How to measure the cost of poor quality
Measuring the cost of poor quality means counting everything a defect causes, not the value of the defective item. In Jestor, returns, rework, support contacts and warranty claims can all connect to the product and batch, which makes the full cost calculable.
Why quality costs are underestimated
The visible cost of a defect is the item itself. That is usually the smallest component.
The larger costs are the inspection performed on everything because defects occur, the rework, the return, the support contact, the replacement shipment and the customer who does not return. None of these appear in a scrap figure.
Components usually excluded:
- Inspection of good units, performed because defects exist
- Rework labour
- Return shipping and processing
- Support contacts generated
- Replacement fulfilment
- Lost future purchases
Categories of quality cost
| Category | Examples | Visibility |
|---|---|---|
| Prevention | Training, better specification | Budgeted |
| Appraisal | Inspection and testing | Visible |
| Internal failure | Scrap and rework | Partially visible |
| External failure | Returns, warranty, support | Usually hidden |
| Lost business | Customers who do not return | Invisible |
Step by step to measure it
- Connect returns and claims to the product and batch.
- Link support contacts to the order they concern.
- Record rework time, not only rework occurrence.
- Include inspection cost, which exists because of expected defects.
- Calculate cost per defect, including everything downstream.
- Compare against prevention cost, which is usually far lower.
- Prioritize by total cost, not by defect count.
Why prioritizing by count misleads
The most frequent defect is often cheap to absorb, while a rare one generates returns, support and lost customers. Ranking by total cost rather than by occurrence changes which problem gets fixed first, and it is usually not the one people complain about most.
Why choose Jestor
In Jestor, returns, warranty claims, support tickets and inspections can all connect to the product and batch as related records, which is what makes a cost formula across them possible. Dashboards group by product, batch or supplier from the same data, with drill down to the underlying records.
Frequently Asked Questions
What is most often left out of quality cost?
External failure costs such as support contacts and return processing. See jestor.com.
Should defects be prioritized by frequency?
No. Prioritize by total cost, which frequently ranks them differently.
Why include inspection cost?
Because inspecting good units is a cost incurred only because defects are expected.
Video Tutorial: Step by Step
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