lean champions

Poor Quality is an Opportunity Lost

lean champions

 

Are you losing opportunities due to poor quality?

Are there many hidden costs bringing down your revenue?

What percentage of the profits are you losing due to poor quality?

How much of the root causes of wastage have you actually identified?

What are the hidden costs of poor quality?

Improving Quality is equal to making money. It is a loss of opportunity and a loss of precious resources, such as time and money, on unnecessary tasks and wasted materials.  Poor quality has catastrophic effects on top and bottom lines.

The cost of poor quality is an estimate of the cost of all efforts undertaken in an organization, including materials and processes used in assembling products, that don’t provide value to customers. In the lexicon of lean manufacturing, these are nonvalue-added activities.

We have found through research of over 400 manufacturers, that up to 12 to 15 percent of revenue is wasted due to poor quality. In a typical organization, a great deal of effort is spent in improving  waste elimination like inspection, waste, rework, and warranty costs. Some alert organizations recognize that losses can accrue from wastes such as excess inventories, unnecessary motion, and supplier non-performance. We have seen that obscure wastes, such as unnecessary paperwork, large lot sizes and excessive auditing may lead to additional estimated losses of up to 35 percent of revenue. In a typical facility, there’s much less effort spent on improving these activities.

In order to identify this problem one has to take the following steps:


In order to identify this problem one has to take the following steps:

  • Compare your products to your competitors’, to a similar product from another facility, or to a product from a world-class manufacturer with same characteristics.
  • Compare the weight, size, number of components, fit and finish, and cost : If your product is heavier, larger, or more complex, there is an opportunity to simplify.
  • Compare labor hours, throughput time, the number of process steps, the complexity of the process, and the product yields.
  • Look into the time lines : when your order-to-delivery time is longer than your competitors’, there’s  an opportunity being lost.
  • Consider how much bigger, heavier, or more complex your product is due to the safety margins.
  • Look into the amount of packaging required
  • Consider how much more expensive a heavier and larger product is to ship, how much more handling is required

Poor quality has hidden costs which cut into your profits. Poor quality is a loss of opportunity.

To know more on how to look into the root cause of your losses and identify the opportunities you are losing due to quality and other factors, reduce rework & reject percentage & dramatically improve the bottom line talk to us.

www.ideasmith.net

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