My previous post mentioned about how costly it can be when your organization is trying to reduce defects especially those that are related to poor quality. Today, I found another article that discusses the same difficulty.
The article identified the traditional costs of poor quality.
Traditional Costs of Poor Quality are costs incurred by a business because of variability in their product or service quality. These costs are due to inspection and nonconformance prevention, as well as costs of nonconformances such as warranty, lost production capacity, waste, rework, and others. In a traditional cost of quality analysis, if we require higher quality to the customer, we will have to increase the cost of inspection and prevention, thus there is a point where the cost of prevention equals the cost due to failures when they occur. This would seem to indicate that there is a point above which it does not make sense to increase the quality of your product or service. However, data and experience with improving quality show that as you increase quality, the costs of prevention and inspection go down, while the cost of failure stays the same.
Given this scenario, therefore, your organization need to establish an ongoing improvement methodology solely from a cost perspective. You have to bear in mind the quality observation that “as the conformance level increases, the revenue that would have gone into prevention and inspection becomes available for other uses in the business.”
How this will be done? The articles offers —
The first task is identifying projects that will result in savings to the bottom line. They might be problems that need to be solved, variability that needs to be reduced, new products and services that need to be designed, or efficiencies that need to be increased. The most important of these projects are assigned to a small core group of highly-trained [roblem-solvers that devote 100% of their time to the projects, called Black Belts. As the projects are completed and the cost savings reflected to the bottom line, the Black Belts move on to the next projects on the list. Green Belts, if used, can solve problems in the area in which they work to further increase the benefits.
