An Economic Evaluation of an Alternative Supplier Customer Quality Control System

Abstract

In the recent literature much attention has been given to the establishment of a “co-maker” relationship between the customer and the manufacturer (supplier) of a commodity. Under a co-maker relationship, the supplier is viewed as an “upstream extension of the customer’s process” [1]. Although much has been written about certain aspects of co-maker relationships, little research has been done to investigate and evaluate their economic impact. In this research, an analysis is made of the potential economic benefits of a co-maker relationship relative to quality control efforts. The total quality control costs under the traditional supplier-customer relationship are compared to the total quality control costs under a co-maker relationship.