What are internal failure costs?

Internal failure costs refer specifically to the costs associated with identifying and correcting defects that occur before products are delivered to customers. These include expenses related to scrap, rework, downtime, and inspection that are required to ensure that the product meets quality standards prior to delivery.

The focus on correcting defects prior to customer delivery illustrates a company's commitment to quality and can prevent further costs associated with customer dissatisfaction, returns, and warranty claims. By addressing issues internally, businesses can enhance their operational efficiency and maintain customer trust.