Case study: Bodega Chandon at Mendoza and Sigma Level
PurposeThe 45% drop in the consumption of sparkling wines (2015 to 2019) after a steady growth of 227% (2000-2015); the increase in the number of sparkling wine houses (61 to 143) and the 27% drop in exports (2012-2019) generated a highly competitive market and decreasing profitability. There is no public data on the cost of quality and/or its metrics vary significantly, so there is no indication of whether the classical model or the finite cost of quality model prevails in the sector under study.
This study argues that it is possible to achieve 100% products conforming to specifications with a finite value of quality cost by improving each job and its associated processes, which is an option as valid as adopting very costly high technology production lines.
MethodologyThe case study proposed is Bodega Chandon in the Argentine province of Mendoza, which exports 20% of its production and is a leader in both the domestic (30% by 2021) and global sparkling wine markets. Bodegas Chandon S.A. centralizes its quality measures through Quality Area (managers and four analysts). The company is ISO 9000:2005 certified and has integrated this methodology into its operations. It does not keep records of external failure costs as it is a direct supplier to wholesale channels. It did not plan to implement the Six Sigma methodology in 2019-2020.
For confidentiality reasons, the name of the product under study will be referred to as Product A. The methodological analysis framework is an exploratory/descriptive, non-experimental, longitudinal research design. The records are from the process of bottling and labeling Product A in the period 2010 to 2013. ResultsThe analysis shows that for both processes, there is a statistically significant negative relationship between the independent variable cost of quality and the intermediate variable percentage of products conforming to specifications (F (1,137) = 7.939, p<.05). Thus, when the total cost of quality decreases, the percentage of products conforming to specifications increases and approaches 100%. The analysis also shows a negative correlation between internal defect costs and the percentage of products conforming to specifications.
There is no statistically significant correlation between the dependent variable (Short Term Sigma Level) and the Quality Prevention Cost component, as the value is consistent for the entire process. There is also no statistically significant correlation between the dependent variable (Short-Term Sigma Level) and the Appraisal. Cost component of the independent variable Quality Cost (F (1,137) = .008, p=.929). The investment in prevention and appraisal is independent of the percentage of products conforming to specifications, as the process is assumed to be kept under control by the actions taken annually. These results provide empirical evidence supporting the finite cost of quality model as prevailing, according to which it is possible to achieve 100% compliance at finite cost.
The percentage of compliant products for the bottling process ranged from a minimum of 97.10% to a maximum of 100% with a mean of 99.85% and a standard deviation of 0.10. For the labeling process, the value ranged from a minimum of 99.40% to a maximum of 100% with a mean of 99.67% and a standard deviation of 0.55. From this approach, there is little motivation to initiate a continuous improvement process to achieve 100% compliant products. When analyzing the sigma level, it was found that the value for the bottling process ranged from a minimum of 4.01 to a maximum of 5.49, with a mean value of 4.55 and a standard deviation of 0.25. For the labeling process, the value ranged from a minimum of 3.38 to a maximum of 6.0, with a mean value of 4.82 and a standard deviation of 0.82. This second approach shows that there is room for continuous improvement. If the bottling and packaging process can be brought to a sigma level of 5.0, this would affect 97% of internal defect costs, which is equivalent to 4.7% of total quality costs (prevention, appraisal, and internal defects).
This action would improve the competitive position of Bodegas Chandon in Mendoza.Practical implications100% specification-compliant products in a sparkling wine winery with a high level of production can be achieved by improving each workstation, which is a real alternative to the use of high technology without requiring significant investment. This approach can be extended to the remaining 132 sparkling wine wineries, which represent 15% of the wine sector, in order to promote the development of quality measures, demystify the complexity of their implementation and demonstrate the positive impact on organizational costs.
Originality/value to date, there is a lack of research on the prevalent quality cost model in the winery sector, and this study fills the gap in the existing literature.