Poor quality costs - a case study in VBS

Abstract

This is a case study of poor quality costs in the accounts payable process in Volvo Business Services AB (VBS). VBS is a new company that was set up three years ago as a shared services centre for the Volvo Group. Their main purpose is to co-ordinate parts of the business administration in all of Volvo's Swedish companies and business units, and the accounts payable is one of the services provided.

The purpose of the study is to find poor quality costs that exist in VBS, define their causes, and give recommendations to VBS as to how to improve quality. Primary data collected through brainstorming, interviews, discussions, and observations is the primary source of information used for the results and analysis.

The results show that the largest poor quality costs exist in the activities of handling interest invoices and payment reminders. This is quite natural since these activities are at the end of the process, and are the result of problems occurring throughout the invoice process. Another problem causing large poor quality costs are incomplete invoices that cannot be processed by VBS because information is lacking or is incorrect.

There are problems in both VBS as well as in their customer companies causing the poor quality costs. Some problems are caused by the customer companies not carrying out their parts of the invoice process correctly, another is the stressful working situation in VBS, as well as the relationship between VBS and the customers, where the responsibilities of each part are not always clear.