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The Multiple Costs of Quality Rejects

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By Emilie A Lachance - August 21, 2018

An essential goal of Continuous Improvement is the reduction in rejects. 

The most stereotypical and commonly thought of costs of rejects are time, materials, and money. While these are three main categories, they are just the tip of the iceberg. The costs are often underestimated and greatly misjudged as they affect much more than appears. Below are the multiple costs of rejects broken up by these three main categories.

1) Time is a cost of quality rejects

Below are the multiple costs of rejects that impact the company’s use of time.

  • Problem solving: Having a plan in case parts are rejected is very important, as problem solving during a crisis is costly, inefficient, and takes unnecessary time.
  • Rescheduling materials: If rejects cannot be reworked, new materials must be used. If there is not enough material in-house, then it must be ordered which takes time and will delay the job.
  • Labor: Setting up the equipment and repeating the process all over again takes unnecessary labor and is costly in the long run.
  • Delivery schedule: When rejects occur, the delivery schedule must be taken into consideration. It is very important to get the job done on time in order to maintain customer satisfaction and retention.

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2) Material waste is another cost of quality rejects

When material is rejected and cannot be reworked, raw material must be used which is costly. In many cases, re-production of the part must start at the beginning. If a part is able to be reworked, the process will likely be shorter and while still costing time and labor, will result in less material wasted.

 

3) Money loss associated with quality rejects

Both time and material play into the financial cost of the reject. This is perhaps the most tangible cost of rejects, as profitability is a concern for most manufacturing companies.

As seen above, the true costs of rejects are much more than just time, material, and money. The multiple costs of rejects - while they are placed under three broad categories here, all impact one of the most important factors: customer satisfaction.

A high-priority goal of most manufacturing companies is to maintain customers by delivering the highest quality product within the scheduled time-line. The multiple costs of rejects all play a role in whether the company can achieve this goal. For this reason, reducing rejects and taking preventative action is crucial to a successful manufacturing process.

Worximity is deeply committed to the philosophies of Continuous Improvement and Lean Manufacturing in food manufacturing. Using our IoT technology we provide company wide visibility into the statistics that matter to manufacturers and accelerate TTV (Time to Value) of investments in company culture and training to achieve outstanding productivity.

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