Costs lie hidden in production environments – from the obvious to the not so obvious.
Obvious… internal costs – cost associated with defects found before the customer receives the product
- Waste, scrap, rework, recalls, recurring failures — and, the not so obvious failure to quantify all of the labor costs and lost opportunities associated with resolving these issues
Sometimes painfully obvious and extremely high cost… external costs – cost associated with defects found after the customer receives the product
- Repairs and servicing, warranty / recall claims, complaints, returns
Obvious but bits and pieces are just accepted as a part of doing business – measuring & monitoring – costs incurred to determine the degree of conformance to quality requirements — all those little things we have to do but wish we didn’t have to do…
- Verification, quality audits, supplier ratings
More of the stuff we wish we didn’t have to do and more costs that just aren’t always quantified – prevention / avoidance – costs incurred to keep failure, measurement & monitoring costs to a minimum
- Managing product requirements, quality planning, quality assurance, training
Where are the next round of cost reductions in your organization? What if the above cost could be cut by one half? What would the impact on your financials be?