Internal Failure Costs.

These are costs of deficiencies discovered before delivery which are associated with the failure (nonconformities) to meet explicit requirements or implicit needs of the external or internal customers.Also included are avoidable process losses and inefficiencies that occur even when requirements and needs are met.These are costs that would disappear if no deficiencies existed.

Failure to Meet Customer Requirements and Needs.

1. Scrap
2.Rework
3.Lost or missing information
4.Failure analysis
5.Scrap and rework due to nonconforming product from supplier
6.100 % sorting inspection
7.Reinspection,retest
8.Changing processes to correct deficiencies
9.Redesign of hardware to correct deficiencies
10.Redesign of software to correct deficiencies.
11.Scrapping of obsolete product
12.Scrap in support operations:Defective items in indirect operations.
13.Rework in internal support operations
14.Downgrading:The difference between the normal selling price and the reduced price due to quality reasons.

Cost of Inefficient Processes

1.Variability of product characteristics
2.Unplanned downtime of equipment
3.Inventory shrinkage
4.Variation of process characteristics from "best practice" :Losses due to cycle time and costs of processes as compared to best practices in providing the same output.
5.Non-value-added activities