Cost of Poor Quality

  The cost of poor quality are the costs associated with providing poor quality products or services either internally or externally.  There are four categories that costs can be placed in: Internal Failure costs, External Failure Costs, Appraisal Costs and Prevention Costs.  Read more in our recent post on The Cost of Poor Quality.

Understanding the cost of poor quality:

  The iceberg is a great representation to use when understanding the cost of poor quality.  The visible portion of the iceberg is often depicted as the visible costs associated with poor quality, such as:

1. Repairs
2. Rework
3. Rejections

  Then there is the part of the iceberg we do not always see.  These are the less visible or less obvious costs associated with poor quality which are often referred to as, the hidden factory.  Some examples of these types of costs are:

1. Lost sales
2. Late delivery
3. Long Lead/Cycle times
4. Long setup/changeover times
5. Muda

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