
252 Part II n The Step-by-Step Guide to the TIQM Quality System
3. Costs of Prevention
Prevention is how you eliminate the costs of failure, by designing qual-
ity in and error-proofing the processes to prevent failure and Information
Scrap and Rework.
Costs of prevention include:
Administrative costs of managing the Information Quality function
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Costs of Process Improvement activities
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Education to help Employees learn how to improve their processes
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Cost Categories of Failure and Information Scrap and Rework
Major cost categories consist of direct costs and opportunity costs.
Direct Costs
Direct costs are the value of all resources consumed in activities such as
Information Scrap and Rework activities or Process Improvement activities,
including:
People time:
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Cost of people time spent in recovery from failure and Information
Scrap and Rework, such as time spent resending an ordered item when an
incorrect item was sent, or time on the phone to ameliorate complaints
Money expended:
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Direct monetary payments to Customers or fines paid
for non-compliance
Materials consumed:
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Materials wasted because of manufacturing defects
caused by Poor Quality Information, or wasted catalogs sent because of
multiple Customer records
Facilities and equipment used:
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Costs of overhead for facilities and equip-
ment required to perform or support work
Information services used:
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The costs of overhead for ...