The Butterfly Defect
A new framework for calculating the cost of assembly line defects in the face of unpredictable outcomes.
How much does a defect actually cost?
One of the hardest challenges for manufacturing leaders is to calculate the ROI of quality investments.
Should you invest against scrap costs and rework time — or should you invest against the potential for a defect to bring down the entire company?
Avoid indecision … and bad investments
It’s easy to forecast the immediate costs of quality. It’s much harder to identify and forecast higher risk, lower frequency events such as recalls or lost contracts. This uncertainty can have a paralyzing effect on investments in quality, especially when it comes to deploying new technology.
Account for your uncertainty
This framework helps solve the problem. It categorizes the universe of possible outcomes that can result from defects, and provides a methodology for incorporating the probability of those outcomes into the cost per defect.
This paper is a must-read for manufacturing operations and supply chain leadership.