities in India and the former Vice Chancellor of Siksha O Anusandhan University (deemed to be university). He has 41 years of academic experiences in institutes of national (India) importance and in some foreign universities. He has ten years of industry experience in top management positions. He advises academic institutions and industries, supervises research scholars and undertakes sponsored research projects. He has published more than 350 papers in scholarly peer reviewed international journals and has also authored twelve books. Many professional institutions both in India and abroad have honoured him. He has been conferred with honorary Doctor of Science from Sambalpur University, India.