Accurate costing in all areas of the business is essential for running a profitable manufacturing enterprise. With today’s sophisticated Enterprise Resource Planning (ERP) systems, most manufacturers can track labor, material, inventory costs, and other shop floor expenses with remarkable precision. But knowing their true cost of quality, a key factor in determining product margins and cost of sale, eludes many.
Tracking quality costs is a complex endeavor made more difficult by several factors. The biggest obstacle is not having an ERP software system in place or using an ERP system that doesn’t offer an internal fully-integrated quality module. Outdated procedures, such as manually entering quality data into a standalone quality system, comes in a close second. With these and other inefficient methods, the process of calculating the cost of quality becomes an additional cost in itself.