What poor quality costs

The cost of poor quality (AQL-F11) puts the system in the language management uses to decide. It has four standard categories: prevention (stopping defects being made), appraisal (checking for them), internal failure (defects found before delivery) and external failure (defects found after).

1. Start with what the books show. Scrap and rework from the NCR log, inspection payroll, calibration invoices, freight invoices, credit memos. Enter them as actuals.
2. Add the hidden costs as marked estimates. NCR handling time, corrective action investigation, machine time lost to remakes. Mark them Estimate and say what share of the total they are.
3. Agree the rules with finance once. Which elements count, which hourly rates apply, whether inspection is a quality cost. Settle it before the first month and write it on the Cost elements tab.
4. Link each failure cost to its record. The NCR or CAPA reference on every failure entry lets you add up what one problem cost, which is often the figure that moves a decision.
5. Bring one improvement case, not a table. One problem, its yearly cost, the action proposed, its cost, the payback and how the saving will be checked.

Expect the full figure to surprise people. Shops that report only scrap and rework usually show 1 to 3 percent of sales; counted across the four categories, the figure is commonly two to four times that. Present it once, explain the estimated share, and then use it quarter on quarter against itself rather than against published benchmarks, which vary too much with what is counted to be useful.

Need more than one resource, or not sure where to start? Book a complimentary 30-minute Aegis Quality Guidance Call. We'll find the tools that fit your situation and a sensible place to start. No sales pressure, no obligation.