Waste of Defects
One of the easiest wastes to identify is waste of defects. This type of waste can lead to rework, salvage and scrap within your company. You will end up with an even bigger problem if one of these defects gets out to the field. Because of this high risk potential, waste of defects can be the most costly of all the wastes. It may cost you a customer, which will result in lost future sales. This is a major reason why lean promotes building quality into your process as one of it's main principles.
The worst case scenario when a defect is produced is when one of these defects gets out to the field. As mentioned earlier, it could lead to the loss of a loyal customer. In addition, there will be costs associated with sorting the product to determine whether or not this defect was a one-off or if there are multiple parts with defects. Remember, for every defective product produced, throughput is negatively effected.
In some industries, a safety related defect will lead to a recall. The cost of these issues can easily climb into the millions of dollars depending on the volume of product sold. Recalls can cause serious damage to a company's reputation. Not only can you lose current customers but potential customers as well. It can easily influence a potential customer's decision to go with a competitors product.
Quality must be built into your process
when building your product. By doing this, you will eliminate defects, build a solid reputation based on quality products and maintain customer loyalty of current clientele and future prospects.
Rework and Salvage
If you're fortunate, the defective product produced is contained within your facility and can be reworked. The downside is that the act of reworking now adds extra cost. Labor hours spent on this product would increase if the rework is small. If the product needs to be completely torn down, labor hours would more than double.
For every defective product that is produced, whether it can be reworked or not, a saleable product is lost. These costs can add up quickly if the problem is not resolved. When dealing with waste of defects, the root cause must be determined and an effective countermeasure put in place.
The last scenario to consider is scrap. In many cases, the defective product will not be salvageable. Material consumption will go up. Labour costs will increase. Throughput will decrease.
For every component lost in building a defective product, a replacement component must be purchased. Depending on material lead time, this may put serious strain on your supply chain. Overseas materials as well as some domestic materials, are not so easily replaced.
The most important thing to remember when dealing with waste of defects,
do not pass on a bad part. It is better to take a bad part out of the process when it is halfway through then to add more material and labour to the part and increase the cost of the defect. Make sure everyone throughout the company is committed to identifying and eliminating defects.