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Figure 1: Example in Cetec ERP of selecting failure codes after logging an in-process inspection on a work order.( Source: Cetec ERP)
Quality starts with inspection failures
Every quality insight begins with an inspection. Whether it is a first article check, incoming material inspection, in-process inspection, or final QC review, inspections are the entry point for identifying defects.
When these inspections are natively integrated into the ERP system and tied directly to the work order or purchase order, they become part of a traceable financial record. The ERP can link every failed inspection to its job, part, and process, creating a single record that operations, quality, and finance teams can all reference.
Turning failures into cost signals
An inspection failure should trigger a costtracking workflow. By embedding cost data capture into the same system that records quality events, manufacturers can connect the dots from detection to dollars.
When inspection failures drive costtracking workflows, every hour of rework, every piece of scrapped material, and every out-of-BOM component request becomes part of a quantifiable‘ cost of quality’ ledger.
Where cost hides: the three buckets of quality failure
1. Labor: Time lost to rework, additional setup, and overhead from reprocessing
2. Top-level materials: Scrap or reallocation of finished goods when units can’ t be salvaged
3. Sub / component-level materials: Extra components consumed to replace failed parts, BOM deviations, and expedited purchases These three categories represent the primary ways quality failures impact the bottom line. Without disciplined tracking, they remain hidden in general production costs.
Tagging labor to failures
The most effective way to quantify labor costs from failures is to link time tracking directly to inspection records. For example, when an operator logs time for rework, they select the relevant inspection ID. That link ensures every rework hour is assigned to a specific failure, making it traceable and reportable.
This approach assumes one critical capability: the ability to track labor time accurately within your manufacturing system. Without it, labor costs tied to quality events will remain estimates at best. Implementing reliable time tracking can be a cultural shift for both operators and supervisors, requiring clear communication on its purpose- not as a productivity monitoring tool, but to quantify and reduce hidden costs.
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