The findings matter for manufacturing companies operating in tight-margin sectors such as waste processing and biodiesel raw material production. In these industries, small inefficiencies can quickly reduce profitability. The study confirms that quality cost management is not merely an accounting exercise—it is a strategic determinant of productivity.
Why Quality Costs Matter in Recycling Manufacturing
PT Rumah Jelantah Surabaya processes used cooking oil into higher-value products, including biodiesel raw materials. Unlike conventional manufacturing sectors with standardized inputs, recycling-based operations face unstable raw material quality. Variations in contamination, moisture, and viscosity can disrupt production.
When quality control is weak, machines can clog or break down. Semi-finished products may require reprocessing. Downtime increases. Scrap and rework accumulate. Each of these problems reduces output while consuming labor, energy, and maintenance resources.
The research by Imam Rulyadi and his colleagues at Universitas 17 Agustus 1945 Surabaya places this operational challenge into a measurable framework: cost of quality.
Quality costs are typically divided into four categories. This study focused on three:
- Prevention costs: spending on employee training, preventive maintenance, and quality planning.
- Appraisal costs: inspection of raw materials, laboratory testing, and quality audits.
- Internal failure costs: scrap, rework, machine downtime, and defect correction before shipment.
Operational productivity was defined as the ratio between output and input within a given period.
How the Research Was Conducted
The research team used a quantitative, causal design. They analyzed 12 months of internal financial and production data from PT Rumah Jelantah Surabaya. The data included monthly quality cost reports and production volume records.
The analysis was conducted using multiple linear regression through IBM SPSS Statistics Version 27. The researchers also performed validity, reliability, and classical assumption tests to ensure the robustness of the statistical model.
The model proved exceptionally strong. The adjusted R-square reached 0.998, meaning 99.8% of the variation in operational productivity could be explained by prevention costs, appraisal costs, and internal failure costs combined.
Key Findings
The results are clear and statistically significant:
1. Prevention Costs Significantly Affect Productivity
Prevention costs showed a statistically significant effect on operational productivity, with a significance value of 0.009.
Investment in training and preventive machine maintenance reduces production errors and long-term inefficiencies. While prevention spending may appear as an expense in accounting records, it functions as a long-term productivity investment.
2. Appraisal Costs Also Have a Significant Impact
Appraisal costs demonstrated a significant influence on productivity, with a significance value of 0.004.
Inspection and laboratory testing act as quality filters. By detecting defects early, the company prevents defective materials from consuming labor hours and machine capacity.
3. Internal Failure Costs Strongly Reduce Productivity
Internal failure costs had the most pronounced impact, with a significance value of 0.003.
Scrap, rework, and downtime represent non-value-added activities. When these costs rise, operational productivity falls sharply. Conversely, reducing internal failure costs leads to immediate productivity gains.
4. Combined Effect Is Overwhelming
The simultaneous F-test produced a significance value of 0.000, confirming that the three variables together significantly determine productivity levels.
In practical terms, quality cost management explains almost all productivity fluctuations at PT Rumah Jelantah Surabaya.
What This Means for Industry
The findings from Universitas 17 Agustus 1945 Surabaya offer direct implications for manufacturers, especially in circular economy sectors.
- Cutting prevention budgets may increase long-term operational losses.
- Strict raw material inspection stabilizes production flow.
- Reducing internal failure costs is the fastest route to productivity improvement.
- Quality management must function as an integrated system.
According to Imam Rulyadi, from Universitas 17 Agustus 1945 Surabaya, prevention, appraisal, and failure control cannot operate in isolation. A fragmented approach creates inefficiency. An integrated quality management system aligns cost control with operational excellence.
The research reinforces established Total Quality Management (TQM) theory, showing that proactive investment reduces reactive repair costs. In recycling-based manufacturing, where input quality is unpredictable, prevention and appraisal become even more critical.
For policymakers and business leaders, the study highlights the economic importance of quality management in Indonesia’s growing circular economy sector. As sustainability policies encourage waste recycling and biodiesel production, operational efficiency will determine which firms remain competitive.
Academic Insight
Imam Rulyadi and his research team at Universitas 17 Agustus 1945 Surabaya emphasize that internal failure costs represent pure waste. These costs do not create additional value. Instead, they drain productivity and profitability. By shifting financial allocation toward prevention and structured appraisal, companies can reduce failure-related losses and improve production stability.
Their analysis confirms that productivity improvement is not solely about increasing output. It is about controlling the hidden costs embedded in the production process.
Author Profile
Co-authors: Yulika Wahyu, Eko Riswanto, Naufal, Shodik, Ravi Hilal, Maria Yovita R. Pandin, and Hwihanus, Faculty of Economics and Business, Universitas 17 Agustus 1945 Surabaya.
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