Understanding the Cost of Poor Quality in the OEE context

Written by Ravinder Singh

Dec 21, 2025

read

In the industrial sector, the quality of manufactured products is a major issue. The cost of poor quality (defective components, rework, customer returns) directly affects overall equipment efficiency, or OEE. Poor quality not only amplifies production costs, but also creates bottlenecks that paralyze the supply chain. A study on this subject is crucial for any manager wishing to optimize operations and preserve the competitiveness of his plant.

The causes of poor quality on a production floor can be manifold: human error, incorrectly adjusted equipment or machine wear and tear. These shortcomings lead to variations in the synthetic yield rate (SRR), unplanned stoppages and higher production costs per unit. According to Wikipedia, OEE is a key indicator for assessing these impacts, as it provides a precise view of productivity, availability and quality.

Improving OEE by reducing the cost of poor quality requires a number of levers. Firstly, continuous improvement using Lean methods to identify and eliminate waste. Secondly, the digitalization of the shop floor, with solutions such as TeepTrak that enable real-time monitoring of performance and detailed analysis of stoppages. OEE indicators provide the database needed to guide corrective actions with precision.

Let’s take a look at a metalworking shop using OEE tracking to improve production. Initially, defects in the cutting process led to frequent scrap. After detailed analysis by TeepTrak, the necessary adjustments were implemented, reducing scrap by 30% in three months. The TRS improved significantly, increasing the efficiency of the workshop while lowering the unit cost of production.

To initiate an effective approach, it is vital to start with an audit of existing processes to identify the root causes of poor quality. It is then necessary to prioritize rapid actions, often visible in machine stoppages, and to monitor their impact on OEE using real-time tools. A structured project, led by a dedicated team, will ensure sustainable and measurable improvement, reinforcing the culture of continuous improvement.

FAQ

Question 1: How does the cost of poor quality impact the OEE?

A high cost of poor quality leads to more frequent machine stoppages, lower yields and increased rejects, all of which have a negative impact on OEE. Correcting these defects improves overall performance and profitability.

Question 2: What are the levers for reducing the cost of poor quality?

Adopting Lean practices to eliminate waste, digitizing performance monitoring with solutions like TeepTrak, and tracking OEE indicators are effective levers for reducing the cost of poor quality.

Question 3: Where do I start to improve OEE in my plant?

Start with a process audit to identify sources of waste. Implement corrective actions targeted at frequent stoppages, and track results with real-time monitoring tools. Set up a team dedicated to continuous improvement.

Get the latest updates

To stay up to date with the latest from TEEPTRAK and Industry 4.0, follow us on LinkedIn and YouTube. You can also subscribe to our newsletter to receive our monthly recap!

Proven Optimization. Measurable Impact.

See how leading manufacturers have improved their OEE, minimized downtime, and achieved real performance gains through tested, results-driven solutions.

You might also like…

Multi Plant OEE: How to Standardize Performance Across Your Manufacturing Sites

How to harmonize OEE measurement across multiple sites to enable reliable comparisons, share best practices, and drive continuous improvement across the group. Multi-plant OEE has become a major strategic issue for manufacturers operating in multiple locations. The question comes up systematically during management committee meetings: "[…]

0 Comments