| In 2003, the cost of Service Manufacturing and Engineering's internal and external failures has reached more than 6% of its annual sales. These failures contributed to the cost of rework, scrap, and getting the company's reputation back to where it was. These rejections/failures were draining some of the departments' energy. Furthermore, they increased the manufacturing cost. All this affected the company sales, especially when several big customers left.; The project describes the study performed to reduce the internal failure cost, by implementing a cost of quality system that highlighted those areas where the company experience a high failure cost. The focus of this project was to determine the reason for getting a very high internal rejection in one of the main parts produced in house. This was accomplished through the use of a methodology that encompasses the use of management improvement tools such as the cause and effect diagram. As a result of this project, 70% reduction in the failure cost has been achieved. |
