Quality, strategy and value creation

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.

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.

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. 

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. 

· Length – 5 -7 pages excluding cover page, double spaced MS Word file. 

· Submit using the assignment tool. 

 Upload and submit as a .pdf file

 Submit using the assignment tool. 

Evaluation 

Please note that professionalism of presentation, while not a specific evaluation criterion, may influence your overall grade for this deliverable if the work produced is significantly lower, or higher, than what would be expected from a professional submission. Items that will be taken into consideration as part of professionalism would include:

· Sentence structure and grammar

· Spelling

· Clear formatting

· Choice of language and terminology

· Clarity of structure (readability)