Process Improvement Through Lean

The cost of quality is one of the cost elements to consider when adopting a lean process improvement. It entails distinguishing between regular and unnecessary costs. The quality costs principle operates in terms of the cost of control and the cost of incapacity to control, which includes preventative costs and assessment costs for the cost of control (Marodin & Saurin, 2013). The cost of incapacity to control stems from internal and external failure costs. The prevention costs aid in avoiding errors and decreasing failure and appraisal costs. Data analysis, planning, and process management are all included in the costs (Collier & Evans, 2014). The appraisal costs are to ensure the quality of the products such as inspection, auditing, packing inspection and testing the quality of the manufactured products. The other cost that should be considered is the internal failure costs which include retests, scrap and repairs. These costs are avoided if there are no defects to the products before reaching the consumer. External failure costs involve the defects that arise after the products are shipped to the consumer and they include warranty issues, consumer complaints and failure in performance.

Question two

In the banking sector, increase increasing the cost that a banking institution spends in reducing the process defect constraints could lead to greatest cost saving. Some of the defect constraints could result from the negative feedback from their customers of the level of service that they offer and defects in the process of opening an account. Increasing the cost in such would enable the bank to make their clients more satisfied and lead to increased customer commitment. Therefore, the long run financial benefit that the banks could establish from such investment is of benefit to the bank.


Collier, D. A., & Evans, J. R. (2014). OM 5. Nelson Education.

Marodin, G. A., & Saurin, T. A. (2013). Implementing lean production systems: research areas and opportunities for future studies. International Journal of Production Research, 51(22), 6663-6680.

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