Absence of TQM across the fuel supply chain: quality failure-associated costs

Abstract

Effective management of the supply chain is an essential success factor for any competitive business environment. Fuel supply chain is a typical supply chain which delivers products characterised by consumer requirements and strict environmental specifications. The purpose of this paper is to estimate the costs associated with quality failures of fuel products resulting from the absence of total quality management (TQM). It focuses on a case concerning the downstream fuel supply chain operated by a medium-sized Greek fuel distribution company. The main sources of the arising costs are quantity deficits, product mixtures, fines, consumer problems and negative publicity. These costs highlight the paramount importance and the critical role of a TQM system implemented across the fuel supply chain that would improve the overall supply chain performance in terms of both cost reduction and customer satisfaction. Some important elements of such a TQM system applicable to a fuel supply chain are outlined.