MRB: The Lifeblood of Cost of Poor Quality

In the competitive landscape of manufacturing, operational excellence is not just a goal, it's a necessity for survival. As Vice President of Quality and with 40 years of experience in Aerospace, Automotive and Commercial industries the heart of this excellence lies in the management of Quality, Cost, and Delivery (QCDs), the trinity of Key Performance Indicators that can make or break a manufacturing operation. Among these crucial processes, the Material Review Board (MRB) stands as an unsung hero, systematically addressing non-conformances and driving continuous improvement while moving product to the appropriate operations, departments and suppliers.

Understanding the QCD Framework

Understanding the QCD Framework

Before diving into the pivotal role of MRB, it's essential to understand the QCD framework and its significance in manufacturing operations. QCDs represent the three critical pillars upon which manufacturing excellence is built:

Quality reflects the degree to which products meet specifications and customer expectations. High quality reduces rework, warranty claims, and customer dissatisfaction.

Cost encompasses all expenses associated with producing goods, including raw materials, labor, overhead, and significantly—the cost of poor quality (COPQ).

Delivery measures the ability to provide products on time, in full, and according to customer requirements.

These three elements are intrinsically linked; a deficiency in one invariably impacts the others. Poor quality leads to increased costs and delayed deliveries. High costs can force compromises in quality. Missed deliveries damage customer relationships and brand reputation.


The Cost of Poor Quality: A Hidden Drain on Profitability

The Cost of Poor Quality represents all costs associated with producing defective products or services. These costs typically include:

  • Scrap and rework

  • Warranty claims and returns

  • Customer complaints and lost business

  • Inspection and testing

  • Excess inventory

  • Expedited shipping

  • Troubleshooting and problem-solving

Remarkably, COPQ can account for 15-40% of total production costs in manufacturing organizations without robust quality systems. Yet, unlike other costs that are meticulously tracked, COPQ often remains hidden, distributed across multiple departments and accounting codes. I have seen that mature Operations will use a COPQ Metric when reviewing operational costs and drive tiger teams to reduce the top contributors. When a company embraces Continuous Improvement, the process never stops.

This is where the Material Review Board becomes invaluable.

cross functional mrb team

The Material Review Board: More Than Just Meetings

The Material Review Board is much more than a series of meetings—it's a comprehensive process for identifying, documenting, analyzing, and resolving non-conformances in manufacturing. An effective MRB serves as the first line of defense against quality issues and the primary mechanism for reducing COPQ.

The Composition of an Effective MRB

In my experience the core team should be a small team of process experts and typically consists of:

  1. Quality Engineer: Responsible for evaluating the non-conformance against quality standards and customer requirements.

  2. Manufacturing Engineer: Provides insights into production processes and potential manufacturing solutions.

  3. Planner: Offers perspective on scheduling impacts and material availability.

Depending on the complexity of the issue, the team might expand to include the following on an as needed basis:

  • Design engineers

  • Supplier representatives

  • Customer service representatives

  • Process specialists

  • Tooling experts

The MRB Process: A Model of Efficiency

An optimal MRB process follows these key steps:

  1. Identification and Segregation: Non-conforming materials are identified and segregated to prevent unintended use.

  2. Documentation: The non-conformance is thoroughly documented, including the nature of the defect, affected parts, and potential impact.

  3. Timely Review: The MRB team convenes promptly—within 24-48 hours of discovering the non-conformance—to maintain production flow. If time permits a daily cadence can be effective

  4. Disposition Decision: The team makes an evidence-based decision regarding the fate of the non-conforming material: I have found that teams that are prepared and know ahead of time of the non-conformance are very effective.

    • Use as is (when the non-conformance doesn't affect form, fit, or function)

    • Rework (to bring the product back to specification)

    • Repair (with documented procedures)

    • Scrap (when the product cannot be salvaged)

    • Return to supplier (for vendor-caused issues)

  5. Implementation: The disposition is implemented, with clear documentation of any rework or repair processes.

  6. Data Collection and Analysis: The Quality Engineer collects and analyzes non-conformance data, prioritizing issues by frequency, severity, and financial impact.

  7. Tiger Team Formation: Cross-functional teams are assembled to address high-priority issues, conducting thorough root cause analysis and implementing corrective actions.

  8. Verification and Validation: The effectiveness of corrective actions is verified through monitoring and follow-up.


MRB as the Lifeblood of COPQ Reduction

The MRB process serves as the circulatory system for quality improvement, maintaining the healthy flow of materials while extracting vital information for systemic improvements. Here's why it's truly the lifeblood of COPQ reduction:

1. Immediate Impact on Production Flow

By meeting frequently and making timely decisions, the MRB prevents the accumulation of non-conforming inventory, a significant component of COPQ. When non-conforming materials sit in quarantine areas for extended periods, they:

  • Occupy valuable floor space

  • Tie up working capital

  • Delay production schedules

  • Risk further degradation

  • Create administrative burdens

A responsive MRB process keeps materials moving through the system, either back into production after rework or out of the facility if scrapped, minimizing these costs.

2. Data-Driven Prioritization

Not all quality issues are created equal. Some may be cosmetic with minimal impact, while others could affect product safety or functionality. The MRB process generates critical data that allows organizations to:

  • Rank defects by financial impact

  • Identify recurring issues versus one-time occurrences

  • Target improvement efforts where they'll have the greatest return

  • Track trends over time to evaluate improvement initiatives

This prioritization ensures that limited resources are allocated to solving the most impactful problems first, maximizing ROI on quality improvement efforts.

3. Cross-Functional Collaboration

The multi-disciplinary nature of the MRB fosters collaboration across departmental boundaries. This collaborative approach:

  • Brings diverse perspectives to problem-solving

  • Prevents siloed thinking and "finger-pointing"

  • Facilitates knowledge transfer between departments

  • Builds organizational capability for quality improvement

  • Creates shared ownership of quality issues

When quality is everyone's responsibility—not just the Quality department's—sustainable improvements become possible.

4. Root Cause Analysis and Systemic Improvement

The tiger teams formed to address high-priority issues dig beyond symptoms to find underlying causes. This systematic approach:

  • Prevents recurrence of similar issues

  • Addresses systemic weaknesses in processes

  • Questions fundamental assumptions

  • Implements preventive rather than just corrective actions

  • Creates standardized solutions that can be applied broadly

By moving from reactive firefighting to proactive prevention, organizations can dramatically reduce their COPQ over time.


Implementing an Effective MRB Process: Best Practices

Based on observed successful implementations, here are key best practices for maximizing the effectiveness of your MRB process:

1. Establish Clear Roles and Responsibilities

Each team member should understand their specific role in the MRB process. Documentation should clarify:

  • Who can initiate an MRB

  • Who must participate

  • Who has decision-making authority

  • Who is responsible for follow-up

2. Standardize Documentation and Workflows

Create standardized forms and workflows to ensure consistency and completeness in the MRB process. Digital solutions can streamline this process, making it easier to:

  • Document non-conformances with photos and measurements

  • Route information to relevant stakeholders

  • Track disposition status

  • Generate analysis reports automatically

3. Set Time-Based Performance Metrics

Establish and track metrics such as:

  • Time from non-conformance identification to MRB meeting

  • Time from MRB decision to implementation

  • Percentage of non-conforming material dispositioned within 48 hours

  • Backlog of pending non-conformance reports

4. Implement Regular Reporting and Review

Schedule regular reviews of MRB data and trends with leadership to:

  • Highlight top issues by cost impact

  • Showcase improvement initiatives

  • Secure resources for high-priority improvements

  • Demonstrate ROI on quality investments

5. Integrate with Broader Quality Management Systems

The MRB process should connect seamlessly with:

  • Supplier quality management

  • Corrective and Preventive Action (CAPA) systems

  • Statistical Process Control (SPC)

  • Design for Manufacturability (DFM)

  • Training and competency development


The Financial Impact: Measuring Success

To demonstrate the value of an effective MRB process, organizations should track key financial metrics, including:

  1. Total COPQ as a percentage of sales: Aim for continuous reduction year over year.

  2. Cost savings from specific improvement initiatives: Document baseline costs and improvements.

  3. Inventory velocity improvements: Measure reductions in quarantined material and WIP.

  4. Productivity gains: Calculate labor hours saved through reduced rework and troubleshooting.

  5. Customer impact metrics: Track reductions in returns, warranty claims, and customer complaints.

Cost of Poor Quality - COPQ

The Cost of Poor Quality (COPQ) Iceberg is a powerful visual that illustrates a fundamental truth in manufacturing—what’s most visible is only a small part of the problem. Traditional quality costs like inspection, warranty claims, scrap, rework, and rejects are tangible and relatively easy to measure, but they represent just the “tip of the iceberg.” Beneath the surface lie the hidden costs—lost opportunities, inefficiencies within the “hidden factory,” excess inventory, late deliveries, lost customer loyalty, and more. These are often intangible and difficult to quantify, yet they can quietly drain profitability and disrupt operational flow. To truly reduce COPQ, organizations must go beyond surface-level fixes and address the systemic issues that lurk below the waterline.


Case Study: MRB Excellence in Action

Consider a precision machining operation that implemented a streamlined MRB process with daily meetings and weekly data analysis. Within six months, they achieved:

  • 62% reduction in quarantined inventory

  • 47% decrease in rework hours

  • 28% improvement in on-time delivery

  • 15% reduction in overall COPQ

  • 8% increase in gross margin

The key to their success? A relentless focus on timely MRB meetings, data-driven prioritization, and cross-functional tiger teams addressing root causes rather than symptoms.


Conclusion: The Continuous Improvement Journey

The Material Review Board stands as the critical junction where quality issues are not just resolved but transformed into opportunities for improvement. By treating the MRB process as the lifeblood of your quality system—continuously pumping valuable information throughout the organization and clearing blockages in the production flow—manufacturers can achieve remarkable reductions in COPQ.

In the end, operational excellence isn't achieved through grand transformations but through the disciplined application of processes like the MRB—systematically identifying, analyzing, and eliminating defects one at a time. The journey toward zero defects may be asymptotic, but with a robust MRB process, organizations can continuously push the curve toward manufacturing perfection while reaping significant financial benefits along the way.

The timely disposition of non-conforming material keeps production flowing; the meticulous collection and analysis of defect data drives intelligent improvement; and the formation of targeted tiger teams ensures that solutions address root causes rather than symptoms. Together, these elements form the powerful circulatory system that reduces the Cost of Poor Quality and drives manufacturing excellence.


Take Your Business to the Next Level by transforming non-conformance into opportunities that will improve your bottom line.

Ready to enhance your business’s quality, efficiency, and overall success? Effective MRB processes are key to unlocking new opportunities and achieving long-term growth. Take the first step toward a more streamlined and successful business operation that will improve your bottom line and satisfy customer expectations.

At Hoagland Management & Consulting LLC, our team of experts is here to guide you through every step of the journey. Reach out today and let us help you elevate your business.

Contact us now and start your journey with HMC!



About the Author

Rick Mangone is a highly accomplished global leader with 40 years of expertise in Quality, Continuous Improvement, Facilities, and Environmental Health & Safety (EH&S). As a certified Six Sigma Black Belt with extensive experience across Aerospace, Automotive, Renewables, and Commercial industries, he has led transformative initiatives at Fortune 500 companies including GM, Honeywell, UTC, Doosan, and Ametek. Most recently, as Vice President of Quality, Facilities, EH&S, and OPEX at AMETEK (Zygo), Rick was recognized with the Dr. Lux Award in 2024 for establishing a multi-site EH&S program and implementing an exceptional Operational Excellence program.

Read Rick’s full bio to learn more about his background and expertise.

Rick Mangone - Hoagland Management & Consulting LLC

Rick Mangone

Rick Mangone is a highly accomplished global leader with 40 years of expertise in Quality, Continuous Improvement, Facilities, and Environmental Health & Safety (EH&S). As a certified Six Sigma Black Belt with extensive experience across Aerospace, Automotive, Renewables, and Commercial industries, he has led transformative initiatives at Fortune 500 companies including GM, Honeywell, UTC, Doosan, and Ametek. Most recently, as Vice President of Quality, Facilities, EH&S, and OPEX at AMETEK (Zygo), Rick was recognized with the Dr. Lux Award in 2024 for establishing a multi-site EH&S program and implementing an exceptional Operational Excellence program.

https://www.hoaglandmgt.com/rick-mangone
Next
Next

Supply Chain Chaos! How To Manage Through Global Volatility