Beacon Quality Blog

Research studies show that manufacturers estimate their cost of quality at approximately 10 percent of revenues, while, in reality, that figure is double that at 20 percent. While statistics like this are eye catching, it’s important to understand what is meant by the term, cost of quality. Unfortunately, it’s a widely misunderstood concept. Many organizations view the cost of quality solely in reference to failure costs. Common examples of activities related to this line of thinking include:

• Rework
• Scrap
• Returned materials
• Warranty recalls

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In a routine audit one of your auditors discovers that during a recent production shift a seasoned employee used fastener B, despite a work instruction for the process that calls for the use of fastener C. A typical investigation of this type of nonconformance would likely note operator error as the cause.

While concluding that this was a case of operator error is an accurate description of what happened and how it happened, if you accept this conclusion you probably haven’t probed deeply enough to understand the root cause. According to the American Society for Quality (ASQ), a root cause is "a factor that caused a nonconformance and should be permanently eliminated through process improvement."

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