Cost of Quality: Maple Leaf Foods a Case Study
Cost of Quality: Maple Leaf Foods a Case Study
Objective
This assignment examines the importance of the cost of quality to an organization. Through this, we will gain a better understanding of how we can measure the cost of quality in an organization and what benefits can be gained from the cost of quality.Cost of Quality: Maple Leaf Foods a Case Study
Scenario
This is a true story that dominated the media in Canada in the summer of 2008 and shook an established and trusted company to its core. Once the crisis was over, 22 people had died as a result of tainted meat. More details are easily available online but the following is from an April 2013 Financial Times article.
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The Story
Maple Leaf Foods is one of the leading food processing companies in Canada, where many of its processed meat brands are household names. The company also supplies restaurants and hotels.
The Challenge
On August 12 2008 management became aware of a possible case of listeriosis contamination at one of its meat processing plants near Toronto. By August 23 the contamination had been confirmed and by the end of September more than 20 people’s deaths had been linked to the listeriosis outbreak associated with Maple Leaf Foods. Many more fell ill. The Canadian press attacked the company and a number of class-action lawsuits were launched on behalf of victims and their relatives. Consumers started to avoid Maple Leaf brands, and trade customers began switching to other suppliers.Cost of Quality: Maple Leaf Foods a Case Study
The Response
Maple Leaf Foods responded swiftly. All products from the affected plant were recalled as soon as the presence of listeriosis was confirmed. Michael McCain, chief executive, took personal charge. He later told the Toronto Globe & Mail that in his handling of the crisis, “there are two advisers I’ve paid no attention to. The first are the lawyers, and the second are the accountants.” His public offer of a full apology and acceptance that Maple Leaf Foods was solely responsible was considered a brave decision because it left the company open to legal action. Mr. McCain accepted this risk: the point was to act first in the interest of public health and then to be open and transparent. The management dealt with the crisis on a number of fronts, including PR, strategy and restructuring.
Deliverables
Analyze the above scenario using the 4 Costs of Quality given below:
· Appraisal cost
· Prevention cost
· Internal failure cost
· External failure cost
Your detailed analysis and report should reflect:
· Root cause(s) of the issue
· What should have been done to prevent the current situation?
· What was done to turn the situation around?
· How did Mr. McCain manage this crisis?
Constraints
Follow all reporting and assignment guidelines. Do not produce a Q & A format report. Instead embed the answers in a logical manner.
Table of Contents
Cost of Quality: Maple Leaf Foods as Case Study. 3
Executive Summary. 3
Introduction. 3
Root Cause(S) Of the Issue. 4
Prevention of The Current Situation. 4
Actions Taken to Turn around The Situation. 5
Management of The Crisis by Mr. Mccain. 6 Cost of Quality: Maple Leaf Foods a Case Study
Conclusion. 7
References. 8
Cost of Quality: Maple Leaf Foods as Case Study
Executive Summary
Cost of quality is the baseline of ensuring the quality of a product as it considers all the aspects of a product or service and puts in place the quality aspects in all the processes involved to get the end product. The ultimate quality failure prevention strategy is to invest on cost of quality to ensure that every step in the line of offering a product or service is of desired quality and this will go a long way in preventing crises that emanate from such failures to undergo such costs.
Introduction
Cost of quality is an important aspect to any given organization. It comprises of the costs foregone for the purposes of ensuring that the goods and services offered by the organization are of the accepted quality standards and the processes involved right from the initial stage to the end product are totally focused on the quality (Omachonu et al., 2004). As such, the cost of quality must be integrated into the strategic management system of an organization, as it forms an integral part of defining the success or failure of the organization’s performance. The benefits of implementing cost of quality ensure that the products or service quality is acceptable as per he set standards and the cost of meeting this quality is kept at minimum to break-even (Krishnan et al., 2000). On the other hand, the cost of quality mirrors in the effectiveness of the existing quality system, providing an opportunity for improvement in areas that can be identified to hold the capabilities of jeopardizing the level of quality. This report utilizes the Maple Leaf Foods case study to show the importance of cost of quality in an organization and how to handle crisis emanating from this aspect.
Root Cause (S) Of the Issue
Maple Leaf Foods is a Canadian based food processing company that mainly deals with meat processing, packaging and supply to households, restaurants and hotels. During the summer of 2008, the firm’s management became aware of a possible listeriosis contamination at one of the processing plants in Toronto (Greenberg & Elliott, 2009). However, it took nearly two weeks to confirm the contamination which turned out to be positive. By this time, the damage had already been done as hundreds of clients were already sick and sadly 22 of them had passed on. The company reputation deteriorated coupled with media attacks, as well as legal lawsuits to claim damages. The clients also largely avoided the company products with trade customers switching to alternative suppliers, which led to a nearly a halt to the overall operations of the company. Although the company CEO accepted the error openly and offered a public apology, the failure that led to the crisis is largely associated with the ineffectiveness on the management of the cost of quality (Greenberg & Elliott, 2009).Cost of Quality: Maple Leaf Foods a Case Study
Prevention of The Current Situation
Cost of quality forms an important part of the strategic management, especially where the organization such as the Maple Leaf Foods undergo several processes that may affect the end product. When it comes to the public health issues, cost of quality aspects should be placed in the forefront to ensure that the quality of the product is of the acceptable standards, right from the processing plant, all the way to the end user. The application of the total quality management system (TQM) has proved to be a solution to some of the associated issues to do with quality by ensuring that the established errors in quality are rectified before the product leaves the processing plant and during supply to the market before it reaches the end user (Omachonu et al., 2004).
For the Maple Leaf Foods case, there are a number of actions that should have been taken to prevent the situation from occurring. First, the management had become aware of a possible listeriosis contamination in their Toronto plant which should have prompted an immediate action on recall of all the recent products supplied from the plant. It took nearly two weeks of wait for the confirmation, meaning that there were no enough internal mechanisms that would have confirmed and established the contamination immediately. This can be termed as a failure of effective application of the appraisal costs, which ensure that the produced products are of quality and as such, steps such as inspection were not followed as this would have established contamination right at the initial stage of the processing (Krishnan et al., 2000).
On the other hand, Maple Leaf Foods also reveals failure to incur preventive costs as part of the cost of quality. These costs, minimize the number of defects at first place to ensure that the quality of the product meets the desired quality level (Krishnan et al., 2000). In this relation, the firm should have ensured that its manufacturing processes match the industry standard level of quality and their workers are knowledgeable enough to handle quality cases through extensive training on quality issues. Furthermore, application of quality engineering through the use of quality system checks also assists in establishing errors in time and rectifying them to prevent such scenarios as the one which faced the Maple Leaf Foods company (Omachonu et al., 2004).
Actions Taken to Turn around The Situation
Crisis management, especially concerning public health is complex and requires careful steps to resolve. Maple Leaf Foods were faced with a crisis that was on the blink of bringing down the whole establishment to its feet, due to the failure of effective application of cost of quality. However, the show of democratic leadership of the company CEO through acceptance of the failures by taking a personal charge and offering a public apology turned the whole scenario around (Greenberg & Elliott, 2009). Apart from acceptance and offering of the public apology, the company took to its core some steps through the application of the internal failure costs (Krishnan et al., 2000). The firm established that on their part they had failed on quality assurance checks internally within their plants and this led to the bold steps of restructuring, as well as application of new quality strategies to rectify these failures.Cost of Quality: Maple Leaf Foods a Case Study
Nevertheless, this was not enough as the damage had already gone beyond the organization to the public limelight. This also required a strategy to counter the failure. To rectify this, the Maple Leaf Foods management underwent the external failure costs, which are the costs incurred through deficiencies found after delivery of products to the clients (Westcott, 2013, 09). As such, the firm undertook the defective product recall and also run an extensive public relations campaign to enlighten the clients on the happenings and the steps the firm had taken to prevent such occurrences in the future.
Management of The Crisis by Mr. McCain
Mr. McCain as a leader and the CEO of Maple Leaf Foods was bestowed with all the efforts to restore back the reputation of the company and as well, to place the company back to its position of operating normally once again (Greenberg & Elliott, 2009). As such, his decision was first to be informed by the internal organs as the firm was already facing several crises, including economic, reputation, public health, as well as legal action. As Mr. McCain revealed later, he made a bold decision that would balance all these crises. First, he considered the cost of quality and as the damage had already been done, the company had to undergo costs to rectify the situation, especially on PR, legal actions as well as product recall.
Secondly, accepting publicly and owning the failures brought back the trust to the public which comprises potential future clients. This was a wise move, especially in protecting the brand image (Guèvremont & Grohmann, 2018). On the other hand, restructuring of the firm was also another good move as it will ensure the gaps that were present on issues to do with quality are eliminated and in future, the detection can be done in earnest to prevent such future occurrences.
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Conclusion
In a recap, the cost of quality is vital, especially in any given manufacturing entity as it places the quality aspect at the core of every process right from beginning to the end of the product processing. Failure to undergo the quality costs may be more costly to the concerned firm as it has been established through the Maple Leaf Foods company. Quality crisis also has been established to be a make or break situation which requires a well thought move, especially when the matter is within the public limelight. The ultimate quality failure prevention strategy is to invest on cost of quality to ensure that every step in the line of offering a product or service is of desired quality and this will go a long way in preventing crises that emanate from such failures to undergo such costs.Cost of Quality: Maple Leaf Foods a Case Study
References
Greenberg, J., & Elliott, C. (2009). A cold cut crisis: Listeriosis, maple leaf foods, and the
politics of apology. Canadian Journal of Communication, 34(2), 189-204. doi:http://dx.doi.org/10.22230/cjc.2009v34n2a2204
Guèvremont, A., & Grohmann, B. (2018). Does brand authenticity alleviate the effect of brand
scandals? Journal of Brand Management, 25(4), 322-336. doi:http://dx.doi.org/10.1057/s41262-017-0084-y
Krishnan, S. K., Agus, A., & Husain, N. (2000). Cost of quality: The hidden costs. Total Quality
Management, 11(4-6), S844-S848.
Omachonu, V. K., Suthummanon, S., & Einspruch, N. G. (2004). The relationship between
quality and quality cost for a manufacturing company. The International Journal of Quality & Reliability Management, 21(2), 277-290. doi:http://dx.doi.org/10.1108/02656710410522720
Westcott, R. T. (2013, 09). Principles of quality costs: Financial measures for strategic
implementation of quality management. Quality Progress, 46, 60.Cost of Quality: Maple Leaf Foods a Case Study
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