Question: Situation: Maria's Seltzer Broth produces a wide array of ready-made carbonated soups. Be sure to look for the hand-labeled cans at your local grocer! But, labeling cans by hand frequently causes errors, and customers who purchase a can labeled Bubbly Beef sometimes find that the can actually contains Chipper Chicken. The disappointed customers call Maria's hotline, and the support team has to correct the mistake. According to The Cost of Poor Quality, what category does this cost belong to?
- Internal failure
- External failure
- Appraisal
- Prevention
Explanation
External failure costs occur when defects reach the customer, requiring corrective action and generating additional expense. Incorrectly labeled seltzer broth cans that reach buyers necessitate support intervention and product replacement. RevOps principles highlight tracking external failures to protect customer satisfaction and reduce revenue loss. Identifying these failures informs improvements in processes like labeling and quality checks. Reducing external failures strengthens operational reliability and preserves brand trust.
Why the other options are incorrect
A) Internal failure occurs before the product reaches the customer, which is not the case here.
C) Appraisal costs relate to inspecting or testing products, not correcting customer-facing errors.
D) Prevention costs are proactive investments to avoid defects, not costs from defects that occurred.
Source for verification
The Cost of Poor Quality
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