Best Practice, Not Inspection

The alternative to inspection is simple, applying the appropriate best practice tools to drive to true root cause to permanently eliminate profit-sucking process problems from your operation.

Let’s take a macro look at where companies spend their money in terms of the cost of quality. The cost of quality refers to costs related to prevention, appraisal (inspection), rework, and scrap (customer returns are factored into either rework or scrap). The above figure shows the relative distribution of expenditures in a typical company, with largest portion of expense resulting from bad quality (scrap). The traditional business will spend about three times the amount of money on appraisal (inspection) than they do on prevention. When you combine appraisal costs with the exponential amount of dollars that are being wasted on rework and scrap, it is clear that this is not an effective model.

Now, contrast that with the lean business model. By spending a majority of their expenditures on prevention, appraisal costs can be greatly reduced, and rework and scrap are maintained at minimal levels. Not only are the dollars being spent in the right places, consider the order of magnitude of total cost. ALL the costs in the lean business model, combined, amount to less than the money a traditional company is wasting in scrap alone. Talk about financial metrics; these savings transfer directly to bottom line profit!

I will close with a quote that sums up this whole discussion in one sentence by one of the true greats:

“The most dangerous kind of waste is the waste we do not recognize.”

–Dr. Shigeo Shingo, Consultant to Toyota Motor Corporation.

Call me to talk about reducing inspection in your operation.

920-841-3478