The cost of quality is one of the key concepts used in managerial finance to describe the ongoing of a business in terms of quality service and product development. As Feigenbaum, its originator, points out, “the ‘cost of quality’ isn’t the price of creating a quality product or service. It’s the cost of NOT creating a quality product or service” (Feigenbaum, 1991). Thus, this concept is related more to the problems that may arise during the functioning of a business.
In a certain sense, it is interested more in the lack of quality of products and services than in the quality itself. In the case of hotel Escargo, it is the cost of the lack of quality services offered to the clients. What can be done differently to achieve higher levels of customer satisfaction is exactly what the cost of quality is interested in. In fact, this is fully congruent with what the mission statement of Escargo states.
There are four methods of cost estimates around the cost of quality. They are prevention costs, appraisal costs, internal failure costs and external failure costs. The first two are grouped within the larger category of the cost of conformance. The other two are grouped into the category of cost of non-conformance (Juran, 1962). In the case we are discussing of hotel Escargo, the methods of cost estimates that are most fit for the use are those of internal failure cost and, especially, prevention cost. The internal failure cost will deal with the problems of the check-in and check-out processes along with those of the room changing. If we look at the scenario we will notice that the three of the mentioned services of the hotel are above the industry’s quality standard time response requirement.
For the check-in process, the standard is of 4 minutes or less, instead of for Escargo is 4 minutes and 51 sec. For check-out, the standard is 2 min or less. Instead, that of Escargo is of 3 min 17 sec. for the room change, the industry standard is about 6 min and that of Escargo is 10 min and 29 sec. The internal failure cost analysis will also point out that on the date the survey was made there were 29 check-ins and 32 room changes. We find that the majority of the people requesting room changes were checked on the same day. That means they were dissatisfied with their rooms.
That is why the analysis of prevention cost is essential. This is “the costs of all activities specifically designed to prevent poor quality in products or services” (Campanella, 1999). The management at Escargo should begin by establishing new procedures for the check-in in order to prevent room changes, which are an added financial cost to the hotel. Especially if the customer reserves before by phone, or online, he should be required to give an estimated time of arrival and credit card information. Information regarding his room preferences should also be requested. This data will be saved to the computer and all the work of the staff should be organized around them.
The cleaning staff will schedule its room cleaning and preparations according to this data, the bellman also. So that when the customer arrives, the key is on the desk, the room is ready and the bellman waiting at the desk for him. After he fulfills the ID card and signs it, the customer should be asked for the approximate time of leaving. This data will also serve as a basis for the organization of the checkout process. The bellman should be ready for that time and the car pickup also. These two measures described will dramatically shorten the check-in and check-out time.
They will also decrease the request for room changes since room assignments will be made according to customer preferences taken before (Harrington, 1987).
References
Campanella, J. (1999) Principles of Quality Costs: Principles, Implementation, and Use. (3rd ed.), ASQ Quality Press.
Feigenbaum, A. (1991), Total Quality Control (3 ed.), New York, New York: McGraw-Hill.
Harrington, J. (1987) Poor-Quality cost. American Society for Quality publications.
Juran, J. (1962), Quality Control Handbook (2 ed.), New York, New York: McGraw-Hill.