Prevention over Reaction
Preventing a problem is far less expensive than reacting to a discovered problem. Consider in the design of a new product, I can get 15 engineers together to do a DFMEA (Design Failure Modes & Effects Analysis) for a total of 8 hours. In this DFMEA the engineers will discuss how the product could fail, how to avoid those failures with design changes, and how it should be tested. This will cost less than $5000. If we skip the DFMEA and go directly to the test and validation phase of product development, we will pay for a prototype of the product, test it, find failures we could have avoided, develop counter measures for the failure, test it again to find the next failure, and so on... which will continue until we run out of testing time. This will cost us anywhere from 10 to 1000 times more than doing the DFMEA. (1,000 times is hard to believe but I've seen it happen and have examples. Let's take the lower multiple just to ensure we are not exaggerating.) So because we skipped the DFMEA we have spent at least $50,000 more in the test & Verification phase than we needed to.
Next we go to manufacturing & assembly where we add another multiple of 10 at a minimum. When we find errors this late in the program we add rework, retooling, deviations from the original design, drawing changes, supplier changes and the list goes on. So it doesn't take much experience before it's understood failures missed in Test & Verification can easily increase manufacturing readiness costs another $500,000.
Next we send the failures out the door for the customers to discover for us. Here the failures end up as warranty and recall costs, post warranty repair, service agreements, service penalties, sales returns, sales allowances, field inspection equipment costs, field service labor, field troubleshooting & diagnostic development & training, extra shipping costs, litigation, and civil court and penalty costs to name a few. Again a conservative cost multiplier of 10 for problems discovered in the field which result in a $5,000,000 bill.
We naturally understand this concept on a personal level. That's why we brush our teeth, change the oil in our car, put on mosquito repellent and use flea treatment on our pets. However when working in a business we often see money saving shortcuts being taken that skip some of the prevention methods in the name of cost savings. But are they really? We can get away with not brushing our teeth now and then and not get the cavity, but in a company the act of skipping a discipline can be contagious. The culture of discipline can be replaced by the undertow of disbelief in the prevention disciplines. Protect your customers and your company from the costs of poor quality by embedding preventative disciplines into your processes.
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