According to businessdictionary.com, rework cost is the standard or actual cost of correcting defective work. This is a preventable cost that increases overall operating costs.
Often there has to be rework in a manufacturing plant, which affects the total annual cost of operations. However, rework cost is often overlooked and is not identified as a separate operating cost. This can lead to erroneous figures on the company's accounting books.
Tracking Rework Cost
To track the exact rework cost, include factors like materials and labor along with the cost of operating the equipment used in rework. Other considerations are the cost of space allocated, paperwork and administration time. Add up all these costs to realize the true rework cost.
Quality cost is a standard technique used for evaluating the trends in the costs of products and services. This includes rework costs, repairs and maintenance. The primary role of quality cost is to provide a tool for checking whether or not the products are meeting the customers' requirements.
Reducing Rework Costs
To reduce rework costs, rework projects should be reviewed and analyzed to identify the mistakes that necessitated the rework. Strategies should then be introduced to avoid repeating those mistakes.