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.
