Costs of Reducing Defects

Poor-quality Cost (Quality and Reliability)There are basically only two ways to reduce defects and the resulting costs of internal and external failures. Either the defects can be prevented or they can be detected and corrected.

a. Defects can be prevented by designing products that are “robust;” that is, that are not sensitive to variations and errors in the production process. Defects can also be prevented by improving production processes. Statistical process control has been especially useful in driving variation out of production processes and thereby reducing defect rates. Most experts believe that until the late 1980s too little attention was paid in North America to prevention. Instead, reliance was placed on detecting defects once they had occurred.

b. Defective units can be detected before they are delivered to customers by inspecting and testing units throughout the production process. This approach to reducing defects is expensive since it involves inspection labour and testing equipment. Moreover, when there is no idle capacity every defective unit that must be reworked or that is scrapped uses precious capacity. The resulting opportunity costs can be quite large.