Why we focus on this formula
Prevention + Appraisal - Cost incurred to ensure that things are done right according to specifications and requirements the first time.
Preventative –
Incurred costs of all activities to prevent poor quality from ever occurring.
These costs help keep Appraisal and Failure costs to a minimum.
Lean6σ and RPA are the essential components of prevention.
Appraisal –
Incurred costs associated with measuring, evaluating, or auditing product to assure conformance to standards. These costs help to catch internal product failures.
Analytics are the essential components of appraisal.
Failure - Cost resulting from products or services not conforming to specifications or requirements set.
Failure costs are divided into 2 failure categories:
Internal -
Incurred to remedy defects discovered before the product is delivered to customer.
External -
Incurred to remedy defects discovered by customers. Costs occur when failed product reach the customer.
