ABSTRACT
A manufacturing plant such as that featured in the case study, which buys in all of its parts from external suppliers, is liable to purchase many of its quality costs from its suppliers. According to Smock,1 Crosby estimates that 50 per cent of a company’s quality problems are caused by defective purchased materials. At the time the research was conducted the company forecast to spend £134 million on externally procured items, excluding purchases from its sister plant It was against this background that a TCO model was developed as a tool to analyse the cost interface between the company and its suppliers. The development of the model was undertaken by Andrew Nix during a teaching company programme between the company and UMIST; for details see Dale and Hollier.2
