Improvement Insights Blog
Cost of Poor Quality
Every businesses wastes a quarter to a third of total expenses 1) fixing stuff that shouldn’t be broken (rework) and 2) throwing away stuff that can’t be fixed (scrap). There are four main costs of poor quality:
- Internal failures that cause rework and scrap.
- External failures that increase returns (to be reworked or scrapped), billing adjustments, concessions and customer complaints.
- Inspection costs of incoming materials,inspection of work in process and final inspection and testing.
- Prevention costs (i.e, Lean Six Sigma)
Inspection, failure, rework and scrap can easily devour much of a companies time and money. Preventing these problems is far less expensive, but requires focus and dedication to eliminate mistakes and errors.
How are you going to spend your costs of poor quality?
