QUALITY CONTROL, IMPROVEMENT

The true definition of quality control is the stabilization and maintenance of a process to produce consistent output. The key to Costco's ability to maintain their low prices and quality is because of good wages and benefits .According to CEO Jim Sinegal ,this is why Costco has extremely low rates of turnover and theft by employees. And Costco’s customers, who are more affluent than other warehouse store shoppers, stay loyal because they like that low prices do not come at the workers’ expense. Also by selling a limited number of items, keep costs down, rely on high volume, have customers buy memberships and aim for upscale shoppers, especially small-business owners.

Costco has in place a quality assurance program. It's objective is to ensure that all products are placed under the same stringent Costco quality guidelines. Each produce item has a Costco-supplier confidential specification sheet that lists specific acceptability factors. Inspections (testing) for fresh produce start at the very beginning while being grown and end at warehouse checkout as customers make the final purchase. If concerns arise, production ceases. Costco is known for its high quality control process especially in produce, jewelry and meats.


Costco wants to provide great products to it's customers while also keeping their prices down. In order to do this,Costco decided to improve it's transportation methods by adopting new technology to better not only their shipping time but costs as well.

Using DMAIC, Costco defined transportation as a need for improvement, measured the variables and set a goal, analyzed what the immediate problem was and came up with possible solutions, improved their current methods by changing the way they supply their warehouses, and controlled the outcome by making sure the new method works and continues to work over time.

To make sure everything is running smoothly, information on shipping time can be analyzed. If for whatever reason supplies are not delivered on time according to Costco standards, any of the Continuous Improvement processes may be used.

A Pareto Analysis may be used to discover a few problems, or defects, and say transportation time is the highest in defect percentage, it would be handled first (unless the next defect can be resolved quicker and cheaper).

A Fishbone Diagram (Cause-and-Effect Diagram) may also be used to determine probable causes of standard transportation time. Those potential causes will be researched and ruled out accordingly until the problem is found.

Another way Costco can improve it's transportation is to use the Process Capability Index. Once a range for shipping time has been established, and the standard deviation has been included, the process capability may be computed. If the equation (Cp= USL-LSL/6xstandard deviation), (Cpk=Min(USL-mean/3xstandard deviation, LSL-mean/3xstandard deviation)) equals 1, the solution can work. If, however, the result is less than 1, the solution must be improved by either centering the mean or reducing the standard deviation.

Costco may also combine Lean and Six Sigma methods to keep up with both defects and improvements. Lean focuses more on getting rid of waste within the company and improves work flow, and Six Sigma focuses on defects which are noticed by the consumer and reduces variance. Both methods, although different, can still work together and further each other in their cause of improving the company. In this way, Costco can continue to identify defects and resolve them in the most efficient manner.