The last, but not least, of Ohno's wastes is the waste of defects. Defects cost money, both immediate and longer term. In Quality Costing the failure or defect categories are internal failure (scrap, rework, delay) and external failure (including warranty, repairs, field service, but also possibly lost custom). Bear in mind that defect costs tend to escalate the longer they remain undetected. Thus a microchip discovered when made might cost just a few Pounds to replace, but if it reaches the customer may cost hundreds, to say nothing of customer goodwill. So, central themes of total quality are "prevention not detection", "quality at source", and "the chain of quality" (meaning that parts per million levels of defect can only be approached by concerted action all along the chain from marketing, to design, to supply, to manufacture, to distribution, to delivery, to field service.) The Toyota philosophy is that a defect should be regarded as a challenge, as an opportunity to improve, rather than something to be traded off against what is ultimately poor management.

In service, "zero defections" has become a powerful theme, recognising that the value of a retained customer increases with time.

Examples: scrap, rework, less than perfect yield, complaints.